Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 28, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity File Number | 1-07109 | ||
Entity Registrant Name | SERVOTRONICS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 16-0837866 | ||
Entity Address, Address Line One | 1110 Maple Street | ||
Entity Address, City or Town | Elma | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 14059 | ||
City Area Code | 716 | ||
Local Phone Number | 655-5990 | ||
Title of 12(b) Security | Common Stock | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Public Float | $ 18,797,515 | ||
Entity Common Stock, Shares Outstanding | 2,525,313 | ||
Entity Central Index Key | 0000089140 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | SVT | ||
Document Fiscal Year Focus | 2022 | ||
Auditor Name | Freed Maxick CPAs, P.C. | ||
Auditor Firm ID | 317 | ||
Auditor Location | Buffalo, New York |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 4,004 | $ 9,546 |
Accounts receivable, net | 9,469 | 7,198 |
Inventories, net | 19,044 | 20,132 |
Prepaid income taxes | 138 | 792 |
Other current assets | 597 | 647 |
Total current assets | 33,252 | 38,315 |
Property, plant and equipment, net | 10,656 | 10,557 |
Deferred income taxes, net | 1,072 | 900 |
Other non-current assets | 314 | 321 |
Total Assets | 45,294 | 50,093 |
Current liabilities: | ||
Current portion of equipment financing and capital leases | 501 | 276 |
Current portion of postretirement obligation | 87 | 136 |
Accounts payable | 3,113 | 663 |
Accrued employee compensation and benefits costs | 1,163 | 1,759 |
Accrued warranty | 581 | 511 |
Other accrued liabilities | 762 | 903 |
Total current liabilities | 6,207 | 4,248 |
Long-term debt | 4,750 | |
Post retirement obligation | 3,975 | 5,729 |
Shareholders' equity: | ||
Common stock, par value $0.20; authorized 4,000,000 shares; issued 2,629,052 shares; outstanding 2,483,318 (2,435,032 - 2021) shares | 523 | 523 |
Capital in excess of par value | 14,556 | 14,500 |
Retained earnings | 23,741 | 25,858 |
Accumulated other comprehensive loss | (2,337) | (3,908) |
Employee stock ownership trust commitment | (157) | (258) |
Treasury stock, at cost 104,464 (122,839 - 2021) shares | (1,214) | (1,349) |
Total shareholders' equity | 35,112 | 35,366 |
Total Liabilities and Shareholders' Equity | $ 45,294 | $ 50,093 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.20 | $ 0.20 |
Common stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, shares issued | 2,629,052 | 2,629,052 |
Common stock, shares outstanding | 2,483,318 | 2,435,032 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 43,821 | $ 40,558 |
Costs and expenses: | ||
Costs of goods sold, inclusive of depreciation and amortization | 37,877 | 34,570 |
Gross profit | 5,944 | 5,988 |
Operating expenses: | ||
Selling, general and administrative | 8,427 | 9,423 |
Legal settlement awards | 1,890 | |
Total operating expenses | 8,427 | 11,313 |
Operating (loss) | (2,483) | (5,325) |
Other (expense)/income: | ||
Employee retention credit (ERC) | 5,622 | |
Paycheck Protection Program loan forgiveness | 4,000 | |
Gain/(loss) on sale of equipment | 36 | (98) |
Interest expense, net | (240) | (187) |
Total other (expense)/income | (204) | 9,337 |
(Loss)/income before income taxes | (2,687) | 4,012 |
Income tax benefit | 570 | 43 |
Net (loss)/income | $ (2,117) | $ 4,055 |
Basic | ||
Net (loss) income per share | $ (0.88) | $ 1.68 |
Diluted | ||
Net (loss) income per share | $ (0.88) | $ 1.68 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME | ||
Net (Loss)/Income | $ (2,117) | $ 4,055 |
Other comprehensive (loss)/income items: | ||
Actuarial gains/(losses) | 1,838 | (3,308) |
Income tax (expense)/benefit on actuarial losses | (386) | 695 |
Reclassification adjustment for amortization of net actuarial losses | 151 | 77 |
Income tax expense on reclassification adjustment | (32) | (16) |
Other comprehensive gain/(loss): | ||
Retirement benefits adjustment, net of income taxes | 1,571 | (2,552) |
Total comprehensive (loss)/income | $ (546) | $ 1,503 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows related to operating activities: | ||
Net (Loss) Income | $ (2,117,000) | $ 4,055,000 |
Adjustments to reconcile net (loss)income to cash provided by operating activities: | ||
Paycheck Protection loan forgiveness | (4,000,000) | |
Depreciation and amortization | 1,217,000 | 1,368,000 |
(Gain)/Loss on disposal of property | (36,000) | 98,000 |
Stock based compensation | 191,000 | 106,000 |
Increase/(Decrease) in allowance for doubtful accounts | 4,000 | (57,000) |
(Decrease)/Increase in inventory reserve | (484,000) | 22,000 |
Increase in warranty reserve | 70,000 | 129,000 |
Deferred income taxes | (589,000) | (84,000) |
Change in assets and liabilities: | ||
Accounts receivable | (2,275,000) | 495,000 |
Inventories | 1,572,000 | 3,252,000 |
Prepaid income taxes | 654,000 | (309,000) |
Other current assets | 49,000 | (264,000) |
Accounts payable | 2,450,000 | (948,000) |
Accrued employee compensation and benefit costs | (596,000) | 110,000 |
Other accrued liabilities | (133,000) | 412,000 |
Post retirement obligation | 186,000 | 105,000 |
Employee stock ownership trust payment | 101,000 | 101,000 |
Net cash provided by operating activities | 264,000 | 4,591,000 |
Cash flows related to investing activities: | ||
Capital expenditures - property, plant and equipment | (1,319,000) | (267,000) |
Proceeds from sale of assets | 38,000 | 270,000 |
Net cash (used) provided by investing activities | (1,281,000) | 3,000 |
Cash flows related to financing activities: | ||
Principal payments on long-term debt | (4,250,000) | (1,334,000) |
Principal payments on equipment financing lease obligations | (275,000) | (452,000) |
Proceeds from equipment note and equipment financing lease | 384,000 | |
Proceeds from line of credit | 500,000 | |
Purchase of treasury shares | (81,000) | |
Net cash used by financing activities | (4,525,000) | (983,000) |
Net (decrease) increase in cash | (5,542,000) | 3,611,000 |
Cash at beginning of year | 9,546,000 | 5,935,000 |
Cash at end of year | $ 4,004,000 | $ 9,546,000 |
Business Description and Summar
Business Description and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Business Description and Summary of Significant Accounting Policies | |
Business Description and Summary of Significant Accounting Policies | 1. Business Description and Summary of Significant Accounting Policies Business Description Servotronics, Inc. and its subsidiaries (collectively the “Registrant” or the “Company”) design, manufacture and market advanced technology products consisting primarily of control components, and consumer products including knives and various types of cutlery and other edged products. The Company operates through two primary segments: the Advanced Technology Group (ATG) and the Consumer Products Group (CPG). Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. Cash The Company considers cash to include all currency and coins owned by the Company as well as all deposits in the bank including checking accounts and savings accounts. Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $135,000 at December 31, 2022 and $131,000 at December 31, 2021. The Company does not accrue interest on past due receivables. Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue is recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. Shipping and handling activities that occur after the customer obtains control of the promised goods are considered fulfillment activities. The timing of satisfaction of the Company’s performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. The Company warrants its products against design, materials and workmanship based on an average of twenty-seven months. The Company determines warranty reserves needed based on actual average costs of warranty units shipped and current facts and circumstances. As of December 31, 2022 and December 31, 2021 under the guidance of ASC460 the Company has recorded a warranty reserve of approximately $581,000 and $511,000, respectively. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or net realizable value adjustments and inventory determined to be slow moving are applied to the gross value of the inventory through a reserve of approximately $1,258,000 and $1,742,000 at December 31, 2022 and December 31, 2021, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding two years of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time or minimum stocking requirements, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of right-of-use (“ROU”) assets accounted for as finance leases. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax returns, combined New York, Texas, California and Connecticut state income tax returns and a separate Arkansas state income tax return. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at December 31, 2022 or December 31, 2021, and did not recognize any interest and/or penalties in its consolidated statements of income during the years ended December 31, 2022 and 2021. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of December 31, 2022 and December 31, 2021. The 2019 through 2022 federal and state tax returns remain subject to examination. Supplemental Cash Flow Information Income taxes (refunded)/paid, for the years ended December 31, 2022 and 2021 amounted to approximately ($636,000) and $345,000, respectively. Interest paid, for the years ended December 31, 2022 and 2021 amounted to approximately $240,000 and $187,000, respectively. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Due to the losses incurred by our ATG and CPG segments, we performed a test for recoverability of the long-lived assets by comparing its carrying value to the future undiscounted cash flows that we expect will be generated by the asset group. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at December 31, 2022 and December 31, 2021. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Research and Development Costs Research and development costs are expensed as incurred. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. The Company had revenues of advanced technology products to two customers, including various divisions and subsidiaries of a common parent company, which represented more than 10% of consolidated revenues in 2022. In both 2022 and 2021 the Company had a concentration of sales to Customer Customer Fair Value of Financial Instruments Accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. Recent Accounting Pronouncements Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Inventories | 2. Inventories December 31, December 31, 2022 2021 ($000's omitted) Raw material and common parts $ 14,534 $ 15,952 Work-in-process 3,258 3,432 Finished goods 2,510 2,490 20,302 21,874 Less inventory reserve (1,258) (1,742) Total inventories $ 19,044 $ 20,132 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 3. Property, Plant and Equipment December 31, December 31, 2022 2021 ($000's omitted) Land $ 7 $ 7 Buildings 11,843 11,363 Machinery, equipment and tooling 20,757 20,689 Construction in progress 1,087 414 33,694 32,473 Less accumulated depreciation and amortization (23,038) (21,916) Property, plant and equipment, net $ 10,656 $ 10,557 Depreciation and amortization expense amounted to approximately $1,217,000 and $1,368,000 for the years ended December 31, 2022 and 2021, respectively. Depreciation expense amounted to approximately $1,186,000 and $1,310,000 for the years ended December 31, 2022 and 2021, respectively. Amortization expense primarily related to equipment financing amounted to approximately $31,000 and $58,000 for years ended December 31, 2022 and 2021, respectively. The Company's Right of Use ('ROU') assets included in machinery, equipment and tooling had a net book value of approximately $185,000 as of December 31, 2022 ($209,000 - 2021). As of December 31, 2022, there is approximately $1,087,000 ($414,000 – 2021) of construction in progress (CIP) included in property, plant and equipment all of which is related to capital projects. There is approximately $607,000 in CIP for machinery and approximately $480,000 for building improvements primarily at the Advance Technology Group. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt. | |
Long-Term Debt | 4. Long-Term Debt December 31, December 31, 2022 2021 ($000's omitted) Line of credit payable to a financial institution; Interest rate is the BSBY Daily Floating Rate (A) $ — $ 4,250 Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) 491 712 Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) 10 64 501 5,026 Less current portion (501) (276) Long term debt $ — $ 4,750 A.) The Company had a $6,000,000 line of credit (LOC). The interest rate is a rate per year equal to the sum of (i) the greater of the Bloomberg’s Short-term Bank Yield (BSBY) Daily Floating Rate or the Index Floor, plus (ii) 1.65 percentage point(s). For purpose of this paragraph “Index Floor” means 0.5% . In addition, the Company is required to pay a commitment fee of 0.25% on the unused portion of the line of credit. The line of credit expires December 31, 2023. On January 11, 2022, the Company executed an amendment, which extended the line of credit (“LOC”) availability period from December 31, 2022 to December 31, 2023. The amended agreement suspended the Debt Service Coverage Ratio loan covenant up through and including the third quarter of 2022. A Quarterly Minimum Cash Flow measurement loan covenant replaced the Debt Service Coverage Ratio loan covenant. Minimum Cash Flow means net income, plus depreciation, depletion, and amortization expense, plus interest expense, plus non-cash expense related to the Servotronics, Inc. Employee Stock Ownership Plan, plus non-cash stock and stock option transactions. Also, the amended agreement required the Company to maintain a minimum liquidity, defined as cash on hand plus LOC availability, of at least $9,000,000. As disclosed in the filing of our 2022 third quarter 10-Q, at that time the Company anticipated that we would fail to meet the Debt Service Coverage Ratio loan covenant up through and including the fourth quarter of 2022. As of December 31, 2022, the Company was not in compliance with this covenant under our loan agreement and, as a result, the availability of the LOC was temporarily frozen. On March 30, 2023, the Company executed an amendment to the loan agreement (the “Amendment”), which provides a waiver of Debt Service Coverage Ratio defaults and other potential defaults at December 31, 2022 and through December 31, 2023, the expiration date of the agreement. The Amendment also provides the following stipulations. The LOC loan was immediately converted to a borrowing base line of credit utilizing eligible accounts receivable (the “Borrowing Base”), with a maximum availability of the lesser of $5,000,000 or the Borrowing Base, which amounted to $6,400,000 as of the amendment date. As of June 29, 2023, the maximum availability under the Borrowing Base LOC will be reduced to the lesser of $3,900,000 or the Borrowing Base; and then as of August 1, 2023, it will be further reduced to the lesser of $1,000,000 or the Borrowing Base. The amended Borrowing Base LOC loan is secured by all equipment, receivables, inventory and real property of the Company and its wholly owned subsidiary, The Ontario Knife Company, with the exception of certain equipment that was purchased from proceeds of government grants. Interest on the Borrowing Base LOC is the Bloomberg Short-Term Bank Yield (“BSBY”) plus 4.00 percentage points, amounting to 8.88% as of March 30, 2023. Pursuant to the Amendment, the Company paid in full the outstanding balance on our equipment loans, approximately $501,000 as of December 31, 2022. Additionally, the Company advanced $500,000 on the Borrowing Base LOC loan for a pledged deposit account with our lender to be used solely to pay interest. The Company intends to refinance the LOC loan with a different lender by June 29, 2023. Failure to deliver a commitment letter to our current lender by June 1, 2023 and to refinance the LOC loan by June 29, 2023 will result in the imposition of additional fees to our current lender of up to $300,000. Ongoing Liquidity Considerations The Company incurred consolidated operating losses from continuing operations for the years ended December 31, 2022 and 2021. The losses incurred were predominantly driven by our decision to maintain our experienced and knowledgeable workforce during the pandemic years and hire ahead of the expected increased customer demand at the ATG. During 2021, the Company’s operating losses were funded by PPP loans and Employee Retention Credits provided by the U.S. government, which were not available in 2022. The Company’s operating losses decreased year over year by 53%, demonstrating positive momentum. The Company’s total shareholders’ equity was approximately $35,112,000 as of December 31, 2022. Also, as of that date, the Company had working capital excluding cash of approximately $23,041,000 and only $501,000 of bank financing. The ATG has experienced growing customer demand since the middle of 2022, causing an increase in inventory purchases and the resulting usage of cash. This was further exacerbated by the hiring and training of staff to support increasing production in 2023. The temporary freezing of availability on our LOC raised initial doubt about our ability to continue as a going concern until the Company amended the loan agreement on March 30, 2023, alleviating that doubt. We believe that our operating cash flow and availability of our amended Borrowing Base LOC provides us with sufficient liquidity in the near term. Additionally, the Company is actively pursuing an alternate credit facility with a different lender to replace the Borrowing Base LOC loan from our current lender by June 29, 2023. We believe that the strength of our asset base and increasing customer demand make our ability to successfully refinance our LOC probable, providing the Company with sufficient liquidity for at least the next 12 months. B.) The Company had an equipment loan facility in the amount of $1,000,000 available until July 9, 2021. This line was non-revolving and non-renewable. The loan term for the equipment covered by the agreement is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was approximately $491,000 outstanding at December 31, 2022 and $712,000 outstanding at December 31, 2021. C.) The Company had a lease line of credit for equipment financing in the amount of $1,000,000 available until June 28, 2018. This line was non-revolving and non-renewable. The lease term for equipment covered by the lease line of credit is 60 months . Monthly payments are fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was approximately $10,000 outstanding at December 31, 2022 and $64,000 at December 31, 2021. Principal maturities of long-term debt are as follows: 2023 - $501,000. Remaining principal payments for the capital note and capital lease obligations for each of the next five years: Year ending December 31, ($000's omitted) 2023 532 Total principal and interest payments 532 Less amount representing interest (31) Present value of net minimum lease payments 501 Less current portion (501) Long term principle payments $ — |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans. | |
Employee Benefit Plans | 5. Employee Benefit Plans Employee Stock Ownership Plan (ESOP) In 1985, the Company established an employee stock ownership plan (ESOP) for the benefit of employees who meet certain minimum age and service requirements. Upon inception of the ESOP, the Company borrowed $2,000,000 from a bank and lent the proceeds to the trust established under the ESOP to purchase shares of the Company’s common stock. The Company’s loan to the trust is at an interest rate approximating the prime rate and is repayable to the Company over a 40-year term ending in December 2024. During 1987 and 1988, the Company loaned an additional $1,942,000 to the trust under terms similar to those under the Company’s original loan. ESOP shares are held by the plan trustees in a suspense account until allocated to participant accounts. Contributions to the ESOP are determinded annually by the Company according to ESOP plan formula. Each year the Company makes contributions to the trust sufficient to enable the trust to repay the principal and interest due to the Company under the trust loans. As the loans are repaid, shares are released from the suspense account pro rata based on the portion of the aggregate loan payments that are paid during the year. The ESOP plan allows dividends on unallocated shares to be distributed to participants in cash, unless otherwise directed. ESOP shares released from the suspense account are allocated to participants on the basis of their relative taxable compensation in the year of allocation and/or on the participant’s account balance. If Servotronics shares are not readily tradeable on an established securities market at the times of an ESOP participant’s termination of employment or retirement and if such ESOP participant requests that his/her ESOP distributed shares be repurchased by the Company, the Company is obligated to do so. The Company’s shares currently trade on NYSE American. There were no outstanding shares subject to the repurchase obligation at December 31, 2022. Since inception of the ESOP, 374,786 shares have been allocated, exclusive of shares distributed to ESOP participants. At December 31, 2022 and 2021, 41,270 and 56,635 shares, respectively, remain unallocated. Related compensation expense associated with the Company’s ESOP, which is equal to the principal reduction on the loans receivable from the trust, amounted to approximately $101,000 in both 2022 and 2021. Included as a reduction to shareholders’ equity is the ESOP trust commitment which represents the remaining indebtedness of the trust to the Company. Employees are entitled to vote allocated shares and the ESOP trustees are entitled to vote unallocated shares and those allocated shares not voted by the employees. Other Postretirement Benefit Plans The Company provides certain postretirement health and life insurance benefits for two former executives of the Company (the Plan). Upon ceasing employment with the Company, the Company pays the annual cost of health insurance coverage and provide life insurance at the same level of coverage at the time of terminating employment with the Company. The Plan also provides a benefit to reimburse the participants for certain out-of-pocket medical or health related expenses. The retirees’ insurance benefits cease upon the death of the former executives. The Plan is unfunded and the actuarially determined future projected postretirement benefit obligation at December 31, 2022 and 2021 was approximately $4,062,000 and $5,865,000, respectively. Amounts recognized in the consolidated balance sheets at December 31, 2022 and 2021 consist of the following: December 31, December 31, 2022 2021 Current portion - retirement benefits and other $ 87,000 $ 136,000 Long-term liabilities - retirement benefits and other 3,975,000 5,729,000 $ 4,062,000 $ 5,865,000 Accumulated other comprehensive loss, before income taxes: Net actuarial loss $ 2,958,000 $ 4,947,000 The estimated net loss to be amortized from AOCI to benefit cost during 2023 is approximately $87,000. Among other changes in actuarial estimates, a significant portion of the decrease in actuarial loss in 2022 was due to a change in the discount rate. The actuarial loss is being amortized based on the expected lifetimes of the former executives. A reconciliation of the beginning and ending balances of accumulated postretirement benefit obligations is as follows: December 31, December 31, 2022 2021 Accumulated postretirement benefit obligations at the beginning of the year $ 5,865,000 $ 2,529,000 Service Cost — 46,000 Interest Cost 157,000 65,000 Actuarial (gain)/loss (1,838,000) 3,308,000 Benefits paid (122,000) (83,000) Accumulated postretirement benefit obligations at the end of the year $ 4,062,000 $ 5,865,000 Financial information for this Plan for the years ended December 31, 2022 and 2021 are as follows: December 31, December 31, 2022 2021 Service Cost $ — $ 46,000 Interest Cost 157,000 65,000 Recognized actuarial loss 151,000 77,000 Pension cost $ 308,000 $ 188,000 Company contribution and benefits paid $ 122,000 $ 83,000 As actuarially determined the Company estimates it will make contributions to the Plan to fund the payments of benefits of approximately $129,000 in 2023. Assumptions used as of and for the years ended December 31, 2022 and 2021 are as follows: December 31, December 31, 2022 2021 Discount rate used in determining Benefit obligation 4.875 % 2.750 % Pension cost 2.750 % 2.625 % Assumed healthcare cost trend rate is estimated at 10% for the first year and then grading down by 0.5% for each year subsequent until a floor of 5% is reached. The assumption for mortality uses the PriH – 2012 with an improvement scale of MP 2022 (for 2021 the MP 2021 improvement scale was used). The effect of a one-percentage-point increase and a one-percentage-point decrease in the assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs and the accumulated postretirement benefit obligation for health care benefits are as follows: December 31, December 31, 2022 2021 Effect of 1% increase in health care trend rates: Benefit obligation $ 636,000 $ 1,078,000 Aggregate of service and interest cost $ 30,000 $ 29,000 Effect of 1% decrease of health care trend rates: Benefit obligation $ (515,000) $ (853,000) Aggregate of service and interest cost $ (23,000) $ (21,000) The Company is actuarially expected to make benefit payments as of December 31, as follows: Years ending December 31, 2023 $ 129,000 2024 141,000 2025 152,000 2026 162,000 2027 173,000 2028 - 2032 $ 1,014,000 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 6. Income Taxes The income tax provision included in the consolidated statements of income consists of the following: Years Ended December 31, December 31, 2022 2021 ($000’s omitted) Current: Federal $ 19 $ 41 State — — 19 41 Deferred: Federal (589) (84) State — — (589) (84) $ (570) $ (43) The reconciliation of the federal statutory income tax rate to the Company’s effective tax rate based upon the total income tax provision is as follows: Years Ended December 31, December 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % Permanent non-taxable income 0.2 % 0.9 % PPP Loan Forgiveness 0.0 % (20.9) % Business credits 0.1 % (2.2) % Stock compensation (0.3) % (0.1) % State taxes, net of federal benefit (0.1) % 0.0 % Other 0.3 % 0.2 % 21.2 % (1.1) % At December 31, 2022 and 2021, the deferred tax assets (liabilities) were comprised of the following: Years Ended December 31, December 31, 2022 2021 ($000’s omitted) Deferred Tax Assets: Inventories $ 316 $ 326 Accrued employees compensation and benefits costs 405 444 Postretirement obligation (accumulated other comprehensive income) 621 1,039 State Net operating loss and credit carryforwards 173 147 Bad debt reserve 29 28 Warranty reserve 122 107 Research and experimental expenses 615 — Other — 104 Total deferred tax assets 2,281 2,195 Valuation allowance (173) (147) Net deferred tax assets 2,108 2,048 Deferred tax liabilities: Prepaid expenses (72) (126) Property, plant and equipment (964) (1,022) Total deferred tax liabilities (1,036) (1,148) Net deferred tax assets $ 1,072 $ 900 In assessing the ability of the Company to realize the benefit of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the level of historical taxable income and projections for future taxable income on existing contracts in place over the periods which deferred tax assets are deductible, management believes it is more likely than not the Company will generate sufficient taxable income to realize the benefits of these deductible differences at December 31, 2022, except for a valuation allowance of $173,000 ($147,000 – 2021) related to certain state net operating loss carryforwards, state tax credit carryforwards and other state net deferred tax assets. At December 31, 2022, the Company has a New York state tax credit carryforward of approximately $173,000 ($147,000 – 2021), which begins to expire in 2023. There are no uncertain tax positions or unrecognized tax benefits for 2022 and 2021. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2019 through 2022 Federal and state tax returns remain subject to examination. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Shareholders' Equity | |
Shareholders' Equity | 7. Shareholders’ Equity Years Ended December 31, 2021 and 2022 Accumulated Other Capital in Total Retained Comprehensive Common excess of Treasury shareholders' Earnings Income Stock par value ESOT stock equity December 31, 2020, as restated $ 21,803 $ (1,356) $ 523 $ 14,481 $ (359) $ (1,355) $ 33,737 Retirement benefits adjustment — (2,552) — — 101 — (2,451) Stock based compensation — — — 19 — 87 106 Purchase of treasury shares — — — — — (81) (81) Net Income 4,055 — — — — — 4,055 December 31, 2021 $ 25,858 $ (3,908) $ 523 $ 14,500 $ (258) $ (1,349) $ 35,366 Retirement benefits adjustment — 1,571 — — 101 — 1,672 Stock based compensation — — — 56 — 135 191 Net Loss (2,117) — — — — — (2,117) December 31, 2022 $ 23,741 $ (2,337) $ 523 $ 14,556 $ (157) $ (1,214) $ 35,112 The Company’s Board of Directors authorized the purchase of up to 450,000 shares of its common stock in the open market or in privately negotiated transactions. As of December 31, 2022, the Company has purchased 360,615 shares and there remain 89,385 shares available to purchase under this program. There were no shares purchased by the Company in 2022. On January 1, 2021, 25,250 shares of restricted stock vested of which 9,920 shares were withheld by the Company for approximately $81,000 to satisfy statutory minimum withholding tax requirements for those participants who elected this option as permitted under the Company's 2012 Long-Term Incentive Plan. The Company’s director compensation policy provides that non-employee directors receive a portion of their annual retainer in the form of restricted stock under the Company’s 2012 Long-Term Incentive Plan as superseded by the Company’s 2022 Equity Incentive Plan. These shares vest quarterly over a twelve month service period, have voting rights and accrue dividends that are paid upon vesting. The aggregate amount of expense to the Company, measured based on the grant date fair value, will be recognized over the requisite service period. An aggregate of 32,685 restricted shares were issued during the twelve month period ended December 31, 2022 with an approximate grant date fair value of $362,000. Included in the years ended December 31, 2022 and 2021 is approximately $191,000 and $106,000, respectively, of stock-based compensation expense related to the restrictive share awards. The Company has approximately $232,000 of stock based compensation expense related to unvested shares to be recognized over the requisite service period. Earnings Per Share Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period plus the number of shares of common stock that would be issued assuming all contingently issuable shares having a dilutive effect on the earnings per share that were outstanding for the period. The dilutive effect of unvested restrictive stock is determined using the treasury stock method. However, if the assumed common shares are anti-dilutive, basic and diluted earnings per share are the same. As a result of the net losses generated in 2022, all outstanding common shares would be antidilutive. As of the year ended December 31, 2022 and 2021 there were 27,010 and 6,576 common shares, respectively, that could potentially dilute basic earnings per share in the future. Incremental shares from assumed conversions are calculated as the number of shares that would be issued, net of the number of shares that could be purchased in the marketplace with the cash received upon stock option exercise. December 31, December 31, 2022 2021 ($000's omitted except for per share data) Net (loss) income $ (2,117) $ 4,055 Weighted average common shares outstanding (basic) 2,418 2,411 Unvested restricted stock 27 7 Weighted average common shares outstanding (diluted) 2,445 2,418 Basic Net (loss) income per share $ (0.88) $ 1.68 Diluted Net (loss) income per share $ (0.88) $ 1.68 Share Based Payments The Company's 2022 Equity Incentive Plan was approved by the shareholders at the 2022 Annual Meeting of Shareholders. This plan authorizes the issuance of up to 300,000 shares. As of December 31, 2022, there is no unrecognized compensation related to the unvested restricted shares vested on January 1, 2022. A summary of the status of restricted share awards granted under all employee plans is presented below: Weighted Average Grant Shares Date Fair Value Restricted Share Activity: Unvested at December 31, 2020 30,914 $ 9.24 Granted in 2021 13,160 $ 7.60 Forfeited in 2021 — — Vested in 2021 37,498 $ 8.95 Unvested at December 31, 2021 6,576 $ 7.60 Granted in 2022 32,921 $ 11.07 Forfeited in 2022 — — Vested in 2022 12,487 $ 9.22 Unvested at December 31, 2022 27,010 $ 11.09 |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2022 | |
Litigation | |
Litigation | 8. Litigation In the course of its business, the Company is subject to a variety of claims and lawsuits that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. Because litigation outcomes are inherently unpredictable, the Company’s evaluation of legal proceedings often involves a series of complex assessments by management, after consulting with legal counsel, about future events and can rely heavily on estimates and assumptions. The Company carries liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. On June 7, 2021, a Summons and Complaint was filed by an employee in the Supreme Court of the State of New York, County of Erie, against Servotronics, Inc., the Servotronics Board of Directors, The Ontario Knife Company and Kenneth D. Trbovich (collectively, the “Defendants”). The Complaint alleges certain violations under the New York Human Rights Law by the Defendants relating to the employee’s employment by the Company as well as intentional and negligent infliction of emotional distress. The Complaint also alleges certain purported derivative causes of action against all Defendants, including breach of fiduciary duties, fraud and corporate waste. The Complaint seeks monetary damages in an amount not less than $5,000,000 with respect to the direct causes of action and equitable relief with respect to the purported derivative causes of action. The Defendants filed a motion to dismiss the Complaint on August 6, 2021. On January 13, 2022, the Defendants’ motion to dismiss was granted, in part, and denied, in part. This litigation is still in its earliest stages. The Company is insured for such matters in the amount of $3 million with a retention of $250,000. Additionally, there is an excess coverage policy for $3 million that considers the payment from the earlier insurance policy as the $3 million retention. Based on the information known by the Company as of the date of this filing, the Company does not consider the risk of loss to be probable and is unable to reasonably or accurately estimate the likelihood and amount of any liability that may be realized as a result of this litigation. Accordingly, no loss has been recognized in the accompanying financials statements related to this litigation. The Company intends to vigorously defend against this litigation. On December 21, 2021, the Company’s former Chief Executive Officer (“Former CEO”) delivered his Notice of Termination and alleged that the Company breached the terms of the Employment Agreement between the Company and the Former CEO by, among others, placing the Former CEO on paid administrative leave in June 2021 pending an internal investigation. On December 22, 2021, the Board of Directors accepted the Former CEO’s resignation from the Company but rejected his request to treat his resignation as resignation for good reason under Paragraph 10 of his Employment Agreement. The Board also determined, based on the findings of its investigation that the Former CEO committed willful malfeasance in violation of his Employment Agreement, and that such willful malfeasance would have justified termination of employment pursuant to Paragraph 9 of the Employment Agreement, but for his earlier resignation. The Former CEO claims that he is entitled to a severance payment equal to 2.99 times his average annual compensation as set forth in the Employment Agreement, plus the reimbursement of certain expenses and the value of any lost benefits. As noted above, the Board of Directors rejected the Former CEO’s claim that the Company breached the Employment Agreement. Accordingly, the Company is classifying the Former CEO’s termination as a voluntary resignation for which no severance is due. The Employment Agreement provides that disputes arising thereunder shall be settled by arbitration. To date, neither party has commenced an arbitration proceeding with respect to these matters. Based on the information known by the Company as of the date of this filing, if a claim is ultimately asserted, the Company does not consider the risk of loss to be probable and is unable to reasonably or accurately estimate the likelihood and amount of any liability that may be realized with respect to this matter. There are no other legal proceedings currently pending by or against the Company other than litigation incidental to the business which is not expected to have a material adverse effect on the business, cash flow, or earnings of the Company. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions The Company paid legal fees and disbursements of approximately $51,000 and $85,000 in the years ended December 31, 2022 and 2021, respectively, for services provided by a law firm that is owned by a member of the Company’s Board of Directors. Additionally, the Company had accrued unbilled legal fees at December 31, 2022 and 2021 of approximately $13,000 and $15,000, respectively, with this firm. |
Business Segments
Business Segments | 12 Months Ended |
Dec. 31, 2022 | |
Business Segments | |
Business Segments | 10. Business Segments The Company operates in two business segments, Advanced Technology Group (“ATG”) and Consumer Products Group (“CPG”). The Company’s reportable segments are strategic business units that offer different products and services. The segments are composed of separate corporations and operations are managed separately. Operations in ATG primarily involve the design, manufacture, and marketing of servo-control components (i.e., torque motors, control valves, actuators, etc.) for prime government contractors, commercial and industrial applications. CPG’s operations involve the design, manufacture and marketing a variety of cutlery products for use by consumers and government agencies. The Company derives its primary sales revenue from domestic customers, although a portion of finished products are for foreign end use. Information regarding the Company’s operations in these segments is summarized as follows ($000’s omitted): ($000's omitted except per share data) ATG CPG Consolidated Years Ended Years Ended Years Ended December 31, December 31, December 31, 2022 2021 2022 2021 2022 2021 Revenues from unaffiliated customers $ 35,185 $ 31,677 $ 8,636 $ 8,881 $ 43,821 $ 40,558 Cost of goods sold, inclusive of dep. and amort. (31,055) (25,929) (6,822) (8,641) (37,877) (34,570) Gross profit 4,130 5,748 1,814 240 5,944 5,988 Gross margin % 11.7 % 18.1 % 21.0 % 2.7 % 13.6 % 14.8 % Operating expenses: Selling, general and administrative (6,592) (7,661) (1,835) (1,762) (8,427) (9,423) Legal settlement awards — (1,800) — (90) — (1,890) Total operating costs and expenses (6,592) (9,461) (1,835) (1,852) (8,427) (11,313) Operating (loss) (2,462) (3,713) (21) (1,612) (2,483) (5,325) Other (expense)/income: Other income: employee retention credit (ERC) — 4,584 — 1,038 — 5,622 Other income: Paycheck Protection Program loan forgiveness — 4,000 — — — 4,000 Interest expense (239) (185) (1) (2) (240) (187) Gain on sale of equipment 36 (98) — — 36 (98) Total other (expense)/income (203) 8,301 (1) 1,036 (204) 9,337 (Loss)/income before income tax provision (2,665) 4,588 (22) (576) (2,687) 4,012 Income tax benefit/ (provision) 565 (78) 5 121 570 43 Net (loss)/income $ (2,100) $ 4,510 $ (17) $ (455) $ (2,117) $ 4,055 Total assets $ 35,766 $ 40,870 $ 9,528 $ 9,223 $ 45,294 $ 50,293 Capital expenditures $ 1,234 $ 263 $ 85 $ 4 $ 1,319 $ 267 Foreign derived sales $ 10,541 $ 7,933 $ 433 $ 511 $ 10,974 $ 8,444 |
Business Description and Summ_2
Business Description and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Business Description and Summary of Significant Accounting Policies | |
Business Description | Business Description Servotronics, Inc. and its subsidiaries (collectively the “Registrant” or the “Company”) design, manufacture and market advanced technology products consisting primarily of control components, and consumer products including knives and various types of cutlery and other edged products. The Company operates through two primary segments: the Advanced Technology Group (ATG) and the Consumer Products Group (CPG). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. |
Cash | Cash The Company considers cash to include all currency and coins owned by the Company as well as all deposits in the bank including checking accounts and savings accounts. |
Accounts Receivable | Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $135,000 at December 31, 2022 and $131,000 at December 31, 2021. The Company does not accrue interest on past due receivables. |
Revenue Recognition | Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue is recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. Shipping and handling activities that occur after the customer obtains control of the promised goods are considered fulfillment activities. The timing of satisfaction of the Company’s performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. The Company warrants its products against design, materials and workmanship based on an average of twenty-seven months. The Company determines warranty reserves needed based on actual average costs of warranty units shipped and current facts and circumstances. As of December 31, 2022 and December 31, 2021 under the guidance of ASC460 the Company has recorded a warranty reserve of approximately $581,000 and $511,000, respectively. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or net realizable value adjustments and inventory determined to be slow moving are applied to the gross value of the inventory through a reserve of approximately $1,258,000 and $1,742,000 at December 31, 2022 and December 31, 2021, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding two years of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time or minimum stocking requirements, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of right-of-use (“ROU”) assets accounted for as finance leases. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax returns, combined New York, Texas, California and Connecticut state income tax returns and a separate Arkansas state income tax return. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at December 31, 2022 or December 31, 2021, and did not recognize any interest and/or penalties in its consolidated statements of income during the years ended December 31, 2022 and 2021. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of December 31, 2022 and December 31, 2021. The 2019 through 2022 federal and state tax returns remain subject to examination. |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Income taxes (refunded)/paid, for the years ended December 31, 2022 and 2021 amounted to approximately ($636,000) and $345,000, respectively. Interest paid, for the years ended December 31, 2022 and 2021 amounted to approximately $240,000 and $187,000, respectively. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Due to the losses incurred by our ATG and CPG segments, we performed a test for recoverability of the long-lived assets by comparing its carrying value to the future undiscounted cash flows that we expect will be generated by the asset group. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at December 31, 2022 and December 31, 2021. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Concentration of Credit Risks | Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. The Company had revenues of advanced technology products to two customers, including various divisions and subsidiaries of a common parent company, which represented more than 10% of consolidated revenues in 2022. In both 2022 and 2021 the Company had a concentration of sales to Customer Customer |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, |
Business Description and Summ_3
Business Description and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Description and Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of depreciable properties | Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Schedule of inventories | December 31, December 31, 2022 2021 ($000's omitted) Raw material and common parts $ 14,534 $ 15,952 Work-in-process 3,258 3,432 Finished goods 2,510 2,490 20,302 21,874 Less inventory reserve (1,258) (1,742) Total inventories $ 19,044 $ 20,132 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Schedule of property, plant and equipment | December 31, December 31, 2022 2021 ($000's omitted) Land $ 7 $ 7 Buildings 11,843 11,363 Machinery, equipment and tooling 20,757 20,689 Construction in progress 1,087 414 33,694 32,473 Less accumulated depreciation and amortization (23,038) (21,916) Property, plant and equipment, net $ 10,656 $ 10,557 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt. | |
Schedule of long-term debt | December 31, December 31, 2022 2021 ($000's omitted) Line of credit payable to a financial institution; Interest rate is the BSBY Daily Floating Rate (A) $ — $ 4,250 Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) 491 712 Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) 10 64 501 5,026 Less current portion (501) (276) Long term debt $ — $ 4,750 A.) The Company had a $6,000,000 line of credit (LOC). The interest rate is a rate per year equal to the sum of (i) the greater of the Bloomberg’s Short-term Bank Yield (BSBY) Daily Floating Rate or the Index Floor, plus (ii) 1.65 percentage point(s). For purpose of this paragraph “Index Floor” means 0.5% . In addition, the Company is required to pay a commitment fee of 0.25% on the unused portion of the line of credit. The line of credit expires December 31, 2023. |
Schedule of payments for capital lease obligations | Year ending December 31, ($000's omitted) 2023 532 Total principal and interest payments 532 Less amount representing interest (31) Present value of net minimum lease payments 501 Less current portion (501) Long term principle payments $ — |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans. | |
Schedule of amounts recognized in the balances sheets | December 31, December 31, 2022 2021 Current portion - retirement benefits and other $ 87,000 $ 136,000 Long-term liabilities - retirement benefits and other 3,975,000 5,729,000 $ 4,062,000 $ 5,865,000 Accumulated other comprehensive loss, before income taxes: Net actuarial loss $ 2,958,000 $ 4,947,000 |
Schedule of beginning and ending balances of accumulated postretirement benefit obligations | December 31, December 31, 2022 2021 Accumulated postretirement benefit obligations at the beginning of the year $ 5,865,000 $ 2,529,000 Service Cost — 46,000 Interest Cost 157,000 65,000 Actuarial (gain)/loss (1,838,000) 3,308,000 Benefits paid (122,000) (83,000) Accumulated postretirement benefit obligations at the end of the year $ 4,062,000 $ 5,865,000 |
Schedule of financial information for this Plan | December 31, December 31, 2022 2021 Service Cost $ — $ 46,000 Interest Cost 157,000 65,000 Recognized actuarial loss 151,000 77,000 Pension cost $ 308,000 $ 188,000 Company contribution and benefits paid $ 122,000 $ 83,000 |
Schedule of assumptions used as of and for the years | December 31, December 31, 2022 2021 Discount rate used in determining Benefit obligation 4.875 % 2.750 % Pension cost 2.750 % 2.625 % |
Schedule of one-percentage-point increase and a one-percentage-point decrease in the assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs and the accumulated postretirement benefit obligation for health care benefits | December 31, December 31, 2022 2021 Effect of 1% increase in health care trend rates: Benefit obligation $ 636,000 $ 1,078,000 Aggregate of service and interest cost $ 30,000 $ 29,000 Effect of 1% decrease of health care trend rates: Benefit obligation $ (515,000) $ (853,000) Aggregate of service and interest cost $ (23,000) $ (21,000) |
Schedule of benefit payments | Years ending December 31, 2023 $ 129,000 2024 141,000 2025 152,000 2026 162,000 2027 173,000 2028 - 2032 $ 1,014,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of income tax provision for income taxes from continuing operations | Years Ended December 31, December 31, 2022 2021 ($000’s omitted) Current: Federal $ 19 $ 41 State — — 19 41 Deferred: Federal (589) (84) State — — (589) (84) $ (570) $ (43) |
Schedule of the reconciliation of effective tax rate from continuing operations and the federal statutory income tax rate | Years Ended December 31, December 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % Permanent non-taxable income 0.2 % 0.9 % PPP Loan Forgiveness 0.0 % (20.9) % Business credits 0.1 % (2.2) % Stock compensation (0.3) % (0.1) % State taxes, net of federal benefit (0.1) % 0.0 % Other 0.3 % 0.2 % 21.2 % (1.1) % |
Schedule of deferred tax assets (liabilities) | Years Ended December 31, December 31, 2022 2021 ($000’s omitted) Deferred Tax Assets: Inventories $ 316 $ 326 Accrued employees compensation and benefits costs 405 444 Postretirement obligation (accumulated other comprehensive income) 621 1,039 State Net operating loss and credit carryforwards 173 147 Bad debt reserve 29 28 Warranty reserve 122 107 Research and experimental expenses 615 — Other — 104 Total deferred tax assets 2,281 2,195 Valuation allowance (173) (147) Net deferred tax assets 2,108 2,048 Deferred tax liabilities: Prepaid expenses (72) (126) Property, plant and equipment (964) (1,022) Total deferred tax liabilities (1,036) (1,148) Net deferred tax assets $ 1,072 $ 900 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Shareholders' Equity | |
Schedule of stockholders equity | Years Ended December 31, 2021 and 2022 Accumulated Other Capital in Total Retained Comprehensive Common excess of Treasury shareholders' Earnings Income Stock par value ESOT stock equity December 31, 2020, as restated $ 21,803 $ (1,356) $ 523 $ 14,481 $ (359) $ (1,355) $ 33,737 Retirement benefits adjustment — (2,552) — — 101 — (2,451) Stock based compensation — — — 19 — 87 106 Purchase of treasury shares — — — — — (81) (81) Net Income 4,055 — — — — — 4,055 December 31, 2021 $ 25,858 $ (3,908) $ 523 $ 14,500 $ (258) $ (1,349) $ 35,366 Retirement benefits adjustment — 1,571 — — 101 — 1,672 Stock based compensation — — — 56 — 135 191 Net Loss (2,117) — — — — — (2,117) December 31, 2022 $ 23,741 $ (2,337) $ 523 $ 14,556 $ (157) $ (1,214) $ 35,112 |
Schedule of earnings per share | December 31, December 31, 2022 2021 ($000's omitted except for per share data) Net (loss) income $ (2,117) $ 4,055 Weighted average common shares outstanding (basic) 2,418 2,411 Unvested restricted stock 27 7 Weighted average common shares outstanding (diluted) 2,445 2,418 Basic Net (loss) income per share $ (0.88) $ 1.68 Diluted Net (loss) income per share $ (0.88) $ 1.68 |
Schedule of summary of the status of restricted share awards granted | Weighted Average Grant Shares Date Fair Value Restricted Share Activity: Unvested at December 31, 2020 30,914 $ 9.24 Granted in 2021 13,160 $ 7.60 Forfeited in 2021 — — Vested in 2021 37,498 $ 8.95 Unvested at December 31, 2021 6,576 $ 7.60 Granted in 2022 32,921 $ 11.07 Forfeited in 2022 — — Vested in 2022 12,487 $ 9.22 Unvested at December 31, 2022 27,010 $ 11.09 |
Business Segments (Tables)
Business Segments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Segments | |
Schedule of information regarding operations in business segment | Information regarding the Company’s operations in these segments is summarized as follows ($000’s omitted): ($000's omitted except per share data) ATG CPG Consolidated Years Ended Years Ended Years Ended December 31, December 31, December 31, 2022 2021 2022 2021 2022 2021 Revenues from unaffiliated customers $ 35,185 $ 31,677 $ 8,636 $ 8,881 $ 43,821 $ 40,558 Cost of goods sold, inclusive of dep. and amort. (31,055) (25,929) (6,822) (8,641) (37,877) (34,570) Gross profit 4,130 5,748 1,814 240 5,944 5,988 Gross margin % 11.7 % 18.1 % 21.0 % 2.7 % 13.6 % 14.8 % Operating expenses: Selling, general and administrative (6,592) (7,661) (1,835) (1,762) (8,427) (9,423) Legal settlement awards — (1,800) — (90) — (1,890) Total operating costs and expenses (6,592) (9,461) (1,835) (1,852) (8,427) (11,313) Operating (loss) (2,462) (3,713) (21) (1,612) (2,483) (5,325) Other (expense)/income: Other income: employee retention credit (ERC) — 4,584 — 1,038 — 5,622 Other income: Paycheck Protection Program loan forgiveness — 4,000 — — — 4,000 Interest expense (239) (185) (1) (2) (240) (187) Gain on sale of equipment 36 (98) — — 36 (98) Total other (expense)/income (203) 8,301 (1) 1,036 (204) 9,337 (Loss)/income before income tax provision (2,665) 4,588 (22) (576) (2,687) 4,012 Income tax benefit/ (provision) 565 (78) 5 121 570 43 Net (loss)/income $ (2,100) $ 4,510 $ (17) $ (455) $ (2,117) $ 4,055 Total assets $ 35,766 $ 40,870 $ 9,528 $ 9,223 $ 45,294 $ 50,293 Capital expenditures $ 1,234 $ 263 $ 85 $ 4 $ 1,319 $ 267 Foreign derived sales $ 10,541 $ 7,933 $ 433 $ 511 $ 10,974 $ 8,444 |
Business Description and Summ_4
Business Description and Summary of Significant Accounting Policies - Estimated useful lives of depreciable properties (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Buildings and improvements | Minimum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 5 years |
Buildings and improvements | Maximum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 40 years |
Machinery and equipment | Minimum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 5 years |
Machinery and equipment | Maximum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 20 years |
Tooling | Minimum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 3 years |
Tooling | Maximum | |
Business Description and Summary of Significant Accounting Policies | |
Estimated useful lives of depreciable properties | 5 years |
Business Description and Summ_5
Business Description and Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) customer Y | Dec. 31, 2021 USD ($) | |
Business Description and Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 135,000 | $ 131,000 |
Warranty period | 27 months | |
Warranty reserve | $ 581,000 | 511,000 |
Inventory reserve | 1,258,000 | 1,742,000 |
Income taxes refunded/paid | 636,000 | 345,000 |
Interest paid | 240,000 | 187,000 |
Impairment of long-lived assets | $ 0 | $ 0 |
Concentration risk, benchmark description | No other customers of the ATG or CPG represented more than 10% of the Company’s consolidated revenues in either of these years | |
Minimum | ||
Business Description and Summary of Significant Accounting Policies | ||
Number of years of customer requirements | Y | 2 | |
Number of year's supply | Y | 1 | |
Customer Concentration Risk | Advanced technology products | Sales Revenue | ||
Business Description and Summary of Significant Accounting Policies | ||
Number of customers | customer | 2 | |
Customer Concentration Risk | Advanced technology products | Sales Revenue | Two Customers | ||
Business Description and Summary of Significant Accounting Policies | ||
Concentration risk, benchmark description | more than 10% | |
Customer Concentration Risk | Advanced technology products | Sales Revenue | Customer A | ||
Business Description and Summary of Significant Accounting Policies | ||
Concentration risk, percentage | 49% | 52.60% |
Customer Concentration Risk | Advanced technology products | Sales Revenue | Customer B | ||
Business Description and Summary of Significant Accounting Policies | ||
Concentration risk, percentage | 49% | 52.60% |
Inventories - Summary of invent
Inventories - Summary of inventories (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories | ||
Raw material and common parts | $ 14,534,000 | $ 15,952,000 |
Work-in-process | 3,258,000 | 3,432,000 |
Finished goods | 2,510,000 | 2,490,000 |
Inventory, Gross | 20,302,000 | 21,874,000 |
Less inventory reserve | (1,258,000) | (1,742,000) |
Total inventories | $ 19,044,000 | $ 20,132,000 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of property, plant and equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | $ 33,694 | $ 32,473 |
Less accumulated depreciation and amortization | (23,038) | (21,916) |
Property, plant and equipment, net | 10,656 | 10,557 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | 7 | 7 |
Buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | 11,843 | 11,363 |
Machinery, equipment and tooling | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | 20,757 | 20,689 |
Construction in progress | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | $ 1,087 | $ 414 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment | ||
Depreciation and amortization expense | $ 1,217,000 | $ 1,368,000 |
Depreciation | 1,186,000 | 1,310,000 |
Amortization expense | 31,000 | 58,000 |
Property, plant and equipment, Gross | 33,694,000 | 32,473,000 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
ROU assets | 185,000 | 209,000 |
Property, plant and equipment, Gross | 20,757,000 | 20,689,000 |
ATG | ||
Property, Plant and Equipment | ||
Construction in progress | 1,087,000 | $ 414,000 |
ATG | Construction in progress (CIP) machinery & equipment and self-constructed assets | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | 607,000 | |
ATG | Construction in progress (CIP) IT equipment and software | ||
Property, Plant and Equipment | ||
Property, plant and equipment, Gross | $ 480,000 |
Long-Term Debt - Summary of lon
Long-Term Debt - Summary of long term debt (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Long-Term Debt | ||
Long-term debt, Total | $ 501,000 | $ 5,026,000 |
Less current portion | (501,000) | (276,000) |
Long term debt | 4,750,000 | |
Line of credit (LOC) | ||
Long-Term Debt | ||
Long-term debt, Total | 4,250,000 | |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) | ||
Long-Term Debt | ||
Long-term debt, Total | 491,000 | 712,000 |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) | ||
Long-Term Debt | ||
Long-term debt, Total | $ 10,000 | $ 64,000 |
Long-Term Debt - Summary of l_2
Long-Term Debt - Summary of long term debt information (Details) | Dec. 31, 2022 |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) | Minimum | |
Debt Instrument | |
Percentage of floating interest rate payable | 1.79553% |
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) | Maximum | |
Debt Instrument | |
Percentage of floating interest rate payable | 1.83501% |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) | Minimum | |
Debt Instrument | |
Percentage of floating interest rate payable | 1.82276% |
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) | Maximum | |
Debt Instrument | |
Percentage of floating interest rate payable | 1.8693% |
Long-Term Debt - Maturities (De
Long-Term Debt - Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Maturities - Topic 842 | ||
2023 | $ 532 | |
Total principal and interest payments | 532 | |
Less amount representing interest | (31) | |
Present value of net minimum lease payments | 501 | |
Less current portion | $ (501) | $ (276) |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | 12 Months Ended | ||||||||
Jun. 29, 2023 | Mar. 30, 2023 | Dec. 31, 2022 | Aug. 01, 2023 | Jan. 11, 2022 | Dec. 31, 2021 | Jul. 09, 2021 | Dec. 31, 2020 | Jun. 28, 2018 | |
Debt Instrument | |||||||||
Long-term debt | $ 501,000 | $ 5,026,000 | |||||||
Cumulative effect | $ 23,741,000 | 25,858,000 | |||||||
Operating loss decreased | 53% | ||||||||
Total shareholders' equity | $ 35,112,000 | 35,366,000 | $ 33,737,000 | ||||||
Principal maturities of long-term debt for 2023 | 501,000 | ||||||||
Cash | 4,004,000 | 9,546,000 | |||||||
Revolving credit facility | |||||||||
Debt Instrument | |||||||||
Maximum availablity under LOC | 5,000,000 | ||||||||
Total shareholders' equity | 35,112,000 | ||||||||
Revolving credit facility | Subsequent Event | |||||||||
Debt Instrument | |||||||||
Maximum availablity under LOC | $ 6,400,000 | ||||||||
Reduced borrowing capacity | $ 3,900,000 | $ 1,000,000 | |||||||
Line of credit (LOC) | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | $ 6,000,000 | ||||||||
Spread on variable rate | 1.65% | ||||||||
Commitment fee on unused portion of line of credit | 0.25% | ||||||||
Long-term debt | 4,250,000 | ||||||||
Line of credit | $ 501,000 | ||||||||
Line of credit advance loan deposit | 500,000 | ||||||||
Working capital | 23,041,000 | ||||||||
Excluding bank financing | $ 501,000 | ||||||||
Cash | $ 9,000,000 | ||||||||
Line of credit (LOC) | Subsequent Event | |||||||||
Debt Instrument | |||||||||
Additional Amount of LOC Loan | $ 300,000 | ||||||||
Line of credit (LOC) | Index Floor | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Index Floor Rate | 0.50% | ||||||||
Line of credit (LOC) | Maximum [Member] | |||||||||
Debt Instrument | |||||||||
Line of credit interest rate | 8.88% | ||||||||
Line of credit (LOC) | Minimum [Member] | |||||||||
Debt Instrument | |||||||||
Line of credit interest rate | 4% | ||||||||
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.79553% - 1.835015% as of December 31, 2022) (B) | |||||||||
Debt Instrument | |||||||||
Long-term debt | $ 491,000 | 712,000 | |||||||
Loan line of credit | $ 1,000,000 | ||||||||
Loan term for equipment covered by loan | 60 months | ||||||||
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C) | |||||||||
Debt Instrument | |||||||||
Long-term debt | $ 10,000 | $ 64,000 | |||||||
Lease line of credit | $ 1,000,000 | ||||||||
Lease term for equipment covered by lease line of credit | 60 months |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 1988 | Dec. 31, 1987 | Dec. 31, 2020 | Dec. 31, 1985 | |
Employee Benefit Plans | ||||||
Amount borrowed | $ 2,000,000 | |||||
Employee stock ownership plan debt structure interest rate description | prime rate | |||||
Employee stock ownership plan, term of loan | 40 years | |||||
Employee stock ownership plan, amount of additional loan | $ 1,942,000 | $ 1,942,000 | ||||
Outstanding shares subject to repurchase obligation | 0 | |||||
ESOP, number of allocated shares since inception | 374,786 | |||||
ESOP, number of unallocated shares | 41,270 | 56,635 | ||||
ESOP, compensation expenses | $ 101,000 | $ 101,000 | ||||
Employer contribution | 129,000 | |||||
Other Postretirement Benefit Plans | ||||||
Employee Benefit Plans | ||||||
Future obligation of benefits | 4,062,000 | 5,865,000 | $ 2,529,000 | |||
Net loss to be amortized from AOCI to benefit cost | 87,000 | |||||
Benefit cost | $ 308,000 | $ 188,000 | ||||
Medical inflation rate for next year | 10% | |||||
Grading down percentage for each year | 0.50% | |||||
Floor rate | 5% |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of amounts recognized in the balances sheets (Details) - Other Postretirement Benefit Plans - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Amounts recognized in the balances sheets | ||
Current portion - retirement benefits and other | $ 87,000 | $ 136,000 |
Long-term liabilities - retirement benefits and other | 3,975,000 | 5,729,000 |
Amounts recognized in the balances sheets | 4,062,000 | 5,865,000 |
Accumulated other comprehensive loss, before income taxes: | ||
Net actuarial loss | $ 2,958,000 | $ 4,947,000 |
Employee Benefit Plans - Sche_2
Employee Benefit Plans - Schedule of beginning and ending balances of accumulated postretirement benefit obligations (Details) - Other Postretirement Benefit Plans - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Benefit Plans | ||
Accumulated postretirement benefit obligations at the beginning of the year | $ 5,865,000 | $ 2,529,000 |
Service Cost | 46,000 | |
Interest Cost | 157,000 | 65,000 |
Actuarial (gain)/loss | (1,838,000) | 3,308,000 |
Benefits paid | (122,000) | (83,000) |
Accumulated postretirement benefit obligations at the end of the year | $ 4,062,000 | $ 5,865,000 |
Employee Benefit Plans - Sche_3
Employee Benefit Plans - Schedule of financial information for this Plan (Details) - Other Postretirement Benefit Plans - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Benefit Plans | ||
Service Cost | $ 46,000 | |
Interest Cost | $ 157,000 | 65,000 |
Recognized actuarial loss | 151,000 | 77,000 |
Pension cost | 308,000 | 188,000 |
Company contribution and benefits paid | $ 122,000 | $ 83,000 |
Employee Benefit Plans - Sche_4
Employee Benefit Plans - Schedule of assumptions used as of and for the years (Details) - Other Postretirement Benefit Plans | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Benefit Plans | ||
Benefit obligation | 4.875% | 2.75% |
Pension cost | 2.75% | 2.625% |
Employee Benefit Plans - Sche_5
Employee Benefit Plans - Schedule of postretirement health care benefits costs and obligation (Details) - Other Postretirement Benefit Plans - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Benefit Plans | ||
Benefit obligation | $ 636,000 | $ 1,078,000 |
Aggregate of service and interest cost | 30,000 | 29,000 |
Benefit obligation | (515,000) | (853,000) |
Aggregate of service and interest cost | $ (23,000) | $ (21,000) |
Employee Benefit Plans - Sche_6
Employee Benefit Plans - Schedule of benefit payments (Details) - Other Postretirement Benefit Plans | Dec. 31, 2022 USD ($) |
Employee Benefit Plans | |
2023 | $ 129,000 |
2024 | 141,000 |
2025 | 152,000 |
2026 | 162,000 |
2027 | 173,000 |
2028 - 2032 | $ 1,014,000 |
Income Taxes - Income tax provi
Income Taxes - Income tax provision from operations included in consolidated statements of operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 19 | $ 41 |
Total current tax | 19 | 41 |
Deferred: | ||
Federal | (589) | (84) |
State | 0 | 0 |
Total deferred | (589) | (84) |
Income tax provision, total | $ (570) | $ (43) |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate based upon total income tax provision (benefit) from continuing operations (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Federal statutory rate | 21% | 21% |
Permanent non-taxable income | 0.20% | 0.90% |
PPP Loan Forgiveness | (0.00%) | (20.90%) |
Business credits | 0.10% | (2.20%) |
Stock compensation | (0.30%) | (0.10%) |
State taxes, net of federal benefit | (0.10%) | 0% |
Other | 0.30% | 0.20% |
Effective tax rate | 21.20% | (1.10%) |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets: | ||
Inventories | $ 316 | $ 326 |
Accrued employees compensation and benefits costs | 405 | 444 |
Postretirement obligation (accumulated other comprehensive income) | 621 | 1,039 |
State Net operating loss and credit carryforwards | 173 | 147 |
Bad debt reserve | 29 | 28 |
Warranty reserve | 122 | 107 |
Research and experimental expenses | 615 | |
Other | 104 | |
Total deferred tax assets | 2,281 | 2,195 |
Valuation allowance | (173) | (147) |
Net deferred tax assets | 2,108 | 2,048 |
Deferred tax liabilities: | ||
Prepaid expenses | (72) | (126) |
Property, plant and equipment | (964) | (1,022) |
Total deferred tax liabilities | (1,036) | (1,148) |
Net deferred tax asset | $ 1,072 | $ 900 |
Income Taxes - Additional infor
Income Taxes - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
State net operating loss carryforwards, state tax credit carryforwards and other state net deferred tax assets valuation allowance | $ 173,000 | $ 147,000 |
Uncertain tax positions or unrecognized tax benefits | 0 | 0 |
Domestic Tax Authority | New York | ||
Income Taxes | ||
Tax credit carryforward | $ 173,000 | $ 147,000 |
Tax credit carryforward expiration date in years | 2023 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of common shareholders' equity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders' Equity | ||
Beginning balance | $ 35,366 | $ 33,737 |
Retirement benefits adjustment | 1,672 | (2,451) |
Stock based compensation | 191 | 106 |
Purchase of treasury shares | (81) | |
Net (Loss) Income | (2,117) | 4,055 |
Ending balance | 35,112 | 35,366 |
Retained earnings | ||
Shareholders' Equity | ||
Beginning balance | 25,858 | 21,803 |
Net (Loss) Income | (2,117) | 4,055 |
Ending balance | 23,741 | 25,858 |
Accumulated Other Comprehensive Loss | ||
Shareholders' Equity | ||
Beginning balance | (3,908) | (1,356) |
Retirement benefits adjustment | 1,571 | (2,552) |
Ending balance | (2,337) | (3,908) |
Common Stock | ||
Shareholders' Equity | ||
Beginning balance | 523 | 523 |
Ending balance | 523 | 523 |
Capital in excess of par value | ||
Shareholders' Equity | ||
Beginning balance | 14,500 | 14,481 |
Stock based compensation | 56 | 19 |
Ending balance | 14,556 | 14,500 |
ESOT | ||
Shareholders' Equity | ||
Beginning balance | (258) | (359) |
Retirement benefits adjustment | 101 | 101 |
Ending balance | (157) | (258) |
Treasury stock | ||
Shareholders' Equity | ||
Beginning balance | (1,349) | (1,355) |
Stock based compensation | 135 | 87 |
Purchase of treasury shares | (81) | |
Ending balance | $ (1,214) | $ (1,349) |
Shareholders' Equity - Share Re
Shareholders' Equity - Share Repurchase Program (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders' Equity | ||
Number of shares purchased | 104,464 | 122,839 |
Share Repurchase Program | ||
Shareholders' Equity | ||
Number of common shares authorized to be purchased | 450,000 | |
Number of shares purchased | 360,615 | |
Remaining number of shares authorized to be purchased | 89,385 | |
Shares purchased | 0 |
Shareholders' Equity - 2012 Lon
Shareholders' Equity - 2012 Long-Term Incentive Plan (Details) - USD ($) | 12 Months Ended | |||
May 14, 2021 | Jan. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders' Equity | ||||
Stock-based compensation expense related to the restrictive share awards | $ 191,000 | $ 106,000 | ||
Unvested Shares Recognized | 232,000 | |||
Non-employee directors | ||||
Shareholders' Equity | ||||
Number of restricted stock issued | 32,685 | |||
Compensation expense not yet recognized | $ 362,000 | |||
2012 Long-Term Incentive Plan | ||||
Shareholders' Equity | ||||
Compensation expense not yet recognized | $ 0 | |||
Number of shares authorized for issuance | 300,000 | |||
Number of restricted stock shares vested | 25,250 | |||
Shares withheld to satisfy the tax obligations | 9,920 | |||
Value of shares withheld and repurchased | $ 81,000 | |||
2012 Long-Term Incentive Plan | Non-employee directors | ||||
Shareholders' Equity | ||||
Vesting period of restricted share awards | 12 months |
Shareholders' Equity - Calculat
Shareholders' Equity - Calculation of earning per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders' Equity | ||
Common shares that could potentially dilute basic earnings per share | 27,010 | 6,576 |
Net (Loss) Income | $ (2,117) | $ 4,055 |
Weighted average common shares outstanding (basic) | 2,418,000 | 2,411,000 |
Unvested restricted stock | 27,000 | 7,000 |
Weighted average common shares outstanding (diluted) | 2,445,000 | 2,418,000 |
Basic | ||
Net (loss) income per share | $ (0.88) | $ 1.68 |
Diluted | ||
Net (loss) income per share | $ (0.88) | $ 1.68 |
Shareholders' Equity - Restrict
Shareholders' Equity - Restricted stock activity (Details) - Restricted Stock - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Share Activity: | ||
Unvested at the beginning | 6,576 | 30,914 |
Granted | 32,921 | 13,160 |
Vested | 12,487 | 37,498 |
Unvested at the end | 27,010 | 6,576 |
Weighted Average Grant Date Fair Value | ||
Unvested, beginning balance | $ 7.60 | $ 9.24 |
Granted | 11.07 | 7.60 |
Vested | 9.22 | 8.95 |
Unvested, ending balance | $ 11.09 | $ 7.60 |
Litigation (Details)
Litigation (Details) | 12 Months Ended | ||
Jan. 13, 2022 USD ($) | Jun. 07, 2021 USD ($) | Dec. 31, 2022 item | |
Litigation | |||
Damages sought value | $ 5,000,000 | ||
Insured amount | $ 3,000,000 | ||
Retention amount | 250,000 | ||
Excess coverage policy | 3,000,000 | ||
Payment as retention from excess coverage policy | 3,000,000 | ||
Gain or loss on litigation | $ 0 | ||
Former CEO | Minimum | |||
Litigation | |||
Multiplier of severance Payment With Average Annual Compensation | item | 2.99 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Legal fees | $ 51,000 | $ 85,000 |
Accrued unbilled legal fees | $ 13,000 | $ 15,000 |
Business Segments - Summary of
Business Segments - Summary of company's operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Segments | ||
Revenues from unaffiliated customers | $ 43,821 | $ 40,558 |
Cost of goods sold, inclusive of dep. and amort. | (37,877) | (34,570) |
Gross profit | 5,944 | 5,988 |
Operating expenses: | ||
Selling, general and administrative | (8,427) | (9,423) |
Legal settlement awards | (1,890) | |
Operating (loss) | (2,483) | (5,325) |
Other (expense)/income: | ||
Other income: Paycheck Protection Program loan forgiveness | 4,000 | |
Interest expense | (240) | (187) |
Gain on sale of equipment | 36 | (98) |
Total other (expense)/income | (204) | 9,337 |
(Loss)/income before income tax provision | (2,687) | 4,012 |
Income tax benefit/ (provision) | (570) | (43) |
Net (loss)/income | (2,117) | 4,055 |
Total Assets | 45,294 | 50,093 |
Operating Segments | ||
Business Segments | ||
Revenues from unaffiliated customers | 43,821 | 40,558 |
Cost of goods sold, inclusive of dep. and amort. | (37,877) | (34,570) |
Gross profit | $ 5,944 | $ 5,988 |
Gross margin % | 13.60% | 14.80% |
Operating expenses: | ||
Selling, general and administrative | $ (8,427) | $ (9,423) |
Legal settlement awards | (1,890) | |
Total operating costs and expenses | (8,427) | (11,313) |
Operating (loss) | (2,483) | (5,325) |
Other (expense)/income: | ||
Other income: employee retention credit (ERC) | 5,622 | |
Other income: Paycheck Protection Program loan forgiveness | 4,000 | |
Interest expense | (240) | (187) |
Gain on sale of equipment | 36 | (98) |
Total other (expense)/income | (204) | 9,337 |
(Loss)/income before income tax provision | (2,687) | 4,012 |
Income tax benefit/ (provision) | 570 | 43 |
Net (loss)/income | (2,117) | 4,055 |
Total Assets | 45,294 | 50,293 |
Capital expenditures | 1,319 | 267 |
Foreign derived sales | 10,974 | 8,444 |
Operating Segments | ATG | ||
Business Segments | ||
Revenues from unaffiliated customers | 35,185 | 31,677 |
Cost of goods sold, inclusive of dep. and amort. | (31,055) | (25,929) |
Gross profit | $ 4,130 | $ 5,748 |
Gross margin % | 11.70% | 18.10% |
Operating expenses: | ||
Selling, general and administrative | $ (6,592) | $ (7,661) |
Legal settlement awards | (1,800) | |
Total operating costs and expenses | (6,592) | (9,461) |
Operating (loss) | (2,462) | (3,713) |
Other (expense)/income: | ||
Other income: employee retention credit (ERC) | 4,584 | |
Other income: Paycheck Protection Program loan forgiveness | 4,000 | |
Interest expense | (239) | (185) |
Gain on sale of equipment | 36 | (98) |
Total other (expense)/income | (203) | 8,301 |
(Loss)/income before income tax provision | (2,665) | 4,588 |
Income tax benefit/ (provision) | 565 | (78) |
Net (loss)/income | (2,100) | 4,510 |
Total Assets | 35,766 | 40,870 |
Capital expenditures | 1,234 | 263 |
Foreign derived sales | 10,541 | 7,933 |
Operating Segments | CPG | ||
Business Segments | ||
Revenues from unaffiliated customers | 8,636 | 8,881 |
Cost of goods sold, inclusive of dep. and amort. | (6,822) | (8,641) |
Gross profit | $ 1,814 | $ 240 |
Gross margin % | 21% | 2.70% |
Operating expenses: | ||
Selling, general and administrative | $ (1,835) | $ (1,762) |
Legal settlement awards | (90) | |
Total operating costs and expenses | (1,835) | (1,852) |
Operating (loss) | (21) | (1,612) |
Other (expense)/income: | ||
Other income: employee retention credit (ERC) | 1,038 | |
Interest expense | (1) | (2) |
Total other (expense)/income | (1) | 1,036 |
(Loss)/income before income tax provision | (22) | (576) |
Income tax benefit/ (provision) | 5 | 121 |
Net (loss)/income | (17) | (455) |
Total Assets | 9,528 | 9,223 |
Capital expenditures | 85 | 4 |
Foreign derived sales | $ 433 | $ 511 |
Business Segments (Details)
Business Segments (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Business Segments | |
Number of operating segments | 2 |