Document Entity Information
Document Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 05, 2018 | Jun. 30, 2017 | |
Entity Information [Line Items] | |||
Entity Registrant Name | SMITH MIDLAND CORP | ||
Entity Central Index Key | 924,719 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 5,074,395 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 27,299,668 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 3,390,000 | $ 3,523,000 |
Investment securities, available-for-sale, at fair value | 1,098,000 | 1,050,000 |
Accounts receivable, net | ||
Trade - billed (less allowance for doubtful accounts of $208 and $347) | 8,967,000 | 7,188,000 |
Trade - unbilled | 251,000 | 271,000 |
Inventories, net | ||
Raw materials | 819,000 | 642,000 |
Finished goods | 2,696,000 | 1,936,000 |
Prepaid expenses and other assets | 452,000 | 371,000 |
Refundable income taxes | 1,359,000 | 251,000 |
Total current assets | 19,032,000 | 15,232,000 |
Property and equipment, net | 9,867,000 | 8,007,000 |
Other assets | 326,000 | 173,000 |
Total assets | 29,225,000 | 23,412,000 |
Current liabilities | ||
Accounts payable - trade | 3,059,000 | 2,091,000 |
Accrued expenses and other liabilities | 588,000 | 294,000 |
Deferred revenue | 1,144,000 | 724,000 |
Accrued compensation | 1,231,000 | 883,000 |
Dividend payable | 256,000 | 49,000 |
Current maturities of notes payable | 637,000 | 587,000 |
Customer deposits | 919,000 | 431,000 |
Total current liabilities | 7,834,000 | 5,059,000 |
Notes payable - less current maturities | 2,896,000 | 3,346,000 |
Deferred tax liability | 1,290,000 | 764,000 |
Total liabilities | 12,020,000 | 9,169,000 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity | ||
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding | 0 | 0 |
Common stock, $.01 par value; authorized 8,000,000 shares; 5,214,148 and 5,085,348 issued and 5,047,895 and 4,941,428 outstanding, respectively | 51,000 | 50,000 |
Additional paid-in capital | 5,719,000 | 5,192,000 |
Treasury stock, at cost, 40,920 shares | (102,000) | (102,000) |
Accumulated other comprehensive loss | (19,000) | (25,000) |
Retained earnings | 11,556,000 | 9,128,000 |
Total stockholders’ equity | 17,205,000 | 14,243,000 |
Total liabilities and stockholders' equity | $ 29,225,000 | $ 23,412,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Allowance for doubtful accounts | $ 347,087 | $ 375,919 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 8,000,000 | 8,000,000 |
Common stock, shares issued (in shares) | 5,085,348 | 4,919,548 |
Common stock, shares outstanding (in shares) | 4,941,428 | 4,881,548 |
Treasury shares (in shares) | 40,920 | 40,920 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | ||
Products sales and leasing | $ 33,322,000 | $ 30,983,000 |
Shipping and installation revenue | 6,510,000 | 7,273,000 |
Royalties | 1,885,000 | 1,794,000 |
Total revenue | 41,717,000 | 40,050,000 |
Cost of goods sold | 30,136,000 | 29,701,000 |
Gross profit | 11,581,000 | 10,349,000 |
General and administrative expenses | 5,370,000 | 3,891,000 |
Selling expenses | 2,496,000 | 2,122,000 |
Total operating expenses | 7,866,000 | 6,013,000 |
Operating income | 3,715,000 | 4,336,000 |
Other income (expense) | ||
Interest expense | (184,000) | (162,000) |
Interest income | 37,000 | 37,000 |
Gain on sale of assets | 51,000 | 32,000 |
Other income | 122,000 | 54,000 |
Total other income (expense) | 26,000 | (39,000) |
Income before income tax expense | 3,741,000 | 4,297,000 |
Income tax expense | 1,057,000 | 1,462,000 |
Net income | $ 2,684,000 | $ 2,835,000 |
Basic earnings per share (in dollars per share) | $ 0.53 | $ 0.57 |
Diluted earnings per share (in dollars per share) | $ 0.53 | $ 0.56 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 2,684,000 | $ 2,835,000 | |
Other comprehensive income (loss), net of tax: (1) | |||
Net unrealized holding loss | [1] | 6,000 | (16,000) |
Comprehensive income | 2,690,000 | 2,819,000 | |
Net unrealized holding loss, tax benefit | $ (10) | $ (9) | |
[1] | Net unrealized income (loss) on available for sale securities are shown net of income tax expense (benefit) of $10 and $(9) for the years ended December 31, 2017 and 2016, respectively. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings |
Balance, beginning of period at Dec. 31, 2015 | $ 11,390,000 | $ 49,000 | $ 5,110,000 | $ (102,000) | $ (9,000) | $ 6,342,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Accrued dividends payable | (49,000) | (49,000) | ||||
Net unrealized holding income | 0 | 0 | (16,000) | |||
Proceeds from options exercised | 83,000 | 1,000 | 82,000 | |||
Net income | 2,835,000 | 2,835,000 | ||||
Balance, end of period at Dec. 31, 2016 | 14,243,000 | 50,000 | 5,192,000 | (102,000) | (25,000) | 9,128,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Accrued dividends payable | (256,000) | (256,000) | ||||
Net unrealized holding income | 6,000 | 6,000 | ||||
Proceeds from options exercised | 117,000 | 1,000 | 116,000 | |||
Vesting of restricted stock | 411,000 | 1,000 | 410,000 | |||
Net income | 2,684,000 | 2,684,000 | ||||
Balance, end of period at Dec. 31, 2017 | $ 17,205,000 | $ 52,000 | $ 5,718,000 | $ (102,000) | $ (19,000) | $ 11,556,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 | |
Reconciliation of net income to net cash provided by operating activities | |||
Net income | $ 2,684,000 | $ 2,835,000 | |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 926,000 | 821,000 | |
Gain on sale of fixed assets | (51,000) | (32,000) | |
Stock compensation | 411,000 | 0 | |
Deferred taxes | 526,000 | 574,000 | |
(Increase) decrease in | |||
Accounts receivable - billed | (1,640,000) | (364,000) | |
Accounts receivable - unbilled | 20,000 | (73,000) | |
Allowance for doubtful accounts | (139,000) | (29,000) | |
Inventories | (937,000) | (85,000) | |
Refundable income taxes | (1,107,000) | 133,000 | |
Prepaid expenses and other assets | (285,000) | (116,000) | |
Increase (decrease) in | |||
Accounts payable - trade | 969,000 | 396,000 | |
Accrued expenses and other liabilities | 294,000 | 46,000 | |
Deferred revenue | 420,000 | (52,000) | |
Accrued compensation | 347,000 | 433,000 | |
Customer deposits | 488,000 | (492,000) | |
Net cash provided by operating activities | 2,926,000 | 3,995,000 | |
Cash Flows From Investing Activities | |||
Purchases of investment securities available-for-sale | (32,000) | (24,000) | |
Purchases of property and equipment | (2,741,000) | (3,745,000) | |
Proceeds from sale of fixed assets | 46,000 | 58,000 | |
Net cash absorbed by investing activities | (2,727,000) | (3,711,000) | |
Cash Flows From Financing Activities | |||
Proceeds from the line-of-credit | 0 | 1,450,000 | |
Repayments on the line-of-credit | 0 | (1,802,000) | |
Proceeds from long-term borrowings | 184,000 | 2,233,000 | |
Repayments of long-term borrowings | (584,000) | (461,000) | |
Dividends paid on common stock | (49,000) | 0 | |
Proceeds from options exercised | 117,000 | 83,000 | |
Net cash provided by or (absorbed by) financing activities | (332,000) | 1,503,000 | |
Net increase (decrease) in cash and cash equivalents | (133,000) | 1,787,000 | |
Cash and cash equivalents | |||
Cash and cash equivalents, beginning of year | 3,523,000 | ||
Cash and cash equivalents, end of year | $ 3,390,000 | 3,523,000 | $ 1,736,000 |
Cash payments for interest | 184,000 | 163,000 | |
Cash payments for income taxes | $ 1,292,000 | $ 770,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Business Smith-Midland Corporation and its wholly-owned subsidiaries (the “Company”) develop, manufacture, license, sell and install precast concrete products for the construction, transportation and utilities industries in the Mid-Atlantic, Northeastern, Midwestern and Southeastern regions of the United States. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash and cash equivalents. Investments Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized. Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value. Inventory reserves (in thousands) were approximately $39 and $67 at December 31, 2017 and 2016 , respectively. Property and Equipment Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2017 , the Company has not identified any uncertain tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2014. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. Stock Compensation Stock Options – Stock based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide services in exchange for the award. The fair value of each stock option is estimated using a Black-Scholes option pricing model based on certain assumptions including expected term, risk-free interest rate, stock price volatility and dividend yield. The assumption for expected term is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The historical volatility of the Company’s stock is used as the basis for the volatility assumption. See Note 6 of Notes to the Consolidated Financial Statements for additional information related to stock based compensation. There have been no option grants since 2008. Substantially all options become vested and exercisable ratably, on an annual basis, over a three -year period. Restricted Stock – On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. Revenue Recognition The Company primarily recognizes revenue on the sale of its standard precast concrete products at shipment date, including revenue derived from any projects to be completed under short-term contracts. Installation of the Company’s standard products can be performed by the customer; however, the Company will install certain products at the time of delivery and will recognize the installation revenue at that time. The installation activities are usually completed the day of delivery or the following day. In building sales, buildings can be erected on the Company’s site and delivered completely installed; or delivered by panel and erected on the job-site, typically within one day. Leasing fees are paid at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease. Royalties are recognized as revenue as they are earned. The Company licenses certain products to other precast companies to produce the Company's products to its engineering specifications under the licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% which are paid on a monthly basis. The revenue from licensing agreements are recognized in the month earned. Certain sales of Soundwall, architectural precast panels and Slenderwall™ concrete products revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts under ASC 605-35. Percent-of-completion contracts are estimated based on the number of units produced during the period multiplied by the unit rate stated in the contract. The contracts are executed by both parties and clearly stipulate the requirements for progress payments and a schedule of delivery dates. Provisions for estimated losses on contracts are made in the period in which such losses are determined. Shipping revenues are recognized in the period the shipping services are provided to the customer. Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is minimal. Shipping and Handling Amounts billed to customers are recorded in sales and the costs associated with the shipping and handling are recorded as cost of goods sold. Sales and Use Taxes Use taxes on construction materials are reported gross in general and administrative expense. Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes. Reclassifications Certain minor reclassifications have been made to prior year amounts to confirm to current year presentation. Risks and Uncertainties The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. In performing this evaluation, the Company analyzes the payment history and its significant past due accounts, subsequent cash collections on these accounts and comparative accounts receivable aging statistics. Based on this information, along with other related factors, the Company develops what it considers to be a reasonable estimate of the uncollectible amounts included in accounts receivable. Management believes the allowance for doubtful accounts at December 31, 2017 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. Fair Value of Financial Instruments The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Advertising Costs The Company expenses all advertising costs as incurred. Advertising expense (in thousands) was approximately $404 and $401 in 2017 and 2016 , respectively. Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. Long-Lived Assets The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2017 . Recent Accounting Pronouncement On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Adoption of this ASU requires that an entity recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Company will adopt the new revenue guidance effective January 1, 2018 using the modified retrospective method. The Company is substantially complete with its evaluation of the effect that the adoption will have on its financial statements. Due to the nature of the business, the Company expects the timing of the revenue recognition to generally remain the same under the new standard. Currently, the Company anticipates the adoption will not have a material effect on the financial statements and have no cumulative-effect adjustment to retained earnings, except for enhanced disclosures. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Adoption of this ASU requires lessees to recognize assets and liabilities for most leases. For public business entities the guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Cash Receipts and Cash Payments , which is intended to reduce diversity in practice as it relates to how certain transactions are classified in the statement of cash flows, as previous guidance was either omitted or unclear. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this pronouncement did not have a material impact on the Company's consolidated financial statements. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consists of the following (in thousands): December 31, 2017 2016 Land and land improvements $ 1,538 $ 1,335 Buildings 5,394 5,265 Machinery and equipment 10,913 9,363 Rental equipment 2,763 1,972 20,608 17,935 Less: accumulated depreciation and amortization (10,741 ) (9,928 ) $ 9,867 $ 8,007 Depreciation expense and amortization (in thousands) was approximately $926 and $821 for the years ended December 31, 2017 and 2016 , respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE Notes payable consist of the following (in thousands): December 31, 2017 2016 Note payable to a Bank, maturing June 2021; with monthly payments of approximately $26 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 1,071 $ 1,329 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,234 1,293 Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6.2 of principal and interest at prime at variable rate (5.29% at December 31, 2017); collateralized by certain property of the Company. 227 288 Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021; with monthly payments varying from $0.3 to $4.1 with weighted average interest at 4.2%. 1,001 1,023 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $2,000,000, maturing September 12, 2018, with interest only payments and an initial rate of 4.49% adjustable monthly (3.99% at December 31, 2017). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — — 3,533 3,933 Less current maturities 637 587 $ 2,896 $ 3,346 The Company’s note payable, which matures in June 2021, with a balance (in thousands) of $1,071 at December 31, 2017 , is secured by all of the assets of the Company. The commitment letter provided by the bank dated September 12, 2017 includes certain restrictive covenants, which require the Company to maintain minimum levels of tangible net worth, places limits on annual capital expenditures and the payment of cash dividends. At December 31, 2017 , the Company was in compliance with all covenants pursuant to the loan agreement, with the increase in the annual capital expenditures limit from $1.5 million to $3.5 million during the year ended December 31, 2017 . The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows (in thousands): Year Ending December 31, 2018 $ 637 2019 620 2020 640 2021 478 2022 166 Thereafter 992 $ 3,533 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company currently leases a portion of its Midland, Virginia property from its CEO, on a month-to-month basis, as additional storage space for the Company's finished work product. The lease agreement calls for an annual rent of $24,000 . The Company has an employment agreement with its current CEO which automatically renews on an annual basis for an additional year, unless earlier terminated or not renewed as provided for therein. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for the CEO’s assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues only for as long as the Company is using the inventions underlying the patents. Additionally, if the CEO (i) voluntarily leaves the employ of the Company within six months of his becoming aware of a Change of Control (as defined in the agreement) of the Company, then he shall be entitled to receive a lump sum amount equal to three times the five -year average of his combined total annual compensation, which includes the Base Salary and bonus, less one dollar ( $1.00 ), and certain other unpaid accrued amounts as of the date of his termination, or (ii) is terminated by the Company without Cause (as defined in the agreement) or leaves the Company with Good Reason (as defined in the agreement), the CEO shall be entitled to a lump sum payment equal to three times the combined Base Salary and bonus paid during the immediately preceding calendar year, and such other unpaid accrued amounts. In any of such cases, the Company will provide the CEO with certain Company fringe benefits for two years , subject to certain conditions as provided for in the agreement, and all of the CEO’s unvested options, if any, to purchase Company stock shall become fully vested and exercisable on the date of termination and all restricted stock, if any, shall be fully vested on the date of termination. The CEO will be entitled to exercise all such options for three years from the date of termination. In the event the CEO’s employment by the Company ceases as a result of the CEO’s (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, the CEO shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense is comprised of the following (in thousands): December 31, 2017 2016 Federal: Current $ 455 $ 777 Deferred 421 514 876 1,291 State: Current 76 108 Deferred 105 63 181 171 $ 1,057 $ 1,462 The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following (in thousands): December 31, 2017 2016 Income taxes at statutory rate $ 1,269 34.0 % $ 1,461 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 136 3.6 % 134 2.7 % Domestic production activities deduction — — % (77 ) (1.6 )% Stock compensation deferred tax asset write-off — — % 25 0.5 % Deferred true-ups 161 4.3 % — — % Provision-to-return 152 4.1 % — — % Rate reduction (664 ) (17.8 )% — — % Other 3 0.1 % (81 ) (1.6 )% $ 1,057 28.3 % $ 1,462 34.0 % Deferred tax assets (liabilities) are as follows (in thousands): December 31, 2017 2016 Depreciation $ (1,185 ) $ (1,404 ) Unrealized losses on investments available for sale 5 15 Retainage (264 ) — Allowance for doubtful accounts 52 128 Prepaid expenses (98 ) — Vacation accrued 67 106 Deferred income — 281 State NOL carryforward 48 75 Other 85 35 Net deferred tax liability $ (1,290 ) $ (764 ) Provisional Amounts Deferred tax assets and liabilities: The Company remeasured certain deferred tax assets and liabilities based on the federal rate at which they are expected to reverse in the future, which is generally 21% . The Company also remeasured the state rate at which certain deferred tax assets and liabilities are expected to reverse in the future associated with the reduction in the future federal benefit from state deferred tax assets and liabilities from 35% to 21%. However, the Company is still analyzing certain aspects of the Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of the Company's deferred tax balance was a tax benefit (in thousands) of $664 . |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Defined Benefit Plan [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company has a 401(k) retirement plan (the "Plan") covering substantially all employees. Participants may contribute up to 10% of their compensation to the Plan. The Company contributes 50% of the participant's contribution, up to 4% of the participant's compensation, as a matching contribution. Total contributions (in thousands) by the Company for the years ended December 31, 2017 and 2016 were approximately $140 and $124 , respectively. |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Compensation Related Costs [Abstract] | |
STOCK COMPENSATION | STOCK COMPENSATION On September 19, 2008, the Board of Directors and Stockholders of the Company adopted the 2008 Stock Option Plan (the "2008 Plan") in addition to the 2004 Stock Option Plan, which allowed the Company to grant up to 500,000 options to employees, officers, directors and consultants to purchase shares of the Company's Common Stock. Options granted under the 2008 Plan could have been either Incentive Stock Options or Non-Qualified Stock Options. There have not been any grants under the 2008 Stock Option Plan since its inception. The Board of Directors replaced the 2008 Stock Option Plan with the 2016 Equity Incentive Plan described below. Options granted under granted under the 2004 Stock Option Plan, generally vested over a three year period. The Company recognizes stock option expense over the vesting period. The Company did not record any stock option expense for the years 2017 and 2016 as all of the options were fully vested. There were 56,800 options exercised for the year ending December 31, 2017 and there were 62,800 options exercised in 2016 . The intrinsic value of the 10,333 options outstanding and exercisable at December 31, 2017 was approximately $58,000 . The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2017 : Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2015 $ 1.96 190,933 190,933 Granted — — — Forfeited (2.21 ) (60,000 ) (60,000 ) Exercised (1.31 ) (62,800 ) (62,800 ) Balance, December 31, 2016 1.96 68,133 68,133 Granted — — — Forfeited (2.15 ) (1,000 ) (1,000 ) Exercised (1.89 ) (56,800 ) (56,800 ) Balance, December 31, 2017 $ 1.21 10,333 10,333 On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, which allows the Company to grant up to 400,000 shares of restricted common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. There were 72,000 and 103,000 shares of restricted stock issued during the years ended December 31, 2017 and December 31, 2016 , respectively. The shares have a three year vesting period which vests ratably, on an annual basis, over a three year period. The total intrinsic value of the outstanding shares of restricted stock is $1,588,950. The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the year ended December 31, 2017 is as follows: Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, December 31, 2015 — $ — Granted 103,000 4.95 Vested — — Forfeited — — Non-vested, December 31, 2016 103,000 4.95 Granted 72,000 5.45 Vested 49,667 5.10 Forfeited — — Non-vested, December 31, 2017 125,333 $ 5.19 Awards are being amortized to expense ratably, on an annual basis, over a three year vesting term, except one grant that vested immediately. Stock compensation for the year ended December 31, 2017 was approximately $411,000 , based upon the value at the date of vesting. There was no expense for the year ended December 31, 2016, as the grants were made in December 2016. The total unrecognized compensation cost related to the non-vested restricted stock is approximately $650,000 as of December 31, 2017 . |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company applies the guidance that is codified under ASC 820-10 related to assets and liabilities recognized or disclosed in the financial statements at fair value on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of ASC 820-10 only apply to the Company’s investment securities, which are carried at fair value. ASC 820-10 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820-10 requires valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Fair Value Hierarchy Inputs to Fair Value Methodology Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Quoted prices for similar assets or liabilities; quoted markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the financial instrument; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from, or corroborated by, observable market information Level 3 Pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption is unobservable or when the estimation of fair value requires significant management judgment The Company categorizes a financial instrument in the fair value hierarchy based on the lowest level of input that is significant to its fair value measurement. As of December 31, 2017 Quoted Market Prices in Active Markets Internal Models with Significant Observable Internal Models Total Fair Value Mutual Funds $ 1,098,281 $ — $ — $ 1,098,281 As of December 31, 2016 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable (Level 2) Internal Models (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,050,220 $ — $ — $ 1,050,220 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company has an employment agreement with its current CEO which automatically renews on an annual basis for an additional year, unless earlier terminated or not renewed as provided for therein. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for the CEO’s assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues only for as long as the Company is using the inventions underlying the patents. Additionally, if the CEO (i) voluntarily leaves the employ of the Company within six months of his becoming aware of a Change of Control (as defined in the agreement) of the Company, then he shall be entitled to receive a lump sum amount equal to three times the five -year average of his combined total annual compensation, which includes the Base Salary and bonus, less one dollar ( $1.00 ), and certain other unpaid accrued amounts as of the date of his termination, or (ii) is terminated by the Company without Cause (as defined in the agreement) or leaves the Company with Good Reason (as defined in the agreement), the CEO shall be entitled to a lump sum payment equal to three times the combined Base Salary and bonus paid during the immediately preceding calendar year, and such other unpaid accrued amounts. In any of such cases, the Company will provide the CEO with certain Company fringe benefits for two years , subject to certain conditions as provided for in the agreement, and all of the CEO’s unvested options , if any, to purchase Company stock shall become fully vested and exercisable on the date of termination, and all restricted stock, if any, shall be fully vested on the date of termination. The CEO will be entitled to exercise all such options for three years from the date of termination. In the event the CEO’s employment by the Company ceases as a result of the CEO’s (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, the CEO shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. The Company is party to legal proceedings and disputes which may arise in the ordinary course of business. In the opinion of the Company, it is unlikely that liabilities, if any, arising from legal disputes will have a material adverse effect on the consolidated financial position of the Company. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Earnings per share are calculated as follows (in thousands, except earnings per share): December 31, 2017 2016 Basic earnings per share Income available to common shareholder $ 2,684 $ 1,462 Weighted average shares outstanding 5,042 4,934 Basic earnings per share $ 0.53 $ 0.57 Diluted earnings per share Income available to common shareholder $ 2,684 $ 1,462 Weighted average shares outstanding 5,042 4,934 Dilutive effect of stock options and restricted stock 37 132 Total weighted average shares outstanding 5,079 5,066 Diluted earnings per share $ 0.53 $ 0.56 There were no options or restricted stock excluded from the diluted earnings per share calculation for the years ended December 31, 2017 and December 31, 2016 . |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash and cash equivalents. |
Investments | Investments Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized. |
Inventories | Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2017 , the Company has not identified any uncertain tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2014. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. |
Stock Options | Stock Compensation Stock Options – Stock based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide services in exchange for the award. The fair value of each stock option is estimated using a Black-Scholes option pricing model based on certain assumptions including expected term, risk-free interest rate, stock price volatility and dividend yield. The assumption for expected term is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The historical volatility of the Company’s stock is used as the basis for the volatility assumption. See Note 6 of Notes to the Consolidated Financial Statements for additional information related to stock based compensation. There have been no option grants since 2008. Substantially all options become vested and exercisable ratably, on an annual basis, over a three -year period. Restricted Stock – On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. |
Revenue Recognition | Revenue Recognition The Company primarily recognizes revenue on the sale of its standard precast concrete products at shipment date, including revenue derived from any projects to be completed under short-term contracts. Installation of the Company’s standard products can be performed by the customer; however, the Company will install certain products at the time of delivery and will recognize the installation revenue at that time. The installation activities are usually completed the day of delivery or the following day. In building sales, buildings can be erected on the Company’s site and delivered completely installed; or delivered by panel and erected on the job-site, typically within one day. Leasing fees are paid at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease. Royalties are recognized as revenue as they are earned. The Company licenses certain products to other precast companies to produce the Company's products to its engineering specifications under the licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% which are paid on a monthly basis. The revenue from licensing agreements are recognized in the month earned. Certain sales of Soundwall, architectural precast panels and Slenderwall™ concrete products revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts under ASC 605-35. Percent-of-completion contracts are estimated based on the number of units produced during the period multiplied by the unit rate stated in the contract. The contracts are executed by both parties and clearly stipulate the requirements for progress payments and a schedule of delivery dates. Provisions for estimated losses on contracts are made in the period in which such losses are determined. Shipping revenues are recognized in the period the shipping services are provided to the customer. Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is minimal. |
Shipping and Handling | Shipping and Handling Amounts billed to customers are recorded in sales and the costs associated with the shipping and handling are recorded as cost of goods sold. |
Sales and Use Taxes | Sales and Use Taxes Use taxes on construction materials are reported gross in general and administrative expense. |
Risks and Uncertainties | Risks and Uncertainties The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. In performing this evaluation, the Company analyzes the payment history and its significant past due accounts, subsequent cash collections on these accounts and comparative accounts receivable aging statistics. Based on this information, along with other related factors, the Company develops what it considers to be a reasonable estimate of the uncollectible amounts included in accounts receivable. Management believes the allowance for doubtful accounts at December 31, 2017 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. |
Estimates | Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Advertising Costs | Advertising Costs The Company expenses all advertising costs as incurred. |
Earnings Per Share | Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. |
Long-Lived Assets | Long-Lived Assets The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2017 . |
Recent Accounting Pronouncements | On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Adoption of this ASU requires that an entity recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Company will adopt the new revenue guidance effective January 1, 2018 using the modified retrospective method. The Company is substantially complete with its evaluation of the effect that the adoption will have on its financial statements. Due to the nature of the business, the Company expects the timing of the revenue recognition to generally remain the same under the new standard. Currently, the Company anticipates the adoption will not have a material effect on the financial statements and have no cumulative-effect adjustment to retained earnings, except for enhanced disclosures. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Adoption of this ASU requires lessees to recognize assets and liabilities for most leases. For public business entities the guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Cash Receipts and Cash Payments , which is intended to reduce diversity in practice as it relates to how certain transactions are classified in the statement of cash flows, as previous guidance was either omitted or unclear. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this pronouncement did not have a material impact on the Company's consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment | Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 Property and equipment consists of the following (in thousands): December 31, 2017 2016 Land and land improvements $ 1,538 $ 1,335 Buildings 5,394 5,265 Machinery and equipment 10,913 9,363 Rental equipment 2,763 1,972 20,608 17,935 Less: accumulated depreciation and amortization (10,741 ) (9,928 ) $ 9,867 $ 8,007 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 Property and equipment consists of the following (in thousands): December 31, 2017 2016 Land and land improvements $ 1,538 $ 1,335 Buildings 5,394 5,265 Machinery and equipment 10,913 9,363 Rental equipment 2,763 1,972 20,608 17,935 Less: accumulated depreciation and amortization (10,741 ) (9,928 ) $ 9,867 $ 8,007 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
Schedule of notes payable | Notes payable consist of the following (in thousands): December 31, 2017 2016 Note payable to a Bank, maturing June 2021; with monthly payments of approximately $26 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 1,071 $ 1,329 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,234 1,293 Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6.2 of principal and interest at prime at variable rate (5.29% at December 31, 2017); collateralized by certain property of the Company. 227 288 Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021; with monthly payments varying from $0.3 to $4.1 with weighted average interest at 4.2%. 1,001 1,023 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $2,000,000, maturing September 12, 2018, with interest only payments and an initial rate of 4.49% adjustable monthly (3.99% at December 31, 2017). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — — 3,533 3,933 Less current maturities 637 587 $ 2,896 $ 3,346 |
Schedule of maturities of notes payable and capital leases | The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows (in thousands): Year Ending December 31, 2018 $ 637 2019 620 2020 640 2021 478 2022 166 Thereafter 992 $ 3,533 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | Income tax expense is comprised of the following (in thousands): December 31, 2017 2016 Federal: Current $ 455 $ 777 Deferred 421 514 876 1,291 State: Current 76 108 Deferred 105 63 181 171 $ 1,057 $ 1,462 |
Schedule of effective income tax rate reconciliation | The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following (in thousands): December 31, 2017 2016 Income taxes at statutory rate $ 1,269 34.0 % $ 1,461 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 136 3.6 % 134 2.7 % Domestic production activities deduction — — % (77 ) (1.6 )% Stock compensation deferred tax asset write-off — — % 25 0.5 % Deferred true-ups 161 4.3 % — — % Provision-to-return 152 4.1 % — — % Rate reduction (664 ) (17.8 )% — — % Other 3 0.1 % (81 ) (1.6 )% $ 1,057 28.3 % $ 1,462 34.0 % |
Schedule of deferred tax assets (liabilities) | Deferred tax assets (liabilities) are as follows (in thousands): December 31, 2017 2016 Depreciation $ (1,185 ) $ (1,404 ) Unrealized losses on investments available for sale 5 15 Retainage (264 ) — Allowance for doubtful accounts 52 128 Prepaid expenses (98 ) — Vacation accrued 67 106 Deferred income — 281 State NOL carryforward 48 75 Other 85 35 Net deferred tax liability $ (1,290 ) $ (764 ) |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Compensation Related Costs [Abstract] | |
Schedule of stock options activity | he fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the year ended December 31, 2017 is as follows: Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, December 31, 2015 — $ — Granted 103,000 4.95 Vested — — Forfeited — — Non-vested, December 31, 2016 103,000 4.95 Granted 72,000 5.45 Vested 49,667 5.10 Forfeited — — Non-vested, December 31, 2017 125,333 $ 5.19 The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2017 : Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2015 $ 1.96 190,933 190,933 Granted — — — Forfeited (2.21 ) (60,000 ) (60,000 ) Exercised (1.31 ) (62,800 ) (62,800 ) Balance, December 31, 2016 1.96 68,133 68,133 Granted — — — Forfeited (2.15 ) (1,000 ) (1,000 ) Exercised (1.89 ) (56,800 ) (56,800 ) Balance, December 31, 2017 $ 1.21 10,333 10,333 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements | The Company categorizes a financial instrument in the fair value hierarchy based on the lowest level of input that is significant to its fair value measurement. As of December 31, 2017 Quoted Market Prices in Active Markets Internal Models with Significant Observable Internal Models Total Fair Value Mutual Funds $ 1,098,281 $ — $ — $ 1,098,281 As of December 31, 2016 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable (Level 2) Internal Models (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,050,220 $ — $ — $ 1,050,220 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Earnings per share are calculated as follows (in thousands, except earnings per share): December 31, 2017 2016 Basic earnings per share Income available to common shareholder $ 2,684 $ 1,462 Weighted average shares outstanding 5,042 4,934 Basic earnings per share $ 0.53 $ 0.57 Diluted earnings per share Income available to common shareholder $ 2,684 $ 1,462 Weighted average shares outstanding 5,042 4,934 Dilutive effect of stock options and restricted stock 37 132 Total weighted average shares outstanding 5,079 5,066 Diluted earnings per share $ 0.53 $ 0.56 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Oct. 13, 2016 | Sep. 19, 2008 | |
Deferred Revenue Arrangement [Line Items] | ||||
Inventory reserve | $ 39,000 | $ 67,000 | ||
Revenue recognition, licensing contract term (years) | 5 years | |||
Advertising expense | $ 404,000 | $ 401,000 | ||
Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Revenue recognition, royalty earned on licensing agreement (percent) | 4.00% | |||
Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Revenue recognition, royalty earned on licensing agreement (percent) | 6.00% | |||
Buildings | Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 10 years | |||
Buildings | Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 40 years | |||
Trucks and automotive equipment | Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 3 years | |||
Trucks and automotive equipment | Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 10 years | |||
Shop machinery and equipment | Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 3 years | |||
Shop machinery and equipment | Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 10 years | |||
Land improvements | Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 10 years | |||
Land improvements | Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 15 years | |||
Office equipment | Minimum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 3 years | |||
Office equipment | Maximum | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Useful life | 10 years | |||
Stock options | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Vesting period | 3 years | |||
Available shares for grant (up to) (in shares) | 400,000 | 500,000 | ||
Restricted Stock Units | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Vesting period | 3 years | |||
Granted (in shares) | 72,000 | 103,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 20,608,000 | $ 17,935,000 |
Less: accumulated depreciation and amortization | (10,741,000) | (9,928,000) |
Property and equipment, net | 9,867,000 | 8,007,000 |
Depreciation expense | 926,000 | 821,000 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,538,000 | 1,335,000 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,394,000 | 5,265,000 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 10,913,000 | 9,363,000 |
Rental equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,763,000 | $ 1,972,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Notes Payable | $ 3,533,000 | $ 3,933,000 |
Less current maturities | 637,000 | 587,000 |
Notes payable - less current maturities | 2,896,000 | 3,346,000 |
Limit on annual capital expenditures | 1,500,000 | |
Limit on annual capital expenditures, increase | 3,500,000 | |
Note payable to a Bank | Note payable due June 2021 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 26,000 | |
Interest rate | 3.99% | |
Note payable to a Bank | $ 1,071,000 | 1,329,000 |
Note payable to a Bank | Note Payable Due July 2031 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 11,000 | |
Interest rate | 5.29% | |
Note payable to a Bank | $ 1,234,000 | 1,293,000 |
Note payable to a Bank | Note payable due April 2021 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 6,200 | |
Interest rate | 5.29% | |
Note payable to a Bank | $ 227,000 | 288,000 |
Installment notes | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.20% | |
Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2016, with interest at 1.0% through 6.7%. | $ 1,001,000 | 1,023,000 |
Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.49% | |
Notes Payable | $ 0 | $ 0 |
Line of credit facility, maximum borrowing capacity | 2,000,000 | |
Summit Community Bank | Installment notes | ||
Debt Instrument [Line Items] | ||
Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2016, with interest at 1.0% through 6.7%. | 1,071,000 | |
Minimum | Installment notes | ||
Debt Instrument [Line Items] | ||
Monthly payments | 300 | |
Maximum | Installment notes | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 4,100 |
Notes Payable and Capital Lease
Notes Payable and Capital Lease Maturities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 637,000 | |
2,018 | 620,000 | |
2,019 | 640,000 | |
2,020 | 478,000 | |
2,021 | 166,000 | |
Thereafter | 992,000 | |
Notes Payable | $ 3,533,000 | $ 3,933,000 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
CEO | |
Related Party Transaction [Line Items] | |
Annual rent | $ 24 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Federal: | ||
Current | $ 455,000 | $ 777,000 |
Deferred | 421,000 | 514,000 |
Federal Income Taxes | 876,000 | 1,291,000 |
State: | ||
Current | 76,000 | 108,000 |
Deferred | 105,000 | 63,000 |
Total State | 181,000 | 171,000 |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | ||
Income taxes at statutory rate | 1,269,000 | 1,461,000 |
State income taxes, net of federal benefit | 136,000 | 134,000 |
Domestic production activities deduction | 0 | (77,000) |
Stock compensation deferred tax asset write-off | 0 | 25,000 |
Deferred true-ups | 161,000 | 0 |
Effective Income Tax Rate Reconciliation, Provision to Return, Amount | 152,000 | 0 |
Rate reduction | 664,000 | 0 |
Other | 3,000 | (81,000) |
Income tax expense | $ 1,057,000 | $ 1,462,000 |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||
Income taxes at statutory rate (percent) | 34.00% | 34.00% |
State income taxes, net of federal benefit (percent) | 3.60% | 2.70% |
Domestic production activities deduction (percent) | (0.00%) | (1.60%) |
Stock compensation deferred tax asset write-off (percent) | 0.00% | 0.50% |
Deferred true-ups (percent) | 4.30% | 0.00% |
Effective Income Tax Rate Reconciliation, Provision to Return, Percent | 4.10% | 0.00% |
Rate reduction (percent) | (17.80%) | 0.00% |
Other (percent) | 0.10% | (1.60%) |
Effective income tax rate (percent) | 28.30% | 34.00% |
Components of Deferred Tax Assets and Liabilities [Abstract] | ||
Unrealized losses on investments available for sale | $ (1,185,000) | $ (1,404,000) |
Unrealized losses on investments available for sale | 5,000 | 15,000 |
Retainage | (264,000) | 0 |
Allowance for doubtful accounts | 52,000 | 128,000 |
Prepaid expenses | (98,000) | 0 |
Vacation accrued | 67,000 | 106,000 |
Deferred income | 0 | 281,000 |
State NOL carryforward | 48,000 | 75,000 |
Other | 85,000 | 35,000 |
Net deferred tax liability | $ (1,290,000) | $ (764,000) |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan [Abstract] | ||
Maximum annual contributions per employee, percent | 10.00% | |
Employer matching contribution, percent of match | 50.00% | |
Employer matching contribution, percent of employees' gross pay | 4.00% | |
Cost recognized | $ 140,000 | $ 124,000 |
Stock Compensation (Details)
Stock Compensation (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Oct. 13, 2016 | Sep. 19, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Intrinsic value of options outstanding (in dollars) | $ 58,000 | ||||
Stock compensation | $ 411,000 | $ 0 | |||
Unrecognized compensation cost related to non-vested restricted stock | $ 650,000 | ||||
Weighted Average Exercise Price | |||||
Beginning balance (in dollars per share) | $ 1.96 | $ 1.96 | |||
Granted (in dollars per share) | 0 | 0 | |||
Forfeited (in dollars per share) | (2.15) | (2.21) | |||
Exercised (in dollars per share) | (1.89) | (1.31) | |||
Ending balance (in dollars per share) | $ 1.21 | $ 1.96 | |||
Options Outstanding | |||||
Beginning balance | 68,133 | 190,933 | |||
Granted | 0 | 0 | |||
Forfeited | (1,000) | (60,000) | |||
Exercised | 56,800 | 62,800 | |||
Ending balance | 10,333 | 68,133 | |||
Vested and Exercisable | |||||
Beginning balance | 68,133 | 190,933 | |||
Granted | 0 | 0 | |||
Forfeited | (1,000) | (60,000) | |||
Exercised | (56,800) | (62,800) | |||
Ending balance | 10,333 | 68,133 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||
Granted (in dollars per share) | $ 0 | $ 0 | |||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options authorized | 400,000 | 500,000 | |||
Vesting period | 3 years | ||||
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Weighted Average Exercise Price | |||||
Granted (in dollars per share) | $ 5.45 | $ 4.95 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |||||
Non-vested, beginning of period (shares) | 103,000 | 0 | |||
Granted (in shares) | 72,000 | 103,000 | |||
Vested (shares) | 49,667 | 0 | |||
Forfeited (shares) | 0 | 0 | |||
Non-vested, end of period (shares) | 103,000 | 0 | 125,333 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||
Non-vested, beginning of period (usd per share) | $ 4.95 | $ 0 | |||
Granted (in dollars per share) | 5.45 | 4.95 | |||
Vested (in dollars per share) | 0.05 | 0 | |||
Forfeited (in dollars per share) | 0 | 0 | |||
Non-vested, ending of period (usd per share) | $ 5.19 | $ 4.95 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Mutual Funds [Member] - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | $ 1,098,281 | $ 1,050,220 |
Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | 1,098,281 | 1,050,220 |
Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | 0 | 0 |
Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - CEO | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Loss Contingencies [Line Items] | |
Annual base salary | $ 99,000 |
Annual royalty fee | $ 99,000 |
Voluntary termination period | 6 months |
Compensation multiplier due to Company upon voluntary termination within defined period | 3 |
Time period used to determine cancellation penalties | 5 years |
Amount subtracted from cancellation penalties | $ 1 |
Compensation multiplier due to employee upon voluntary termination with good reason | 3 |
Period following termination of continued fringe benefits | 2 years |
Period following termination options are exercisable | 3 years |
Compensation multiplier due to employee's estate upon death | 1 |
Period following termination due to disability of continued compensation | 1 year |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net income | $ 2,684,000 | $ 2,835,000 |
Basic earnings (loss) per share | ||
Weighted average shares outstanding | 5,042,000 | 4,934,000 |
Basic earnings per share (in dollars per share) | $ 0.53 | $ 0.57 |
Diluted earnings (loss) per share | ||
Weighted average shares outstanding | 5,042,000 | 4,934,000 |
Dilutive effect of stock options | 37,000 | 132,000 |
Total weighted average shares outstanding | 5,079,000 | 5,066,000 |
Diluted earnings per share (in dollars per share) | $ 0.53 | $ 0.56 |
Income tax expense | $ 1,057,000 | $ 1,462,000 |
Uncategorized Items - smid-2017
Label | Element | Value |
Other Comprehensive Income (Loss), Net of Tax | us-gaap_OtherComprehensiveIncomeLossNetOfTax | $ (16,000) |