Delaware
|
|
13-3458955
|
(State or other jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
Large accelerated filer
¨
|
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
|
Smaller reporting company
x
|
Emerging growth company
¨
|
|
|
|
||
|
||
|
March 31, 2017
|
|
September 30, 2016
|
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
509
|
|
|
$
|
845
|
|
Accounts receivable, net of allowance
|
14,713
|
|
|
17,140
|
|
||
Inventories, net
|
16,477
|
|
|
15,384
|
|
||
Assets held for sale
|
—
|
|
|
4,611
|
|
||
Other current assets
|
997
|
|
|
1,214
|
|
||
Total current assets
|
32,696
|
|
|
39,194
|
|
||
|
|
|
|
||||
Property, plant & equipment, net
|
17,010
|
|
|
10,994
|
|
||
Intangible assets, net
|
75
|
|
|
95
|
|
||
Goodwill
|
101
|
|
|
101
|
|
||
Other long term assets
|
8
|
|
|
13
|
|
||
Total assets
|
$
|
49,890
|
|
|
$
|
50,397
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
1,530
|
|
|
$
|
2,908
|
|
Current portion of capital lease
|
206
|
|
|
—
|
|
||
Accounts payable
|
11,784
|
|
|
10,864
|
|
||
Accrued payroll and related expenses
|
1,207
|
|
|
3,365
|
|
||
Other accrued expenses
|
496
|
|
|
529
|
|
||
Customer deposits
|
2,161
|
|
|
1,756
|
|
||
Total current liabilities
|
$
|
17,384
|
|
|
$
|
19,422
|
|
|
|
|
|
||||
Long-term debt
|
12,950
|
|
|
16,732
|
|
||
Long-term capital lease
|
5,471
|
|
|
—
|
|
||
Other long-term liabilities
|
1,425
|
|
|
379
|
|
||
Total liabilities
|
37,230
|
|
|
36,533
|
|
||
|
|
|
|
||||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
—
|
|
|
—
|
|
||
500,000 shares authorized; none issued or outstanding
|
|
|
|
||||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized: 50,000,000 shares
|
|
|
|
||||
Issued: 11,372,111 and 11,330,151 shares, respectively
|
|
|
|
||||
Outstanding: 10,316,623 and 10,274,663 shares, respectively
|
114
|
|
|
113
|
|
||
Additional paid-in capital
|
46,557
|
|
|
46,294
|
|
||
Retained earnings/(accumulated deficit)
|
(32,422
|
)
|
|
(30,954
|
)
|
||
Treasury stock, at cost: 1,055,488 shares
|
(1,589
|
)
|
|
(1,589
|
)
|
||
Total stockholders’ equity
|
12,660
|
|
|
13,864
|
|
||
Total liabilities and stockholders’ equity
|
$
|
49,890
|
|
|
$
|
50,397
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
||||||||
|
|
|
|
||||||||||||
Net sales
|
$
|
21,368
|
|
|
$
|
33,148
|
|
|
$
|
42,344
|
|
|
$
|
66,081
|
|
Cost of sales
|
19,089
|
|
|
27,412
|
|
|
38,269
|
|
|
54,528
|
|
||||
Gross profit
|
2,279
|
|
|
5,736
|
|
|
4,075
|
|
|
11,553
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses
|
2,665
|
|
|
3,762
|
|
|
5,095
|
|
|
7,747
|
|
||||
Operating profit/(loss)
|
(386
|
)
|
|
1,974
|
|
|
(1,020
|
)
|
|
3,806
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and financing expense
|
229
|
|
|
513
|
|
|
448
|
|
|
802
|
|
||||
Income/(loss) before income taxes
|
(615
|
)
|
|
1,461
|
|
|
(1,468
|
)
|
|
3,004
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for/(benefit from) income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income/(loss)
|
$
|
(615
|
)
|
|
$
|
1,461
|
|
|
$
|
(1,468
|
)
|
|
$
|
3,004
|
|
|
|
|
|
|
|
|
|
||||||||
Net income/(loss) per common and common equivalent share:
|
|
|
|
|
|||||||||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.29
|
|
Diluted
|
(0.06
|
)
|
|
0.14
|
|
|
(0.14
|
)
|
|
0.29
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|||||||||||||
Basic
|
10,173,388
|
|
|
10,205,031
|
|
|
10,168,339
|
|
|
10,210,539
|
|
||||
Diluted
|
10,173,388
|
|
|
10,205,031
|
|
|
10,168,339
|
|
|
10,210,539
|
|
|
Common
Stock, par $0.01 |
|
|
Additional
Paid-In Capital |
|
|
Retained
Earnings (Deficit) |
|
|
Treasury
Stock, at cost |
|
|
Total
Stockholders’ Equity |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balances, October 1, 2015
|
$
|
112
|
|
|
$
|
45,845
|
|
|
$
|
(35,740
|
)
|
|
$
|
(1,529
|
)
|
|
$
|
8,688
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
—
|
|
|
—
|
|
|
3,004
|
|
|
—
|
|
|
3,004
|
|
|||||
Stock-based compensation
|
—
|
|
|
162
|
|
|
—
|
|
|
—
|
|
|
162
|
|
|||||
Restricted (non-vested) stock grants, net of
forfeitures |
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Employee stock plan purchase
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||
Return of incentive compensation shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
(60
|
)
|
|||||
Balances, April 1, 2016
|
$
|
113
|
|
|
$
|
46,013
|
|
|
$
|
(32,736
|
)
|
|
$
|
(1,589
|
)
|
|
$
|
11,801
|
|
|
Common
Stock, par $0.01 |
|
|
Additional
Paid-In Capital |
|
|
Retained
Earnings (Deficit) |
|
|
Treasury
Stock, at cost |
|
|
Total
Stockholders’ Equity |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, October 1, 2016
|
$
|
113
|
|
|
$
|
46,294
|
|
|
$
|
(30,954
|
)
|
|
$
|
(1,589
|
)
|
|
$
|
13,864
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(1,468
|
)
|
|
—
|
|
|
(1,468
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
252
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|||||
Restricted (non-vested) stock grants, net of
forfeitures |
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Employee stock plan purchases
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
Shares withheld for payment of taxes upon
vesting of restricted stock |
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Balances, March 31, 2017
|
$
|
114
|
|
|
$
|
46,557
|
|
|
$
|
(32,422
|
)
|
|
$
|
(1,589
|
)
|
|
$
|
12,660
|
|
|
|
Six Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net income/(loss)
|
|
$
|
(1,468
|
)
|
|
$
|
3,004
|
|
Non-cash adjustments:
|
|
|
|
|
||||
Stock-based compensation
|
|
252
|
|
|
162
|
|
||
Incentive compensation shares returned
|
|
—
|
|
|
(60
|
)
|
||
Depreciation and amortization
|
|
1,330
|
|
|
1,681
|
|
||
(Gain)/loss on sale of property, plant and equipment
|
|
—
|
|
|
1
|
|
||
Reserve for doubtful accounts
|
|
(151
|
)
|
|
270
|
|
||
Provision for excess/obsolete inventory
|
|
(196
|
)
|
|
279
|
|
||
Amortization of deferred gain on sale leaseback
|
|
(30
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
2,578
|
|
|
6,422
|
|
||
Inventory
|
|
(897
|
)
|
|
1,580
|
|
||
Other current assets
|
|
217
|
|
|
185
|
|
||
Other long term assets
|
|
5
|
|
|
(11
|
)
|
||
Accounts payable
|
|
920
|
|
|
(6,497
|
)
|
||
Accrued expenses
|
|
(2,191
|
)
|
|
629
|
|
||
Customer deposits
|
|
405
|
|
|
(1,015
|
)
|
||
Other long term liabilities
|
|
(85
|
)
|
|
(14
|
)
|
||
Net cash flows from operating activities
|
|
689
|
|
|
6,616
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Purchases of property, plant and equipment
|
|
(1,536
|
)
|
|
(1,270
|
)
|
||
Proceeds from sale-leaseback
|
|
5,750
|
|
|
—
|
|
||
Net cash flows from investing activities
|
|
4,214
|
|
|
(1,270
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Advances from revolving line of credit
|
|
21,448
|
|
|
30,271
|
|
||
Repayments of revolving line of credit
|
|
(19,868
|
)
|
|
(32,998
|
)
|
||
Repayments under other loan agreements
|
|
(6,758
|
)
|
|
(1,696
|
)
|
||
Repayments under capital lease
|
|
(73
|
)
|
|
—
|
|
||
Debt issuance costs
|
|
—
|
|
|
(211
|
)
|
||
Proceeds from employee stock plan purchases
|
|
13
|
|
|
7
|
|
||
Shares withheld for payment of taxes upon vesting of restricted stock
|
|
(1
|
)
|
|
—
|
|
||
Net cash flows from financing activities
|
|
(5,239
|
)
|
|
(4,627
|
)
|
||
|
|
|
|
|
||||
Net cash flows for the period
|
|
(336
|
)
|
|
719
|
|
||
Cash, beginning of period
|
|
845
|
|
|
407
|
|
||
Cash, end of period
|
|
$
|
509
|
|
|
$
|
1,126
|
|
|
|
|
|
|
||||
Supplemental cash flow information
|
|
|
|
|
||||
Interest paid
|
|
$
|
429
|
|
|
$
|
803
|
|
Income taxes paid
|
|
79
|
|
|
—
|
|
||
Borrowings under capital lease
|
|
5,750
|
|
|
—
|
|
PP&E Lives
|
|
Estimated
Useful Lives |
|
|
(years)
|
Land improvements
|
|
10
|
Buildings and improvements
|
|
5 to 40
|
Machinery and equipment
|
|
3 to 5
|
Furniture and fixtures
|
|
3 to 7
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
Shares for EPS Calculation
|
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
|
10,173,388
|
|
|
10,205,031
|
|
|
10,168,339
|
|
|
10,210,539
|
|
Incremental shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted shares
|
|
10,173,388
|
|
|
10,205,031
|
|
|
10,168,339
|
|
|
10,210,539
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive shares excluded
|
|
1,157,356
|
|
|
804,965
|
|
|
1,157,356
|
|
|
804,965
|
|
|
|
Six Months Ended
|
||||||
Allowance for Doubtful Accounts
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
(in thousands)
|
|
|
|
|
||||
Allowance, beginning of period
|
|
$
|
226
|
|
|
$
|
423
|
|
Provision for doubtful accounts
|
|
(151
|
)
|
|
270
|
|
||
Write-offs/recoveries
|
|
15
|
|
|
(158
|
)
|
||
Allowance, end of period
|
|
$
|
90
|
|
|
$
|
535
|
|
Inventories
|
|
March 31,
2017 |
|
September 30,
2016 |
||||
(in thousands)
|
|
|
|
|
|
|||
Raw materials
|
|
$
|
9,711
|
|
|
$
|
9,138
|
|
Work-in-process
|
|
6,676
|
|
|
5,932
|
|
||
Finished goods
|
|
1,519
|
|
|
1,939
|
|
||
Total inventories
|
|
17,906
|
|
|
17,009
|
|
||
Reserve for excess/obsolete inventory
|
|
(1,429
|
)
|
|
(1,625
|
)
|
||
Inventories, net
|
|
$
|
16,477
|
|
|
$
|
15,384
|
|
Property, Plant & Equipment
|
|
March 31,
2017 |
|
September 30,
2016 |
||||
(in thousands)
|
|
|
|
|
||||
Land and improvements
|
|
$
|
788
|
|
|
$
|
788
|
|
Buildings and improvements
|
|
8,910
|
|
|
8,910
|
|
||
Building under capital lease
|
|
5,750
|
|
|
—
|
|
||
Machinery and equipment
|
|
28,371
|
|
|
26,905
|
|
||
Furniture and fixtures
|
|
7,503
|
|
|
7,489
|
|
||
Construction in progress
|
|
3,135
|
|
|
3,079
|
|
||
Total property, plant and equipment, at cost
|
|
54,457
|
|
|
47,171
|
|
||
Accumulated depreciation
|
|
(37,447
|
)
|
|
(36,177
|
)
|
||
Property, plant and equipment, net
|
|
$
|
17,010
|
|
|
$
|
10,994
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Depreciation expense
|
|
$
|
652
|
|
|
$
|
807
|
|
|
$
|
1,298
|
|
|
$
|
1,647
|
|
Intangible Assets
|
|
March 31,
2017 |
|
September 30,
2016 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Property tax abatement - Albuquerque
|
|
$
|
360
|
|
|
$
|
360
|
|
Accumulated amortization
|
|
(285
|
)
|
|
(265
|
)
|
||
Intangible assets, net
|
|
$
|
75
|
|
|
$
|
95
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Amortization Expense
|
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Intangible amortization expense
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
20
|
|
|
$
|
20
|
|
Future Amortization
|
|
Estimated future amortization
|
||
(in thousands)
|
|
|
|
|
Twelve months ended March,
|
|
|
|
|
2018
|
|
$
|
40
|
|
2019
|
|
35
|
|
|
2020 and thereafter
|
|
—
|
|
|
|
|
|
|
|
March 31, 2017
|
|
September 30, 2016
|
||||||||||
Debt
|
|
Fixed/ Variable
Rate |
|
Maturity
Date |
|
Balance
|
|
Interest Rate
|
|
Balance
|
|
Interest Rate
|
||||||
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
M&T credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revolving Credit Facility
|
|
v
|
|
1/18/2018
|
|
$
|
5,541
|
|
|
5.23
|
%
|
|
$
|
3,961
|
|
|
3.28
|
%
|
Term Loan A
(1)
|
|
f
|
|
2/1/2020
|
|
—
|
|
|
—
|
|
|
3,693
|
|
|
3.98
|
|
||
Term Loan B
|
|
v
|
|
2/1/2023
|
|
8,283
|
|
|
4.03
|
|
|
8,983
|
|
|
3.03
|
|
||
Albuquerque Mortgage Loan
(1)
|
|
v
|
|
2/1/2018
|
|
—
|
|
|
—
|
|
|
2,200
|
|
|
3.55
|
|
||
Celmet Building Term Loan
|
|
f
|
|
11/7/2018
|
|
867
|
|
|
4.72
|
|
|
932
|
|
|
4.72
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Albuquerque Industrial Revenue Bond
(1)
|
|
f
|
|
3/1/2019
|
|
—
|
|
|
—
|
|
|
100
|
|
|
5.63
|
|
||
Total debt, gross
|
|
|
|
|
|
14,691
|
|
|
|
|
19,869
|
|
|
|
||||
Unamortized debt issuance costs
|
|
|
|
|
|
(211
|
)
|
|
|
|
(229
|
)
|
|
|
||||
Total debt, net
|
|
|
|
|
|
14,480
|
|
|
|
|
19,640
|
|
|
|
||||
Less: current portion
|
|
|
|
|
|
(1,530
|
)
|
|
|
|
(2,908
|
)
|
|
|
||||
Long-term debt
|
|
|
|
|
|
$
|
12,950
|
|
|
|
|
$
|
16,732
|
|
|
|
a)
|
Revolving Credit Facility (“Revolver”)
: Up to
$16.0 million
is available through
January 18, 2018
. The maximum amount the Company may borrow is determined based on a borrowing base calculation described below.
|
b)
|
Term Loan A
:
$10.0 million
was borrowed on January 18, 2013. Principal was being repaid in
108 equal monthly installments
of
$93 thousand
. The proceeds of the sale-leaseback transaction described in
Note 14—Capital Lease
were used to pay down the loan, which was subsequently paid off in due course.
|
c)
|
Term Loan B:
$14.0 million
was borrowed on January 18, 2013. Principal is being repaid in
120 equal monthly installments
of
$117 thousand
.
|
d)
|
Albuquerque
Mortgage Loan
:
$4.0 million
was borrowed on December 16, 2009. The loan was secured by real property in Albuquerque, NM, and principal was being repaid in equal
monthly installments
of
$22 thousand
. The loan was repaid in connection with the sale-leaseback transaction described in
Note 14—Capital Lease
.
|
e)
|
Celmet Building Term Loan:
$1.3 million
was borrowed on November 8, 2013 pursuant to an amendment to the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in
59 equal monthly installments
of
$11 thousand
plus a balloon payment due at maturity.
|
Debt Repayment Schedule
|
|
Contractual
Principal Payments |
|||
(in thousands)
|
|
|
|
||
Twelve months ended March
|
|
|
|
||
2018
|
|
|
$
|
1,530
|
|
2019
|
(1)
|
|
2,137
|
|
|
2020
|
|
|
1,400
|
|
|
2021
|
|
|
1,400
|
|
|
2022 and thereafter
(2)
|
|
8,224
|
|
||
|
|
|
$
|
14,691
|
|
|
|
March 31, 2017
|
|
September 30, 2016
|
||||||||||||
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Term Loan A
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,489
|
|
|
$
|
3,693
|
|
Celmet Building Term Loan
|
|
811
|
|
|
867
|
|
|
864
|
|
|
932
|
|
|
|
Six Months Ended
|
||||||
Warranty Reserve
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Reserve, beginning of period
|
|
$
|
180
|
|
|
$
|
399
|
|
Provision
|
|
111
|
|
|
123
|
|
||
Warranty costs
|
|
(101
|
)
|
|
(183
|
)
|
||
Reserve, end of period
|
|
$
|
190
|
|
|
$
|
339
|
|
|
|
Six Months Ended
|
|
||
Valuation of Options
|
|
March 31,
2017 |
|
||
|
|
|
|
||
Assumptions for Black-Scholes:
|
|
|
|
||
Risk-free interest rate
|
|
1.48
|
%
|
|
|
Expected term in years
|
|
4.0
|
|
|
|
Volatility
|
|
40
|
%
|
|
|
Expected annual dividends
|
|
none
|
|
|
|
|
|
|
|
||
Value of options granted:
|
|
|
|
||
Number of options granted
|
|
50,000
|
|
|
|
Weighted average fair value per share
|
|
$
|
1.18
|
|
|
Fair value of options granted (000s)
|
|
$
|
59
|
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 31, 2017
|
|
April 1, 2016
|
||||||||||
Stock Options
|
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
||||||
|
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
|
759,795
|
|
|
$
|
4.43
|
|
|
717,645
|
|
|
$
|
4.40
|
|
Granted
|
|
50,000
|
|
|
3.60
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
|
(30,500
|
)
|
|
5.70
|
|
|
(15,500
|
)
|
|
5.99
|
|
||
Expired
|
|
(19,750
|
)
|
|
5.37
|
|
|
—
|
|
|
—
|
|
||
Outstanding, end of period
|
|
759,545
|
|
|
$
|
4.30
|
|
|
702,145
|
|
|
$
|
4.37
|
|
|
|
|
|
|
|
|
|
|
||||||
For options expected to vest
|
|
|
|
|
|
|
|
|
|
|
||||
Number expected to vest
|
|
738,410
|
|
|
$
|
4.30
|
|
|
558,596
|
|
|
$
|
4.44
|
|
Weighted average remaining term, in years
|
|
4.9
|
|
|
|
|
5.3
|
|
|
|
|
|||
Intrinsic value (000s)
|
|
|
|
$
|
11
|
|
|
|
|
|
$
|
239
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Number exercisable
|
|
324,472
|
|
|
$
|
4.46
|
|
|
260,036
|
|
|
$
|
4.84
|
|
Weighted average remaining term, in years
|
|
4.3
|
|
|
|
|
4.4
|
|
|
|
|
|||
Intrinsic value (000s)
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Expense not yet recognized (000s)
|
|
|
|
$
|
526
|
|
|
|
|
|
$
|
597
|
|
|
Weighted average years to be recognized
|
|
2.3
|
|
|
|
|
3.1
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
For options exercised
|
|
|
|
|
|
|
|
|
||||||
Intrinsic value (000s)
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 31, 2017
|
|
April 1, 2016
|
||||||||||
Stock Options
|
|
Number
of Options |
|
Wgtd. Avg.
Grant Date Fair Value |
|
Number
of Options |
|
Wgtd. Avg.
Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
||||||
Non-vested, beginning of period
|
|
489,109
|
|
|
$
|
1.43
|
|
|
546,145
|
|
|
$
|
1.41
|
|
Granted
|
|
50,000
|
|
|
1.18
|
|
|
—
|
|
|
—
|
|
||
Vested
|
|
(104,036
|
)
|
|
1.45
|
|
|
(104,036
|
)
|
|
1.45
|
|
||
Forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Non-vested, end of period
|
|
435,073
|
|
|
$
|
1.40
|
|
|
442,109
|
|
|
$
|
1.40
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 31, 2017
|
|
April 1, 2016
|
||||||||||
Restricted (Non-vested) Stock
|
|
Number of
Non-vested Shares |
|
Wgtd. Avg.
Grant Date Fair Value |
|
Number of
Non-vested Shares |
|
Wgtd. Avg.
Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
|
228,759
|
|
|
$
|
4.40
|
|
|
54,960
|
|
|
$
|
4.23
|
|
Granted
|
|
194,766
|
|
|
3.62
|
|
|
59,560
|
|
|
4.03
|
|
||
Vested
|
|
(25,131
|
)
|
|
4.22
|
|
|
(11,700
|
)
|
|
4.23
|
|
||
Shares withheld for payment of
taxes upon vesting of restricted stock |
|
(583
|
)
|
|
3.60
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Outstanding, end of period
|
|
397,811
|
|
|
$
|
4.03
|
|
|
102,820
|
|
|
$
|
4.11
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-vested shares
|
|
|
|
|
|
|
|
|
|
|
|
|||
Expense not yet recognized (000s)
|
|
|
|
$
|
1,075
|
|
|
|
|
|
$
|
357
|
|
|
Weighted average remaining years for vesting
|
|
2.4
|
|
|
|
|
2.5
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
For shares vested
|
|
|
|
|
|
|
|
|
|
|
|
|||
Aggregate fair value on vesting dates (000s)
|
|
|
|
|
$
|
94
|
|
|
|
|
|
$
|
43
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Income Tax Provision/Benefit
|
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|||||||
Provision for/(benefit from) income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
% of Sales by Sector
|
|
March 31,
2017 |
|
April 1,
2016 |
|
March 31,
2017 |
|
April 1,
2016 |
|
|
|
|
|
|
|
|
|
Aerospace & Defense
|
|
44%
|
|
34%
|
|
47%
|
|
37%
|
Medical
|
|
32%
|
|
50%
|
|
30%
|
|
46%
|
Industrial
|
|
21%
|
|
14%
|
|
20%
|
|
15%
|
Communications & Other
|
|
3%
|
|
2%
|
|
3%
|
|
2%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
Capital Lease Payment Schedule
|
|
Contractual
Principal Payments |
||
(in thousands)
|
|
|
|
|
Twelve months ended March
|
|
|
|
|
2018
|
|
$
|
478
|
|
2019
|
|
487
|
|
|
2020
|
|
497
|
|
|
2021
|
|
549
|
|
|
2022 and thereafter
|
|
6,101
|
|
|
Total capital lease payments
|
|
$
|
8,112
|
|
Less: amounts representing interest
|
|
(2,435
|
)
|
|
Present value of minimum lease payment
|
|
$
|
5,677
|
|
|
|
|
•
|
Our engineering services include the design, development, and fabrication of customized stress testing platforms to simulate a product’s end application, such as thermal cycling and vibration, in order to ensure reliable performance and avoid catastrophic failure when the product is placed in service.
|
•
|
Our vertical manufacturing model offers customers the ability to simplify their supply chain by utilizing a single supplier for their critical components including complex printed circuit board assembly (“PCBA”), precision metalworking, and interconnect solutions. This service model allows us to control the cost, lead time, and quality of these critical components which are then integrated into full system assemblies and minimizes our customers’ supply chain risk.
|
•
|
We provide direct order fulfillment services for our customers by integrating with their configuration management process to obtain their customer orders, customize the product to the specific requirements, functionally test the product and provide verification data, and direct ship to their end customer in order to reduce time, cost, and complexity within our customers’ supply chain.
|
•
|
We are the only EMS provider with an on-site laboratory that has been approved by the Defense Logistics Agency (“DLA”) for their Qualified Testing Supplier List (“QTSL”) program which deems the site suitable to conduct various QTSL and military testing standards including counterfeit component analysis. In addition, this advanced laboratory is utilized for complex design analysis and manufacturing process development to solve challenges and accelerate our customers’ time to market.
|
•
|
Newark, New York - Located approximately one hour east of Rochester, New York, our Newark location is our corporate headquarters and is the largest manufacturing location providing complex circuit board manufacturing, interconnect solutions, and system-level assemblies along with an on-site material analysis laboratory for advanced manufacturing process development.
|
•
|
Rochester, New York - Focuses on precision metalworking services including complex metal chassis and assemblies.
|
•
|
Albuquerque, New Mexico - Specializes in the aerospace and defense markets with complex circuit board and system-level assemblies along with a state of the art analysis and testing laboratory which conducts counterfeit component analysis and complex design analysis.
|
|
|
Three Months Ended
|
||||||
Income Statement Data
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
(in thousands)
|
|
|
|
|
||||
Net sales
|
|
$
|
21,368
|
|
|
$
|
33,148
|
|
|
|
|
|
|
||||
Gross profit
|
|
2,279
|
|
|
5,736
|
|
||
Selling and administrative expenses
|
|
2,665
|
|
|
3,762
|
|
||
Interest and financing expense
|
|
229
|
|
|
513
|
|
||
Income/(loss) before income taxes
|
|
(615
|
)
|
|
1,461
|
|
||
Provision for/(benefit from) income taxes
|
|
—
|
|
|
—
|
|
||
Net income/(loss)
|
|
$
|
(615
|
)
|
|
$
|
1,461
|
|
|
|
Three Months Ended
|
||
% of Sales by Sector
|
|
March 31,
2017 |
|
April 1,
2016 |
|
|
|
|
|
Aerospace & Defense
|
|
44%
|
|
34%
|
Medical
|
|
32%
|
|
50%
|
Industrial
|
|
21%
|
|
14%
|
Communications & Other
|
|
3%
|
|
2%
|
|
|
100%
|
|
100%
|
|
|
Six Months Ended
|
||||||
Income Statement Data
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
(in thousands)
|
|
|
|
|
||||
Net sales
|
|
$
|
42,344
|
|
|
$
|
66,081
|
|
|
|
|
|
|
||||
Gross profit
|
|
4,075
|
|
|
11,553
|
|
||
Selling and administrative expenses
|
|
5,095
|
|
|
7,747
|
|
||
Interest and financing expense
|
|
448
|
|
|
802
|
|
||
Income/(loss) before income taxes
|
|
(1,468
|
)
|
|
3,004
|
|
||
Provision for/(benefit from) income taxes
|
|
—
|
|
|
—
|
|
||
Net income/(loss)
|
|
$
|
(1,468
|
)
|
|
$
|
3,004
|
|
|
|
Six Months Ended
|
||
% of Sales by Sector
|
|
March 31,
2017 |
|
April 1,
2016 |
|
|
|
|
|
Aerospace & Defense
|
|
47%
|
|
37%
|
Medical
|
|
30%
|
|
46%
|
Industrial
|
|
20%
|
|
15%
|
Communications & Other
|
|
3%
|
|
2%
|
|
|
100%
|
|
100%
|
|
|
Six Months Ended
|
||||||
Cash Flow Data
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
(in thousands)
|
|
|
|
|
||||
Cash, beginning of period
|
|
$
|
845
|
|
|
$
|
407
|
|
Net cash flow from:
|
|
|
|
|
|
|
||
Operating activities
|
|
689
|
|
|
6,616
|
|
||
Investing activities
|
|
4,214
|
|
|
(1,270
|
)
|
||
Financing activities
|
|
(5,239
|
)
|
|
(4,627
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(336
|
)
|
|
719
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
509
|
|
|
$
|
1,126
|
|
|
|
Limit at
|
|
Calculated Amount At
|
||||
Debt Covenant
|
|
March 31,
2017 |
|
September 30,
2016 |
|
March 31,
2017 |
|
September 30,
2016 |
|
|
|
|
|
|
|
|
|
Quarterly EBITDAS (000s)
|
|
Minimum $240
|
|
Minimum $1,080
|
|
$375
|
|
$1,269
|
Debt to EBITDAS Ratio
|
|
Maximum 4.7
|
|
Maximum 3.1x
|
|
4.4x
|
|
2.0x
|
Fixed Charge Coverage Ratio
|
|
Minimum 0.3x
|
|
Minimum 1.25x
|
|
0.3x
|
|
1.5x
|
Maximum Inventory
|
|
Maximum $25.0m
|
|
Maximum $27.0m
|
|
$17.9m
|
|
$17.0m
|
Maximum Capital Expenditures
|
|
Maximum $4.5m annually
|
|
Maximum $4.5m annually
|
|
Measured Annually
|
|
$3.3m
|
|
|
Three Months Ended
|
||
|
|
March 31,
2017 |
||
(in thousands)
|
|
|
||
Net income/(loss)
|
|
$
|
(615
|
)
|
Provision for/(benefit from) income taxes
|
|
—
|
|
|
Depreciation and amortization expense
|
|
644
|
|
|
Interest expense
|
|
229
|
|
|
Non-cash stock compensation
|
|
117
|
|
|
EBITDAS
|
|
$
|
375
|
|
|
|
Three Months Ended
|
||
|
|
March 31,
2017 |
||
(in thousands)
|
|
|
||
Net income/(loss)
|
|
$
|
(615
|
)
|
Provision for/(benefit from) income taxes
|
|
—
|
|
|
Depreciation and amortization expense
|
|
644
|
|
|
Interest expense
|
|
229
|
|
|
Non-cash stock compensation
|
|
117
|
|
|
Unfinanced capital expenditures
|
|
(1,079
|
)
|
|
Income taxes paid
|
|
—
|
|
|
Adjusted EBITDA
|
|
$
|
(704
|
)
|
|
|
IEC Electronics Corp.
|
|
|
(Registrant)
|
|
|
|
May 10, 2017
|
By:
|
/s/ Jeffrey T. Schlarbaum
|
|
|
Jeffrey T. Schlarbaum
|
|
|
President & Chief Executive Officer
|
|
|
|
May 10, 2017
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Chief Financial Officer
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Waiver of Annual Bonus for 2017 Fiscal Year dated as of March 23, 2017 between IEC Electronics Corp. and Jeffrey T. Schlarbaum
|
10.2
|
|
Waiver of Annual Bonus for 2017 Fiscal Year dated as of March 23, 2017 between IEC Electronics Corp. and Michael T. Williams
|
10.3
|
|
Waiver of Annual Bonus for 2017 Fiscal Year dated as of March 23, 2017 between IEC Electronics Corp. and Jens Hauvn
|
10.4
|
|
Third Amendment to Fifth Amended and Restated Credit Facility Agreement dated as of May 5, 2017
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
|
101
|
|
The following items from this Quarterly Report on Form 10-Q formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Income Statements (unaudited), (iii) Consolidated Statements of Changes in Stockholders’ Equity (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements.
|
DATED: March 23, 2017
|
JEFFREY T. SCHLARBAUM
|
|
|
|
|
|
|
/s/ Jeffrey T. Schlarbaum
|
|
By:
|
Jeffrey T. Schlarbaum
|
DATED: March 23, 2017
|
IEC ELECTRONICS CORP.
|
|
|
|
|
|
|
/s/ Lynn Hartrick
|
|
By:
|
Lynn Hartrick
|
|
Title:
|
Board of Director
|
DATED: March 23, 2017
|
MICHAEL T. WILLIAMS
|
|
|
|
|
|
|
/s/ Michael T. Williams
|
|
By:
|
Michael T. Williams
|
DATED: March 23, 2017
|
IEC ELECTRONICS CORP.
|
|
|
|
|
|
|
/s/ Jennifer Brown
|
|
By:
|
Jennifer Brown
|
|
Title:
|
VP of Human Resources & Corporate Secretary
|
DATED: March 23, 2017
|
JENS HAUVN
|
|
|
|
|
|
|
/s/ Jens Hauvn
|
|
By:
|
Jens Hauvn
|
DATED: March 23, 2017
|
IEC ELECTRONICS CORP.
|
|
|
|
|
|
|
/s/ Jennifer Brown
|
|
By:
|
Jennifer Brown
|
|
Title:
|
VP of Human Resources & Corporate Secretary
|
Pricing Grid - Applicable Margin
|
|||
|
Fixed Charge Coverage
|
|
|
Level
|
Ratio
|
Revolver
|
Term Loan B
|
I
|
x ≤ 1.60:1.00
|
2.75%
|
3.00%
|
II
|
1.60:1.00 < x ≤ 1.85:1.00
|
2.50%
|
2.75%
|
III
|
x > 1.85:1.00
|
2.25%
|
2.50%
|
Level
|
Fixed Charge Coverage Ratio
|
Unused Fee
|
I
|
x ≤ 1.60:1.00
|
0.375%
|
II
|
1.60:1.00 < x ≤ 1.85:1.00
|
0.375%
|
III
|
x > 1.85:1.00
|
0.250%
|
By:
|
/s/ Michael D. Pick
|
|
|
Name:
Michael D. Pick
|
|
|
Title: Vice President
|
|
By:
|
/s/ Michael T. Williams
|
|
|
Name: Michael T. Williams
|
|
|
Title: Chief Financial Officer
|
|
$6,000,000.00
|
May 5, 2017
|
|
By:
|
/s/ Michael T. Williams
|
|
|
|
Name: Michael T. Williams
|
|
|
|
Title: Chief Financial Officer
|
|
1)
|
Borrower is planning on effectuating a Permitted Stock Repurchase on the date first above written (“Planned Permitted Stock Repurchase”) in the amount of $___________.
|
2)
|
Should the Planned Permitted Stock Repurchase occur, the aggregate of all Permitted Stock Repurchases by Borrower, inclusive of the Planned Permitted Stock Repurchase, from the Third Amendment Closing Date through the Revolving Credit Termination Date will not exceed $3,000,000.00.
|
3)
|
The Unused Availability, calculated giving pro forma effect to the Planned Permitted Stock Repurchase, is greater than $4,000,000.00 for each of the five (5) consecutive Business Days preceding the Planned Permitted Stock Repurchase.
|
4)
|
No Event of Default has occurred or will occur as a result of effectuating the Planned Permitted Stock Repurchase.
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the
three and six
months ended
March 31, 2017
for IEC Electronics Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: May 10, 2017
|
By:
|
/s/ Jeffrey T. Schlarbaum
|
|
|
Jeffrey T. Schlarbaum
|
|
|
President & Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the
three and six
months ended
March 31, 2017
for IEC Electronics Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: May 10, 2017
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: May 10, 2017
|
By:
|
/s/ Jeffrey T. Schlarbaum
|
|
|
Jeffrey T. Schlarbaum
|
|
|
President & Chief Executive Officer
|
Dated: May 10, 2017
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Chief Financial Officer
|