x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
|
47-2266942
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
5420 Lyndon B. Johnson Freeway, Suite 500, Dallas, Texas
|
|
75240
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
¨
|
Accelerated filer
ý
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Non-accelerated filer
¨
(Do not check if smaller reporting company)
|
Smaller reporting company
¨
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Emerging growth company
¨
|
|
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Page
No.
|
|
||
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|
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Item 1.
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||
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||
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||
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||
|
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Item 2.
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||
Item 3.
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Item 4.
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||
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Item 1.
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||
Item 1A.
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||
Item 2.
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||
Item 6.
|
||
EX-31.1
|
|
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EX-31.2
|
|
|
EX-32.1
|
|
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EX-32.2
|
|
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EX-101 INSTANCE DOCUMENT
|
|
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EX-101 SCHEMA DOCUMENT
|
|
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EX-101 CALCULATION LINKBASE DOCUMENT
|
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EX-101 LABELS LINKBASE DOCUMENT
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|
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EX-101 PRESENTATION LINKBASE DOCUMENT
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|
|
EX-101 DEFINITION LINKBASE DOCUMENT
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|
Item 1.
|
Financial Statements.
|
|
Three Months Ended
December 31, |
|
Nine Months Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues, net
|
$
|
69,036
|
|
|
$
|
65,257
|
|
|
$
|
242,757
|
|
|
$
|
211,035
|
|
Cost of revenues
|
(38,834
|
)
|
|
(37,888
|
)
|
|
(131,032
|
)
|
|
(112,587
|
)
|
||||
Gross profit
|
30,202
|
|
|
27,369
|
|
|
111,725
|
|
|
98,448
|
|
||||
Selling, general and administrative expenses
|
(21,923
|
)
|
|
(22,230
|
)
|
|
(71,545
|
)
|
|
(70,623
|
)
|
||||
Impairment expenses
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(1,096
|
)
|
||||
Operating income
|
8,279
|
|
|
5,126
|
|
|
40,180
|
|
|
26,729
|
|
||||
Interest expense, net
|
(540
|
)
|
|
(673
|
)
|
|
(1,842
|
)
|
|
(2,163
|
)
|
||||
Other income (expense), net
|
36
|
|
|
587
|
|
|
(23
|
)
|
|
1,864
|
|
||||
Income before income taxes
|
7,775
|
|
|
5,040
|
|
|
38,315
|
|
|
26,430
|
|
||||
Provision for income taxes
|
(5,140
|
)
|
|
(3,181
|
)
|
|
(16,243
|
)
|
|
(11,953
|
)
|
||||
Income from continuing operations
|
2,635
|
|
|
1,859
|
|
|
22,072
|
|
|
14,477
|
|
||||
Loss from discontinued operations, net of tax
|
(36,672
|
)
|
|
(1,454
|
)
|
|
(40,293
|
)
|
|
(6,134
|
)
|
||||
Net (loss) income
|
$
|
(34,037
|
)
|
|
$
|
405
|
|
|
$
|
(18,221
|
)
|
|
$
|
8,343
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.12
|
|
|
$
|
1.41
|
|
|
$
|
0.92
|
|
Discontinued operations
|
(2.34
|
)
|
|
(0.09
|
)
|
|
(2.57
|
)
|
|
(0.39
|
)
|
||||
Net (loss) income
|
$
|
(2.17
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.16
|
)
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.12
|
|
|
$
|
1.41
|
|
|
$
|
0.92
|
|
Discontinued operations
|
(2.34
|
)
|
|
(0.09
|
)
|
|
(2.57
|
)
|
|
(0.39
|
)
|
||||
Net (loss) income
|
$
|
(2.17
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.16
|
)
|
|
$
|
0.53
|
|
|
Three Months Ended
December 31, |
|
Nine Months Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Net (loss) income
|
$
|
(34,037
|
)
|
|
$
|
405
|
|
|
$
|
(18,221
|
)
|
|
$
|
8,343
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(134
|
)
|
|
(1,534
|
)
|
|
3,503
|
|
|
(3,466
|
)
|
||||
Cash flow hedging activity, net of taxes of $(57), $(420), $(38) and $(383), respectively
|
106
|
|
|
779
|
|
|
72
|
|
|
712
|
|
||||
Pension and other post retirement effects, net of taxes of $(5), $(1), $9 and $(5), respectively
|
9
|
|
|
2
|
|
|
(17
|
)
|
|
10
|
|
||||
Other comprehensive (loss) income
|
(19
|
)
|
|
(753
|
)
|
|
3,558
|
|
|
(2,744
|
)
|
||||
Comprehensive (loss) income
|
$
|
(34,056
|
)
|
|
$
|
(348
|
)
|
|
$
|
(14,663
|
)
|
|
$
|
5,599
|
|
|
December 31,
2017 |
|
March 31,
2017 |
||||
|
(in thousands, except per share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,542
|
|
|
$
|
23,146
|
|
Bank time deposits
|
—
|
|
|
1,776
|
|
||
Accounts receivable, net of allowance of $1,697 and $1,466, respectively
|
51,407
|
|
|
59,831
|
|
||
Inventories, net
|
45,487
|
|
|
43,665
|
|
||
Prepaid expenses and other current assets
|
6,164
|
|
|
3,084
|
|
||
Current assets, discontinued operations
|
3,023
|
|
|
14,781
|
|
||
Total current assets
|
132,623
|
|
|
146,283
|
|
||
Property, plant and equipment, net of accumulated depreciation of $59,791 and $56,002, respectively
|
55,235
|
|
|
56,812
|
|
||
Goodwill
|
81,870
|
|
|
80,863
|
|
||
Intangible assets, net
|
54,947
|
|
|
59,312
|
|
||
Other assets
|
23,785
|
|
|
16,010
|
|
||
Non-current assets, discontinued operations
|
—
|
|
|
38,809
|
|
||
Total assets
|
$
|
348,460
|
|
|
$
|
398,089
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
14,946
|
|
|
$
|
10,372
|
|
Accrued and other current liabilities
|
24,708
|
|
|
21,619
|
|
||
Current portion of long-term debt
|
561
|
|
|
561
|
|
||
Current liabilities, discontinued operations
|
3,613
|
|
|
5,184
|
|
||
Total current liabilities
|
43,828
|
|
|
37,736
|
|
||
Long-term debt
|
39,600
|
|
|
72,646
|
|
||
Retirement benefits payable
|
809
|
|
|
1,464
|
|
||
Other long-term liabilities
|
3,788
|
|
|
13,805
|
|
||
Total liabilities
|
88,025
|
|
|
125,651
|
|
||
Equity:
|
|
|
|
||||
Common shares, $0.01 par value
|
158
|
|
|
157
|
|
||
Shares authorized – 50,000
|
|
|
|
||||
Shares issued – 15,969 and 15,846, respectively
|
|
|
|
||||
Preferred shares, $0.01 par value
|
—
|
|
|
—
|
|
||
Shares authorized – 10,000
|
|
|
|
||||
Shares issued – 0
|
|
|
|
||||
Additional paid-in capital
|
41,851
|
|
|
38,701
|
|
||
Treasury shares, at cost – 52 and 29 shares, respectively
|
(2,008
|
)
|
|
(1,011
|
)
|
||
Retained earnings
|
227,311
|
|
|
245,026
|
|
||
Accumulated other comprehensive loss
|
(6,877
|
)
|
|
(10,435
|
)
|
||
Total equity
|
260,435
|
|
|
272,438
|
|
||
Total liabilities and equity
|
$
|
348,460
|
|
|
$
|
398,089
|
|
|
Nine Months Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(18,221
|
)
|
|
$
|
8,343
|
|
Less: Loss from discontinued operations
|
(40,293
|
)
|
|
(6,134
|
)
|
||
Income from continuing operations
|
$
|
22,072
|
|
|
$
|
14,477
|
|
Adjustments to reconcile income from continuing operations to net cash provided (used) by operating activities:
|
|
|
|
||||
Depreciation
|
5,697
|
|
|
5,367
|
|
||
Amortization of intangible and other assets
|
5,450
|
|
|
4,633
|
|
||
Provision for doubtful accounts
|
220
|
|
|
(29
|
)
|
||
Provision for inventory reserves
|
(6
|
)
|
|
533
|
|
||
Share-based and other executive compensation
|
3,329
|
|
|
3,837
|
|
||
Acquisition-related non-cash gain
|
—
|
|
|
(376
|
)
|
||
Net (gain) loss on sales of assets
|
(89
|
)
|
|
30
|
|
||
Net pension benefit
|
(974
|
)
|
|
(843
|
)
|
||
Impairment of assets
|
—
|
|
|
1,096
|
|
||
Net deferred taxes
|
(430
|
)
|
|
(2,076
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
8,673
|
|
|
2,912
|
|
||
Inventories, net
|
(1,262
|
)
|
|
(2,099
|
)
|
||
Prepaid expenses and other current assets
|
375
|
|
|
(639
|
)
|
||
Other assets
|
9
|
|
|
(158
|
)
|
||
Accounts payable and other current liabilities
|
10,343
|
|
|
3,988
|
|
||
Retirement benefits payable and other liabilities
|
(6,357
|
)
|
|
3,094
|
|
||
Net cash provided by operating activities from continuing operations
|
47,050
|
|
|
33,747
|
|
||
Net cash used in operating activities from discontinued operations
|
(8,291
|
)
|
|
(1,074
|
)
|
||
Net cash provided by operating activities
|
38,759
|
|
|
32,673
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(4,263
|
)
|
|
(5,602
|
)
|
||
Proceeds from sale of assets held for investment
|
546
|
|
|
97
|
|
||
Proceeds from sale of assets
|
22
|
|
|
193
|
|
||
Net change in bank time deposits
|
1,840
|
|
|
11,442
|
|
||
Net cash (used in) provided by investing activities from continuing operations
|
(1,855
|
)
|
|
6,130
|
|
||
Net cash used in investing activities from discontinued operations
|
(825
|
)
|
|
(1,362
|
)
|
||
Net cash (used in) provided by investing activities
|
(2,680
|
)
|
|
4,768
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of lines of credit
|
(33,046
|
)
|
|
(42,835
|
)
|
||
Payment of deferred loan costs
|
(422
|
)
|
|
—
|
|
||
Purchase of treasury shares
|
(997
|
)
|
|
(972
|
)
|
||
Proceeds from stock option activity
|
328
|
|
|
2,169
|
|
||
Net cash used in financing activities
|
(34,137
|
)
|
|
(41,638
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,454
|
|
|
(1,376
|
)
|
||
Net change in cash and cash equivalents
|
3,396
|
|
|
(5,573
|
)
|
||
Cash and cash equivalents, beginning of period
|
23,146
|
|
|
25,987
|
|
||
Cash and cash equivalents, end of period
|
$
|
26,542
|
|
|
$
|
20,414
|
|
|
|
|
|
1.
|
ORGANIZATION AND OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
|
|
Severance/
Retention
|
|
Asset Write-
down
|
|
Other (a)
|
|
Total
|
||||||||
Nine Months Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
163
|
|
|
$
|
232
|
|
Selling, general and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
163
|
|
|
$
|
232
|
|
|
|
|
|
|
|
|
|
||||||||
Inception to Date Restructuring Charges
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
$
|
291
|
|
|
$
|
69
|
|
|
$
|
496
|
|
|
$
|
856
|
|
Selling, general and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
291
|
|
|
$
|
69
|
|
|
$
|
496
|
|
|
$
|
856
|
|
(a)
|
Other consisted of moving costs related to relocation of manufacturing activities, consulting fees for production and efficiency support, recruiting fees to increase staff in locations where production is being relocated and duplicate and inefficient labor incurred during the transition and relocation. The charges were expensed as incurred.
|
2.
|
ACQUISITION
|
|
Three Months Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||||
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Revenues, net
|
$
|
4,616
|
|
$
|
10,239
|
|
|
$
|
19,289
|
|
$
|
28,700
|
|
Impairment expense
|
46,007
|
|
—
|
|
|
46,007
|
|
2,800
|
|
||||
Loss from discontinued operations before income taxes
|
(52,029
|
)
|
(1,750
|
)
|
|
(57,685
|
)
|
(8,959
|
)
|
||||
Income tax benefit
|
15,357
|
|
296
|
|
|
17,392
|
|
2,825
|
|
||||
Loss from discontinued operations, net
|
$
|
(36,672
|
)
|
$
|
(1,454
|
)
|
|
$
|
(40,293
|
)
|
$
|
(6,134
|
)
|
|
December 31, 2017
|
|
March 31, 2017
|
||||
Assets
|
|
|
|
||||
Accounts receivable, net
|
$
|
2,808
|
|
|
$
|
3,951
|
|
Inventories, net
|
—
|
|
|
6,736
|
|
||
Prepaid expenses and other current assets
(
1
)
|
215
|
|
|
4,094
|
|
||
Total current assets
|
$
|
3,023
|
|
|
$
|
14,781
|
|
Property, plant and equipment, net
|
—
|
|
|
7,085
|
|
||
Intangibles assets, net
|
—
|
|
|
31,298
|
|
||
Deferred tax assets
(
1
)
|
—
|
|
|
426
|
|
||
Total non-current assets
|
—
|
|
|
38,809
|
|
||
Total assets
|
$
|
3,023
|
|
|
$
|
53,590
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Accounts payable, accrued and other expenses
|
$
|
3,613
|
|
|
$
|
5,184
|
|
4.
|
INVENTORIES
|
|
December 31, 2017
|
|
March 31, 2017
|
||||
Raw materials and supplies
|
$
|
22,329
|
|
|
$
|
18,960
|
|
Work in process
|
3,986
|
|
|
6,271
|
|
||
Finished goods
|
26,112
|
|
|
25,535
|
|
||
Total inventories
|
52,427
|
|
|
50,766
|
|
||
Less: LIFO reserve
|
(5,295
|
)
|
|
(5,295
|
)
|
||
Less: Obsolescence reserve
|
(1,645
|
)
|
|
(1,806
|
)
|
||
Inventories, net
|
$
|
45,487
|
|
|
$
|
43,665
|
|
5.
|
INTANGIBLE ASSETS
|
|
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||||||||
|
Wtd Avg Life
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
||||||||
|
(Years)
|
|
|
|
|
|
|
|
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Patents
|
12
|
|
$
|
9,636
|
|
|
$
|
(5,459
|
)
|
|
$
|
9,576
|
|
|
$
|
(4,779
|
)
|
Customer lists and amortized trademarks
|
12
|
|
58,168
|
|
|
(23,478
|
)
|
|
57,421
|
|
|
(19,523
|
)
|
||||
Non-compete agreements
|
5
|
|
1,731
|
|
|
(681
|
)
|
|
1,469
|
|
|
(194
|
)
|
||||
Other
|
12
|
|
5,019
|
|
|
(1,347
|
)
|
|
4,849
|
|
|
(828
|
)
|
||||
|
|
|
$
|
74,554
|
|
|
$
|
(30,965
|
)
|
|
$
|
73,315
|
|
|
$
|
(25,324
|
)
|
Trade names and trademarks not being amortized
|
|
|
$
|
11,358
|
|
|
$
|
—
|
|
|
$
|
11,321
|
|
|
$
|
—
|
|
6.
|
SPIN-OFF EXECUTIVE COMPENSATION
|
|
Three Months Ended December 31, 2017
|
||||||||||
|
Stock Options
|
|
Restricted Shares
|
|
Total
|
||||||
Share-based compensation expense
|
$
|
54
|
|
|
$
|
1,067
|
|
|
$
|
1,121
|
|
Related income tax benefit
|
(16
|
)
|
|
(375
|
)
|
|
(391
|
)
|
|||
Net share-based compensation expense
|
$
|
38
|
|
|
$
|
692
|
|
|
$
|
730
|
|
|
Three Months Ended December 31, 2016
|
||||||||||
|
Stock Options
|
|
Restricted Shares
|
|
Total
|
||||||
Share-based compensation expense
|
$
|
54
|
|
|
$
|
624
|
|
|
$
|
678
|
|
Related income tax benefit
|
(19
|
)
|
|
(218
|
)
|
|
(237
|
)
|
|||
Net share-based compensation expense
|
$
|
35
|
|
|
$
|
406
|
|
|
$
|
441
|
|
|
Nine Months Ended December 31, 2017
|
||||||||||
|
Stock Options
|
|
Restricted Shares
|
|
Total
|
||||||
Share-based compensation expense
|
$
|
162
|
|
|
$
|
2,651
|
|
|
$
|
2,813
|
|
Related income tax benefit
|
(49
|
)
|
|
(937
|
)
|
|
(986
|
)
|
|||
Net share-based compensation expense
|
$
|
113
|
|
|
$
|
1,714
|
|
|
$
|
1,827
|
|
|
Nine Months Ended December 31, 2016
|
||||||||||
|
Stock Options
|
|
Restricted Shares
|
|
Total
|
||||||
Share-based compensation expense
|
$
|
419
|
|
|
$
|
1,723
|
|
|
$
|
2,142
|
|
Related income tax benefit
|
(147
|
)
|
|
(603
|
)
|
|
(750
|
)
|
|||
Net share-based compensation expense
|
$
|
272
|
|
|
$
|
1,120
|
|
|
$
|
1,392
|
|
|
Nine Months Ended December 31, 2017
|
|||||||||
|
Number of
Shares
|
|
Weighted Average
Exercise Price
|
|
Remaining
Contractual Life
|
|
Aggregate
Intrinsic Value
|
|||
|
|
|
|
|
(Years)
|
|
(in millions)
|
|||
Outstanding at April 1, 2017
|
251,635
|
|
|
$
|
24.44
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
Exercised
|
(19,918
|
)
|
|
16.51
|
|
|
|
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
|
|
|
|
Outstanding at December 31, 2017
|
231,717
|
|
|
$
|
25.12
|
|
|
6.5
|
|
$4.8
|
Exercisable at December 31, 2017
|
213,791
|
|
|
$
|
25.17
|
|
|
6.5
|
|
$4.4
|
|
Nine Months Ended December 31, 2017
|
|||||
|
Number of Shares
|
|
Weighted Average Grant
Date Fair Value
|
|||
Outstanding at April 1, 2017
|
209,491
|
|
|
$
|
26.53
|
|
Granted
|
121,902
|
|
|
46.23
|
|
|
Vested
|
(79,107
|
)
|
|
22.77
|
|
|
Canceled
|
(4,415
|
)
|
|
33.26
|
|
|
Outstanding at December 31, 2017
|
247,871
|
|
|
$
|
37.30
|
|
8.
|
LONG-TERM DEBT
|
|
December 31, 2017
|
|
March 31, 2017
|
||||
Revolving Credit Facility, interest rate of 2.82% and 2.23%, respectively
|
$
|
28,000
|
|
|
$
|
60,625
|
|
Whitmore term loan, interest rate of 3.57% and 2.98%, respectively
|
12,161
|
|
|
12,582
|
|
||
Total debt
|
40,161
|
|
|
73,207
|
|
||
Less: Current portion
|
(561
|
)
|
|
(561
|
)
|
||
Long-term debt
|
$
|
39,600
|
|
|
$
|
72,646
|
|
9.
|
DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING
|
|
December 31, 2017
|
|
March 31, 2017
|
||||
Current derivative assets
|
$
|
57
|
|
|
$
|
—
|
|
Current derivative liabilities
|
134
|
|
|
199
|
|
||
Non-current derivative liabilities
|
431
|
|
|
420
|
|
10.
|
EARNINGS PER SHARE
|
|
Three Months Ended
December 31, |
|
Nine Months Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income from continuing operations
|
$
|
2,635
|
|
|
$
|
1,859
|
|
|
$
|
22,072
|
|
|
$
|
14,477
|
|
Loss from discontinued operations
|
(36,672
|
)
|
|
(1,454
|
)
|
|
(40,293
|
)
|
|
(6,134
|
)
|
||||
Net (loss) income
|
$
|
(34,037
|
)
|
|
$
|
405
|
|
|
$
|
(18,221
|
)
|
|
$
|
8,343
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares:
|
|
|
|
|
|
|
|
||||||||
Common stock
|
15,694
|
|
|
15,586
|
|
|
15,659
|
|
|
15,529
|
|
||||
Participating securities
|
—
|
|
|
246
|
|
|
—
|
|
|
219
|
|
||||
Denominator for basic earnings per common share
|
15,694
|
|
|
15,832
|
|
|
15,659
|
|
|
15,748
|
|
||||
Potentially dilutive securities
|
—
|
|
|
62
|
|
|
—
|
|
|
64
|
|
||||
Denominator for diluted earnings per common share
|
15,694
|
|
|
15,894
|
|
|
15,659
|
|
|
15,812
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.12
|
|
|
$
|
1.41
|
|
|
$
|
0.92
|
|
Discontinued operations
|
(2.34
|
)
|
|
(0.09
|
)
|
|
(2.57
|
)
|
|
(0.39
|
)
|
||||
Net (loss) income
|
$
|
(2.17
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.16
|
)
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.12
|
|
|
$
|
1.41
|
|
|
$
|
0.92
|
|
Discontinued operations
|
(2.34
|
)
|
|
(0.09
|
)
|
|
(2.57
|
)
|
|
(0.39
|
)
|
||||
Net (loss) income
|
$
|
(2.17
|
)
|
|
$
|
0.03
|
|
|
$
|
(1.16
|
)
|
|
$
|
0.53
|
|
11.
|
SHAREHOLDERS' EQUITY
|
12.
|
FAIR VALUE MEASUREMENTS
|
|
Nine Months Ended
December 31, 2017 |
|
||
|
SureSeal
|
|
||
Balance at April 1, 2017
|
$
|
6,390
|
|
|
Change in estimate
|
110
|
|
|
|
Payment of contingent fee
|
(6,500
|
)
|
|
|
Balance at December 31, 2017
|
$
|
—
|
|
|
|
Carrying Values before Impairment
|
|
Estimated Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Intangible assets
|
$
|
30,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Property, plant and equipment
|
8,064
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Inventory
|
6,409
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
426
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
13.
|
RETIREMENT PLANS
|
|
Three Months Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Service cost, benefits earned during the period
|
$
|
14
|
|
|
$
|
—
|
|
Interest cost on projected benefit obligation
|
628
|
|
|
616
|
|
||
Expected return on assets
|
(980
|
)
|
|
(902
|
)
|
||
Amortization of net actuarial loss
|
7
|
|
|
—
|
|
||
Net pension benefit
|
$
|
(331
|
)
|
|
$
|
(286
|
)
|
|
Nine Months Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Service cost, benefits earned during the period
|
$
|
41
|
|
|
$
|
—
|
|
Interest cost on projected benefit obligation
|
1,883
|
|
|
1,850
|
|
||
Expected return on assets
|
(2,941
|
)
|
|
(2,706
|
)
|
||
Amortization of net actuarial loss
|
21
|
|
|
—
|
|
||
Net pension benefit
|
$
|
(996
|
)
|
|
$
|
(856
|
)
|
14.
|
CONTINGENCIES
|
15.
|
INCOME TAXES
|
16.
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
Three Months Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
Currency translation adjustments:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(4,495
|
)
|
|
$
|
(7,180
|
)
|
Adjustments for foreign currency translation
|
(134
|
)
|
|
(1,534
|
)
|
||
Balance at end of period
|
$
|
(4,629
|
)
|
|
$
|
(8,714
|
)
|
Interest rate swaps:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(436
|
)
|
|
$
|
(1,288
|
)
|
Unrealized gains (losses), net of taxes of $(40) and $(375), respectively (a)
|
74
|
|
|
696
|
|
||
Reclassification of losses included in interest expense, net of taxes of $(17) and $(45), respectively
|
32
|
|
|
83
|
|
||
Other comprehensive income
|
106
|
|
|
779
|
|
||
Balance at end of period
|
$
|
(330
|
)
|
|
$
|
(509
|
)
|
Defined benefit plans:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(1,927
|
)
|
|
$
|
(1,221
|
)
|
Amortization of net loss, net of taxes of $(5) and $(1), respectively
|
9
|
|
|
2
|
|
||
Balance at end of period
|
$
|
(1,918
|
)
|
|
$
|
(1,219
|
)
|
|
Nine Months Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
Currency translation adjustments:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(8,132
|
)
|
|
$
|
(5,248
|
)
|
Adjustments for foreign currency translation
|
3,503
|
|
|
(3,466
|
)
|
||
Balance at end of period
|
$
|
(4,629
|
)
|
|
$
|
(8,714
|
)
|
Interest rate swaps:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(402
|
)
|
|
$
|
(1,221
|
)
|
Unrealized gains (losses), net of taxes of $23 and $(239), respectively (a)
|
(43
|
)
|
|
444
|
|
||
Reclassification of losses included in interest expense, net of taxes of $(61) and ($144), respectively
|
115
|
|
|
268
|
|
||
Other comprehensive loss
|
72
|
|
|
712
|
|
||
Balance at end of period
|
$
|
(330
|
)
|
|
$
|
(509
|
)
|
Defined benefit plans:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(1,901
|
)
|
|
$
|
(1,229
|
)
|
Amortization of net (gain) loss, net of taxes of $9 and $(5), respectively
|
(17
|
)
|
|
10
|
|
||
Balance at end of period
|
$
|
(1,918
|
)
|
|
$
|
(1,219
|
)
|
(a)
|
Unrealized losses are reclassified to earnings as underlying cash interest payments are made. We expect to recognize a loss of
$0.1 million
, net of deferred taxes, over the next twelve months related to designated cash flow hedges based on their fair values at
December 31, 2017
.
|
17.
|
SEGMENTS
|
•
|
Industrial Products
includes specialty mechanical products, fire and smoke protection products, architecturally-specified building products and storage, filtration and application equipment for use with our specialty chemicals and other products for general industrial application.
|
•
|
Specialty Chemicals
is comprised of pipe thread sealants, firestopping sealants and caulks and adhesives/solvent cements, lubricants and greases, drilling compounds, anti-seize compounds, chemical formulations and degreasers and cleaners.
|
(in thousands)
|
Industrial
Products
|
|
Specialty Chemicals
|
|
Subtotal –
Reportable
Segments
|
|
Eliminations and
Other
|
|
Total
|
||||||||||
Revenues, net
|
$
|
37,906
|
|
|
$
|
31,129
|
|
|
$
|
69,035
|
|
|
$
|
1
|
|
|
$
|
69,036
|
|
Operating income
|
7,299
|
|
|
4,048
|
|
|
11,347
|
|
|
(3,068
|
)
|
|
8,279
|
|
(in thousands)
|
Industrial
Products
|
|
Specialty Chemicals
|
|
Subtotal –
Reportable
Segments
|
|
Eliminations and
Other
|
|
Total
|
||||||||||
Revenues, net
|
$
|
31,715
|
|
|
$
|
33,498
|
|
|
$
|
65,213
|
|
|
$
|
44
|
|
|
$
|
65,257
|
|
Operating income
|
3,978
|
|
|
3,099
|
|
|
7,077
|
|
|
(1,951
|
)
|
|
5,126
|
|
(in thousands)
|
Industrial
Products
|
|
Specialty Chemicals
|
|
Subtotal –
Reportable
Segments
|
|
Eliminations and
Other
|
|
Total
|
||||||||||
Revenues, net
|
$
|
139,654
|
|
|
$
|
103,101
|
|
|
$
|
242,755
|
|
|
$
|
2
|
|
|
$
|
242,757
|
|
Operating income
|
33,211
|
|
|
15,116
|
|
|
48,327
|
|
|
(8,147
|
)
|
|
40,180
|
|
(in thousands)
|
Industrial
Products
|
|
Specialty Chemicals
|
|
Subtotal –
Reportable
Segments
|
|
Eliminations and
Other
|
|
Total
|
||||||||||
Revenues, net
|
$
|
117,048
|
|
|
$
|
93,898
|
|
|
$
|
210,946
|
|
|
$
|
89
|
|
|
$
|
211,035
|
|
Operating income
|
24,482
|
|
|
12,709
|
|
|
37,191
|
|
|
(10,462
|
)
|
|
26,729
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended December 31,
|
||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
||||
Revenues, net
|
|
$
|
69,036
|
|
|
$
|
65,257
|
|
|
|
Nine Months Ended December 31,
|
||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
||||
Revenues, net
|
|
$
|
242,757
|
|
|
$
|
211,035
|
|
|
|
Three Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Gross profit
|
|
$
|
30,202
|
|
|
$
|
27,369
|
|
Gross profit margin
|
|
43.7
|
%
|
|
41.9
|
%
|
|
|
Nine Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Gross profit
|
|
$
|
111,725
|
|
|
$
|
98,448
|
|
Gross profit margin
|
|
46.0
|
%
|
|
46.7
|
%
|
|
|
Three Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Operating and impairment expenses
|
|
$
|
21,923
|
|
|
$
|
22,243
|
|
Operating expenses as a % of sales
|
|
31.8
|
%
|
|
34.1
|
%
|
|
|
Nine Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Operating and impairment expenses
|
|
$
|
71,545
|
|
|
$
|
71,719
|
|
Operating expenses as a % of sales
|
|
29.5
|
%
|
|
34.0
|
%
|
|
|
Three Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Operating income
|
|
$
|
8,279
|
|
|
$
|
5,126
|
|
Operating margin
|
|
12.0
|
%
|
|
7.9
|
%
|
|
|
Nine Months Ended December 31,
|
||||||
(amounts in thousands except for percentages)
|
|
2017
|
|
2016
|
||||
Operating income
|
|
$
|
40,180
|
|
|
$
|
26,729
|
|
Operating margin
|
|
16.6
|
%
|
|
12.7
|
%
|
|
Nine Months Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Net cash provided by operating activities from continuing operations
|
$
|
47,050
|
|
|
$
|
33,747
|
|
Net cash (used in) provided by investing activities from continuing operations
|
(1,855
|
)
|
|
6,130
|
|
||
Net cash used in financing activities
|
(34,137
|
)
|
|
(41,638
|
)
|
•
|
our business strategy;
|
•
|
future levels of revenues, operating margins, income from operations, net income or earnings per share;
|
•
|
anticipated levels of demand for our products and services;
|
•
|
future levels of research and development, capital, environmental or maintenance expenditures;
|
•
|
our beliefs regarding the timing and effects on our business of health and safety, tax, environmental or other legislation, rules and regulations;
|
•
|
the success or timing of completion of ongoing or anticipated capital, restructuring or maintenance projects;
|
•
|
expectations regarding the acquisition or divestiture of assets and businesses;
|
•
|
our ability to obtain appropriate insurance and indemnities;
|
•
|
the potential effects of judicial or other proceedings, including tax audits, on our business, financial condition, results of operations and cash flows;
|
•
|
the anticipated effects of actions of third parties such as competitors, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation; and
|
•
|
the effective date and expected impact of accounting pronouncements.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
|
|
Maximum Number
of Shares
(or Approximate
Dollar Value)
That May Yet Be
Purchased
Under the Program (a)
|
||||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
Oct 1 - 31
|
|
13,601
|
|
(b)
|
$
|
44.40
|
|
|
1,221
|
|
|
$
|
34.9
|
|
November 1-30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.9
|
|
||
December 1-31
|
|
7,989
|
|
(c)
|
45.95
|
|
|
—
|
|
|
34.9
|
|
||
Total
|
|
21,590
|
|
|
|
|
|
1,221
|
|
|
|
(a)
|
On November 11, 2016, we announced that our Board of Directors authorized us to repurchase shares of our common stock up to an aggregate market value of
$35.0 million
during a two-year period. The program may be limited or terminated at any time. As of
December 31, 2017
,
1,221
shares have been repurchased for an aggregate of
$0.1 million
.
|
(b)
|
Includes
12,380
shares tendered by employees to satisfy minimum tax withholding amounts for restricted share vesting at an average price per share of
$44.35
.
|
(c)
|
Represents
7,989
shares tendered by employees to satisfy minimum tax withholding amounts for restricted share vesting at an average price per share of
$45.95
.
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
10.1+
|
|
|
10.2+
|
|
|
10.3+
|
|
|
31.1+
|
|
|
|
|
|
31.2+
|
|
|
|
|
|
32.1++
|
|
|
|
|
|
32.2++
|
|
|
|
|
|
EX-101+
|
|
INSTANCE DOCUMENT
|
|
|
|
EX-101+
|
|
SCHEMA DOCUMENT
|
|
|
|
EX-101+
|
|
CALCULATION LINKBASE DOCUMENT
|
|
|
|
EX-101+
|
|
LABELS LINKBASE DOCUMENT
|
|
|
|
EX-101+
|
|
PRESENTATION LINKBASE DOCUMENT
|
|
|
|
EX-101+
|
|
DEFINITION LINKBASE DOCUMENT
|
|
|
|
|
|
CSW INDUSTRIALS, INC.
|
|
|
|
Date: February 8, 2018
|
|
/s/ Joseph B. Armes
|
|
|
Joseph B. Armes
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: February 8, 2018
|
|
/s/ Greggory W. Branning
|
|
|
Greggory W. Branning
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
(a)
|
The Restricted Shares granted hereby shall vest in three (3) equal annual installments beginning on the first annual anniversary of the Date of Grant (i.e., ), on condition that the Participant remains an employee of the Company, or one of its Subsidiaries or Affiliates, on the applicable anniversary date that each installment vests. Subject to Section 2(b) below, all unvested Restricted Shares will be forfeited and cancelled upon the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, on the date of such termination.
|
(b)
|
Notwithstanding anything contained in this Award Agreement to the contrary, any unvested Restricted Shares granted pursuant to this Award Agreement shall automatically vest in full upon the occurrence of any of the following events: (i) a Change in Control, (ii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her Disability, or (iii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her death. For purposes of this Award Agreement, “Disability” means the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
|
(a)
|
The Restricted Shares granted hereby shall vest on the first annual anniversary of the Date of Grant (i.e., ), on condition that the Participant remains a member of the Board of Directors of the Company through the vesting date. Subject to Section 2(b) below, all unvested Restricted Shares will be forfeited and cancelled upon the Participant’s termination as a member of the Board of Directors of the Company on the date of such termination.
|
(b)
|
Notwithstanding anything contained in this Award Agreement to the contrary, any unvested Restricted Shares granted pursuant to this Award Agreement shall automatically vest in full upon the occurrence of any of the following events: (i) a Change in Control, (ii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her Disability, or (iii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her death. For purposes of this Award Agreement, “Disability” means the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
|
(a)
|
The Restricted Stock Units granted hereby shall vest in three (3) equal annual installments beginning on the first annual anniversary of the Date of Grant (i.e., ), on condition that the Participant remains an employee of the Company, or one of its Subsidiaries or Affiliates, on the applicable anniversary date that each installment vests. Subject to Section 2(b) below, all unvested Restricted Stock Units will be forfeited and cancelled upon the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, on the date of such termination.
|
(b)
|
Notwithstanding anything contained in this Award Agreement to the contrary, any unvested Restricted Stock Units granted pursuant to this Award Agreement shall automatically vest in full upon the occurrence of any of the following events: (i) a Change in Control, (ii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her Disability, or (iii) the Participant’s termination of service from the Company and all Subsidiaries and Affiliates, as applicable, due to his or her death. For purposes of this Award Agreement, “Disability” means the Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
December 31, 2017
of CSW Industrials, Inc.;
|
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 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 purpose 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 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.
|
/s/ Joseph B. Armes
|
Joseph B. Armes
|
Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
December 31, 2017
of CSW Industrials, Inc.;
|
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 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 purpose 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 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.
|
/s/ Greggory W. Branning
|
Greggory W. Branning
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ Joseph B. Armes
|
Joseph B. Armes
|
Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ Greggory W. Branning
|
Greggory W. Branning
|
Chief Financial Officer
|
(Principal Financial Officer)
|