DSG(DSGR) - 2020 Q4 - Annual Report

Financial Performance - Revenue for 2020 was $351.6 million, a decrease of 5.2$370.8 million in 2019[147] - Gross profit for 2020 was $186.5 million, representing 53.1$20.6 million in 2020 from $9.1 million in 2019, reflecting improved cost control measures[151] - Net income for 2020 was$15.1 million, a significant increase from $7.2 million in 2019[147] - Adjusted non-GAAP operating income decreased to$27.4 million in 2020 from $28.6 million in 2019, impacted by lower sales[151] - Consolidated revenue decreased by 5.2$351.6 million in 2020 from $370.8 million in 2019, primarily due to the COVID-19 pandemic and lower sales to oil and gas customers[154] - Gross profit decreased to$186.5 million in 2020 from $197.4 million in 2019, with a gross profit margin of 53.1$1.390 million in 2020 compared to $1.471 million in 2019, despite having one more selling day in 2020[154] - Basic income per share rose to$1.68 in 2020 from $0.81 in 2019, marking a substantial increase of 107.4$20.785 million for the year ended December 31, 2020, compared to $9.674 million in 2019[275] Cash Flow and Liquidity - The company had$28.4 million in unrestricted cash and $66.0 million in borrowing capacity as of December 31, 2020[137] - Cash provided by operating activities was$32.5 million in 2020, significantly higher than $9.2 million in 2019, reflecting stronger operating results[164] - Total cash, cash equivalents, and restricted cash at the end of 2020 amounted to$29,391,000, up from $6,297,000 at the end of 2019[209] - As of December 31, 2020, the company had no borrowings under its Credit Agreement and had borrowing availability of$66.0 million[167] - The company continues to monitor its liquidity and cash flows while managing operating expenses in response to COVID-19[138] Acquisitions - The acquisition of Partsmaster in August 2020 cost $35.3 million, with$2.3 million paid at acquisition and $33.0 million due in May 2021[143] - The Company completed the acquisition of Partsmaster on August 31, 2020, for$35.3 million in cash, resulting in $7.7 million of intangible assets[193] - Partsmaster contributed$22.6 million in sales and $13.2 million in gross profit since its inclusion on August 31, 2020[154][155] - The Company acquired Partsmaster for a purchase price of$35.3 million in cash, with $2.3 million paid at closing and the remaining$33.0 million due in May 2021[247][248] Expenses and Cost Management - Selling expenses decreased to $76.8 million in 2020 from$85.3 million in 2019, representing 21.8% of sales compared to 23.0% in 2019[157] - General and administrative expenses decreased to $89.2 million in 2020 from$102.9 million in 2019, primarily due to a reduction in stock-based compensation and other cost control measures[158] - The Company recorded severance costs of $2.077 million in 2020, resulting in an ending balance of$1.251 million in the reserve for severance[303] Assets and Liabilities - Total current assets increased to $143.1 million as of December 31, 2020, compared to$106.4 million as of December 31, 2019[199] - Accounts receivable increased to $44.5 million in 2020, up from$38.8 million in 2019, reflecting a growth of approximately 14.3%[199] - Total liabilities increased to $133.9 million in 2020 from$96.4 million in 2019, indicating a rise of approximately 38.9%[199] - The Company has a current liability for accrued acquisition liability of $32.7 million as of December 31, 2020[199] Goodwill and Intangible Assets - The Company recorded a goodwill impairment charge of$1.9 million related to the Screw Products reporting unit[159] - The Company's consolidated goodwill balance as of December 31, 2020, was $35.2 million, with the Bolt reporting unit's goodwill at$13.8 million[190] - Goodwill increased from $20.9 million in 2019 to$35.2 million in 2020, reflecting the cost of business acquisitions exceeding the fair value of identifiable net assets[226] - The gross carrying amount of intangible assets was $23.638 million as of December 31, 2020, with a net carrying value of$18.503 million[273] Taxation - Total income tax expense for the year ended December 31, 2020, was $5.672 million, compared to$2.453 million for the year ended December 31, 2019, representing an increase of 131.0%[277] - The effective income tax rate for 2020 was 27.3%, up from 25.4% in 2019[277] - The Company recorded $35.2 million of tax-deductible goodwill from recent acquisitions, which may provide future tax benefits[281] - As of December 31, 2020, the company had$7.2 million of U.S. federal net operating loss carryforwards, expiring beginning in 2030, and $7.7 million of state net operating loss carryforwards, expiring through 2034[277] Stock and Compensation - The Company repurchased 47,504 shares of its common stock in 2020 at a cost of$3.3 million[241][242] - The Company contributed $2.9 million to its 401(k) plan in 2020, down from$3.2 million in 2019[307] - As of December 31, 2020, the outstanding Stock Performance Rights (SPRs) were 581,000, with an intrinsic value of $14.6 million[320] - Compensation expenses related to Restricted Stock Awards (RSAs) were$1.2 million in 2020, down from $1.3 million in 2019[322]