ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our historical consolidated financial statements and notes, as well as the selected historical consolidated financial data that are included in our Annual Report filed on Form 10-K for the year ended
December 31, 2015
.
Unless stated otherwise, all currency amounts are presented in thousands of U.S. dollars (000s).
Overview
Our business is organized into two segments: NobelClad and DynaEnergetics.
NobelClad
NobelClad manufactures clad metal plates and transition joints, which are made from clad plates, for sale to customers that fabricate industrial equipment for various industries, including oil and gas, petrochemicals, alternative energy, hydrometallurgy, aluminum production, shipbuilding, power generation, industrial refrigeration, and similar industries. While a large portion of the demand for our clad metal products is driven by new plant construction and large plant expansion projects, maintenance and retrofit projects at existing chemical processing, petrochemical processing, oil refining, and aluminum smelting facilities also account for a significant portion of total demand. These industries tend to be cyclical in nature and timing of new order inflow remains difficult to predict; however, we believe that our NobelClad segment is well-positioned in the marketplace.
Cost of products sold for NobelClad includes the cost of metals and alloys used to manufacture clad metal plates, the cost of explosives, employee compensation and benefits, freight, outside processing costs, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.
We use backlog as a primary means to measure the immediate outlook for our NobelClad business. We define “backlog” at any given point in time as all firm, unfulfilled purchase orders and commitments at that time. Generally speaking, we expect to fill most backlog orders within the following 12 months. From experience, most firm purchase orders and commitments are realized. Our NobelClad backlog decreased to
$40,182
at
March 31, 2016
from $41,832 at
December 31, 2015
.
DynaEnergetics
DynaEnergetics manufactures shaped charges, detonators and detonating cord, and bidirectional boosters and perforating guns for sale to customers that perform the perforation of oil and gas wells and from sales of seismic products to customers involved in oil and gas exploration activities.
Cost of products sold for DynaEnergetics includes the cost of metals, explosives and other raw materials used to manufacture shaped charges, detonating products and perforating guns as well as employee compensation and benefits, depreciation of manufacturing facilities and equipment, manufacturing supplies and other manufacturing overhead expenses.
Results for the First Three Months of 2016
First quarter sales were impacted by a strong performance by NobelClad’s Mt. Braddock, Pennsylvania operation. Late in the quarter, the production team took advantage of raw material availability and accelerated work on several orders to address customer demand.
Despite deteriorating demand in DynaEnergetics’ end markets, the business continues to outperform its sector by selling high-value products such as the DynaSelect intrinsically safe integrated switch-detonator and the DPEX line of deep-penetrating shaped charges. Sales volumes of DynaSelect were at record levels during the first quarter despite a more than 30% sequential drop in the U.S. rig count. Industry conditions have slowed the roll out and adoption of the factory assembled DynaStage perforating system.
Given the steep decline in the U.S. rig count and sharply lower capital spending budgets by exploration and production companies, the second and third quarters could be particularly challenging for businesses in the well completion sector, including DynaEnergetics.
Consolidated Results of Operations
Three Months Ended
March 31, 2016
Compared With
Three Months Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
Net sales
|
|
$
|
40,532
|
|
|
$
|
40,819
|
|
|
$
|
(287
|
)
|
|
(1
|
)%
|
Gross profit
|
|
10,385
|
|
|
10,703
|
|
|
(318
|
)
|
|
(3
|
)%
|
Gross profit margin
|
|
25.6
|
%
|
|
26.2
|
%
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
5,448
|
|
|
6,038
|
|
|
(590
|
)
|
|
(10
|
)%
|
% of net sales
|
|
13.4
|
%
|
|
14.8
|
%
|
|
|
|
|
Selling and distribution expenses
|
|
4,023
|
|
|
4,878
|
|
|
(855
|
)
|
|
(18
|
)%
|
% of net sales
|
|
9.9
|
%
|
|
12.0
|
%
|
|
|
|
|
Amortization of purchased intangible assets
|
|
999
|
|
|
1,017
|
|
|
(18
|
)
|
|
(2
|
)%
|
% of net sales
|
|
2.5
|
%
|
|
2.5
|
%
|
|
|
|
|
Restructuring charges
|
|
—
|
|
|
1,996
|
|
|
(1,996
|
)
|
|
(100
|
)%
|
Operating income (loss)
|
|
(85
|
)
|
|
(3,226
|
)
|
|
3,141
|
|
|
(97
|
)%
|
Other income (expense), net
|
|
32
|
|
|
1,124
|
|
|
(1,092
|
)
|
|
(97
|
)%
|
Interest income (expense), net
|
|
(163
|
)
|
|
(179
|
)
|
|
16
|
|
|
(9
|
)%
|
Income tax provision (benefit)
|
|
197
|
|
|
96
|
|
|
101
|
|
|
105
|
%
|
Net income (loss)
|
|
(413
|
)
|
|
(2,377
|
)
|
|
1,964
|
|
|
(83
|
)%
|
Adjusted EBITDA
|
|
$
|
3,014
|
|
|
$
|
2,166
|
|
|
$
|
848
|
|
|
39
|
%
|
Net sales
The
decrease
compared with
2015
was due to an
8%
decrease
in DynaEnergetics partially offset by a
5%
increase
in NobelClad. The decline in DynaEnergetics was due to deteriorating demand in its end markets. NobelClad took advantage of raw material availability and accelerated shipments on several orders in the first quarter of 2016.
Gross profit
The
decrease
in gross profit and gross profit margin compared with
2015
was due to a lower proportion of sales in DynaEnergetics relative to NobelClad and unfavorable project mix in NobelClad partially offset by favorable product mix in DynaEnergetics.
General and administrative expenses
The
decrease
compared with
2015
primarily was due to a reduction in salaries and benefits, lower stock-based compensation and a decrease in spending on outside services. The first quarter of 2015 also included incremental audit and legal expenses of $450 associated with the restatement of previously-issued financial statements included in our 2014 Form 10-K.
Selling and distribution expenses
The
decrease
compared with
2015
principally was due to lower selling expenses in DynaEnergetics after closing distribution centers as part of its previously announced restructuring programs.
Restructuring charges
There were no restructuring charges in first quarter of
2016
.
In
2015
the components of restructuring charges were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and benefits
|
|
Asset impairments
|
|
Contract termination
|
|
Equipment moving and other exit costs
|
|
Total
|
NobelClad restructuring
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
54
|
|
DynaEnergetics restructuring
|
|
146
|
|
|
202
|
|
|
—
|
|
|
34
|
|
|
382
|
|
Corporate restructuring
|
|
1,560
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,560
|
|
Total restructuring charges
|
|
$
|
1,745
|
|
|
$
|
202
|
|
|
$
|
11
|
|
|
$
|
38
|
|
|
$
|
1,996
|
|
NobelClad's restructuring relates to shifting of the majority of clad metal plate production from facilities in Rivesaltes, France and Würgendorf, Germany to its manufacturing facility in Liebenscheid, Germany.
DynaEnergetics' restructuring relates to the consolidation of perforating gun manufacturing centers, the closure of distribution centers, and the reduction of administrative workforce at the corporate offices in Troisdorf, Germany.
Corporate restructuring relates to severance payments and the acceleration of unvested stock awards associated with
the elimination of certain positions in our corporate office.
Operating income
The
increase
compared with
2015
was due to an
increase
in DynaEnergetics operating income and lower corporate unallocated and stock-based compensation expenses partially offset by a decrease in NobelClad operating income. Corporate unallocated and stock-based compensation expenses are not allocated to our business segments.
Other income (expense), net
The
decrease
compared with
2015
primarily was due to a decline in unrealized foreign currency gains. Our subsidiaries frequently enter into inter-company and third party transactions that are denominated in currencies other than their functional currency. Changes in exchange rates with respect to these transactions will result in unrealized gains or losses if unsettled at end of the reporting period or realized foreign currency transaction gains or losses at settlement of the transaction.
Interest income (expense), net
The
increase
compared with
2015
was due to higher interest expense on a larger average outstanding debt balance as well as to the amortization of loan fees associated with the credit agreement entered into during February 2015 and amended in December 2016.
Income tax provision (benefit)
We recorded income tax expense of
$197
for the
first quarter
of
2016
compared to income tax expense of
$96
for the
first quarter
of
2015
. We currently are unable to recognize tax benefits associated with losses incurred in certain jurisdictions due to valuation allowances recorded against our deferred tax assets in those jurisdictions.
Net loss
As a result of the factors discussed above, net
loss
for
three months ended March 31, 2016
was
$413
(
$0.03
per diluted share) compared with a net
loss
of
$2,377
(
$0.17
per diluted share) for the same period in
2015
.
Adjusted EBITDA
The
increase
compared with 2015 primarily was due to the smaller net loss compared to 2015 as well higher other income from foreign currency transaction gains in
2015
.
Adjusted EBITDA is a non-GAAP (generally accepted accounting principles) measure that we believe provides an important indicator of our ongoing operating performance. Adjusted EBITDA, as well as income measures that exclude restructuring expenses (ex-items), are non-GAAP financial measures used by management to measure operating performance. Non-GAAP results are presented only as a supplement to the financial statements based on U.S. GAAP. The non-GAAP financial information is provided to enhance the reader's understanding of DMC’s financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided within the schedules that follow.
EBITDA is defined as net income plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation, restructuring and impairment charges and, when appropriate, other items that management does not utilize in assessing DMC’s operating performance (as further described in the following financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure.
Management uses these non-GAAP measures in its operational and financial decision-making, believing that it is useful to eliminate certain items in order to focus on what it deems to be a more reliable indicator of ongoing operating performance. As a result, internal management reports used during monthly operating reviews feature the adjusted EBITDA. In addition, certain management incentive awards are based, in part, on the amount of adjusted EBITDA achieved during the year. Management also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.
Because not all companies use identical calculations, DMC’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.
All of the items included in the reconciliation from net income to EBITDA and adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles and stock-based compensation) or (ii) items that management does not consider to be useful in assessing DMC’s operating performance (e.g., income taxes, restructuring and impairment charges). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect
DMC's ability to generate free cash flow or invest in its business. For example, by adjusting for depreciation and amortization in computing EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, management believes that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.
The following is a reconciliation of the most directly comparable GAAP measure to EBITDA and Adjusted EBIDTA.
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
2016
|
|
2015
|
Net loss attributable to DMC
|
|
$
|
(413
|
)
|
|
$
|
(2,377
|
)
|
Interest expense
|
|
164
|
|
|
182
|
|
Interest income
|
|
(1
|
)
|
|
(3
|
)
|
Provision for income taxes
|
|
197
|
|
|
96
|
|
Depreciation
|
|
1,514
|
|
|
1,655
|
|
Amortization of purchased intangible assets
|
|
999
|
|
|
1,017
|
|
EBITDA
|
|
2,460
|
|
|
570
|
|
Restructuring charges
|
|
—
|
|
|
1,996
|
|
Stock-based compensation
|
|
586
|
|
|
724
|
|
Other (income) expense, net
|
|
(32
|
)
|
|
(1,124
|
)
|
Adjusted EBITDA
|
|
$
|
3,014
|
|
|
$
|
2,166
|
|
Business Segment Financial Information
We primarily evaluate performance and allocate resources based on segment revenues, operating income and adjusted EBITDA as well as projected future performance. Segment operating income is defined as revenues less expenses identifiable to the segment. Segment operating income will reconcile to consolidated income before income taxes by deducting unallocated corporate expenses, including stock-based compensation, net other expense, net interest expense, income tax provision, and income from discontinued operations.
NobelClad
Three Months Ended
March 31, 2016
Compared With
Three Months Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
Net sales
|
|
$
|
25,052
|
|
|
$
|
23,944
|
|
|
$
|
1,108
|
|
|
5
|
%
|
Gross profit
|
|
3,967
|
|
|
4,550
|
|
|
(583
|
)
|
|
(13
|
)%
|
Gross profit margin
|
|
15.8
|
%
|
|
19.0
|
%
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
985
|
|
|
1,250
|
|
|
(265
|
)
|
|
(21
|
%)
|
Selling and distribution expenses
|
|
1,379
|
|
|
1,328
|
|
|
51
|
|
|
4
|
%
|
Amortization of purchased intangible assets
|
|
94
|
|
|
96
|
|
|
(2
|
)
|
|
(2
|
)%
|
Restructuring expenses
|
|
—
|
|
|
54
|
|
|
(54
|
)
|
|
(100
|
)%
|
Operating income (loss)
|
|
1,508
|
|
|
1,821
|
|
|
(313
|
)
|
|
(17
|
)%
|
Adjusted EBITDA
|
|
$
|
2,440
|
|
|
$
|
3,032
|
|
|
$
|
(592
|
)
|
|
(20
|
)%
|
Net sales
The
increase
compared with
2015
reflects the timing differences with respect to when orders enter our backlog and the subsequent shipment of these orders.
Gross profit
The
decrease
in gross profit and gross profit margin compared with
2015
primarily was due to less favorable margins on its mix of projects in the first quarter of 2016 when compared to the same period in 2015. The decline in gross profit partially was offset by higher sales and lower manufacturing overhead expenses from consolidation of manufacturing facilities in Europe.
General and administrative expenses
The
decrease
compared with
2015
primarily was attributable to lower salaries and wages.
Restructuring expense
Restructuring expenses in
2015
related to shifting the majority of clad metal plate production from facilities in Rivesaltes, France and Würgendorf, Germany to its manufacturing facility in Liebenscheid, Germany.
Operating income
The decline in operating income was driven by lower gross margin from unfavorable project mix. The decline was partially offset by higher sales and lower general and administrative expenses.
Adjusted EBITDA
The decrease compared with
2015
was due to a decline in operating income and lower depreciation in the first quarter of 2016 from consolidating manufacturing operations in Europe. See explanation of the use of Adjusted EBITDA under "Consolidated Results of Operations."
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
2016
|
|
2015
|
Income from operations
|
|
$
|
1,508
|
|
|
$
|
1,821
|
|
Adjustments:
|
|
|
|
|
Restructuring
|
|
—
|
|
|
54
|
|
Depreciation
|
|
838
|
|
|
1,061
|
|
Amortization of purchased intangibles
|
|
94
|
|
|
96
|
|
Adjusted EBITDA
|
|
$
|
2,440
|
|
|
$
|
3,032
|
|
DynaEnergetics
Three Months Ended
March 31, 2016
Compared With
Three Months Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
Net sales
|
|
$
|
15,480
|
|
|
$
|
16,875
|
|
|
$
|
(1,395
|
)
|
|
(8
|
)%
|
Gross profit
|
|
6,466
|
|
|
6,201
|
|
|
265
|
|
|
4
|
%
|
Gross profit margin
|
|
41.8
|
%
|
|
36.7
|
%
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
2,062
|
|
|
2,215
|
|
|
(153
|
)
|
|
(7
|
%)
|
Selling and distribution expenses
|
|
2,579
|
|
|
3,478
|
|
|
(899
|
)
|
|
(26
|
)%
|
Amortization of purchased intangible assets
|
|
905
|
|
|
921
|
|
|
(16
|
)
|
|
(2
|
)%
|
Restructuring expenses
|
|
—
|
|
|
382
|
|
|
(382
|
)
|
|
(100
|
)%
|
Operating income (loss)
|
|
920
|
|
|
(794
|
)
|
|
1,714
|
|
|
(216
|
)%
|
Adjusted EBITDA
|
|
$
|
2,501
|
|
|
$
|
1,103
|
|
|
$
|
1,398
|
|
|
127
|
%
|
Net sales
The
decrease
compared with
2015
primarily was due to deteriorating demand in DynaEnergetics' end markets.
Gross profit
The
increase
in gross profit and gross profit margin compared with
2015
was due to favorable product mix mostly attributable to sales of our DynaSelect intrinsically-safe switch detonator and our DPEX line of deep penetrating shaped charges.
General and administrative expenses
The
decrease
compared with
2015
primarily was due to a headcount reduction associated with our previously announced restructuring programs.
Selling and distribution expenses
The
decrease
compared with
2015
was principally due to lower salaries and wages including the impact of closing multiple distribution centers in 2015 combined with a decrease in outside sales agents commission expense due to lower sales into territories in which we don't have a captive sales force.
Restructuring expense
DynaEnergetics' restructuring activity in 2015 relates to the closure of a number of distribution centers in North America and Colombia and the closure of a perforating gun manufacturing facility and distribution center in Edmonton, Alberta.
Operating income
DynaEnergetics' operating income
increase
d compared with
2015
primarily due to lower operating expenses as a result of cost reduction initiatives.
Adjusted EBITDA
The increase compared with
2015
is primarily due to higher operating income. See explanation of the use of Adjusted EBITDA under "Consolidated Results of Operations"
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
2016
|
|
2015
|
Income (loss) from operations
|
|
$
|
920
|
|
|
$
|
(794
|
)
|
Adjustments:
|
|
|
|
|
Restructuring
|
|
—
|
|
|
382
|
|
Depreciation
|
|
676
|
|
|
594
|
|
Amortization of purchased intangibles
|
|
905
|
|
|
921
|
|
Adjusted EBITDA
|
|
$
|
2,501
|
|
|
$
|
1,103
|
|
Liquidity and Capital Resources
We have historically financed our operations from a combination of internally generated cash flow, revolving credit borrowings, various long-term debt arrangements, and the issuance of common stock. We believe that cash flow from operations and funds available under our current credit facilities and any future replacement thereof will be sufficient to fund the working capital, debt interest service, dividend payments, and capital expenditure requirements of our current business operations for the foreseeable future. Nevertheless, our ability to generate sufficient cash flows from operations will depend upon our success in executing our strategies. If we are unable to (i) realize sales from our backlog; (ii) secure new customer orders; (iii) continue selling products at attractive margins; and (iv) continue to implement cost-effective internal processes, our ability to meet cash requirements through operating activities could be impacted. Additionally, continued challenging conditions in our core energy markets could impact our ability to meet cash requirements through operating activities. Furthermore, any restriction on the availability of borrowings under our credit facilities could negatively affect our ability to meet future cash requirements.
Debt facilities
We have a a
five
-year
$75,000
syndicated credit agreement (“credit facility”), which allows for revolving loans of
$65,000
in US dollars and
$10,000
in alternate currencies as well as a
$100,000
accordion feature to increase the commitments in any of the loan classes subject to approval by applicable lenders. We also maintain a line of credit with a German bank for certain DynaEnergetics operations. This line of credit provides a borrowing capacity of 4,000 Euros.
As of
March 31, 2016
, U.S. dollar revolving loans of
$23,500
were outstanding under our credit facility. While we had approximately $
51,500
of available revolving credit loan capacity as of
March 31, 2016
under our various credit facilities, future borrowings are subject to compliance with financial covenants that could significantly limit such availability.
There are two significant financial covenants under our credit facility, the leverage ratio and debt service coverage ratio requirements. The leverage ratio is defined in the credit facility as Consolidated Funded Indebtedness at the balance sheet date as compared to Consolidated EBITDA, which is defined as earnings before provisions for income taxes, interest expense, depreciation and amortization, extraordinary, non-recurring charges and other non-cash charges, for the previous twelve months. For the
three months ended March 31, 2016
and the year ended
December 31, 2015
, Consolidated EBITDA approximated the “Adjusted EBITDA” that we reported for the respective periods. Under our credit facility, the maximum leverage ratio permitted by our credit facility is 3.75 to 1.0. The actual leverage ratio as of
March 31, 2016
was 1.65 to 1.0.
The debt service coverage ratio, as defined in the credit facility, means, for any period, the ratio of Consolidated EBITDA less the sum of cash dividends, cash income taxes and capital expenditures to Debt Service Charges. Consolidated EBITDA is defined above and Debt Service Charges equals the sum of cash interest expense and scheduled principal payments of Consolidated
Funded Indebtedness. Under our credit facility, the minimum debt service coverage ratio permitted by our credit facility is 1.35 to 1.0. The actual debt service coverage ratio for the trailing twelve months ended
March 31, 2016
was 8.79 to 1.0.
Our existing loan agreements include various covenants and restrictions, certain of which relate to the payment of dividends or other distributions to stockholders, redemption of capital stock, incurrence of additional indebtedness, mortgaging, pledging or disposition of major assets, and maintenance of specified financial ratios. As of
March 31, 2016
, we were in compliance with all financial covenants and other provisions of our debt agreements.
Other contractual obligations and commitments
Our long-term debt balance decreased to
$23,500
at
March 31, 2016
from
$27,500
at
December 31, 2015
. Our other contractual obligations and commitments have not materially changed since
December 31, 2015
.
Cash flows from operating activities
Net cash provided by operating activities was
$3,805
for the
three months ended March 31, 2016
. This compares to net cash used in operating activities of
$3,832
for the same period in
2015
. The year-over-year increase in operating cash flows of $
7,637
was driven by an increase in net income of $
1,964
and a $
7,965
decrease in net working capital. We experienced favorable net working capital changes of $
1,379
in the first quarter of
2016
compared with unfavorable changes in net in working capital of $
6,586
in the same period of
2015
. Favorable changes in our first quarter
2016
working capital included a
$4,878
increase in customer advances related to customer prepayments in NobelClad and a
$3,612
increase in accounts receivable due to lower sales volume and improved collections in DynaEnergetics. These favorable changes in working capital were partially offset by a
$2,812
decrease in accrued expenses and other liabilities primarily as a result of income tax payments and a
$3,047
increase in prepaid expenses.
Net cash provided by operating activities was $
3,832
for the
three months ended
March 31, 2015
. We experienced unfavorable net working capital changes of $
6,586
in the
2015
period, including an increase in inventories and prepaid expenses of $
4,933
and $
618
, respectively, and decreases of $
2,122
in accounts payable and $
1,301
in customer advances. The increases in working capital were driven by higher sales in DynaEnergetics, timing of accounts payable and prepayment for raw materials with long lead times but favorable pricing. These unfavorable changes were partially offset by a decrease in accounts receivable of $
3,979
.
Cash flows from investing activities
Net cash flows used in investing activities for the
three months ended March 31, 2016
were
$415
and primarily consisted of capital expenditures.
Net cash flows used in investing activities for the
three months ended
March 31, 2015
totaled $
891
and consisted almost entirely of capital expenditures.
Cash flows from financing activities
Net cash flows used in financing activities for the
three months ended March 31, 2016
totaled
$4,284
, which included net repayments on bank lines of credit of $
3,998
and payment of quarterly dividends of $
284
.
Net cash flows provided by financing activities for the
three months ended
March 31, 2015
totaled $
8,747
, which included net borrowings on bank lines of credit of $
10,142
and payment of quarterly dividends of $
559
.
Payment of Dividends
On February 17, 2016, our board of directors declared a quarterly cash dividend of $0.02 per share which was paid on April 15, 2016. The dividend totaled
$288
and was payable to shareholders of record as of March 31, 2016. We paid a quarterly cash dividend of $0.04 per share in the first quarter of 2015.
We may continue to pay quarterly dividends in the future subject to capital availability and periodic determinations that cash dividends are in compliance with our debt covenants and are in the best interests of our stockholders, but we cannot assure you that such payments will continue. Future dividends may be affected by, among other items, our views on potential future capital requirements, future business prospects, debt covenant compliance, changes in federal income tax laws, or any other factors that our board of directors deems relevant. Any decision to pay cash dividends is and will continue to be at the discretion of our Board of Directors.
Critical Accounting Policies
Our critical accounting policies have not changed from those reported in our Annual Report filed on Form 10-K for the year ended
December 31, 2015
.