What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-04-17 compared with 2022-03-31 · 89 added, 87 removed, 154 unchanged (53% of the section changed)

16 unchanged sentences

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 outbreak, including a recent resurgence in the United States, continues to evolve as of the date of this report.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations.

The Company had previously experienced an adverse impact to its business by a reduction in revenues in 2020 from that of 2019, a reduction in backlog during 2020 from that in 2019, lower production volumes, employee absences during 2020 and 2021, and bidding restrictions within certain key states such as Maryland and North Carolina.

The Company is currently experiencing delays in receipt of materials through its supply chain.

The Company is currently experiencing minor delays in receipt of materials through its supply chain.

The Company may be further negatively impacted in the following respects:

by the potential inability of customers of the Company to pay amounts owed to the Company for products or services already provided should their businesses suffer setbacks;

a) by the potential inability of customers of the Company to pay amounts owed to the Company for products or services already provided should their businesses suffer setbacks;

this risk is heightened by the relatively long lag time experienced by the Company in collecting accounts receivable (see "Liquidity and Capital Resources" below);

by potential supply side issues should our vendors experience hardships, and have to reduce or terminate operations, due to the COVID-19 outbreak, impacting the Company’s sourcing of materials;

by increased adverse effects on our workforce due to contracting or taking care of a relative who has contracted COVID-19, or have been quarantined by a medical professional;

in this respect, our workforce had previously been impacted as of the financial statement date with an effect on operations at all locations, but this impact has substantially diminished as of the filing date, but no assurance can be provided as to future impacts, particularly in view of potential new coronavirus outbreaks;

in the event that any of the three states in which we have facilities provide for the quarantine of our manufacturing employees, our production manufacturing will be significantly affected;

in the event that any of the states in which we sell our products and services may eliminate, cancel, or delay projects due to monetary limitations resulting from the COVID-19 outbreak;

b) by potential supply side issues should our vendors experience hardships, and have to reduce or terminate operations, due to the COVID-19 outbreak, impacting the Company's sourcing of materials;

c) by increased adverse effects on our workforce due to contracting or taking care of a relative who has contracted COVID-19, or have been quarantined by a medical professional;

in this respect, our workforce had been impacted at all locations in prior years, but this impact has substantially diminished in the current reporting year, but no assurance can be provided as to future impacts, particularly in view of potential new coronavirus outbreaks;

d) in the event that any of the three states in which we have facilities provide for the quarantine of our manufacturing employees, our production manufacturing will be significantly affected;

e) in the event that any of the states in which we sell our products and services may eliminate, cancel, or delay projects due to monetary limitations resulting from the COVID-19 outbreak;

in this respect, the Company had previously seen a reduction in bidding activity;

the reduction of state infrastructure budgets due to the reduction in funding through the gas tax, or other funding sources;

the increase in the overall loan defaults, which in turn impacts the banking sector’s ability to fund projects in which the Company’s products may be utilized;

in the event that economic hardships force the Company to default on loan payments, our loans may be called and our ability to borrow under our bank line of credit could cease;

f) the reduction of state infrastructure budgets due to the reduction in funding through the gas tax, or other funding sources;

g) the increase in the overall loan defaults, which in turn impacts the banking sector's ability to fund projects in which the Company's products may be utilized;

h) in the event that economic hardships force the Company to default on loan payments, our loans may be called and our ability to borrow under our bank line of credit could cease;

Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

2 unchanged sentences

In this respect, should the outbreak cause serious economic harm in our areas of operation, our revenue expectations are unlikely to be fulfilled.

Overall, the Company’s financial bottom line performance was significantly higher in 2021 when compared to 2020.

The Company had net income for 2021 in the amount of $7,570 compared to net income of $2,665 for 2020.

Sales increased by $6,780 to $50,642 in 2021 from $43,862 in 2020.

The increase in sales is mainly from barrier rentals, which included multiple short-term special barrier rental projects in the first quarter 2021 and, to a lesser extent, an increase in linear feet rented over the prior year of the core rental fleet.

Future barrier rental revenues are not expected to continue to trend at the same rate as in the first quarter of 2021 due to the nature and frequency of the short-term special barrier projects, although the Company anticipates continued growth of core rental revenues.

Product sales, royalty income, and shipping and installation revenue also increased in 2021 as compared to 2020.

The significant increase in barrier rentals also favorably impacted gross margins, excluding royalties, with an increase to 25% in 2021 from 22% in 2020.

Operating expenses for 2021 increased over 2020 mainly due to increased non-cash stock compensation expense and increased selling costs associated with additional sales personnel.

Overall, the Company’s financial bottom line performance was lower in 2022 when compared to 2021.

The Company had net income for 2022 of $800 compared to net income of $7,570 for 2021.

Sales decreased by $511 to $50,131 in 2022 from $50,642 in 2021.

The decrease in sales is mainly from a decrease in barrier rentals and, to a lesser extent, a decrease in soundwall sales.

The decrease in barrier rentals is attributed to a decrease in barrier rentals from short-term special barrier rental projects.

Despite the decrease in total barrier rentals, barrier rental revenue from the core rental fleet increased 11% for the year ended December 31, 2022 from the year ended December 31, 2021.

The decrease in soundwall sales was due to delays in approvals of customer drawings and therefore delays in production.

Royalty income and shipping and installation revenue also increased in 2022 as compared to 2021.

The increase in cost of goods sold as a percentage of revenue, not including royalties, for 2022 compared to 2021 is due to increased material and labor costs.

Additionally, there were more short-term special barrier rental projects that occurred throughout 2021 than 2022, which carry higher margins than product sales.

Operating expenses for 2022 increased over 2021 mainly due to increased selling costs associated with additional sales personnel and an increase in bad debt expense.

Fourth quarter 2022 revenues were $14,487 compared to $10,017 in the fourth quarter 2021.

The net income for the fourth quarter 2021 was $24 compared to $713 in the fourth quarter 2020.

The decrease in revenue and net income for the fourth quarter 2021 as compared to the fourth quarter 2020 was primarily due to one-time special projects occurring in the fourth quarter 2020, delays in customer approvals for production, and to a lesser extent an increase in material and labor costs due to inflationary factors.

The Company expects the first quarter 2022 to experience similar inflationary factors and customer approval delays as the fourth quarter 2021.

With the increase in backlog in March 2022, as compared to the prior year, from approximately $19.6 million to $29.0 million, the Company anticipates greater sales volumes in the second and third quarter 2022, although no assurance can be provided.

The increase in revenue for the fourth quarter 2022 as compared to the fourth quarter 2021 was primarily due to an increase in barrier sales and an increase in shipping and installation.

As of March 13, 2023, the Company’s sales backlog was approximately $52.4 million, as compared to approximately $29.0 million around the same time in the prior year.

The Company anticipates greater sales volumes throughout 2023, although no assurance can be provided.

The Company continues to increase marketing and sales efforts towards SlenderWall sales and barrier rentals, in line with long-term strategic objectives.

1 unchanged sentence

Year ended December 31, 2022 compared to the year ended December 31, 2021

For the year ended December 31, 2021, the Company had total revenue of $50,642 compared to total revenue of $43,862 for the year ended December 31, 2020, an increase of $6,780, or 15%.

For the year ended December 31, 2022, the Company had total revenue of $50,131 compared to total revenue of $50,642 for the year ended December 31, 2021, a decrease of $511 or 1%.

Revenue includes product sales, barrier rentals, royalty income, and shipping and installation revenues.

Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barrier, Easi-Set®/Easi-Span® buildings, utility products, and miscellaneous precast products.

Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barriers, Easi-Set®/Easi-Span® buildings, utility products, and miscellaneous precast products.

The following table summarizes the revenue by type and a comparison for the years ended December 31, 2022 and 2021 (in thousands):

19 unchanged sentences

barrier sales, Easi-Set and Easi-Span building sales, utility sales, and shipping and installation revenue are recognized as revenue at a point in time.

Soundwall Sales – Soundwall panel sales slightly increased by 7% in 2021 compared to 2020 due primarily to increased production during 2021 at the North Carolina and South Carolina facilities as compared to 2020, and continued production at the Virginia plant for the largest soundwall contract in Company history, which was initially awarded during 2018.

Soundwall Sales – Soundwall panel sales decreased by 49% in 2022 compared to 2021 primarily due to decreased production during 2022 at all facilities.

Production for several projects concluded towards the end of 2021 at all facilities.

Additionally, the Company experienced delays in customer drawing approvals throughout 2022 causing delays in production.

The Company expects soundwall panel sales to be similar in 2023 as compared to 2022, although no assurance can be provided.

Architectural Sales – Architectural panel sales increased by 34% in 2021 compared to 2020.

The Company was awarded a large architectural project which began production in the fourth quarter of 2020, with the majority of production occurring in 2021.

Architectural Sales – Architectural panel sales decreased by 13% in 2022 compared to 2021.

The Company was awarded a large architectural project, which began production in the fourth quarter of 2020 and the majority of production occurred in 2021.

Architectural sales are expected to decrease during 2023, as compared to 2022, with an anticipated shift to more SlenderWall sales, although no assurance can be provided.

SlenderWall Sales – SlenderWall panel sales increased by 89% in 2021 when compared to 2020.

SlenderWall sales are generated on a project basis, and success is determined by the number and dollar value of projects awarded and produced in any particular period.

The increase is mainly attributable to one large project which started production at the end of the second quarter 2021.

SlenderWall Sales – SlenderWall panel sales decreased by 17% in 2022 compared to 2021.

The decrease is mainly attributable to one large project, which started production in the second quarter of 2021 and concluded in the second quarter of 2022.

Currently, the Company has the largest quantity of bids out for the SlenderWall product in history and expects to be awarded multiple projects in the near future.

1 unchanged sentence

Miscellaneous Wall Sales – Miscellaneous wall sales can be highly customized precast concrete products or retaining and lagging panels that do not fit other product categories.

Miscellaneous wall sales decreased by 30% in 2021 when compared to 2020 due to the decreased amount of retaining wall projects in production.

Miscellaneous wall sales increased by 48% in 2022 when compared to 2021 due to the increased amount of retaining wall projects in production.

Miscellaneous sales are expected to trend similar in 2023, as compared to 2022, although no assurance can be provided.

Barrier Sales – Barrier sales decreased by 15% in 2021 when compared to 2020.

The main reason for the decrease is due to reduced barrier production demand in North Carolina and South Carolina, combined with the increase in the core fleet of barrier rentals.

Aligning with the Company’s strategy to shift to barrier rentals versus barrier sales in the Delaware to Virginia region, barrier sales are expected to trend lower in 2022 than previous years.

Barrier Sales – Barrier sales increased by 43% in 2022 when compared to 2021.

The main reason for the increase is due to large barrier projects in North Carolina and South Carolina.

The Company continues to focus on shifting barrier sales to barrier rentals in the Delaware to Virginia region.

Barrier sales are expected to trend lower in 2023 than previous years as the Company continues to shift from barrier sales to barrier rentals.

Easi-Set® and Easi-Span® Building Sales – The Easi-Set® Buildings program includes Easi-Set®, plant assembled and Easi-Span®, site assembled, and an extensive line of pre-engineered restrooms.

Building sales slightly increased by 3% in 2021 as compared to 2020.

Building sales increased by 35% in 2022 as compared to 2021 due to increased sales at all locations.

Building and restroom sales are expected to continue to trend similar during 2023 as compared to 2022, although no assurance can be provided.

Utility Sales – Utility products are mainly comprised of underground utility vaults used in infrastructure construction.

Utility product sales increased by 88% in 2021 compared to 2020.

Utility product sales decreased by 18% in 2022 compared to 2021.

The Company continues to competitively bid on utility projects to gain market share and has recently won multiple data center projects increasing the sales volume of dry utility vaults.

Utility sales are expected to increase for 2022 as compared to 2021, although no assurance can be provided.

Utility sales are expected to trend similar during 2023 as compared to 2022, although no assurance can be provided.

Miscellaneous Product Sales – Miscellaneous products are products that are produced or sold that do not meet the criteria defined for other revenue categories.

Examples would include precast concrete slabs, blocks or small add-on items.

For 2021, miscellaneous product sales decreased by 22% when compared to 2020.

The change is mainly attributed to specialty concrete blocks produced at the North Carolina plant which began in 2020 and significantly decreased during the third quarter 2021.

Miscellaneous product sales are expected to decrease in 2022 as compared to 2021, although no assurance can be provided.

Barrier Rentals – Barrier rentals increased significantly in 2021 as compared to 2020 due to the higher quantity of linear feet rented over the previous year and, to a greater extent, a few short-term special projects during 2021.

A substantial portion of the total revenue from these special projects was earned in the first quarter 2021.

As indicated above, the Company is shifting its focus to barrier rentals compared to barrier sales with the significant increase in the rental fleet beginning in late 2019, and continued plans to significantly increase the fleet during 2022.

Future barrier rental revenues are not expected to continue trending at the same rate as in 2021 due to the nature and frequency of the short-term special barrier projects in the early part of that period, however the Company generally expects increased barrier rentals of the core rental fleet for future periods, although no assurance can be given.

Royalty Income – Royalties significantly increased by 31% in 2021 as compared to 2020.

For 2022, miscellaneous product sales increased by 35% when compared to 2021.

The change is mainly attributed to specialty products produced at the South Carolina plant throughout 2022.

Miscellaneous product sales are expected to trend lower during 2023 as compared to 2022, although no assurance can be provided.

Barrier Rentals – Barrier rentals decreased by 34% in 2022 as compared to 2021.

While both 2022 and 2021 barrier rentals included short-term special projects, 2022 had less rental revenue from short-term special barrier projects.

As indicated above, the Company is continuing to shift its focus to barrier rentals compared to barrier sales with the significant increase in the rental fleet that occurred during 2022.

Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher in 2023 as compared to barrier rental revenue, excluding revenue from special barrier projects, in 2022, although no assurance can be given.

Royalty Income – Royalties increased by 13% in 2022 as compared to 2021.

The increase in royalties is mainly due to the increase in barrier royalties during 2022 compared to 2021.

Infrastructure spending continues to drive royalties, and the Company anticipates 2022 royalties to increase compared to 2021 with the approval of the J-J Hooks barrier in California and Florida, although no assurance can be given.

Infrastructure spending continues to drive royalties, and the Company anticipates 2023 royalties to increase compared to 2022, although no assurance can be given.

Shipping and Installation – Shipping revenue results from shipping our products to the customers' final destination and is recognized when the shipping services take place.

2 unchanged sentences

Shipping and installation revenues increased by 33% for 2022 when compared to 2021.

The increase is mainly attributed to the increase in shipping, setting, and offloading associated with core barrier rentals during 2021 as compared to the prior year.

The increase is mainly attributed to the increase in shipping and installation of SlenderWall and architectural panels.

This is associated with the increased production of SlenderWall and architectural panels that occurred in the third and fourth quarters of 2021.

Cost of Goods Sold – Total cost of goods sold for the year ended December 31, 2022 was $40,662, an increase of $4,440, or 12%, from $36,222 for the year ended December 31, 2021.

Total cost of goods sold as a percentage of total revenue, not including royalties, decreased to 75% for the year ended December 31, 2021 from 78% for the year ended December 31, 2020.

The decrease in cost of goods sold as a percentage of revenue, not including royalties, is mainly due to the increase in barrier rental revenues, which typically have higher margins than product sales, and the increase in short-term special barrier rental projects, which carry slightly higher margins due to the complexity and risk of the projects.

Total cost of goods sold as a percentage of total revenue, not including royalties, increased to 85% for the year ended December 31, 2022 from 75% for the year ended December 31, 2021.

The increase in cost of goods sold as a percentage of revenue, not including royalties, is mainly due to the decrease in short-term special barrier rental projects, which carry higher margins than standard barrier rental projects due to the complexity and risk of the projects.

Further, cost of goods sold for the year ended December 31, 2022 increased, as compared to the same period in 2021, due to inflationary impacts on material and labor costs.

General and Administrative Expenses – For the year ended December 31, 2022, the Company's general and administrative expenses increased by $135, or 2%, to $5,551 from $5,416 during the same period in 2021.

The increase is mainly attributed to an increase in non-cash stock compensation awarded and vested in 2021 as compared to 2020.

The increase is mainly attributed to an increase in bad debt expense driven by the increase in accounts receivable.

The increase was partially offset by a decrease in salaries and wages.

General and administrative expense as a percentage of total revenue was 11% for the years ended December 31, 2022 and 2021.

Selling Expenses – Selling expenses for the year ended December 31, 2022 increased by $228, or 8%, to $3,064 from $2,836 for the year ended December 31, 2021.

1 unchanged sentence

The Company expects selling expenses to increase in future periods with the plan for additional sales associates and increased advertising spending aligning with the strategy to increase SlenderWall sales and barrier rentals.

Operating Income – The Company had operating income for the year ended December 31, 2021 of $6,168 compared to operating income of $3,759 for the year ended December 31, 2020, an increase of $2,409, or 64%.

The increase in operating income was mainly due to the increase in gross profit associated with the increase in total revenue, mainly deriving from royalties and barrier rentals.

Operating results for the 2020 periods were also adversely affected due to COVID-19 related factors.

Operating Income – The Company had operating income for the year ended December 31, 2022 of $854 compared to operating income of $6,168 for the year ended December 31, 2021, a decrease of $5,314, or 86%.

The decrease in operating income was mainly due to the decrease in gross profit associated with the decrease in total revenue deriving from barrier rentals.

Operating results for 2022 were also adversely impacted by rising costs of material and labor due to inflation.

Interest Expense – Interest expense was $260 for the year ended December 31, 2022 compared to $190 for the year ended December 31, 2021.

The decrease of $27, or 12%, was due primarily to the payoff of two long-term notes during 2021.

Interest expense for 2022 is expected to increase, as compared to 2021, with the financing of real property acquired during the fourth quarter 2021.

The increase of $70, or 37%, was due primarily to the increased level of indebtedness from the financing that occurred in the first quarter of 2022 for the real property acquired in the fourth quarter 2021.

Income Tax Expense – The Company had income tax expense of $145 for the year ended December 31, 2022 compared to income tax expense of $1,524 for the year ended December 31, 2021.

The Company had an effective rate of 15.4% for the year ended December 31, 2022 compared to an effective rate of 16.8% for the same period in 2021.

The decrease in the effective tax rate is mainly attributed to the exclusion of $2,692 from federal taxable income related to PPP loan forgiveness under section 1106(i) of the CARES Act.

The decrease in the effective tax rate is attributed to current year tax credits and a decrease in the Company’s state tax liability.

Net Income – The Company had net income of $800 for the year ended December 31, 2022, compared to net income of $7,570 for the same period in 2021.

Net income in 2021 included a gain of $2,692 for forgiveness of a Paycheck Protection Program loan.

The basic and diluted earnings per share was $0.15 for 2022 compared to basic and diluted earnings per share of $1.45 for the year ended December 31, 2021.

There were 5,233 basic and 5,253 diluted weighted average shares outstanding in 2022, and 5,205 basic and 5,232 diluted weighted average shares outstanding in 2021.

Profitability for the year ended December 31, 2021 was positively impacted by the forgiveness of the PPP loan (described below in Liquidity and Capital Resources) in the amount of $2,692.

Liquidity and Capital Resources

The Company financed its capital expenditures requirements for 2021 with cash flows from operations, cash balances on hand and notes payable to a bank.

The Company financed its capital expenditures requirements for 2022 with cash balances on hand and notes payable to a bank.

The Company had $6,416 of debt obligations at December 31, 2022, of which $626 is scheduled to mature within twelve months.

During the twelve months ended December 31, 2021, the Company made repayments of outstanding debt in the amount $793 and received $49 in proceeds of borrowings deriving from the financing of a vehicle.

The Company did not draw on the line of credit during the twelve months ended December 31, 2021.

During the twelve months ended December 31, 2022, the Company made repayments of outstanding debt in the amount $581 and received $2,805 in proceeds of borrowings related to the financing that occurred in the first quarter of 2022 for the real property acquired during the fourth quarter of 2021.

The Company has a mortgage note payable to Summit Community Bank (the “Bank”) for the construction of its North Carolina facility.

8 unchanged sentences

The balance of the note payable at December 31, 2022 was $2,064.

Additionally, the Company has 3 smaller installment loans with annual interest rates between 2.9% and 4.5%, maturing between 2022 and 2025, with varying balances totaling $76.

Subsequent to December 31, 2021, on February 10, 2022, the Company completed the financing for its prior acquisition of certain real property in Midland, VA totaling approximately 29.8 acres with a note payable to the Bank in the amount of $2,805.

The loan is collateralized by a first lien position on the above-referenced real property.

The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months in the amount of $21.

On February 10, 2022, the Company completed the financing for its prior acquisition of certain real property in Midland, VA totaling approximately 29.8 acres with a note payable to the Bank in the amount of $2,805.

The loan is collateralized by a first lien position on the related real property.

The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months for $21.

The loan matures on February 10, 2037.

The balance of the note payable on December 31, 2022 was $2,692.

The Company additionally has two smaller installment loans with annual interest rates of 2.90% and 3.99%, maturing in 2025, with balances totaling $51.

Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $10,000.

The Company received a special exception to the capital expenditure covenant from the Bank to purchase certain real property during 2021 in the amount of $3,300.

The Company received a special exception to the capital expenditure covenant from the Bank to purchase barrier during 2022 for $5,000 (see Note 7, Commitments and Contingencies, of the Financial Statements).

The Company is in compliance with all covenants pursuant to the loan agreements as of December 31, 2022.

In addition to the notes payable discussed above, on April 16, 2020, the Company obtained a loan, evidenced by a promissory note, under the Paycheck Protection Program (the “PPP”) from the Bank in the amount of $2,692.

The PPP provides for loans to qualifying businesses, the proceeds of which may only be used for payroll costs, rent, utilities, mortgage interest, and interest on other pre-existing indebtedness.

The interest rate per the promissory note, dated April 16, 2020 and executed by the Company in favor of the Bank, was fixed at 1.00% per annum, with principal and interest payments starting thirty (30) days after the amount of forgiveness is determined under section 1106 of the CARES Act.

The proceeds of the loan were required to be utilized pursuant to the requirements of the PPP, and all or a portion of the loan could be forgiven in accordance with the PPP applicable rules, regulations, and guidelines.

On July 9, 2021, the Company received loan forgiveness for the full amount of the loan of $2,692.

The Company also has a $4,000 line of credit with the Bank with no balance outstanding as of December 31, 2021.

The line of credit is evidenced by a commercial revolving promissory note which carries a variable interest rate of prime and matures on October 1, 2022.

In addition to the notes payable discussed above, the Company has a $5,000 line of credit with the Bank with no balance outstanding as of December 31, 2022.

The line of credit is evidenced by a commercial revolving promissory note, which carries a variable interest rate of prime, with a floor of 3.50%, and matures on October 1, 2023.

The loan is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets.

Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $3,500 during the term of the loan;

and (ii) to obtain bank approval prior to its funding any acquisition.

Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $5,000 during the term of the loan and (ii) to obtain bank approval prior to its funding of any acquisition.

On October 1, 2022, the Company received a Commitment Letter from the Bank to provide a guidance line of credit specifically to purchase business equipment in an amount up to $1,500.

3 unchanged sentences

As of December 31, 2022, the Company had not purchased any equipment pursuant to the $1,500 commitment.

At December 31, 2021, the Company had cash totaling $13,492 and no investment securities available for sale compared to cash totaling $8,764 and $1,228 of investment securities available for sale at December 31, 2020.

Investment securities at December 31, 2020 consisted of shares of USVAX (a Virginia Bond Fund).

In the fourth quarter 2021, the Company sold all of the investment securities.

During 2021, the Company’s operating activities provided $9,126 of cash due mainly to operating income, collection of accounts receivable, cash received for deferred revenue, and accrued but unpaid income taxes.

In 2021, investing activities used $3,654 in cash primarily for the purchase of additional land in Virginia, the purchase of rental barrier, manufacturing equipment, and a vehicle, partially offset by the sale of the USVAX shares in the fourth quarter 2021.

Financing activities used $744 in cash in 2021 mainly as a result of repaying long-term debt.

Capital spending, including financed additions, increased from $2,627 in 2020 to $5,367 in 2021.

Capital expenditures in 2021 included spending for additional land in Virginia, rental barrier, manufacturing equipment, and a vehicle.

While the Company anticipates capital spending for 2022 to be approximately $8,000, which includes a significant expansion in the barrier rental fleet with approximate costs of $5,000, and approximately $3,000 for yard development and miscellaneous manufacturing equipment, excluding acquisitions and plant expansions (which none are anticipated at this time), such plans may change if the Company is adversely effected by the coronavirus outbreak.

At December 31, 2022, the Company had cash totaling $6,726 compared to cash totaling $13,492 at December 31, 2021.

The decrease in cash is primarily the result of higher accounts receivable at December 31, 2022 than at December 31, 2021 and from investing activities which used $2,631 in cash primarily for the purchase of rental barrier, manufacturing equipment, and a vehicle.

Financing activities provided $2,199 in cash in 2022 mainly from the financing of real property purchased in the fourth quarter of 2021.

Capital spending, including financed additions, decreased from $5,367 in 2021 to $5,264 in 2022.

Capital expenditures in 2022 were primarily related to spending for the buy-back of barrier for the barrier rental fleet.

The Company anticipates capital spending for 2023 to be approximately $5,000, which includes a new batch plant system, completion of yard development, completion of the barrier buy-back, and miscellaneous manufacturing equipment.

Anticipated capital expenditures excludes acquisitions and plant expansions.

The Company's notes payable are financed at fixed rates of interest.

This leaves the Company almost impervious to fluctuating interest rates.

Increases in such rates will only affect the interest paid by the Company if new debt is obtained with a variable interest rate.

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 45 to 75 days after the products are produced and with some architectural contracts, retainage may be held until the entire project is completed.

Increases in such rates will only affect the interest paid by the Company if new debt is obtained, or the available line of credit is drawn upon, with a variable interest rate.

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 45 to 75 days after the products are produced and with some contracts, retainage may be held until the entire project is completed.

This payment schedule could result in liquidity problems for the Company because it must bear the cost of production for its products before it receives payment.

1 unchanged sentence

Although no assurances can be given, the Company believes that its current cash resources, anticipated cash flow from operations, and the availability under the line of credit will be sufficient to finance the Company’s operations for at least the next 12 months.

The Company’s accounts receivable balances, net of allowance for doubtful accounts, at December 31, 2022 was $16,223, compared to $10,013 at December 31, 202.

The increase is primarily the result of turnover of the accounts receivable position throughout the later part of 2022 until the first quarter of 2023.

The Company expects accounts receivable balances to trend downwards, beginning in the second quarter of 2023, with increased collection efforts as a result of the fulfillment of the accounts receivable position, although no assurance can be provided.

The Company’s inventory at December 31, 2022 was $3,818 and at December 31, 2021 was $2,845, an increase of $974.

26 unchanged sentences

The failure to generate or obtain sufficient working capital during the winter may have a material adverse effect on the Company.

Management believes that the Company’s operations were affected by inflation in 2021 and 2020, particularly in the purchases of certain raw materials such as cement and aggregates, steel, and also with labor costs.

Management believes that the Company's operations were affected by inflation in 2022 and 2021, particularly in the purchases of certain raw materials such as cement, aggregates, and steel, and with labor costs.

The Company believes that raw material pricing and labor costs will increase in 2023, although no assurance can be given regarding future pricing or costs.

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis