What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-05-23 compared with 2023-04-17 · 72 added, 92 removed, 151 unchanged (52% of the section changed)

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As a result of these factors, the Company is not always able to earn a profit for each period, therefore, please read Management's Discussion and Analysis of Financial Condition and Results of Operations and the accompanying financial statements with these factors in mind.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spread globally beyond its point of origin.

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 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 minor delays in receipt of materials through its supply chain.

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

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);

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;

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.

Although the Company experienced a loss in the first quarter of 2020 and reduced revenues for the year 2020 as compared to 2019, as well as experiencing factors described above, given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to ultimately estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for future years.

The discussions below, including without limitation with respect to liquidity, are subject to the future effects of the COVID-19 outbreak.

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 lower in 2022 when compared to 2021.

Overall, the Company’s financial bottom line performance was essentially equal in 2023 when compared to 2022.

The Company had net income for 2023 of $795 compared to net income of $800 for 2022.

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.

Total revenue increased by $9,449 to $59,580 in 2023 from $50,131 in 2022.

The increase in sales is mainly from an increase in SlenderWall, soundwall, and miscellaneous wall sales.

Fourth quarter 2023 revenues were $16,389 compared to $14,487 in the fourth quarter 2022.

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.

The increase in revenue for the fourth quarter 2023 as compared to the fourth quarter 2022 was primarily due to an increase in barrier rental and an increase in soundwall sales.

Cost of sales as a percentage of revenue, not including royalties, increased to 86% in 2023 compared to 85% in 2022 due to additional costs, approximately $400, incurred for the remaking of panels for a specific project in the second quarter of 2023.

Cost of sales as a percentage of revenue, not including royalties, remained flat at 85% for the fourth quarter 2023 as compared to the fourth quarter 2022.

Operating income was $1,118 for 2023, as compared to $854 for 2022.

Operating expenses for 2023 was $9,534 compared to $8,614 in 2022.

The increase is due to increased selling costs associated with additional sales personnel and increased general and administrative costs due to increased insurance costs for a specific project in New York.

Total operating expense was $2,580 for both the fourth quarter 2023 and the fourth quarter 2022.

Income tax expense for 2023 was $528, or an effective tax rate of 40.0%, as compared to $145, or an effective tax rate of 15.4% for 2022, adversely affecting net income in 2023.

The increase was mainly due to an increase in state tax liability for a true-up of state tax expense.

As of March 12, 2024, the Company’s sales backlog was approximately $60.8 million, as compared to approximately $52.4 million around the same time in the prior year.

It is estimated that most of the projects in the current sales backlog will be produced within 12 months, but a few will be produced over multiple years.

The Company anticipates greater sales volumes throughout 2024, although no assurance can be provided.

The Company also anticipates funding related to the Infrastructure Investment and Jobs Act to begin coming through the state and local governments in the latter half of 2024 and beyond to further promote growth in the revenue backlog related to the highway and transportation markets, 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.

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Year ended December 31, 2023 compared to the year ended December 31, 2022

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%.

For the year ended December 31, 2023, the Company had total revenue of $59,580 compared to total revenue of $50,131 for the year ended December 31, 2022, an increase of $9,449 or 19%.

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

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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 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.

Soundwall Sales – Soundwall panel sales increased by 86% in 2023 compared to 2022.

The increase is mainly due to higher production volumes at the North Carolina and South Carolina plants reflecting larger soundwall projects than in the prior period.

The Company expects soundwall panel sales to be similar in 2024 as compared to 2023, although no assurance can be provided.

Architectural Sales – Architectural panel sales decreased by 74% in 2023 compared to 2022.

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 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.

The decrease is from the completion of two architectural projects in the third quarter of 2022.

Architectural sales are expected to be higher during 2024, as compared to 2023, although no assurance can be provided.

SlenderWall Sales – SlenderWall panel sales increased by 257% in 2023 compared to 2022.

The increase is due to two projects being produced consecutively throughout 2023 in comparison to a single project in 2022, which production was completed in the first quarter of 2022.

The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor.

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

SlenderWall sales are expected to be lower during 2024, as compared to 2023.

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

Miscellaneous wall sales increased by 85% in 2023 when compared to 2022 due to the increased amount of wall panel projects in Virginia and increased retaining wall projects in South Carolina.

Miscellaneous sales are expected to trend similar in 2024, as compared to 2023, although no assurance can be provided.

Barrier Sales – Barrier sales increased by 17% in 2023 when compared to 2022.

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.

The increase is due to large barrier projects at all three manufacturing facilities that had significant production volumes in the first and third quarters of 2023.

Barrier sales are expected to trend lower in 2024 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 increased by 35% in 2022 as compared to 2021 due to increased sales at all locations.

Building sales increased by 15% in 2023 as compared to 2022 due to increased sales at all locations, reflecting general product sale fluctuations.

Building and restroom sales are expected to continue to trend similar during 2024 as compared to 2023, although no assurance can be provided.

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

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 product sales increased by 41% in 2023 compared to 2022.

The increase is related to the increase in the market for dry utility vaults to support the growth in data centers.

Utility sales are expected to trend similar during 2024 as compared to 2023, although no assurance can be provided.

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Barrier Rentals – Barrier rentals decreased by 3% in 2023 as compared to 2022.

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

Revenue from the Company’s core rental barrier fleet decreased by 43% in 2023 as compared to 2022.

The decrease in barrier rental revenue from the core rental barrier fleet was due to additional revenue recognized in the prior period related to the barrier buy-back agreement, which was fully recognized as of December 31, 2022.

Additionally, the decrease is related to a temporary slowdown in barrier rental projects during the first half of 2023, however the Company saw a significant increase in projects during the fourth quarter of 2023.

The decrease in barrier rental revenue from the core rental in the current year, was offset, in part, by an increase in barrier rental revenue from special barrier projects.

Barrier rental revenue from special projects increased 157% in 2023 as compared to 2022.

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.

Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher in 2024 as compared to barrier rental revenue, excluding revenue from special barrier projects, in 2023, as funding increases related to the Infrastructure Investment and Jobs Act, although no assurance can be given.

Royalty Income – Royalties increased by 5% in 2023 as compared to 2022.

The increase in royalties is mainly due to the increase in barrier royalties during 2023 compared to 2022.

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

As funding increases related to the Infrastructure Investment and Jobs Act, the Company expects 2024 royalties to increase compared to 2023, 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.

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Installation revenue results when attaching architectural wall panels to a building, installing an Easi-Set® building at a customers' site, setting highway barrier, or setting any of our other precast products at a site specific to the requirements of the owner.

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

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, 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.

Shipping and installation revenues decreased by 11% for 2023 when compared to 2022.

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

This is associated with the decreased production of SlenderWall and architectural panels that occurred in the third and fourth quarters of 2022 that would typically be shipped and installed throughout 2023.

Cost of Sales – Total cost of sales for the year ended December 31, 2023 was $48,928, an increase of $8,266, or 20%, from $40,662 for the year ended December 31, 2022.

Total cost of sales as a percentage of total revenue, not including royalties, increased to 86% for the year ended December 31, 2023 from 85% for the year ended December 31, 2022.

The increase in cost of sales as a percentage of revenue, not including royalties, is mainly due to additional costs incurred, approximately $400, for the production of panels remade for one specific project in the second quarter of 2023.

To a lesser extent, the margins for the year ended December 31, 2023 were negatively impacted by the decrease in revenues derived from barrier rental revenue, which carry higher margins than product sales.

Higher revenue levels in 2023 than in 2022 had a favorable affect on margins reflecting the absorption of fixed overhead costs.

Increased material and labor costs also affected margins for the year ended December 31, 2023 as compared to the same period in 2022.

General and Administrative Expenses – For the year ended December 31, 2023, the Company's general and administrative expenses increased by $439, or 8%, to $5,990 from $5,551 during the same period in 2022.

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.

The increase is mainly attributed to increased insurance costs for a specific project in New York.

The Company previously reported a loss due to a wire fraud incident in the second quarter of 2023.

The Company recovered additional funds in the fourth quarter of 2023 resulting in a net loss of $25 for the full year 2023.

General and administrative expenses for the year ended December 31, 2023 also increased over the prior year due to an increase in audit fees and an increase in salaries and wages.

Selling Expenses – Selling expenses for the year ended December 31, 2023 increased by $480, or 16%, to $3,544 from $3,064 for the year ended December 31, 2022.

Selling expenses increased during 2022 due to additional salespersons hired and increased advertising expenses.

Selling expenses increased during 2023 due to additional salespersons hired, increased commissions related to the increased sales, and increased spending for advertising.

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, 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 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.

Operating Income – The Company had operating income for the year ended December 31, 2023 of $1,118 compared to operating income of $854 for the year ended December 31, 2022, an increase of $264, or 31%.

The increase in operating income was mainly due to the increase in gross profit and decrease in operating expenses as a percent of revenue.

Income Tax Expense – The Company had income tax expense of $528 for the year ended December 31, 2023 compared to income tax expense of $145 for the year ended December 31, 2022.

The Company had an effective rate of 40.0% for the year ended December 31, 2023 compared to an effective rate of 15.4% for the same period in 2022.

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

The increase in the effective tax rate is attributed to the increase in the Company’s state tax liability for a true-up of state tax expense.

Net Income – The Company had net income of $795 for the year ended December 31, 2023, compared to net income of $800 for the same period in 2022.

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 2023 compared to basic and diluted earnings per share of $0.15 for the year ended December 31, 2022.

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Liquidity and Capital Resources

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

The Company financed its capital expenditures for 2023 with cash balances on hand.

The Company had $5,789 of debt obligations at December 31, 2023, of which $636 is scheduled to mature within twelve months.

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.

During the twelve months ended December 31, 2023, the Company made repayments of outstanding debt in the amount $627.

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

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The balance of the note payable at December 31, 2023 was $1,398.

On March 27, 2020, the Company completed the refinancing of existing loans with a note payable to the Bank in the amount of $2,701.

A portion of the funds in the amount of $678 were secured for improvements to an existing five acre parcel for additional storage at the Midland, Virginia plant.

The loan is collateralized by a first lien position on the Virginia property, building, and assets.

The Company also has a note payable to the Bank in the amount of $2,701.

The loan is collateralized by a first lien position on the Midland, VA plant, building, and assets.

The refinance also released the lien on the Smith-Columbia plant in Hopkins, South Carolina (Columbia).

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The balance of the note payable at December 31, 2023 was $1,814.

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.

On February 10, 2022, the Company completed the financing for its acquisition of certain real property in Midland, VA from the fourth quarter of 2021, 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.

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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 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, 2023.

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At December 31, 2023, the Company had cash totaling $9,175 compared to cash totaling $6,726 at December 31, 2022.

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.

The increase in cash is primarily the result of cash provided from operations, more specifically related to the cash flow from barrier rentals in addition to an increase in customer deposits.

Investing activities used $4,664 in cash primarily for the development of a storage lot for the barrier rental fleet and the purchase of a new batch plant system in South Carolina.

Financing activities used $619 in cash in 2023 related to the repayment of notes payable throughout 2023.

Capital spending, including financed additions, decreased from $5,264 in 2022 to $5,010 in 2023.

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.

Capital expenditures in 2023 were primarily related to spending for the yard development for a storage lot for the barrier rental fleet, a new batch plant system for the South Carolina manufacturing facility, and the completion of the barrier buy-back.

The Company anticipates capital spending for 2024 to be approximately $5,000, which includes expansion of the North Carolina manufacturing facility, soundwall forms for increased production capacity, and miscellaneous manufacturing equipment.

Anticipated capital expenditures excludes acquisitions.

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

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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 accounts receivable balance, net of allowance for credit losses, at December 31, 2023 was $17,209, compared to accounts receivable balance, net of allowance for doubtful accounts, of $16,223 at December 31, 2022.

The increase is primarily the result of increased revenue and to a lesser extent, lagging effects of turnover of the accounts receivable position throughout the later part of 2022 and through the first quarter of 2023.

The Company expects DSO to trend downwards, with increased collection efforts, although no assurance can be provided.

The Company’s inventory at December 31, 2023 was $5,150 and at December 31, 2022 was $3,818, an increase of $1,331.

The annual inventory turns for 2023 and 2022 were 15.0 and 14.1, respectively.

Finished goods inventory slightly increased for 2022 as compared to 2021.

Critical Accounting Policies

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are more fully described in its Summary of Accounting Policies to the Company’s consolidated financial statements.

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The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below, however, application of these accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties and as a result, actual results could differ from these estimates.

The Company evaluates the adequacy of its allowance for doubtful accounts at the end of each quarter.

In performing this evaluation, the Company analyzes the payment history of its significant past due accounts, subsequent cash collections on these accounts, comparative accounts receivable aging statistics, and other customer specific considerations existing and known as of the time of the analysis.

Based on this information, along with other related factors, the Company develops what it considers to be a reasonable estimate of the uncollectible amounts included in accounts receivable.

Allowance for Credit Losses -The Company evaluates the adequacy of its allowance for credit losses at the end of each quarter.

In performing this evaluation, the Company analyzes the payment history of its significant past due accounts, subsequent cash collections on these accounts, comparative accounts receivable aging statistics, macro-economic conditions, and other customer specific considerations existing and known as of the time of the analysis.

Based on this information, along with other related factors, the Company develops an estimate of the uncollectible amounts included in accounts receivable.

This estimate involves significant judgment by the management of the Company.

Actual uncollectible amounts may differ from the Company’s estimate.

The Company recognizes revenue on the sale of its standard precast concrete products, and the associated shipping and installation revenue, at shipment date, including revenue derived from any projects to be completed under short-term contracts.

Over-Time Revenue Recognition- The Company recognizes revenue on the sale of its standard precast concrete products, and the associated shipping and installation revenue, at shipment date, including revenue derived from any projects to be completed under short-term contracts.

Leasing and royalties are recognized as revenue over time.

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The Company expects the backlog to increase with continued bidding on large infrastructure and SlenderWall/architectural projects, although no assurance can be given.

The risk exists that recessionary economic conditions and the coronavirus outbreak may adversely affect the Company more than it has experienced to date.

The risk exists that recessionary economic conditions may adversely affect the Company more than it has experienced to date.

To mitigate these economic and other risks, the Company has a broader product offering than most competitors and has historically been a leader in innovation and new product development in the industry.

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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