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STOCKHOLDERS' EQUITY | 6 Months Ended
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Jun. 30, 2023
Stockholders' Equity Note [Abstract] |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Stock-Based Compensation The Company’s results for the three and six months ended June 30, 2023 and 2022 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:
|  | Increase/(Decrease) for the |  | Increase/(Decrease) for the
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Cost of sales |  | $ | 545 |  |  | $ | 277 |  |  | $ | 959 |  |  | $ | 676 |
Operating expenses |  | 3,203 |  |  | 3,535 |  |  | 7,559 |  |  | 6,213 |
Net earnings |  | (2,881) |  |  | (2,933) |  |  | (6,563) |  |  | (5,312) |
As allowed by ASC 718, the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest. The Company's omnibus incentive plan allows for the granting of stock awards and options to purchase common stock. Both incentive stock options and nonqualified stock options can be awarded under the plan. No option will be exercisable for longer than ten years after the date of grant. The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises. As of June 30, 2023, the plan had 1,034,630 shares available for future awards, which included an additional 800,000 shares approved by the Company's shareholders during its annual meeting of shareholders held on June 22, 2023. Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three to five years for stock options, three years for employee restricted stock awards, three years for employee performance share awards, and three years for non-employee director restricted stock awards. Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events. Option activity for the six months ended June 30, 2023 and 2022 is summarized below:
For the Six Months Ended June 30, 2023 |  | Shares (000s) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term
Outstanding as of December 31, 2022 |  | 1,045 |  |  | $ | 99.82 |  |  | $ | 27,221 |  |  |
Granted |  | 109 |  |  | 138.09 |  |  |  |  |
Exercised |  | (46) |  |  | 83.43 |  |  |  |  |
Forfeited |  | (11) |  |  | 131.79 |  |  |  |  |
Canceled |  | (1) |  |  | 138.07 |  |  |  |  |
Outstanding as of June 30, 2023 |  | 1,096 |  |  | $ | 103.96 |  |  | $ | 35,430 |  |  | 6.2
Exercisable as of June 30, 2023 |  | 728 |  |  | $ | 87.95 |  |  | $ | 34,170 |  |  | 4.8
For the Six Months Ended June 30, 2022 |  | Shares (000s) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term
Outstanding as of December 31, 2021 |  | 867 |  |  | $ | 88.19 |  |  | $ | 69,711 |  |  |
Granted |  | 109 |  |  | 138.07 |  |  |  |  |
Exercised |  | (18) |  |  | 72.74 |  |  |  |  |
Forfeited |  | (6) |  |  | 120.36 |  |  |  |  |
Canceled |  | — |  |  | — |  |  |  |  |
Outstanding as of June 30, 2022 |  | 952 |  |  | $ | 93.99 |  |  | $ | 34,907 |  |  | 6.4
Exercisable as of June 30, 2022 |  | 666 |  |  | $ | 81.11 |  |  | $ | 32,409 |  |  | 5.4
ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The weighted average fair values of the stock options granted under the Plans were calculated using either the Black-Scholes model or the Binomial model, whichever was deemed to be most appropriate. For the six months ended June 30, 2023, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions: dividend yields of 0.5%; expected volatilities of 28%; risk-free interest rates of 3.9%; and expected lives of 4.8 years. For the six months ended June 30, 2022, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions: dividend yields of 0.5%; expected volatilities of 31%; risk-free interest rates of 2.0%; and expected lives of 4.9 years. The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior. Expected volatility is based on the Company’s historical volatility levels. Dividend yields are based on the Company’s historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life. Other information pertaining to option activity during the three and six months ended June 30, 2023 and 2022 is as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Weighted-average fair value of options granted |  | $ | — |  |  | $ | — |  |  | $ | 40.91 |  |  | $ | 40.26 |
Total intrinsic value of stock options exercised ($000s) |  | $ | 597 |  |  | $ | 495 |  |  | $ | 2,181 |  |  | $ | 1,149 |
Non-vested restricted stock activity for the six months ended June 30, 2023 and 2022 is summarized below:
|  | Six Months Ended June 30,
|  | 2023 |  | 2022
|  | Shares (000s) |  | Weighted Average Grant Date Fair Value |  | Shares (000s) |  | Weighted Average Grant Date Fair Value
Non-vested balance as of December 31 |  | 122 |  |  | $ | 124.42 |  |  | 166 |  |  | $ | 99.70 |
Granted |  | 39 |  |  | 137.48 |  |  | 34 |  |  | 137.74 |
Vested |  | (32) |  |  | 110.95 |  |  | (77) |  |  | 80.84 |
Forfeited |  | (4) |  |  | 128.06 |  |  | (3) |  |  | 116.73 |
Non-vested balance as of June 30 |  | 125 |  |  | $ | 131.76 |  |  | 120 |  |  | $ | 122.03 |
Non-vested performance share activity for the six months ended June 30, 2023 and 2022 is summarized below:
|  | Six Months Ended June 30,
|  | 2023 |  | 2022
|  | Shares (000s) |  | Weighted Average Grant Date Fair Value |  | Shares (000s) |  | Weighted Average Grant Date Fair Value
Non-vested balance as of December 31 |  | 70 |  |  | $ | 127.69 |  |  | 69 |  | $ | 110.72 |
Granted |  | 42 |  |  | 139.66 |  |  | 39 |  | 114.22
Vested |  | (36) |  |  | 98.84 |  |  | (35) |  | 53.17
Forfeited |  | — |  |  | — |  |  | (3) |  | 84.09
Non-vested balance as of June 30 |  | 76 |  |  | $ | 135.25 |  |  | 70 |  | $ | 127.69 |
The performance share (“PS”) awards provide the recipients the right to receive a certain number of shares of the Company’s common stock in the future, subject to an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and relative total shareholder return (TSR) where vesting is dependent upon the Company’s TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents. Expense is measured based on the fair value at the date of grant utilizing a Black-Scholes methodology to produce a Monte-Carlo simulation model which allows for the incorporation of the performance hurdles that must be met before the PS vests. The assumptions used in the fair value determination were risk free interest rates of 4.2% and 1.8%; dividend yields of 0.5% and 0.5%; volatilities of 32% and 32%; and initial TSR’s of 4.2% and -15.7%, in each case for the six months ended June 30, 2023 and 2022, respectively. Expense is estimated based on the number of shares expected to vest, assuming the requisite service period is rendered and the probable outcome of the performance condition is achieved. The estimate is revised if subsequent information indicates that the actual number of shares likely to vest differs from previous estimates. Expense is ultimately adjusted based on the actual achievement of service and performance targets. The PS will cliff vest 100% at the end of the third year following the grant in accordance with the performance metrics set forth. As of June 30, 2023 and 2022, there were $26,244 and $19,988, respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans. As of June 30, 2023, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.1 years. The Company estimates that share-based compensation expense for the year ended December 31, 2023 will be approximately $16,000. Repurchase of Common Stock The Company's Board of Directors has approved a stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 3,099,224 shares have been purchased. The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors. Open market repurchases of common stock could be made pursuant to trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. The Company also repurchases (withholds) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan. Such repurchases of shares from employees are funded with existing cash on hand. During the six months ended June 30, 2023, the Company purchased 28,676 shares from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan. During the six months ended June 30, 2022, the Company purchased 250,661 shares from open market purchases and from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan. These shares were purchased at an average cost of $136.85 and $140.42, respectively.

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