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Earnings Per Share and Stock Plans | 12 Months Ended
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Mar. 31, 2022
Earnings Per Share [Abstract] |
Earnings Per Share and Stock Plans | Earnings per Share and Stock Plans Earnings per Share The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.” Basic earnings per share exclude any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share include any dilutive effects of stock options, unvested restricted stock units, unvested performance shares, and unvested restricted stock. Stock options and performance shares with respect to 156,000 and 244,000 common shares were not included in the computation of diluted earnings per share for fiscal 2022 and 2021, respectively, because they were antidilutive. For the years ended March 31, 2022 and 2021, an additional 120,000 and 105,000, respectively, in contingently issuable shares were not included in the computation of diluted earnings per share because a performance condition had not yet been met. The following table sets forth the computation of basic and diluted earnings per share (share data presented in thousands):
|  | Year Ended March 31,
Numerator for basic and diluted earnings per share: |  | 2022 |  | 2021 |  | 2020
Net income |  | $ | 29,660 |  |  | $ | 9,106 |  |  | $ | 59,672 |
Denominators: |  |  |  |  |  |
Weighted-average common stock outstanding— denominator for basic EPS |  | 28,040 |  |  | 23,897 |  |  | 23,619 |
Effect of dilutive employee stock options, RSU's and performance shares |  | 361 |  |  | 276 |  |  | 236 |
Adjusted weighted-average common stock outstanding and assumed conversions— denominator for diluted EPS |  | 28,401 |  |  | 24,173 |  |  | 23,855 |
The weighted-average common stock outstanding shown above is net of unallocated ESOP shares (see Note 14). In May of fiscal 2022, the Company issued 4,312,500 shares of common stock raising $198,705,000 net of fees in connection with the Dorner acquisition. Refer to Note 3 for additional details of this transaction. Stock Plans The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation,” applying the modified prospective method. This Statement requires all equity-based payments to employees, including grants of employee stock options, to be recognized in the statement of earnings based on the grant date fair value of the award. Under the modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption. The Company grants share based compensation to eligible participants under the 2016 Long Term Incentive Plan, as Amended and Restated in June 2019 ("2016 LTIP"). The total number of shares of common stock with respect to which awards may be granted under the 2016 LTIP were increased by 2,500,000 as a result of the June 2019 amendment. Shares not previously authorized for issuance under any of the prior stock plans, and shares not issued or subject to outstanding awards under the prior stock plans are still available for issuance. Details of the shares granted under these plans are discussed below. Prior to the adoption of the 2016 LTIP, the Company granted stock awards under the 2010 Long Term Incentive Plan and the 2006 Long Term Incentive Plan, collectively referred to as the “Prior Stock Plans.” Stock based compensation expense was $11,246,000, $8,022,000, and $4,507,000 for fiscal 2022, 2021, and 2020, respectively. The lower stock based compensation expense in fiscal 2020 is primarily related to shares that were forfeited when the Company's prior Chief Executive Officer (CEO) resigned on January 10, 2020. The forfeiture resulted in the reversal of $1,981,000 in stock compensation expense during fiscal 2020 recorded as a reduction to General and administrative expenses. Stock compensation expense is included in cost of products sold, selling, general and administrative, and research and development expenses depending on the nature of the service of the employee receiving the award. The Company recognizes expense for all share–based awards over the service period, which is the shorter of the period until the employees’ retirement eligibility dates or the service period for the award, for awards expected to vest. Accordingly, expense is generally reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company recognized compensation expense for stock option awards and unvested restricted share awards that vest based on time or market parameters straight-line over the requisite service period for vesting of the award. Long Term Incentive Plan Under the 2016 LTIP, t he total number of shares of common stock with respect to which awards may be granted under the plan is 2,500,000 in addition to shares not previously authorized for issuance under any of the prior stock plans and any shares not issued or subject to outstanding awards under the prior stock plans. As of March 31, 2022, 1,799,000 shares remain available for future grants. The 2016 LTIP was designed as an omnibus plan and awards may consist of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, or stock bonuses. Under the 2016 LTIP, the granting of awards to employees may take the form of options, restricted shares, and performance shares. The Compensation Committee of our Board of Directors determines the number of shares, the term, the frequency and date, the type, the exercise periods, any performance criteria pursuant to which awards may be granted, and the restriction and other terms and conditions of each grant in accordance with terms of the Plan. In connection with the acquisition of Magnetek, the Company agreed to continue the 2014 Stock Incentive Plan of Magnetek, Inc. (the "Magnetek Stock Plan"). In doing so, the Company has available under the Magnetek Stock Plan 164,461 of the Company's shares which can be granted to certain employees as stock-based compensation. Stock Option Plans Prior to fiscal 2021, options outstanding under the 2016 LTIP generally become exercisable over a 4-year period at a rate of 25% per year commencing one year from the date of grant and have an exercise price of not less than 100% of the fair market value of the common stock on the date of grant. For fiscal 2021 and fiscal 2022, options outstanding under the 2016 LTIP generally become exercisable over a 3-year period at a rate of 33% per year commencing one year from the date of grant and have an exercise price of not less than 100% of the fair market value of the common stock on the date of grant. A summary of option transactions during each of the three fiscal years in the period ended March 31, 2022 is as follows:
|  | Shares |  | Weighted- average Exercise Price per share |  | Weighted- average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value
Outstanding at April 1, 2019 |  | 834,777 |  |  | 23.52 |  |  | 7.04 |  | $ | 9,602 |
Granted |  | 171,515 |  |  | 35.16 |  |  |  |  |
Exercised |  | (296,027) |  |  | 20.26 |  |  |  |  |
Cancelled |  | (183,471) |  |  | 31.01 |  |  |  |  |
Outstanding at March 31, 2020 |  | 526,794 |  |  | 26.53 |  |  | 6.93 |  | $ | 1,518 |
Granted |  | 242,178 |  |  | 26.74 |  |  |  |  |
Exercised |  | (97,398) |  |  | 20.24 |  |  |  |  |
Cancelled |  | (13,760) |  |  | 31.85 |  |  |  |  |
Outstanding at March 31, 2021 |  | 657,814 |  |  | 27.45 |  |  | 7.29 |  | $ | 16,652 |
Granted |  | 159,643 |  |  | 54.06 |  |  |  |  |
Exercised |  | (105,132) |  |  | 25.24 |  |  |  |  |
Cancelled |  | (32,540) |  |  | 31.71 |  |  |  |  |
Outstanding at March 31, 2022 |  | 679,785 |  |  | 33.82 |  |  | 7.08 |  | $ | 15,294 |
Exercisable at March 31, 2022 |  | 322,218 |  |  | $ | 26.64 |  |  | 5.69 |  | $ | 10,190 |
The Company calculated intrinsic value for those options that had an exercise price lower than the market price of our common shares as of March 31, 2022. The aggregate intrinsic value of outstanding options as of March 31, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of our common shares for the 523,000 options that were in-the-money at that date. The aggregate intrinsic value of exercisable options as of March 31, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of our common shares for the 321,000 exercisable options that were in-the-money at that date. The Company's closing stock price was $42.40 as of March 31, 2022. The total intrinsic value of stock options exercised was $2,513,000, $1,749,000, and $5,438,000 during fiscal 2022, 2021, and 2020, respectively. The grant date fair value of options that vested was $11.19, $9.15, and $7.43 during fiscal 2022, 2021, and 2020, respectively. As of March 31, 2022, $2,537,000 of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 1.6 years. Exercise prices for options outstanding as of March 31, 2022, ranged from $13.43 to $54.26. The following table provides certain information with respect to stock options outstanding at March 31, 2022:
|  | Stock Options Outstanding |  | Weighted-average Exercise Price |  | Weighted-average Remaining Contractual Life
Range of Exercise Prices |  |  |  |  |  |
$10.01 to 20.00 |  | 71,378 |  |  | $ | 15.23 |  |  | 3.98
$20.01 to 30.00 |  | 235,876 |  |  | $ | 25.17 |  |  | 6.69
$30.01 to $40.00 |  | 216,117 |  |  | $ | 34.79 |  |  | 7.09
$40.01 to $50.00 |  | 6,365 |  |  | $ | 49.36 |  |  | 9.13
$50.01 to $60.00 |  | 150,049 |  | $ | 54.26 |  |  | 9.04
|  | 679,785 |  |  | $ | 33.82 |  |  | 7.08
The following table provides certain information with respect to stock options exercisable at March 31, 2022:
Range of Exercise Prices |  | Stock Options Exercisable |  | Weighted- average Exercise Price per share
$10.01 to 20.00 |  | 71,378 |  |  | $ | 15.23 |
$20.01 to 30.00 |  | 138,200 |  |  | 24.93 |
$30.01 to $40.00 |  | 111,122 |  |  | 35.73 |
$40.01 to $50.00 |  | — |  |  | — |
$50.01 to $60.00 |  | 1,518 |  |  | 54.26 |
|  | 322,218 |  |  | $ | 26.64 |
The fair value of stock options granted was estimated on the date of grant using a Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The weighted-average grant date fair value of the options was $17.71, $8.46, and $12.39 for options granted during fiscal 2022, 2021, and 2020, respectively. The following table provides the weighted-average assumptions used to value stock options granted during fiscal 2022, 2021, and 2020:
|  | Year Ended March 31, 2022 |  | Year Ended March 31, 2021 |  | Year Ended March 31, 2020
Assumptions: |  |  |  |  |  |
Risk-free interest rate |  | 0.35 | % |  | 0.23 | % |  | 2.23 | %
Dividend yield |  | 0.44 | % |  | 0.90 | % |  | 0.68 | %
Volatility factor |  | 0.372 |  | 0.380 |  | 0.372
Expected life |  | 5.5 years |  | 5.5 years |  | 5.5 years
To determine expected volatility, the Company uses historical volatility based on daily closing prices of its Common Stock over periods that correlate with the expected terms of the options granted. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate term of the options granted. Expected dividends are based on the Company's history and expectation of dividend payouts. The expected term of stock options is based on vesting schedules, expected exercise patterns and contractual terms. Restricted Stock Units The Company granted restricted stock units under the 2016 LTIP during fiscal 2022, 2021, and 2020 to employees as well as to the Company’s non-executive directors as part of their annual compensation. Prior to fiscal 2021, restricted stock units for employees vest ratably based on service one-quarter after each of years one, two, three, and four. For fiscal 2021 and 2022, restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three. A summary of the restricted stock unit awards granted under the Company’s LTIP plan as of March 31, 2022 is as follows:
|  | Shares |  | Weighted-average Grant Date Fair Value per share
Unvested at April 1, 2019 |  | 230,197 |  |  | $ | 30.22 |
Granted |  | 151,351 |  |  | 38.40 |
Vested |  | (106,792) |  |  | 31.90 |
Forfeited |  | (62,035) |  |  | 31.61 |
Unvested at March 31, 2020 |  | 212,721 |  |  | $ | 35.20 |
Granted |  | 195,181 |  |  | 29.16 |
Vested |  | (125,150) |  |  | 31.85 |
Forfeited |  | (12,963) |  |  | 34.74 |
Unvested at March 31, 2021 |  | 269,789 |  |  | $ | 32.41 |
Granted |  | 133,082 |  |  | 49.98 |
Vested |  | (138,407) |  |  | 35.71 |
Forfeited |  | (19,728) |  |  | 35.41 |
Unvested at March 31, 2022 |  | 244,736 |  |  | $ | 39.86 |
Total unrecognized compensation cost related to unvested restricted stock units as of March 31, 2022 is $4,724,000 and is expected to be recognized over a weighted average period of 1.6 years. The fair value of restricted stock units that vested during the year ended March 31, 2022 and 2021 was $4,943,000 and $3,986,000, respectively. Performance Shares The Company granted performance shares under the 2016 LTIP during fiscal 2022, 2021, and 2020. Performance based shares are recognized as compensation expense based upon their grant date fair value and to the extent it is probable that the performance conditions will be met. This expense is recognized ratably over the three year period that these shares are restricted. Fiscal 2019 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2020. During fiscal 2020, the Company determined that the fiscal year 2019 performance shares were earned based on the performance condition being met. Fiscal 2020 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2021. During fiscal 2021, the Company determined that this performance condition would not be met. Fiscal 2021 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Return on Invested Capital ("ROIC") for the twelve months ended March 31, 2023. At this time the Company believes the March 31, 2023 performance condition will be met. Fiscal 2022 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated ROIC for the twelve months ended March 31, 2024. At this time the Company believes the March 31, 2024 performance condition will be met. A summary of the performance shares transactions during each of the three fiscal years in the period ended March 31, 2022 is as follows:
|  | Shares |  | Weighted-average Grant Date Fair Value per share
Unvested at April 1, 2019 |  | 153,386 |  |  | $ | 23.11 |
Granted |  | 38,585 |  |  | 37.67 |
Forfeited |  | (125,251) |  |  | 22.67 |
Unvested at March 31, 2020 |  | 66,720 |  |  | $ | 32.36 |
Granted |  | 83,164 |  |  | 25.97 |
Vested |  | (23,201) |  |  | 25.28 |
Forfeited |  | (3,451) |  |  | 25.28 |
Unvested at March 31, 2021 |  | 123,232 |  |  | $ | 29.58 |
Granted |  | 41,322 |  |  | 52.01 |
Vested |  | (18,296) |  |  | 36.43 |
Forfeited |  | (8,226) |  |  | 30.25 |
Unvested at March 31, 2022 |  | 138,032 |  |  | $ | 35.35 |
The Company had $1,968,000 in unrecognized compensation costs related to the unvested performance share awards as of March 31, 2022. Directors Stock During fiscal 2022, 2021, and 2020, a total of 21,928, 16,209, and 11,768 shares of stock, respectively, were granted under the 2016 LTIP to the Company’s non-executive directors as part of their annual compensation. The weighted average fair value grant price of those shares was $43.73, $33.32, and $39.09 for fiscal 2022, 2021, and 2020, respectively. The expense related to the shares for fiscal 2022 was $959,000 and $540,000 and $460,000 for fiscal years 2021 and 2020. Dividends On March 21, 2022, the Company's Board of Directors approved payment of a quarterly dividend of $0.07 per common share, representing an annual dividend rate of $0.28 per share. The dividend was paid on May 16, 2022 to shareholders of record on May 6, 2022 and totaled approximately $2,000,000. Stock Repurchase Plan On March 26, 2019, the Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $20 million of the Company's common stock. No repurchases were made during the fiscal years ended March 31, 2022 or 2021.

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