x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 46-4007249 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification Number) |
Large accelerated filer ¨ | Accelerated filer x | Non-accelerated filer ¨ | Smaller reporting company ¨ | Emerging growth company x |
(Do not check if a smaller reporting company) |
Page | |||
June 30, 2018 | December 31, 2017 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 41,776 | $ | 64,533 | ||
Accounts receivable, net of allowance for doubtful accounts of $1,575 and $1,550, respectively | 39,916 | 71,509 | ||||
Inventories | 27,278 | 24,109 | ||||
Other current assets | 25,017 | 18,684 | ||||
Total current assets | 133,987 | 178,835 | ||||
Property and equipment, net | 13,645 | 12,200 | ||||
Goodwill | 5,680 | 9,402 | ||||
Intangible assets, net | 736,940 | 757,882 | ||||
Deferred income tax assets | 7,605 | 8,198 | ||||
Other assets | 17,289 | 16,746 | ||||
TOTAL ASSETS | $ | 915,146 | $ | 983,263 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 7,769 | $ | 15,014 | ||
Current portion of long-term debt | 6,995 | 7,926 | ||||
Income taxes payable | 4,715 | 5,931 | ||||
Accrued expenses and other current liabilities | 50,046 | 65,809 | ||||
Total current liabilities | 69,525 | 94,680 | ||||
Long-term debt | 401,469 | 402,868 | ||||
Other noncurrent liabilities | 37,644 | 38,505 | ||||
Deferred income tax liabilities | 30,031 | 31,130 | ||||
Total liabilities | 538,669 | 567,183 | ||||
Commitments and contingencies (see Note 17) | ||||||
Stockholders’ equity: | ||||||
Common stock, par value $0.0001; 400,000,000 shares authorized, 51,148,343 and 51,002,234 shares issued and 50,486,962 and 50,340,853 shares outstanding at June 30, 2018 and December 31, 2017, respectively | 5 | 5 | ||||
Preferred stock; par value $0.0001, 1 share authorized and outstanding at June 30, 2018 and December 31, 2017 | — | — | ||||
Treasury stock; par value $0.0001, 661,381 shares at June 30, 2018 and December 31, 2017 | (3,885 | ) | (3,885 | ) | ||
Additional paid-in capital | 534,755 | 533,015 | ||||
Accumulated deficit | (140,080 | ) | (108,729 | ) | ||
Accumulated other comprehensive loss | (22,834 | ) | (12,769 | ) | ||
Total AgroFresh stockholders’ equity | 367,961 | 407,637 | ||||
Non-controlling interest | 8,516 | 8,443 | ||||
Total stockholders' equity | 376,477 | 416,080 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 915,146 | $ | 983,263 |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||
Net sales | $ | 18,420 | $ | 16,389 | $ | 56,771 | $ | 49,119 | |||||
Cost of sales (excluding amortization, shown separately below) | 5,402 | 3,906 | 16,248 | 9,745 | |||||||||
Gross profit | 13,018 | 12,483 | 40,523 | 39,374 | |||||||||
Research and development expenses | 3,733 | 3,735 | 6,802 | 7,032 | |||||||||
Selling, general, and administrative expenses | 15,609 | 13,435 | 31,920 | 29,866 | |||||||||
Amortization of intangibles | 11,402 | 10,445 | 22,341 | 20,890 | |||||||||
Change in fair value of contingent consideration | 98 | (1,211 | ) | 236 | (996 | ) | |||||||
Operating loss | (17,824 | ) | (13,921 | ) | (20,776 | ) | (17,418 | ) | |||||
Other income | 538 | 215 | 608 | 255 | |||||||||
Gain on foreign currency exchange | 3,272 | 7,968 | 5,203 | 11,071 | |||||||||
Interest expense, net | (8,763 | ) | (8,564 | ) | (17,118 | ) | (18,857 | ) | |||||
Loss before income taxes | (22,777 | ) | (14,302 | ) | (32,083 | ) | (24,949 | ) | |||||
Benefit for income taxes | (4,375 | ) | (16,909 | ) | (805 | ) | (15,527 | ) | |||||
Net (loss) income including non-controlling interests | $ | (18,402 | ) | $ | 2,607 | $ | (31,278 | ) | $ | (9,422 | ) | ||
Less: Net (loss) income attributable to non-controlling interests | (18 | ) | — | 73 | — | ||||||||
Net (loss) income attributable to AgroFresh Solutions, Inc | $ | (18,384 | ) | $ | 2,607 | $ | (31,351 | ) | $ | (9,422 | ) | ||
Net (loss) income per share: | |||||||||||||
Basic | $ | (0.37 | ) | $ | 0.05 | $ | (0.63 | ) | $ | (0.19 | ) | ||
Diluted | $ | (0.37 | ) | $ | 0.05 | $ | (0.63 | ) | $ | (0.19 | ) | ||
Weighted average shares outstanding: | |||||||||||||
Basic | 49,864,822 | 49,670,621 | 49,814,744 | 49,941,993 | |||||||||
Diluted | 49,864,822 | 50,035,343 | 49,814,744 | 49,941,993 |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||
Net (loss) income | $ | (18,402 | ) | $ | 2,607 | $ | (31,278 | ) | $ | (9,422 | ) | ||
Other comprehensive income (loss): | |||||||||||||
Unrealized gain on hedging activity, net of tax of $238 and $832 | 843 | — | 2,970 | — | |||||||||
Foreign currency translation adjustments | (16,064 | ) | (8,415 | ) | (13,035 | ) | (10,285 | ) | |||||
Comprehensive loss | $ | (33,623 | ) | $ | (5,808 | ) | $ | (41,343 | ) | $ | (19,707 | ) |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | |||||||||||||||||||||
Balance at December 31, 2016 | 1 | $ | — | 50,698,587 | $ | 5 | $ | (3,885 | ) | $ | 475,598 | $ | (132,200 | ) | $ | (4,373 | ) | $ | 335,145 | ||||||
Stock-based compensation | — | — | — | — | — | 806 | — | — | 806 | ||||||||||||||||
Transfer of director compensation from liability to equity | — | — | — | — | — | 80 | — | — | 80 | ||||||||||||||||
Issuance of restricted stock | — | — | 300,499 | — | — | — | — | — | — | ||||||||||||||||
Settlement of Dow Liabilities, net of income tax | — | — | — | — | — | 55,089 | — | — | 55,089 | ||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | (9,422 | ) | (10,285 | ) | (19,707 | ) | |||||||||||||
Balance at June 30, 2017 | 1 | $ | — | 50,999,086 | $ | 5 | $ | (3,885 | ) | $ | 531,573 | $ | (141,622 | ) | $ | (14,658 | ) | $ | 371,413 |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | ||||||||||||||||||||||||
Balance at December 31, 2017 | 1 | $ | — | 51,002,234 | $ | 5 | $ | (3,885 | ) | $ | 533,015 | $ | (108,729 | ) | $ | (12,769 | ) | $ | 8,443 | $ | 416,080 | |||||||
Stock-based compensation | — | — | — | — | — | 1,740 | — | — | — | 1,740 | ||||||||||||||||||
Issuance of stock, net of forfeitures | — | — | 146,109 | — | — | — | — | — | — | — | ||||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | (31,351 | ) | (10,065 | ) | 73 | (41,343 | ) | |||||||||||||||
Balance at June 30, 2018 | 1 | $ | — | 51,148,343 | $ | 5 | $ | (3,885 | ) | $ | 534,755 | $ | (140,080 | ) | $ | (22,834 | ) | $ | 8,516 | $ | 376,477 |
(in thousands) | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||
Cash flows from operating activities: | ||||||
Net loss | $ | (31,278 | ) | $ | (9,422 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Depreciation and amortization | 22,953 | 22,046 | ||||
Provision for bad debts | 182 | 789 | ||||
Stock-based compensation | 1,900 | 806 | ||||
Pension expense | 64 | 153 | ||||
Amortization of deferred financing costs | 1,214 | 1,166 | ||||
Accretion of contingent consideration | 2,043 | 5,515 | ||||
Increase (decrease) in fair value of contingent consideration | 236 | (996 | ) | |||
Deferred income taxes | (506 | ) | (19,726 | ) | ||
Loss on sales of property | — | 80 | ||||
Provision for inventory obsolescence | — | 89 | ||||
Other | 114 | 43 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 27,340 | 37,232 | ||||
Inventories | (5,083 | ) | (2,758 | ) | ||
Prepaid expenses and other current assets | (8,152 | ) | 198 | |||
Accounts payable | (7,300 | ) | (19,864 | ) | ||
Accrued expenses and other liabilities | (8,434 | ) | (1,987 | ) | ||
Income taxes payable | (1,216 | ) | 2,581 | |||
Other assets and liabilities | 2,098 | 205 | ||||
Net cash (used in) provided by operating activities | (3,825 | ) | 16,150 | |||
Cash flows from investing activities: | ||||||
Cash paid for property and equipment | (2,327 | ) | (2,835 | ) | ||
Proceeds from sale of property | — | 9 | ||||
Asset Acquisition | (1,587 | ) | — | |||
Other investments | — | (1,050 | ) | |||
Net cash used in investing activities | (3,914 | ) | (3,876 | ) | ||
Cash flows from financing activities: | ||||||
Payment of Dow liabilities settlement | (10,000 | ) | (10,000 | ) | ||
Repayment of long term debt | (3,330 | ) | (2,125 | ) | ||
Net cash used in financing activities | (13,330 | ) | (12,125 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (1,688 | ) | 1,131 | |||
Net (decrease) increase in cash and cash equivalents | (22,757 | ) | 1,280 | |||
Cash and cash equivalents, beginning of period | $ | 64,533 | 77,312 | |||
Cash and cash equivalents, end of period | $ | 41,776 | $ | 78,592 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for: | ||||||
Cash paid for interest | $ | 15,777 | $ | 12,309 | ||
Cash paid for income taxes | $ | 4,245 | $ | 1,291 | ||
Supplemental schedule of non-cash investing and financing activities: | ||||||
Accrued purchases of property and equipment | $ | — | $ | 254 | ||
Settlement of Dow liabilities not resulting from cash payment, net of deferred income taxes | $ | — | $ | 55,089 |
1. | Description of Business |
2. | Basis of Presentation and Summary of Significant Accounting Policies |
Revenues for the three months ended June 30, 2018 (in thousands) | |||||||||||||||||||
Region | North America | EMEA | Latin America | Asia Pacific | Total Revenue | ||||||||||||||
Product | |||||||||||||||||||
1-MCP based | $ | 691 | $ | 4,040 | $ | 4,432 | $ | 4,688 | $ | 13,851 | |||||||||
Fungicides, waxes, coatings, biocides | — | 3,345 | — | — | 3,345 | ||||||||||||||
Other* | 284 | 191 | 90 | 659 | 1,224 | ||||||||||||||
$ | 975 | $ | 7,576 | $ | 4,522 | $ | 5,347 | $ | 18,420 | ||||||||||
Pattern of Revenue Recognition | |||||||||||||||||||
Products transferred at a point in time | $ | 943 | $ | 7,516 | $ | 4,501 | $ | 4,688 | $ | 17,648 | |||||||||
Services transferred over time | 32 | 60 | 21 | 659 | 772 | ||||||||||||||
$ | 975 | $ | 7,576 | $ | 4,522 | $ | 5,347 | $ | 18,420 |
Revenues for the six months ended June 30, 2018 (in thousands) | |||||||||||||||||||
Region | North America | EMEA | Latin America | Asia Pacific | Total Revenue | ||||||||||||||
Product | |||||||||||||||||||
1-MCP based | $ | 2,587 | $ | 9,163 | $ | 25,379 | $ | 9,081 | $ | 46,210 | |||||||||
Fungicides, waxes, coatings, biocides | — | 8,932 | — | — | 8,932 | ||||||||||||||
Other* | 383 | 279 | 207 | 760 | 1,629 | ||||||||||||||
$ | 2,970 | $ | 18,374 | $ | 25,586 | $ | 9,841 | $ | 56,771 | ||||||||||
Pattern of Revenue Recognition | |||||||||||||||||||
Products transferred at a point in time | $ | 2,925 | $ | 18,311 | $ | 25,560 | $ | 9,081 | $ | 55,877 | |||||||||
Services transferred over time | 45 | 63 | 26 | 760 | 894 | ||||||||||||||
$ | 2,970 | $ | 18,374 | $ | 25,586 | $ | 9,841 | $ | 56,771 |
Balance at January 1, 2018 | Additions | Deductions | Balance at June 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Contract assets: | ||||||||||||||||
Unbilled revenue | $ | 739 | $ | 44 | $ | (739 | ) | $ | 44 | |||||||
Contract liabilities: | ||||||||||||||||
Deferred revenue | $ | 100 | $ | 2,008 | $ | (903 | ) | $ | 1,205 |
Balance at June 30, 2018 (in thousands) | As reported | ASC 606 Adjustments | Balances without adoption of ASC 606 | ||||||
Consolidated Balance Sheet | |||||||||
Liabilities | |||||||||
Accrued expenses and other current liabilities | $ | 50,046 | $ | (993 | ) | $ | 49,053 | ||
Equity | |||||||||
Accumulated deficit | $ | (140,080 | ) | $ | 993 | $ | (139,087 | ) |
Three months ended June 30, 2018 (in thousands) | As reported | ASC 606 Adjustments | Balances without adoption of ASC 606 | ||||||
Consolidated Statements of Operations | |||||||||
Revenue | |||||||||
Net sales | $ | 18,420 | $ | 663 | $ | 19,083 | |||
Net loss attributable to AgroFresh Solutions, Inc | $ | (18,384 | ) | $ | 517 | $ | (17,867 | ) |
Six months ended June 30, 2018 (in thousands) | As reported | ASC 606 Adjustments | Balances without adoption of ASC 606 | ||||||
Consolidated Statements of Operations | |||||||||
Revenue | |||||||||
Net sales | $ | 56,771 | $ | 993 | $ | 57,764 | |||
Net loss attributable to AgroFresh Solutions, Inc | (31,351 | ) | $ | 775 | $ | (30,576 | ) |
3. | Business Combinations and Asset Acquisition |
4. | Related Party Transactions |
(amounts in thousands) | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||
Amortization of prepayment related to set-up of transition services | $ | — | $ | 414 | |||
Ongoing costs of transition services agreement | 168 | 1,485 | |||||
Rent expense | — | 496 | |||||
Other expenses | 1,415 | 319 | |||||
Total incurred expenses | $ | 1,583 | $ | 2,714 |
5. | Inventories |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Raw material | $ | 1,723 | $ | 2,148 | |||
Work-in-process | 1,492 | 6,585 | |||||
Finished goods | 23,266 | 14,647 | |||||
Supplies | 797 | 729 | |||||
Total inventories | $ | 27,278 | $ | 24,109 |
6. | Other Current Assets |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
VAT receivable | $ | 10,298 | $ | 14,088 | |||
Prepaid income tax asset | 6,327 | 2,314 | |||||
Other | 8,392 | 2,282 | |||||
Total other current assets | $ | 25,017 | $ | 18,684 |
7. | Property and Equipment |
(in thousands, except for useful life data) | Useful life (years) | June 30, 2018 | December 31, 2017 | ||||||
Leasehold improvements | 7-20 | $ | 2,983 | $ | 2,976 | ||||
Machinery & equipment | 1-12 | 7,569 | 7,853 | ||||||
Furniture | 1-12 | 1,715 | 1,698 | ||||||
Construction in progress | 4,521 | 2,075 | |||||||
16,788 | 14,602 | ||||||||
Less: accumulated depreciation | (3,143 | ) | (2,402 | ) | |||||
Total property and equipment, net | $ | 13,645 | $ | 12,200 |
8. | Goodwill and Intangible Assets |
(in thousands) | Goodwill | ||
Balance as of December 31, 2017 | $ | 9,402 | |
Measurement period adjustment | (3,654 | ) | |
Foreign currency translation | (68 | ) | |
Balance as of June 30, 2018 | $ | 5,680 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||
Other intangible assets: | |||||||||||||||||||
Developed technology | $ | 759,374 | $ | (114,916 | ) | $ | 644,458 | $ | 759,374 | $ | (94,886 | ) | $ | 664,488 | |||||
In-process research and development | 39,000 | (3,972 | ) | 35,028 | 39,000 | (2,889 | ) | 36,111 | |||||||||||
Trade name | 29,816 | — | 29,816 | 29,816 | — | 29,816 | |||||||||||||
Service provider network | 2,000 | — | 2,000 | 2,000 | — | 2,000 | |||||||||||||
Customer relationships | 20,306 | (972 | ) | 19,334 | 20,306 | (806 | ) | 19,500 | |||||||||||
Software | 7,581 | (1,344 | ) | 6,237 | 1,274 | (404 | ) | 870 | |||||||||||
Software not yet placed in service | — | — | — | 5,022 | 5,022 | ||||||||||||||
Other | 100 | (33 | ) | 67 | 100 | (25 | ) | 75 | |||||||||||
Total intangible assets | $ | 858,177 | $ | (121,237 | ) | $ | 736,940 | $ | 856,892 | $ | (99,010 | ) | $ | 757,882 |
(in thousands) | Amount | ||
2018 (remaining) | $ | 22,528 | |
2019 | 46,128 | ||
2020 | 46,109 | ||
2021 | 44,893 | ||
2022 | 43,673 | ||
Thereafter | 501,793 | ||
Total | $ | 705,124 |
9. | Accrued and Other Current Liabilities |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Tax amortization benefit contingency | $ | 11,820 | $ | 11,820 | |||
Additional consideration due seller | 928 | 693 | |||||
Dow settlement liability | 10,000 | ||||||
Accrued compensation and benefits | 8,750 | 8,932 | |||||
Accrued rebates payable | 5,696 | 5,027 | |||||
Insurance premium financing payable | 1 | 639 | |||||
Severance | 154 | 113 | |||||
Deferred revenue | 1,205 | 100 | |||||
Other notes payable | 1,281 | 5,056 | |||||
Accrued taxes | 9,620 | 7,848 | |||||
Accrued interest | 4,499 | 6,321 | |||||
Other | 6,092 | 9,260 | |||||
Total accrued and other current liabilities | $ | 50,046 | $ | 65,809 |
10. | Debt |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Total Term Loan outstanding | $ | 406,040 | $ | 407,109 | |||
Tecnidex loan outstanding | 2,424 | 3,685 | |||||
Less: Amounts due within one year | 6,995 | 7,926 | |||||
Total long-term debt due after one year | $ | 401,469 | $ | 402,868 |
(in thousands) | Amount | ||
2018 (remaining) | $ | 4,870 | |
2019 | 4,991 | ||
2020 | 4,250 | ||
2021 | 401,626 | ||
Total | $ | 415,737 |
11. | Other Noncurrent Liabilities |
(in thousands) | June 30, 2018 | December 31, 2017 | |||||
Tax amortization benefit contingency | $ | 33,605 | $ | 31,562 | |||
Other | 4,039 | 6,943 | |||||
Total other noncurrent liabilities | $ | 37,644 | $ | 38,505 |
12. | Severance |
13. | Stockholders’ Equity |
14. | Stock-based Compensation |
15. | Earnings Per Share |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||
Basic weighted-average common shares outstanding | 49,864,822 | 49,670,621 | 49,814,744 | 49,941,993 | |||||
Effect of dilutive options, performance stock units and restricted stock | — | 364,722 | — | — | |||||
Diluted weighted-average shares outstanding | 49,864,822 | 50,035,343 | 49,814,744 | 49,941,993 |
(in thousands, except share data) | Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||
Stock-based compensation awards(1): | |||||||||
Stock options | 613,243 | 577,500 | 613,243 | 921,970 | |||||
Restricted stock to non-directors | 480,323 | — | 400,546 | 934,819 | |||||
Restricted stock to directors | 69,495 | — | 69,018 | 141,957 | |||||
Warrants: | |||||||||
Private placement warrants | 6,160,000 | 6,160,000 | 6,160,000 | 6,160,000 | |||||
Public warrants | 9,823,072 | 9,823,072 | 9,823,072 | 9,823,072 |
(1) | SARs and Phantom Shares are payable in cash so will therefore have no impact on number of shares |
16. | Income Taxes |
17. | Commitments and Contingencies |
18. | Fair Value Measurements |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Tax amortization benefit contingency(1) | $ | — | $ | — | $ | 45,425 | $ | 45,425 | ||||
Contingent consideration(2) | — | — | 928 | 928 | ||||||||
Interest rate contract (3) | — | (3,325 | ) | — | (3,325 | ) | ||||||
Stock appreciation rights(4) | — | — | 156 | 156 | ||||||||
Phantom shares(5) | — | — | 348 | 348 | ||||||||
Total | $ | — | $ | (3,325 | ) | $ | 46,857 | $ | 43,532 |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Tax amortization benefit contingency(1) | $ | — | $ | — | $ | 43,382 | $ | 43,382 | ||||
Contingent consideration(2) | — | — | 691 | 691 | ||||||||
Interest rate contract (3) | — | 456 | — | 456 | ||||||||
Stock appreciation rights(4) | — | — | 268 | 268 | ||||||||
Phantom shares(5) | — | — | 186 | 186 | ||||||||
Total | $ | — | $ | 456 | $ | 44,527 | $ | 44,983 |
(1) | The fair value of the tax amortization benefit contingency is measured using an income approach based on the Company’s best estimate of the undiscounted cash payments to be made, with the current portion tax effected at 35.3% and the non-current portion tax effected at 21.5% due to the TCJA enacted in the U.S and discounted to present value utilizing an appropriate market discount rate. Per the TRA Amendment, payments due to Dow under the Tax Receivable Agreement were reduced from 85% to 50% of the applicable tax savings realized by the Company. The valuation technique used did not change during the six months ended June 30, 2018. |
(2) | The fair value of the contingent consideration related to the Tecnidex acquisition. |
(3) | The derivative assets and liabilities relate to an interest rate derivative that is measured at fair value using observable market inputs such as interest rates, our own credit risks as well as an evaluation of the counterparts' credit risks. The fair value for the six months ended June 30, 2018 resulted in an asset balance while the three months ended December 31, 2017 was in a liability balance. |
(4) | The fair value of the stock appreciation rights was measured using a Black Scholes pricing model during the six months ended June 30, 2018. The valuation technique used did not change during the six months ended June 30, 2018. |
(5) | The fair value of phantom shares are based on the fair value of the Company's common stock. The valuation technique used did not change during the six months ended June 30, 2018. |
(in thousands) | Tax amortization benefit contingency | Contingent consideration related to acquisition | Interest rate contract | Stock appreciation rights | Phantom shares | Total | ||||||||||||
Balance, December 31, 2017 | $ | 43,382 | $ | 691 | $ | 456 | $ | 268 | $ | 186 | $ | 44,983 | ||||||
Accretion | 2,043 | — | — | — | — | 2,043 | ||||||||||||
Stock compensation expense | — | — | — | (112 | ) | 162 | 50 | |||||||||||
Mark-to-market adjustment | — | 237 | (3,781 | ) | (3,544 | ) | ||||||||||||
Balance, June 30, 2018 | $ | 45,425 | $ | 928 | $ | (3,325 | ) | $ | 156 | $ | 348 | $ | 43,532 |
(in thousands) | Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||
Net sales | $ | 18,420 | $ | 16,389 | $ | 56,771 | $ | 49,119 | |||||
Cost of sales (excluding amortization, shown separately below) | 5,402 | 3,906 | 16,248 | 9,745 | |||||||||
Gross profit | 13,018 | 12,483 | 40,523 | 39,374 | |||||||||
Research and development expenses | 3,733 | 3,735 | 6,802 | 7,032 | |||||||||
Selling, general, and administrative expenses | 15,609 | 13,435 | 31,920 | 29,866 | |||||||||
Amortization of intangibles | 11,402 | 10,445 | 22,341 | 20,890 | |||||||||
Change in fair value of contingent consideration | 98 | (1,211 | ) | 236 | (996 | ) | |||||||
Operating loss | (17,824 | ) | (13,921 | ) | (20,776 | ) | (17,418 | ) | |||||
Other income | 538 | 215 | 608 | 255 | |||||||||
Gain on foreign currency exchange | 3,272 | 7,968 | 5,203 | 11,071 | |||||||||
Interest expense, net | (8,763 | ) | (8,564 | ) | (17,118 | ) | (18,857 | ) | |||||
Loss before income taxes | (22,777 | ) | (14,302 | ) | (32,083 | ) | (24,949 | ) | |||||
Benefit for income taxes | (4,375 | ) | (16,909 | ) | (805 | ) | (15,527 | ) | |||||
Net (loss) income including non-controlling interests | $ | (18,402 | ) | $ | 2,607 | $ | (31,278 | ) | $ | (9,422 | ) | ||
Less: Net (loss) income attributable to non-controlling interests | (18 | ) | — | 73 | — | ||||||||
Net (loss) income attributable to AgroFresh Solutions, Inc | (18,384 | ) | 2,607 | $ | (31,351 | ) | $ | (9,422 | ) |
(in thousands) | Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||
GAAP net income (loss) | $ | (18,402 | ) | $ | 2,607 | $ | (31,278 | ) | $ | (9,422 | ) | ||
Provision (benefit) for income taxes | (4,375 | ) | (16,909 | ) | (805 | ) | (15,527 | ) | |||||
Interest expense(1) | 8,763 | 8,564 | 17,118 | 18,857 | |||||||||
Depreciation and amortization | 11,680 | 11,068 | 22,953 | 22,046 | |||||||||
Non-GAAP EBITDA | $ | (2,334 | ) | $ | 5,330 | $ | 7,988 | $ | 15,954 |
(in thousands) | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||
Net cash (used in) provided by operating activities | (3,825 | ) | 16,150 | |
Net cash used in investing activities | (3,914 | ) | (3,876 | ) |
Net cash used in financing activities | (13,330 | ) | (12,125 | ) |
Exhibit No. | Description | |
(1) | Second Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2015. | |
(4) | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation. | |
(1) | Series A Certificate of Designation. | |
(2) | Amended and Restated Bylaws. | |
(3) | Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of September 3, 2015. | |
(5) | Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of November 2, 2017. | |
(1) | Specimen Common Stock Certificate. | |
(1) | Specimen Warrant Certificate. | |
* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. | |
* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended. | |
* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | * | XBRL Instance Document |
101.SCH | * | XBRL Taxonomy Extension Schema Document |
101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | * | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | * | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
(1) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on August 6, 2015. |
(2) | Incorporated by reference to Annex A to the Company’s definitive proxy statement (File No. 001-36197) filed with the Securities and Exchange Commission on July 16, 2015. |
(3) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 10, 2015. |
(4) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on June 7, 2017. |
(5) | Incorporated by reference to an exhibit to the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 9, 2017. |
AgroFresh Solutions, Inc. | ||
Date: | August 15, 2018 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of AgroFresh Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 15, 2018 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of AgroFresh Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 15, 2018 | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer |
AgroFresh Solutions, Inc. | ||
Date: | August 15, 2018 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 02, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | AgroFresh Solutions, Inc. | |
Entity Central Index Key | 0001592016 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,486,962 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Allowance for doubtful accounts | $ 1,627 | $ 1,550 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 51,148,343 | 51,002,234 |
Common stock, shares outstanding (in shares) | 50,486,962 | 50,340,853 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1 | 1 |
Preferred stock, shares outstanding (in shares) | 1 | 1 |
Treasury stock (in shares) | 661,381 | 661,381 |
Treasury Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Net sales | $ 18,420 | $ 16,389 | $ 56,771 | $ 49,119 |
Cost of sales (excluding amortization, shown separately below) | 5,402 | 3,906 | 16,248 | 9,745 |
Gross profit | 13,018 | 12,483 | 40,523 | 39,374 |
Research and development expenses | 3,733 | 3,735 | 6,802 | 7,032 |
Selling, general, and administrative expenses | 15,609 | 13,435 | 31,920 | 29,866 |
Amortization of intangibles | 11,402 | 10,445 | 22,341 | 20,890 |
Change in fair value of contingent consideration | 98 | (1,211) | 236 | (996) |
Operating loss | (17,824) | (13,921) | (20,776) | (17,418) |
Other income | 538 | 215 | 608 | 255 |
Gain on foreign currency exchange | 3,272 | 7,968 | 5,203 | 11,071 |
Interest expense, net | (8,763) | (8,564) | (17,118) | (18,857) |
Loss before income taxes | (22,777) | (14,302) | (32,083) | (24,949) |
Benefit for income taxes | (4,375) | (16,909) | (805) | (15,527) |
Net (loss) income including non-controlling interests | (18,402) | 2,607 | (31,278) | (9,422) |
Less: Net (loss) income attributable to non-controlling interests | (18) | 0 | 73 | 0 |
Net (loss) income attributable to AgroFresh Solutions, Inc | $ (18,384) | $ 2,607 | $ (31,351) | $ (9,422) |
Net (loss) income per share: | ||||
Basic (in dollars per share) | $ (0.37) | $ 0.05 | $ (0.63) | $ (0.19) |
Diluted (in dollars per share) | $ (0.37) | $ 0.05 | $ (0.63) | $ (0.19) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 49,864,822 | 49,670,621 | 49,814,744 | 49,941,993 |
Diluted (in shares) | 49,864,822 | 50,035,343 | 49,814,744 | 49,941,993 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (18,402) | $ 2,607 | $ (31,278) | $ (9,422) |
Other comprehensive income (loss): | ||||
Unrealized gain on hedging activity, net of tax of $238 and $832 | 843 | 0 | 2,970 | 0 |
Foreign currency translation adjustments | (16,064) | (8,415) | (13,035) | (10,285) |
Comprehensive loss | $ (33,623) | $ (5,808) | $ (41,343) | $ (19,707) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized gain on hedging activity, tax | $ 238 | $ 832 |
Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business AgroFresh Solutions, Inc. (the “Company”) is a global leader in delivering innovative food preservation and waste reduction solutions for fresh produce. The Company is empowering the food industry with Smarter FreshnessTM, a range of integrated solutions designed to help growers, packers and retailers improve produce freshness and quality while reducing waste. The Company’s solutions range from pre-harvest with HarvistaTM and LandSpringTM to its marquee SmartFreshTM Quality System, which includes SmartFreshTM, AdvanStoreTM and ActiMistTM, working together to maintain the quality of stored produce. The Company has a controlling interest in Tecnidex Fruit Protection, S.A.U. (“Tecnidex”), a leading provider of post-harvest fungicides, waxes, coatings and biocides for the citrus market. Additionally, the Company’s initial retail solution, RipeLockTM, optimizes banana ripening for the benefit of retailers and consumers. The Company has key products registered in over 45 countries, supports approximately 3,700 direct customers and services over 25,000 storage rooms globally. The end markets that the Company serves are seasonal and are generally aligned with the seasonal growing patterns of the Company’s customers. For those customers growing, harvesting or storing apples, the Company’s primary market, the peak season in the southern hemisphere is the first and second quarters of each year, while the peak season in the northern hemisphere is the third and fourth quarters of each year. Within each half-year period (i.e., January through June for the southern hemisphere, and July through December for the northern hemisphere) the apple growing season has historically occurred during both quarters. A variety of factors, including weather, may affect the timing of the growing, harvesting and storing patterns of the Company’s customers and therefore shift the consumption of the Company’s services and products between the first and second quarters primarily in the southern hemisphere or between the third and fourth quarters primarily in the northern hemisphere. The Company was originally incorporated as Boulevard Acquisition Corp. (“Boulevard”), a blank check company, in Delaware on October 24, 2013, and was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. On July 31, 2015, the Company completed a Business Combination (refer to Note 3) and changed its name to AgroFresh Solutions, Inc. Prior to consummation of the Business Combination, the Company’s efforts were limited to organizational activities, its initial public offering and related financings, and the search for suitable business acquisition transactions. |
Basis of Presentation and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements include all adjustments that are necessary for a fair presentation of the Company's condensed consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. Adoption of Highly Inflationary Accounting in Argentina GAAP requires the use of highly inflationary accounting for countries whose cumulative three-year inflation rate exceeds 100 percent. The Company has been closely monitoring the inflation data and currency volatility in Argentina, where there are multiple data sources for measuring and reporting inflation. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, indicated that the three-year cumulative inflation rate in that country exceeded 100 percent as of June 30, 2018. As a result, the Company has elected to adopt highly inflationary accounting as of July 1, 2018 for subsidiaries in Argentina. Under highly inflationary accounting, the functional currency of subsidiaries in Argentina became the U.S. dollar, and their income statement and balance sheet will be measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities will be reflected in earnings. As of June 30, 2018, the Company’s subsidiaries in Argentina had a net asset position of $18.3 million. Net sales attributable to Argentina were approximately 11 and 12 percent of the Company’s consolidated net sales for the six months ended June 30, 2018 and 2017, respectively. Revenue Recognition On January 1, 2018, the Company began to account for revenue in accordance with Accounting Standards Codification ("ASC") 606, which requires revenue recognized to represent the transfer of promised goods or services to customers at an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company utilized the modified retrospective method of adoption to all contracts that were not completed as of January 1, 2018. Prior period results were not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company has not made any significant changes to judgments in applying ASC 606 during the six months ended June 30, 2018. Performance Obligations The Company derives revenue from the sale of products created with proprietary technology to regulate the ripening of produce and through performing post application technical services for its customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s contracts have multiple performance obligations primarily related to product application and post application services which the Company provides. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company calculates the costs of satisfying a performance obligation and factors in an appropriate margin for that distinct good or service. The transaction price is primarily fixed, as prices are governed by the terms and conditions of the Company's contracts with customers, and payment is typically made under standard terms. The Company has certain transactions that provide for variable consideration through rebate and customer loyalty programs. Depending on the program, the customer may elect to receive either a credit against its account or a cash payment. The Company recognizes an accrued provision for estimated rebates and customer loyalty program payouts at the time services are provided. The primary factors considered when estimating the provision for rebates and customer loyalty programs are the average historical experience of aggregate credits issued, the historical relationship of rebates as a percentage of total gross product sales, and the contract terms and conditions of the various rebate programs in effect at the time services are performed. The Company provides standard warranty provisions. Performance obligations related to product application are typically satisfied at a point in time when the customer obtains control upon application. Performance obligations related to post-application services are satisfied over time and revenue is recognized using the output method, as control of the service transfers to the customer over time during and after storage of the produce. The Company believes that this method provides a faithful depiction of the transfer of value over the term of the performance obligation because the level of effort in providing these services is consistent during the service period. Performance obligations related to Tecnidex sales-type leases are satisfied at the point in time that equipment is installed at the customer site. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographic region, product and timing of transfer of goods and services. The Company determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
*Other includes RipeLock, AdvanStore, LandSpring, Verigo, technical services and sales-type leases related to Tecnidex Contract Assets and Liabilities ASC 606 requires an entity to present a revenue contract as a contract asset when the entity performs its obligations under the contract by transferring goods or services to a customer before the customer pays consideration or before payment is due. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. The following table presents changes in the Company’s contract assets and liabilities during the six months ended June 30, 2018:
The Company recognizes contract assets in the form of unbilled revenue in instances where services are performed by the Company but not billed by period end. The Company recognizes contract liabilities in the form of deferred revenue in instances where a customer pays in advance for future services to be performed by the Company. The Company generally receives payments from its customers based on standard terms and conditions. No significant changes or impairment losses occurred to contract balances during the six months ended June 30, 2018. Amounts reclassified from unbilled revenue to accounts receivable for the six months ended June 30, 2018 were $0.7 million. Amounts reclassified from deferred revenue to revenue were $0.9 million for the six months ended June 30, 2018. Practical Expedients Elected The Company has elected the following practical expedients in applying ASC 606 across all reportable segments: Unsatisfied Performance Obligations. Because all of its performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and, therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Contract Costs. All incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Significant Financing Component. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Sales Tax Exclusion from the Transaction Price. The Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. Shipping and Handling Activities. The Company accounts for shipping and handling activities it performs after a customer obtains control of the good as activities to fulfill the promise to transfer the good. Modified Retrospective Method. The Company adopted ASC 606 on January 1, 2018 utilizing the modified retrospective method, which meant the Company did not retrospectively adjust prior periods. The Company applied the modified retrospective method only to contracts that were not completed at January 1, 2018 and accounted for the aggregate effect of any contract modifications upon adoption. No cumulative adjustment to retained earnings was recorded upon adoption. The following table summarizes the amounts by which the consolidated financial statements are affected in the current reporting period by ASC 606 as compared with the guidance that was in effect before the change.
For additional information, these condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Recently Issued Accounting Standards and Pronouncements In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12 Targeted Improvements to Accounting for Hedging Activities. This update makes more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. This update will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted upon its issuance. The Company is currently assessing the impact of the future adoption of this standard on its financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation. Scope of Modification Accounting. ASU 2017-09 addresses the changes to the terms and conditions of share-based awards. ASU 2017-09 is effective for periods beginning after December 15, 2017 and interim periods therein on a modified retrospective basis. The Company adopted the new ASU as of January 1, 2018, and it did not have a material impact on the financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations. Clarifying the Definition of a Business. The new accounting guidance clarifies the definition of a business and provides additional guidance to assist entities with evaluating whether transactions should be accounted for as asset acquisitions (or asset disposals) or business combinations (or disposals of a business). Under the new guidance, an entity first determines whether substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the transaction should be accounted for as an asset acquisition as opposed to a business combination. This distinction is important because the accounting for an asset acquisition significantly differs from the accounting for a business combination. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted. During the second quarter of 2018, the Company adopted this standard in connection with the acquisition of Verigo (refer to Note 3). In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, which simplifies the test for goodwill impairment. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted for interim or annual goodwill impairments tests after January 1, 2017. This standard will impact future financial statements when adopted. In February 2016, the FASB issued ASU 2016-02, Leases. The main objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2016-02 may have on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which has been updated through several revisions and clarifications since its original issuance. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in accordance with the transfer of control over those goods and services. The new standard also requires additional disclosures intended to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue, and the related cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. The Company adopted the new standard as of January 1, 2018, using the modified retrospective approach to all contracts that were not completed as of January 1, 2018. Prior period results were not adjusted and continue to be reported under the accounting standards in effect for the prior period. See the Revenue Recognition subsection above in this Note 2 for further details on the impact to the Company’s financial statements upon adoption and practical expedients elected. |
Business Combinations and Asset Acquisition |
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Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Business Combinations and Asset Acquisition | Business Combinations and Asset Acquisition Business Combination with Dow On July 31, 2015 (the "Closing Date"), the Company consummated a business combination (the “Business Combination”) pursuant to the Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), by and between the Company and The Dow Chemical Company ("Dow") providing for the acquisition by the Company of the AgroFresh Business from Dow, resulting in AgroFresh Inc. becoming a wholly-owned, indirect subsidiary of the Company. Pursuant to the Purchase Agreement, the Company paid the following consideration to Rohm and Haas Company (“R&H”), a subsidiary of Dow: (i) 17.5 million shares of common stock (the “Stock Consideration”) and (ii) $635 million in cash (the “Cash Consideration”). On April 4, 2017, the Company entered into an agreement (the “Amendment Agreement”) with Dow, R&H, Boulevard Acquisition Sponsor, LLC (the “Sponsor”), AgroFresh Inc., Avenue Capital Management II, L.P. (“Avenue”) and, solely as to certain sections of the Amendment Agreement, Joel Citron, Darren Thompson and Robert J. Campbell (collectively, the “Founding Holders”), Marc Lasry and Stephen Trevor. Pursuant to the Amendment Agreement and certain related agreements entered into on the same date (as described below), among other things, the Company and Dow agreed to modify certain obligations of the Company pursuant to (i) the Purchase Agreement, (ii) the Tax Receivables Agreement, dated July 31, 2015 (the “Tax Receivables Agreement”), among the Company, Dow, R&H and AgroFresh Inc., and (iii) the Warrant Purchase Agreement, dated July 31, 2015 (the “Warrant Purchase Agreement”), among the Company, Dow, R&H and the Sponsor. Mr. Campbell is a member of the Company's board of directors, each of Mr. Lasry and Mr. Trevor was a member of the Company’s board of directors at the time the Amendment Agreement was entered into, Dow is a significant stockholder of the Company and the Sponsor was a significant stockholder of the Company at the time the Amendment Agreement was entered into. Amendment Agreement Pursuant to the Amendment Agreement, the Company agreed to pay Dow the aggregate amount of $20.0 million, of which $10.0 million was paid on April 4, 2017 and the remaining $10.0 million was paid on January 31, 2018, in full satisfaction of the Company’s obligations with respect to (i) the working capital adjustment under the Purchase Agreement, (ii) certain transfer and value added tax reimbursement obligations under the Purchase Agreement, and (iii) the amount payable to Dow pursuant to the Tax Receivables Agreement on account of the 2015 tax year. During the six months ended June 30, 2018 these liabilities were extinguished. First Amendment to Tax Receivables Agreement The Company, Dow, R&H and AgroFresh Inc. entered into a First Amendment to the Tax Receivables Agreement (the “TRA Amendment”). The TRA Amendment reduced, from 85% to 50%, the percentage that the Company is required to pay to Dow pursuant to the Tax Receivables Agreement of the annual tax savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes as a result of the increase in tax basis of the AgroFresh assets resulting from a Section 338(h)(10) election that the Company and Dow made in connection with the Business Combination. Stock Buyback Agreement The Company and Dow entered into a letter agreement (the “Stock Buyback Agreement”), pursuant to which Dow agreed to use its reasonable best efforts to purchase up to 5,070,358 shares of the Company’s common stock in the open market (representing approximately 10% of the total number of shares of the Company’s common stock then outstanding), over a period of up to 18 months. Termination of Warrant Purchase Agreement The Company, Dow, R&H and the Sponsor entered into a letter agreement, pursuant to which the Warrant Purchase Agreement was terminated effective immediately. As a result of the Amendment Agreement, the TRA Amendment and the termination of the Warrant Purchase Agreement, the Company recorded a reduction of liabilities of $95.1 million net of deferred income taxes of $40.0 million. The net impact of $55.1 million has been recorded to additional paid-in capital as the agreements were with related parties and the transaction has been treated as a capital transaction. Acquisition of Tecnidex On November 7, 2017, the Company entered into a definitive agreement to acquire a controlling interest in Tecnidex Fruit Protection, S.A.U. ("Tecnidex"). The transaction was closed on December 1, 2017. Tecnidex, a privately-held international company, is a leading provider of post-harvest fungicides, waxes, coatings, and biocides for the citrus market, with clients in 18 countries. For over 35 years, Tecnidex has been helping fruit and vegetable producers offer clean, safe and high-quality products to their regional clients. The acquisition was accounted for as a purchase in accordance with ASC 805, Business Combination. At the effective date of the acquisition, the Company agreed to pay holders of Tecnidex estimated $25.0 million in cash for 75% of the outstanding capital stock, of which $20.0 million was paid on December 1, 2017. In the third quarter of 2018 the price is expected to be finalized and paid based on working capital, net debt and other adjustments. In accordance with the acquisition method of accounting, the Company is allocating the purchase price to the estimated fair values of the identifiable assets acquired and liabilities assumed, with any excess allocated to goodwill. The allocation of the purchase price accounting is preliminary as the Company is still in the process of valuing the assets acquired and liabilities assumed; therefore the allocation of the acquisition consideration is subject to change. The preliminary assessment of fair value of the contingent consideration payments on the acquisition date was approximately $0.7 million and was estimated by applying a probability-based income approach utilizing an appropriate discount rate. This estimation was based on significant inputs that are not observable in the market, referred to as Level 3 inputs. During the six months ended June 30, 2018 there was an adjustment made to consideration payable to holders of Tecnidex which resulted in a measurement period adjustment of $3.7 million to the purchase price allocation. Acquisition of Verigo On April 9, 2018, the Company acquired the assets of Comm-n-Sense Corp., d/b/a Verigo ("Verigo"), pursuant to the terms of an Asset Purchase Agreement, for approximately $1.8 million. Verigo, a privately-held organization, provided hardware in the form of wireless data receptors along with cloud-based software to synchronize data pulled from the hardware to support and provide tools for monitoring environmental and quality factors, such as temperature and relative humidity. The transaction was accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired was concentrated in a singular asset, the acquired software. Asset acquisitions are accounted for using a cost accumulation approach, whereby the total consideration paid is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions The Company is a party to ongoing agreements with Dow, a related party, including, but not limited to, operating-related agreements for certain transition services and seconded employees. In addition, during the six months ended June 30, 2018, the Company paid $0.6 million to Dow in order to terminate the provision of IT services provided by Dow. The Company incurred expenses for such services for the six months ended June 30, 2018 and June 30, 2017 as follows:
As of June 30, 2018 and June 30, 2017, the Company had an outstanding payable to Dow of $1.1 million and $0.3 million, respectively. Refer to Note 3 regarding the contingent consideration owed to Dow as part of the Business Combination. In addition, during 2016, the Company made a minority investment in RipeLocker, LLC ("RipeLocker"), a company led by George Lobisser, a director of the Company. On November 29, 2016, the Company entered into a Mutual Services Agreement (the “Services Agreement”) with George Lobisser and RipeLocker. Pursuant to the Services Agreement, (i) the Company agreed to provide RipeLocker with technical support, in the form of access to the Company’s research and development personnel for a specified number of hours for purposes of providing advice and input relating to RipeLocker’s products and services, and (ii) Mr. Lobisser agreed to provide consulting services to the Company as may be reasonably requested by the Company from time to time. The Services Agreement provided for Mr. Lobisser to receive a consulting fee of $5,000 per full day for time spent performing consulting services under the Services Agreement (pro-rated for any partial day), plus reimbursement for out-of-pocket expenses, provided that for each hour of technical support provided by the Company to RipeLocker, Mr. Lobisser agreed to provide one-half hour of consulting services for no consideration. In February 2017, the Company and Mr. Lobisser agreed to substantially curtail any mutual consulting services to be provided under the Services Agreement, and that any further services would be provided at no charge. For the six months ended June 30, 2018, there were no material amounts paid and as of June 30, 2018, there were no material amounts owed to RipeLocker or Mr. Lobisser for consulting services. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories at June 30, 2018 and December 31, 2017 consisted of the following:
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Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other Current Assets The Company's other current assets at June 30, 2018 and December 31, 2017 consisted of the following:
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment at June 30, 2018 and December 31, 2017 consisted of the following:
Depreciation expense for the three and six months ended June 30, 2018 was $0.4 million and $0.7 million, respectively. Depreciation expense for the three and six months ended June 30, 2017 was $0.3 million and $0.6 million, respectively. Depreciation expense is recorded in cost of sales, selling, general and administrative expense and research and development expense in the condensed consolidated statements of operations. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Changes in the carrying amount of goodwill for the six months ended June 30, 2018 are as follows:
See note 3 for a description of the measurement period adjustment. The Company’s intangible assets at June 30, 2018 and December 31, 2017 consisted of the following:
At June 30, 2018, the weighted-average amortization period remaining for the finite-lived intangible assets was 16.9 years. At June 30, 2018, the weighted-average amortization periods remaining for developed technology, customer relationships, in-process R&D, software and other was 16.8, 21.2, 16.3, 2.6, and 4.0 years, respectively. Estimated annual amortization expense for finite-lived intangible assets, excluding amounts in Work in Progress, subsequent to June 30, 2018 is as follows:
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Accrued and Other Current Liabilities |
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Accrued and Other Current Liabilities | Accrued and Other Current Liabilities The Company’s accrued and other current liabilities at June 30, 2018 and December 31, 2017 consisted of the following:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The Company’s debt, net of unamortized discounts and deferred financing fees, at June 30, 2018 and December 31, 2017 consisted of the following:
At June 30, 2018, the Company evaluated the amount recorded under the Term Loan (defined below) and determined that the fair value was approximately $412.4 million. The fair value of the debt is based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy. The Term Loan is presented net of deferred issuance costs, which are amortized using the effective interest method over the term of the Term Loan. Gross deferred issuance costs at the inception of the Term Loan were $12.9 million and as of June 30, 2018 there were $7.3 million of unamortized deferred issuance costs. Scheduled principal repayments of debt subsequent to June 30, 2018 are as follows:
Credit Facility On July 31, 2015, in connection with the consummation of the Business Combination, AgroFresh Inc. as the borrower and its parent, AF Solutions Holdings LLC (“AF Solutions Holdings”), a wholly-owned subsidiary of the Company, as the guarantor, entered into a Credit Agreement with Bank of Montreal, as administrative agent (the “Credit Facility”). The Credit Facility consists of a $425.0 million term loan (the “Term Loan”), with an amortization equal to 1.00% per year, and a $25.0 million revolving loan facility (the “Revolving Loan”). The Revolving Loan includes a $10.0 million letter-of-credit sub-facility, issuances against which reduce the available capacity for borrowing. As of June 30, 2018, the Company has issued $0.5 million of letters of credit, against which no funds have been drawn. The Term Loan has a scheduled maturity date of July 31, 2021, and the Revolving Loan has a scheduled maturity date of July 31, 2019. The interest rates on borrowings under the facilities are either the alternate base rate plus 3.75% or LIBOR plus 4.75% per annum, with a 1.00% LIBOR floor (with step-downs in respect of borrowings under the Revolving Loan dependent upon the achievement of certain financial ratios). The obligations under the Credit Facility are secured by liens on substantially all of the assets of (a) AgroFresh Inc. and its direct wholly-owned domestic subsidiaries, and (b) AF Solutions Holdings, including the common stock of AgroFresh Inc. The net proceeds of the Term Loan were used to fund a portion of the purchase price payable to R&H in connection with the Business Combination. Amounts available under the Revolving Loan may also be used for working capital, general corporate purposes, and other uses, all as more fully set forth in the Credit Agreement. At June 30, 2018, there was $413.3 million outstanding under the Term Loan and no balance outstanding under the Revolving Loan. As of the Closing Date, the Company incurred approximately $12.9 million in debt issuance costs related to the Term Loan and $1.3 million in costs related to the Revolving Loan. The debt issuance costs associated with the Term Loan were capitalized against the principal balance of the debt, and the Revolving Loan costs were capitalized in Other Assets. All issuance costs will be accreted through interest expense for the duration of each respective debt facility. The interest expense related to the amortization of the debt issuance costs during the three and six months ended June 30, 2018 was approximately $0.6 million and $1.2 million, respectively. On November 18, 2015, the Credit Facility was amended. An existing provision in the credit agreement permitted the Company, subject to an overall cap of $12.0 million per fiscal year and certain other conditions, to pay dividends to the Company’s public stockholders and to redeem or repurchase, through July 31, 2016, the Company’s outstanding warrants for an aggregate purchase price of up to $10.0 million. The amendment expanded the scope of this provision to also permit the repurchase of shares of the Company’s outstanding common stock or other equity securities (subject to the same overall cap and other conditions). Certain restrictive covenants are contained in the Credit Facility, which the Company was in compliance with as of June 30, 2018, other than certain covenants that would apply only to the extent the Company draws against the Revolving Loan and has an outstanding balance at a calendar quarter-end. There were no outstanding draws against the Revolving Loan as of June 30, 2018. Beginning with the year ended December 31, 2016, the Company is required to prepay Term Loan Borrowings and Incremental Term Loan Borrowings in an aggregate amount equal to 50% of the "Excess Cash Flow" (as defined in the Credit Facility) for the fiscal year; provided that such amount of the Excess Cash Flow in any fiscal year shall be reduced by (i) the aggregate amount of prepayments of Term Loans and Incremental Term Loans made, (ii) to the extent accompanied by permanent reductions of Revolving Commitments, the aggregate amount of prepayments of Revolving Loans (other than prepayments financed with the proceeds of Indebtedness), and (iii) repaid borrowings of Revolving Loans made on the Effective Date to account for any additional original issue discount or upfront fees that are implemented pursuant to the Fee Letter provided further that, prepayments of Term Loan Borrowings and Incremental Term Loan Borrowings shall only be required if 50% of the Excess Cash Flow for such fiscal year exceeds $5.0 million. There are no amounts due under this provision as of June 30, 2018. |
Other Noncurrent Liabilities |
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Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Noncurrent Liabilities | Other Noncurrent Liabilities The Company’s other noncurrent liabilities at June 30, 2018 and December 31, 2017 consisted of the following:
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Severance |
6 Months Ended |
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Jun. 30, 2018 | |
Compensation Related Costs [Abstract] | |
Severance | Severance The Company expensed $0.0 million and 0.3 million for severance for the three and six months ended June 30, 2018, respectively. There was no severance expense for the three and six months ended June 30, 2017. This amount, which does not include stock compensation expense, was recorded in selling, general and administrative expense in the condensed consolidated statements of operations. As of June 30, 2018, the Company had $0.2 million of severance liability, of which $0.1 million will be paid out over the next year. |
Stockholders' Equity |
6 Months Ended |
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Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity The authorized common stock of the Company consists of 400,000,000 shares with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share of common stock. As of June 30, 2018, there were 50,486,962 shares of common stock outstanding. As of June 30, 2018, there were warrants to purchase 15,983,072 shares of the Company’s common stock outstanding at a strike price of $11.50. Of the 15,983,072 warrants, 9,823,072 were issued as part of the units sold in the Company's initial public offering in February 2014 (not counting 1,201,928 warrants that were subsequently repurchased during 2015) and 6,160,000 warrants were sold in a private placement at the time of such public offering. On November 18, 2015, the Company announced that its board of directors had authorized a stock repurchase program (the “Repurchase Program”). The Repurchase Program authorized the Company to repurchase in the aggregate up to $10 million of the Company’s publicly-traded shares of common stock. The Repurchase Program was in effect for a period of one year, until November 17, 2016. Under the Repurchase Program, the Company repurchased 661,381 shares of its common stock for $3.9 million, which shares are classified as treasury stock on the condensed consolidated balance sheet. In connection with and as a condition to the consummation of the Business Combination, the Company issued R&H one share of Series A Preferred Stock. R&H, voting as a separate class, is entitled to appoint one director to the Company’s board of directors for so long as R&H beneficially holds 10% or more of the aggregate amount of the outstanding shares of common stock and non-voting common stock of the Company. The Series A Preferred Stock has no other rights. Simultaneously with the consummation of the Business Combination, the Company issued 4,878,048 shares of common stock at a price of $10.25 per share in a private placement to raise an aggregate of $50 million of additional equity. |
Stock-based Compensation |
6 Months Ended |
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Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation Stock compensation expense for both equity-classified and liability-classified awards for the three and six months ended June 30, 2018 was $1.3 million and $1.9 million, respectively. Stock compensation expense for both equity-classified and liability-classified awards for the three and six months ended June 30, 2017 was $0.9 million and $1.2 million, respectively. Stock compensation expense is recognized in cost of goods sold, selling, general and administrative expenses, and research and development expenses. At June 30, 2018, there was $5.8 million of unrecognized compensation cost relating to outstanding unvested equity instruments expected to be recognized over the weighted average period of 1.8 years. |
Earnings Per Share |
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Earnings Per Share | Earnings Per Share Basic loss per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Due to the loss in the quarter, dilutive loss per share is the same as basic loss per share as the adjustment for the assumed issuance of all potentially dilutive share-based awards, including stock options, restricted stock and warrants would be anti-dilutive. The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net income (loss) per common share:
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company's common stock during the period, because their inclusion would result in an anti-dilutive effect on per share amounts. The following represents amounts that could potentially dilute basic earnings per share in the future:
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Warrants and options are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period. Performance share units are considered anti-dilutive if the performance targets upon which the issuance of the shares is contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes consists of provisions for federal, state, and foreign incomes taxes. The effective tax rates for the periods ended June 30, 2018, and June 30, 2017, reflect the Company’s expected tax rate on reported income from continuing operations before income tax and tax adjustments. The Company operates in a global environment with significant operations in the U.S. and various other jurisdictions outside the U.S. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted in the U.S. The TCJA represents sweeping changes in U.S. tax law. Among other changes in tax law, the TCJA permanently reduced the U.S. corporate income tax rate to 21% beginning in 2018; imposed a one-time repatriation tax on deferred foreign earnings; established a participation exemption system by allowing a 100% dividends received deduction on qualifying dividends paid by foreign subsidiaries; limited deductions for net interest expense; and expanded the U.S. taxation of foreign earned income to include “global intangible low-taxed income” (“GILTI”). As permitted by Staff Accounting Bulletin No. 118, the tax benefit recorded in the fourth quarter of 2017 due to the enactment of the TCJA was considered “provisional”, based on reasonable estimates. The Company is continuing to collect and analyze detailed information about the earnings and profits of its non-U.S. subsidiaries, the related taxes paid, the amounts which could be repatriated, the foreign taxes which may be incurred on repatriation, and the associated impact of these items under the TCJA. The Company may record adjustments to refine those estimates during the measurement period, as additional analysis is completed. No adjustments were recorded during the six months ended June 30, 2018. The TCJA transitions the U.S. from a worldwide tax system to a territorial tax system. Under previous law, companies could indefinitely defer U.S. income taxation on unremitted foreign earnings. The TCJA imposes a one-time repatriation tax on deferred foreign earnings of 15.5% for liquid assets and 8% for illiquid assets, payable in defined increments over eight years. As a result of this requirement, the Company recognized provisional tax expense of $0.5 million in 2017, and provisionally expects to pay $0.3 million, net of estimated applicable foreign tax credits, and after utilization of FTC Credit carryforwards. These previously deferred foreign earnings may now be repatriated to the U.S. without additional U.S. federal taxation. However, any such repatriation could incur withholding and other foreign taxes in the source and intervening foreign jurisdictions, and certain U.S. state taxes. The Company continues to not recognize any U.S. income or foreign withholding taxes for the differences between the financial reporting and tax basis of the investments in foreign subsidiaries that are indefinitely reinvested outside the U.S. This amount may be recognized upon a sale or liquidation. The Company's effective tax rate for the three and six months ended June 30, 2018 was 19.2% and 2.5%, respectively compared to the effective tax rate for the three and six months ended June 30, 2017 of 118.2% and 62.2%, respectively. The effective tax rate for the six months ended June 30, 2018 differs from the U.S. statutory tax rate of 21%, due to unbenefited losses and certain provisions of the TCJA. The unbenefited losses related to the elimination of intercompany profit in inventory. In addition to the unbenefited losses, certain provisions of the TCJA impacted the Company. The reduction of the U.S. corporate income tax rate to 21% and the limitation and deductibility of U.S. interest expense reduced the overall tax benefit for the Company. Other provisions like the inclusion of GILTI had an immaterial impact on the effective tax rate. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore did not provide any deferred taxes in the consolidated financial statements at December 31, 2017 or June 30, 2018. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is currently involved in various claims and legal actions that arise in the ordinary course of business. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date and can be reasonably estimated. Although the results of litigation and claims can never be predicted with certainty, the Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, financial condition or results of operations. Purchase Commitments The Company has various purchasing contracts for contract manufacturing and research and development services which are based on the requirements of the business. Generally, the contracts are at prices not in excess of current market prices and do not commit the business to obligations outside the normal customary terms for similar contracts. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements Liabilities Measured at Fair Value on a Recurring Basis The following table presents the fair value of the Company’s financial instrument liability/(asset) that are measured at fair value on a recurring basis as of June 30, 2018:
The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2017:
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There were no transfers between Level 1 and Level 2 and no transfers out of Level 3 of the fair value hierarchy during the six months ended June 30, 2018. At June 30, 2018, the Company evaluated the amount recorded under the Term Loan and determined that the fair value was approximately $412.4 million. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value. Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis The following table presents the changes during the period presented in our Level 3 financial instrument liability/(asset) that are measured at fair value on a recurring basis.
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Basis of Presentation and Summary of Significant Accounting Policies (Policy) |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements include all adjustments that are necessary for a fair presentation of the Company's condensed consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. |
Revenue Recognition | The Company recognizes contract assets in the form of unbilled revenue in instances where services are performed by the Company but not billed by period end. The Company recognizes contract liabilities in the form of deferred revenue in instances where a customer pays in advance for future services to be performed by the Company. The Company generally receives payments from its customers based on standard terms and conditions. Practical Expedients Elected The Company has elected the following practical expedients in applying ASC 606 across all reportable segments: Unsatisfied Performance Obligations. Because all of its performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and, therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Contract Costs. All incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Significant Financing Component. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Sales Tax Exclusion from the Transaction Price. The Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. Shipping and Handling Activities. The Company accounts for shipping and handling activities it performs after a customer obtains control of the good as activities to fulfill the promise to transfer the good. Modified Retrospective Method. The Company adopted ASC 606 on January 1, 2018 utilizing the modified retrospective method, which meant the Company did not retrospectively adjust prior periods. The Company applied the modified retrospective method only to contracts that were not completed at January 1, 2018 and accounted for the aggregate effect of any contract modifications upon adoption. No cumulative adjustment to retained earnings was recorded upon adoption. Revenue Recognition On January 1, 2018, the Company began to account for revenue in accordance with Accounting Standards Codification ("ASC") 606, which requires revenue recognized to represent the transfer of promised goods or services to customers at an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company utilized the modified retrospective method of adoption to all contracts that were not completed as of January 1, 2018. Prior period results were not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company has not made any significant changes to judgments in applying ASC 606 during the six months ended June 30, 2018. Performance Obligations The Company derives revenue from the sale of products created with proprietary technology to regulate the ripening of produce and through performing post application technical services for its customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s contracts have multiple performance obligations primarily related to product application and post application services which the Company provides. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company calculates the costs of satisfying a performance obligation and factors in an appropriate margin for that distinct good or service. The transaction price is primarily fixed, as prices are governed by the terms and conditions of the Company's contracts with customers, and payment is typically made under standard terms. The Company has certain transactions that provide for variable consideration through rebate and customer loyalty programs. Depending on the program, the customer may elect to receive either a credit against its account or a cash payment. The Company recognizes an accrued provision for estimated rebates and customer loyalty program payouts at the time services are provided. The primary factors considered when estimating the provision for rebates and customer loyalty programs are the average historical experience of aggregate credits issued, the historical relationship of rebates as a percentage of total gross product sales, and the contract terms and conditions of the various rebate programs in effect at the time services are performed. The Company provides standard warranty provisions. Performance obligations related to product application are typically satisfied at a point in time when the customer obtains control upon application. Performance obligations related to post-application services are satisfied over time and revenue is recognized using the output method, as control of the service transfers to the customer over time during and after storage of the produce. The Company believes that this method provides a faithful depiction of the transfer of value over the term of the performance obligation because the level of effort in providing these services is consistent during the service period. Performance obligations related to Tecnidex sales-type leases are satisfied at the point in time that equipment is installed at the customer site. |
Recently Issued Accounting Standards and Pronouncements | Recently Issued Accounting Standards and Pronouncements In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12 Targeted Improvements to Accounting for Hedging Activities. This update makes more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. This update will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted upon its issuance. The Company is currently assessing the impact of the future adoption of this standard on its financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation. Scope of Modification Accounting. ASU 2017-09 addresses the changes to the terms and conditions of share-based awards. ASU 2017-09 is effective for periods beginning after December 15, 2017 and interim periods therein on a modified retrospective basis. The Company adopted the new ASU as of January 1, 2018, and it did not have a material impact on the financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations. Clarifying the Definition of a Business. The new accounting guidance clarifies the definition of a business and provides additional guidance to assist entities with evaluating whether transactions should be accounted for as asset acquisitions (or asset disposals) or business combinations (or disposals of a business). Under the new guidance, an entity first determines whether substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the transaction should be accounted for as an asset acquisition as opposed to a business combination. This distinction is important because the accounting for an asset acquisition significantly differs from the accounting for a business combination. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted. During the second quarter of 2018, the Company adopted this standard in connection with the acquisition of Verigo (refer to Note 3). In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, which simplifies the test for goodwill impairment. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted for interim or annual goodwill impairments tests after January 1, 2017. This standard will impact future financial statements when adopted. In February 2016, the FASB issued ASU 2016-02, Leases. The main objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2016-02 may have on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which has been updated through several revisions and clarifications since its original issuance. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in accordance with the transfer of control over those goods and services. The new standard also requires additional disclosures intended to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue, and the related cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. The Company adopted the new standard as of January 1, 2018, using the modified retrospective approach to all contracts that were not completed as of January 1, 2018. Prior period results were not adjusted and continue to be reported under the accounting standards in effect for the prior period. See the Revenue Recognition subsection above in this Note 2 for further details on the impact to the Company’s financial statements upon adoption and practical expedients elected. |
Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregated Revenue | The Company disaggregates revenue from contracts with customers into geographic region, product and timing of transfer of goods and services. The Company determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
*Other includes RipeLock, AdvanStore, LandSpring, Verigo, technical services and sales-type leases related to Tecnidex |
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Schedule of Changes in Contract Assets and Liabilities | The following table presents changes in the Company’s contract assets and liabilities during the six months ended June 30, 2018:
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Summary of Affect of ASC 606 on Financial Statements | The following table summarizes the amounts by which the consolidated financial statements are affected in the current reporting period by ASC 606 as compared with the guidance that was in effect before the change.
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Related Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of incurred expenses for services | The Company incurred expenses for such services for the six months ended June 30, 2018 and June 30, 2017 as follows:
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories at June 30, 2018 and December 31, 2017 consisted of the following:
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Other Current Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other current assets | The Company's other current assets at June 30, 2018 and December 31, 2017 consisted of the following:
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Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment | Property and equipment at June 30, 2018 and December 31, 2017 consisted of the following:
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Goodwill and Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill for the six months ended June 30, 2018 are as follows:
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Schedule of other intangible assets | The Company’s intangible assets at June 30, 2018 and December 31, 2017 consisted of the following:
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Schedule of estimated annual amortization expense for finite-lived intangible assets | Estimated annual amortization expense for finite-lived intangible assets, excluding amounts in Work in Progress, subsequent to June 30, 2018 is as follows:
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Accrued and Other Current Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and other current liabilities | The Company’s accrued and other current liabilities at June 30, 2018 and December 31, 2017 consisted of the following:
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt, net of unamortized discount and deferred financing fees | The Company’s debt, net of unamortized discounts and deferred financing fees, at June 30, 2018 and December 31, 2017 consisted of the following:
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Schedule of principal repayments under the term loan | Scheduled principal repayments of debt subsequent to June 30, 2018 are as follows:
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Other Noncurrent Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Other noncurrent liabilities | The Company’s other noncurrent liabilities at June 30, 2018 and December 31, 2017 consisted of the following:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average common shares outstanding | The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net income (loss) per common share:
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Amounts that could potentially dilute basic earnings per share | The following represents amounts that could potentially dilute basic earnings per share in the future:
———————————————————————————————
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tabular disclosure of financial instruments measured at fair value on a recurring basis | The following table presents the fair value of the Company’s financial instrument liability/(asset) that are measured at fair value on a recurring basis as of June 30, 2018:
The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2017:
———————————————————————————————
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Changes in financial instruments measured at level 3 fair value on a recurring basis | The following table presents the changes during the period presented in our Level 3 financial instrument liability/(asset) that are measured at fair value on a recurring basis.
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Description of Business (Details) storage_room in Thousands |
6 Months Ended |
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Jun. 30, 2018
customer
country
storage_room
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating countries (over) | country | 45 |
Number of customers | customer | 3,700 |
Number of service locations | storage_room | 25 |
Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) - ARGENTINA - USD ($) $ in Millions |
6 Months Ended | |
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Jun. 30, 2018 |
Jun. 30, 2017 |
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Sales Revenue, Net | Geographic Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 11.00% | 12.00% |
Subsidiaries | ||
Concentration Risk [Line Items] | ||
Net assets | $ 18.3 |
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Contract Assets and Liabilities (Details) $ in Thousands |
6 Months Ended |
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Jun. 30, 2018
USD ($)
| |
Contract assets: | |
Balance at January 1, 2018 | $ 739 |
Additions | 44 |
Deductions | (739) |
Balance at June 30, 2018 | 44 |
Contract liabilities: | |
Balance at January 1, 2018 | 100 |
Additions | 2,008 |
Deductions | (903) |
Balance at June 30, 2018 | 1,205 |
Reclassified from unbilled revenue to accounts receivable | 700 |
Reclassified from deferred revenue to revenue | $ (900) |
Inventories (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw material | $ 1,723 | $ 2,148 |
Work-in-process | 1,492 | 6,585 |
Finished goods | 23,266 | 14,647 |
Supplies | 797 | 729 |
Total inventories | $ 27,278 | $ 24,109 |
Other Current Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
VAT receivable | $ 10,298 | $ 14,088 |
Prepaid income tax asset | 6,327 | 2,314 |
Other | 8,392 | 2,282 |
Total other current assets | $ 25,017 | $ 18,684 |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands |
6 Months Ended |
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Jun. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
December 31, 2017 | $ 9,402 |
Measurement period adjustment | (3,654) |
Foreign currency translation | (68) |
June 30, 2018 | $ 5,680 |
Goodwill and Intangible Assets - Future Amortization (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
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Estimated annual amortization expense | |
2018 (remaining) | $ 22,528 |
2019 | 46,128 |
2020 | 46,109 |
2021 | 44,893 |
2022 | 43,673 |
Thereafter | 501,793 |
Net, finite-lived intangible assets | $ 705,124 |
Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Tax amortization benefit contingency | $ 11,820 | $ 11,820 |
Additional consideration due seller | 928 | 693 |
Dow settlement liability | 10,000 | |
Accrued compensation and benefits | 8,750 | 8,932 |
Accrued rebates payable | 5,696 | 5,027 |
Insurance premium financing payable | 1 | 639 |
Severance | 154 | 113 |
Deferred revenue | 1,205 | 100 |
Other notes payable | 1,281 | 5,056 |
Accrued taxes | 9,620 | 7,848 |
Accrued interest | 4,499 | 6,321 |
Other | 6,092 | 9,260 |
Accrued and other current liabilities | $ 50,046 | $ 65,809 |
Debt - Net of Unamortized Discounts and Deferred Financing Fees (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Less: Amounts due within one year | $ 6,995 | $ 7,926 |
Long-term debt | 401,469 | 402,868 |
Term loan | ||
Debt Instrument [Line Items] | ||
Loan outstanding | 406,040 | 407,109 |
Loans Payable | ||
Debt Instrument [Line Items] | ||
Loan outstanding | $ 2,424 | $ 3,685 |
Debt - Principal Repayments (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Schedule of principal repayments under the Term Loan | |
2018 (remaining) | $ 4,870 |
2019 | 4,991 |
2020 | 4,250 |
2021 | 401,626 |
Total | $ 415,737 |
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | ||
Tax amortization benefit contingency | $ 33,605 | $ 31,562 |
Other | 4,039 | 6,943 |
Total other noncurrent liabilities | $ 37,644 | $ 38,505 |
Severance (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Compensation Related Costs [Abstract] | ||||
Severance expense | $ 0 | $ 0 | $ 300,000 | $ 0 |
Severance liability | 200,000 | 200,000 | ||
Severance liability, current | $ 100,000 | $ 100,000 |
Stock-based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $ 1.3 | $ 0.9 | $ 1.9 | $ 1.2 |
Share-based compensation, nonvested awards, compensation cost not yet recognized | $ 5.8 | $ 5.8 | ||
Period for recognition of compensation on unvested stock option | 1 year 9 months 4 days |
Earnings Per Share - Schedule of Weighted Average Common Shares Outstanding (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted-average common shares outstanding (in shares) | 49,864,822 | 49,670,621 | 49,814,744 | 49,941,993 |
Effect of dilutive options, performance stock units and restricted stock (in shares) | 0 | 364,722 | 0 | 0 |
Dilute weighted-average shares outstanding (in shares) | 49,864,822 | 50,035,343 | 49,814,744 | 49,941,993 |
Earnings Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
||||
Stock options | |||||||
Earnings Per Share [Line Items] | |||||||
Antidilutive securities (in shares) | [1] | 613,243 | 577,500 | 613,243 | 921,970 | ||
Restricted Stock Units (RSUs) | |||||||
Earnings Per Share [Line Items] | |||||||
Antidilutive securities (in shares) | [1] | 480,323 | 0 | 400,546 | 934,819 | ||
Warrants | Private placement | |||||||
Earnings Per Share [Line Items] | |||||||
Antidilutive securities (in shares) | [1] | 6,160,000 | 6,160,000 | 6,160,000 | 6,160,000 | ||
Warrants | Public | |||||||
Earnings Per Share [Line Items] | |||||||
Antidilutive securities (in shares) | [1] | 9,823,072 | 9,823,072 | 9,823,072 | 9,823,072 | ||
Director | Restricted Stock | |||||||
Earnings Per Share [Line Items] | |||||||
Antidilutive securities (in shares) | [1] | 69,495 | 0 | 69,018 | 141,957 | ||
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Provisional tax expense | $ 0.5 | ||||
Provisional tax liability | $ 0.3 | ||||
Effective tax rate (as a percent) | 19.20% | 118.20% | 2.50% | 62.20% |
Fair Value Measurements - Changes of Level 3 Financial Instruments (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Contingent consideration | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | $ 44,983 |
Accretion | 2,043 |
Stock compensation expense | 50 |
Mark-to-market adjustment | (3,544) |
Balance, ending period | 43,532 |
Contingent consideration | Tax amortization benefit contingency | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | 43,382 |
Accretion | 2,043 |
Stock compensation expense | 0 |
Mark-to-market adjustment | 0 |
Balance, ending period | 45,425 |
Contingent consideration | Contingent consideration related to acquisition | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | 691 |
Accretion | 0 |
Stock compensation expense | 0 |
Mark-to-market adjustment | 237 |
Balance, ending period | 928 |
Contingent consideration | Interest rate contract | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | 456 |
Accretion | 0 |
Stock compensation expense | 0 |
Mark-to-market adjustment | (3,781) |
Balance, ending period | (3,325) |
Contingent consideration | Stock appreciation rights | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | 268 |
Accretion | 0 |
Stock compensation expense | (112) |
Mark-to-market adjustment | |
Balance, ending period | 156 |
Contingent consideration | Phantom shares | |
Financial instruments measured at Level 3 fair value on a recurring basis rollforward | |
Balance, beginning period | 186 |
Accretion | 0 |
Stock compensation expense | 162 |
Mark-to-market adjustment | |
Balance, ending period | 348 |
Term loan | |
Financial instruments measured at Level 3 fair value on a recurring basis | |
Fair value of debt | $ 412,400 |
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