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Basis of Presentation and Summary of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2020

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. For additional information, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2019.

Revenue Recognition

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 closely monitors 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 adopted highly inflationary accounting as of July 1, 2018 for its subsidiary in Argentina. Under highly inflationary accounting, the functional currency of the Company's subsidiary in Argentina became the U.S. dollar, and its income statement and balance sheet are measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on Argentine peso-denominated monetary assets and liabilities will be reflected in earnings. As the three-year cumulative inflation rate exceeded 100 percent as of March 31, 2020, there is no change to highly inflationary accounting. As of March 31, 2020, the Company’s subsidiary in Argentina had a net asset position of $5.0 million. Net sales attributable to Argentina were approximately 15% of the Company’s consolidated net sales for each of the three months ended March 31, 2020 and 2019.

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.

Revenues for the three months ended March 31, 2020


(in thousands)
Region	North America (1)		EMEA (2)		Latin America (3)		Asia Pacific (4)		Total Revenue
Product
1-MCP based	$	561	$	5,320	$	16,582	$	4,815	$	27,278
Fungicides, waxes, coatings, sanitizers	—		3,873		594		—		4,467
Other*	442		439		355		42		1,278
	$	1,003	$	9,632	$	17,531	$	4,857	$	33,023

Pattern of Revenue Recognition
Products transferred at a point in time	$	581	$	9,203	$	17,439	$	4,815	$	32,038
Services transferred over time	422		429		92		42		985
	$	1,003	$	9,632	$	17,531	$	4,857	$	33,023

Revenues for the three months ended March 31, 2019


(in thousands)
Region	North America (1)		EMEA (2)		Latin America (3)		Asia Pacific (4)		Total Revenue
Product
1-MCP based	$	2,602	$	6,781	$	19,469	$	4,353	$	33,205
Fungicides, waxes, coatings, sanitizers	—		4,887		565		—		5,452
Other*	123		12		139		9		283
	$	2,725	$	11,680	$	20,173	$	4,362	$	38,940

Pattern of Revenue Recognition
Products transferred at a point in time	$	2,290	$	11,074	$	20,143	$	4,329	$	37,836
Services transferred over time	435		606		30		33		1,104
	$	2,725	$	11,680	$	20,173	$	4,362	$	38,940

*Other includes FreshCloud, technical services and sales-type leases related to Tecnidex.

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(1) North America includes the United States and Canada.

(2) EMEA includes Europe, the Middle East and Africa.

(3) Latin America includes Argentina, Brazil, Chile, Costa Rica, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Peru and Uruguay.

(4) Asia Pacific includes Australia, China, India, Japan, New Zealand, the Philippines, South Korea, Taiwan and Thailand.

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 three months ended March 31, 2020 and the year ended December 31, 2019:


(in thousands)	Balance at January 1, 2020		Additions	Deductions	Balance at March 31, 2020
Contract assets:
Unbilled revenue	$	1,666	734	(100)	$	2,300
Contract liabilities:
Deferred revenue	$	1,175	2,539	(835)	$	2,879


(in thousands)	Balance at January 1, 2019		Additions	Deductions	Balance at December 31, 2019
Contract assets:
Unbilled revenue	$	1,956	10,029	(10,319)	$	1,666
Contract liabilities:
Deferred revenue	$	1,280	3,032	(3,137)	$	1,175

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.

Recently Issued Accounting Standards and Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 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. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements of the Company.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”, which introduces a new

current expense credit loss model to measure impairment on certain types of financial instruments. This update requires an entity to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. In addition, the FASB issued various amendments during 2018 and 2019 to clarify the provisions of ASU 2016-13. The standard is effective for fiscal years beginning January 1, 2020, including interim periods. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the financial statements of the Company.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which is part of the FASB disclosure framework project to improve the effectiveness of disclosures in the notes to the financial statements. The amendments in the new guidance remove, modify and add

certain disclosure requirements related to fair value measurements covered in Topic 820. The new standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the notes to condensed consolidated financial statements of the Company.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and also improve consistent application by clarifying and amending existing guidance. The new standard is

effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Company is currently evaluating the impact of adopting this guidance.