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 | 47-1254894 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | o | Accelerated filer | o | |||
Non-accelerated filer | x (do not check if a smaller reporting company) | Smaller reporting company | o |
Page No. | ||
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,187 | $ | 18,751 | |||
Accounts receivable, net of allowances of $8,481 and $2,272, respectively | 39,740 | 11,977 | |||||
Inventories | 18,943 | 6,829 | |||||
Other current assets | 8,563 | 1,293 | |||||
Total current assets | 84,433 | 38,850 | |||||
Property and equipment, net | 51,959 | 2,153 | |||||
Other assets: | |||||||
Goodwill | 177,541 | 47,421 | |||||
Intangible assets, net | 557,614 | 269,468 | |||||
Other assets | 55 | 40 | |||||
Total assets | $ | 871,602 | $ | 357,932 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 31,959 | $ | 9,302 | |||
Accrued liabilities | 14,856 | 5,230 | |||||
Senior term loan- current portion | 6,000 | 12,750 | |||||
Founder contingent consideration | 2,197 | 25,197 | |||||
Tax receivable obligation- current portion | 6,594 | 6,632 | |||||
Notes payable, net- current portion | 984 | — | |||||
Other current liabilities | 4,675 | 217 | |||||
Total current liabilities | 67,265 | 59,328 | |||||
Long-term liabilities: | |||||||
Senior term loan, net | 572,281 | 181,704 | |||||
Revolving credit facility, net | 4,144 | — | |||||
Notes payable, net | 6,642 | 3,757 | |||||
Net deferred tax liabilities | 62,277 | 5,115 | |||||
Tax receivable obligation | 89,498 | 89,498 | |||||
Other liabilities | 5,806 | 3,107 | |||||
Total long-term liabilities | 740,648 | 283,181 | |||||
Commitment and contingencies (Note 11) | |||||||
Shareholders' Equity: | |||||||
Common stock, $0.0001 par value, 375,000,000 shares authorized at September 30, 2016 and December 31, 2015 and 76,881,921 and 74,843,470 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 8 | 8 | |||||
Additional paid in capital | 39,273 | 793 | |||||
Common stock held in treasury, at par, 3,504,521 and 4,991,858 shares at September 30, 2016 and December 31, 2015, respectively | — | (1 | ) | ||||
Retained earnings | 33,438 | 14,623 | |||||
Accumulated other comprehensive loss | (9,030 | ) | — | ||||
Total shareholders' equity | 63,689 | 15,423 | |||||
Total liabilities and shareholders' equity | $ | 871,602 | $ | 357,932 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 67,982 | $ | 45,914 | $ | 182,193 | $ | 137,543 | |||||||
Cost of goods sold | 35,646 | 20,260 | 88,891 | 60,787 | |||||||||||
Gross profit | 32,336 | 25,654 | 93,302 | 76,756 | |||||||||||
Sales & marketing expenses | 8,903 | 5,146 | 22,551 | 13,780 | |||||||||||
General & administrative expenses | 15,971 | 16,068 | 27,688 | 37,085 | |||||||||||
Gain on change in fair value of contingent consideration | (505 | ) | — | (505 | ) | — | |||||||||
Total operating expenses | 24,369 | 21,214 | 49,734 | 50,865 | |||||||||||
Operating income | 7,967 | 4,440 | 43,568 | 25,891 | |||||||||||
Interest expense | 5,636 | 3,311 | 11,788 | 9,324 | |||||||||||
Other income | (4,221 | ) | — | (4,221 | ) | — | |||||||||
Loss on extinguishment of debt | 1,100 | — | 1,100 | — | |||||||||||
Income before income taxes | 5,452 | 1,129 | 34,901 | 16,567 | |||||||||||
Income tax expense | 3,807 | 4,118 | 16,086 | 11,092 | |||||||||||
Net income (loss) | $ | 1,645 | $ | (2,989 | ) | $ | 18,815 | $ | 5,475 | ||||||
Other comprehensive (loss) income: | |||||||||||||||
Foreign currency translation adjustments | (9,030 | ) | — | (9,030 | ) | — | |||||||||
Comprehensive (loss) income | $ | (7,385 | ) | $ | (2,989 | ) | $ | 9,785 | $ | 5,475 | |||||
Basic and diluted earnings per share | $ | 0.02 | $ | (0.04 | ) | $ | 0.25 | $ | 0.07 | ||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 75,455,047 | 74,982,461 | 75,032,287 | 74,707,855 | |||||||||||
Diluted | 75,557,760 | 74,982,461 | 75,094,446 | 74,707,855 |
Common Stock | Additional Paid in Capital | Treasury Stock | Retained Earnings | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
BALANCE—December 31, 2014 | 75,000,000 | $ | 8 | $ | 116,423 | 7,411,263 | $ | (1 | ) | $ | 4,738 | $ | 121,168 | ||||||||||||
Net income | — | — | — | — | — | 5,475 | 5,475 | ||||||||||||||||||
Capital distributions | — | — | (22,285 | ) | — | — | — | (22,285 | ) | ||||||||||||||||
Issuance of tax receivable agreement | — | — | (96,090 | ) | — | — | — | (96,090 | ) | ||||||||||||||||
Vesting of restricted stock awards | — | — | — | (1,668,073 | ) | — | — | — | |||||||||||||||||
Equity-based incentive compensation | — | — | 2,073 | — | — | — | 2,073 | ||||||||||||||||||
BALANCE—September 30, 2015 | 75,000,000 | $ | 8 | $ | 121 | 5,743,190 | $ | (1 | ) | $ | 10,213 | $ | 10,341 |
Common Stock | Additional Paid in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
BALANCE—December 31, 2015 | 74,843,470 | $ | 8 | $ | 793 | 4,991,858 | $ | (1 | ) | $ | 14,623 | $ | — | $ | 15,423 | ||||||||||||||
Net income | — | — | — | — | — | 18,815 | — | 18,815 | |||||||||||||||||||||
Issuance of common shares as consideration | 2,083,689 | 1 | 35,318 | — | — | — | — | 35,319 | |||||||||||||||||||||
Vesting of restricted stock awards | — | — | — | (1,442,099 | ) | — | — | — | — | ||||||||||||||||||||
Forfeiture of restricted stock awards | (45,238 | ) | (1 | ) | — | (45,238 | ) | 1 | — | — | — | ||||||||||||||||||
Equity-based incentive compensation | — | — | 3,162 | — | — | — | — | 3,162 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | (9,030 | ) | (9,030 | ) | |||||||||||||||||||
BALANCE—September 30, 2016 | 76,881,921 | $ | 8 | $ | 39,273 | 3,504,521 | $ | — | $ | 33,438 | $ | (9,030 | ) | $ | 63,689 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 18,815 | $ | 5,475 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation | 814 | 206 | |||||
Amortization of intangible assets | 3,433 | 3,165 | |||||
Amortization of deferred financing costs and debt discounts | 888 | 627 | |||||
Deferred income taxes | 2,419 | 7,026 | |||||
Equity-based compensation expense | 3,972 | 2,435 | |||||
Founder contingent compensation | — | 13,805 | |||||
Loss on disposal of property and equipment | 39 | — | |||||
Loss on extinguishment of debt | 1,100 | — | |||||
Gain on change in fair value of contingent consideration | (505 | ) | — | ||||
Tax receivable agreement non-cash item | (38 | ) | — | ||||
Changes in operating assets and liabilities, net of effects of acquisition: | |||||||
Accounts receivable | (5,801 | ) | (1,663 | ) | |||
Inventories | (2,590 | ) | 536 | ||||
Other assets | (4,301 | ) | (2,239 | ) | |||
Accounts payable | 2,363 | 738 | |||||
Accrued and other liabilities | 73 | 824 | |||||
Payments of founder contingent compensation | (23,000 | ) | — | ||||
Net cash (used in) provided by operating activities | (2,319 | ) | 30,935 | ||||
Investing activities: | |||||||
Acquisition of Tyrrells, net of cash acquired | (365,616 | ) | — | ||||
Acquisition of Boundless Nutrition, net of cash acquired | (16,521 | ) | — | ||||
Acquisition of Paqui, net of cash acquired | — | (7,830 | ) | ||||
Acquisition of property and equipment | (2,980 | ) | (626 | ) | |||
Net cash used in investing activities | (385,117 | ) | (8,456 | ) | |||
Financing activities: | |||||||
Capital distributions | — | (22,285 | ) | ||||
Term loan borrowings | 593,420 | 7,500 | |||||
Payments on term loans | (197,313 | ) | (7,625 | ) | |||
Draws on revolving credit facilities | 20,500 | 15,000 | |||||
Payments on revolving credit facilities | (15,000 | ) | (13,500 | ) | |||
Deferred financing costs | (15,517 | ) | (284 | ) | |||
Net cash provided by (used in) financing activities | 386,090 | (21,194 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (218 | ) | — | ||||
(Decrease) increase in cash and cash equivalents | (1,564 | ) | 1,285 | ||||
Cash and cash equivalents—Beginning of period | 18,751 | 5,615 | |||||
Cash and cash equivalents—End of period | $ | 17,187 | $ | 6,900 | |||
Supplemental disclosure of cash flow information: | |||||||
Income taxes paid | $ | 14,555 | $ | 6,887 | |||
Interest paid | $ | 7,616 | $ | 8,633 | |||
Non-cash investing and financing activities during the period: | |||||||
Issuance of common shares as consideration | $ | 35,319 | $ | — | |||
Issuance of tax receivable agreement | $ | — | $ | 96,090 | |||
Issuance of notes payable as consideration | $ | 3,777 | $ | 3,715 | |||
Contingent consideration | $ | 1,085 | $ | 390 | |||
Acquisition of property and equipment via financing | $ | — | $ | 833 |
• | TA Topco 1, LLC ("Topco"), the former parent entity of the Company, liquidated in accordance with the terms and conditions of Topco's existing limited liability company agreement ("Topco Liquidation"). The holders of existing units in Topco received 100% of the capital stock of the Company, which was allocated to such unit holders pursuant to the distribution provisions of the existing limited liability company agreement of Topco based upon the liquidation value of Topco. Since Topco was liquidated at the time of our IPO, the implied liquidation value of Topco was based on the IPO price of $18.00 per share. Topco ceased to exist following the Topco Liquidation. |
• | The Company entered into a tax receivable agreement ("TRA") with the former holders of units in Topco pursuant to which such holders received the right to future payments from the Company. Refer to Note 10 for more details regarding the TRA. |
September 30, 2016 | December 31, 2015 | ||||||
Liabilities: | |||||||
Founder contingent compensation | $ | 2,197 | $ | 25,197 | |||
Contingent consideration (1) | 2,491 | 1,911 | |||||
Total liabilities | $ | 4,688 | $ | 27,108 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Balance at beginning of the period | $ | 25,197 | $ | 6,936 | |||
Charge to expense | — | 13,805 | |||||
Payment | (23,000 | ) | — | ||||
Balance at end of the period | $ | 2,197 | $ | 20,741 |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Balance at beginning of the period | $ | 1,911 | $ | — | ||||
Fair value of contingent consideration at acquisition date | 1,085 | 390 | ||||||
Gain on change in fair value of contingent consideration | (505 | ) | — | |||||
Balance at end of the period | $ | 2,491 | $ | 390 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Customer: | |||||||||||
Costco | 22 | % | 29 | % | 26 | % | 32 | % | |||
Sam's Club | 10 | % | 18 | % | 13 | % | 17 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands, except share and per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic and diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income (loss) | $ | 1,645 | $ | (2,989 | ) | $ | 18,815 | $ | 5,475 | |||||||
Less: net (income) loss attributable to participating securities | (83 | ) | 252 | (1,078 | ) | (495 | ) | |||||||||
Net income (loss) attributable to common shareholders | 1,562 | (2,737 | ) | 17,737 | 4,980 | |||||||||||
Denominator: | ||||||||||||||||
Basic: | ||||||||||||||||
Basic weighted average shares outstanding | 75,455,047 | 74,982,461 | 75,032,287 | 74,707,855 | ||||||||||||
Less: participating securities | (3,802,277 | ) | (6,312,221 | ) | (4,300,007 | ) | (6,754,654 | ) | ||||||||
Basic weighted average common shares outstanding | 71,652,770 | 68,670,240 | 70,732,280 | 67,953,201 | ||||||||||||
Basic earnings per share | $ | 0.02 | $ | (0.04 | ) | $ | 0.25 | $ | 0.07 | |||||||
Diluted: | ||||||||||||||||
Basic weighted average shares outstanding | 75,455,047 | 74,982,461 | 75,032,287 | 74,707,855 | ||||||||||||
Unvested RSUs (1) | 89,053 | — | 62,159 | — | ||||||||||||
Unvested stock options (2) | 13,660 | — | — | — | ||||||||||||
Diluted weighted average shares outstanding | 75,557,760 | 74,982,461 | 75,094,446 | 74,707,855 | ||||||||||||
Less: participating securities | (3,802,277 | ) | (6,312,221 | ) | (4,300,007 | ) | (6,754,654 | ) | ||||||||
Diluted weighted average common shares outstanding | 71,755,483 | 68,670,240 | 70,794,439 | 67,953,201 | ||||||||||||
Diluted earnings per share | $ | 0.02 | $ | (0.04 | ) | $ | 0.25 | $ | 0.07 |
Purchase consideration: | |||
Cash paid as purchase consideration | $ | 381,069 | |
Fair value of equity issued to Sellers | 35,319 | ||
Total purchase consideration | 416,388 | ||
Less: cash and cash equivalents acquired | (15,451 | ) | |
Total purchase price- net of cash and cash equivalents acquired | 400,937 | ||
Fair value of net assets acquired and liabilities assumed: | |||
Accounts receivable | 21,690 | ||
Inventory | 8,404 | ||
Property and equipment | 47,923 | ||
Other assets | 2,869 | ||
Indefinite-lived identifiable intangible asset- trade names | 252,289 | ||
Definite-lived identifiable intangible assets- customer relationships (15-year useful life) | 33,878 | ||
Accounts payable | (19,498 | ) | |
Other liabilities | (15,024 | ) | |
Deferred tax liabilities | (55,953 | ) | |
Total fair value of net assets acquired and liabilities assumed | 276,578 | ||
Excess purchase consideration over fair value of net assets acquired (goodwill) | $ | 124,359 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Unaudited) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net sales | $ | 90,048 | $ | 73,747 | $ | 269,781 | $ | 212,500 | |||||||
Net (loss) income | $ | (2,345 | ) | $ | (6,025 | ) | $ | 6,610 | $ | (9,934 | ) | ||||
Basic net (loss) income per share | $ | (0.03 | ) | $ | (0.08 | ) | $ | 0.09 | $ | (0.13 | ) | ||||
Diluted net (loss) income per share | $ | (0.03 | ) | $ | (0.08 | ) | $ | 0.08 | $ | (0.13 | ) |
Purchase consideration: | |||
Cash paid as purchase consideration | $ | 16,651 | |
Fair value of notes payable issued to sellers as consideration | 3,776 | ||
Fair value of contingent consideration | 1,085 | ||
Total purchase consideration | 21,512 | ||
Less: cash and cash equivalents acquired | (129 | ) | |
Total purchase price- net of cash and cash equivalents acquired | 21,383 | ||
Fair value of net assets acquired and liabilities assumed: | |||
Accounts receivable and inventory | 2,046 | ||
Property and equipment | 751 | ||
Other assets | 178 | ||
Indefinite-lived identifiable intangible asset- trade name | 9,440 | ||
Definite-lived identifiable intangible assets- customer relationships and trade name | 2,160 | ||
Accounts payable | (1,111 | ) | |
Other liabilities | (532 | ) | |
Total fair value of net assets acquired and liabilities assumed | 12,932 | ||
Excess purchase consideration over fair value of net assets acquired (goodwill) | $ | 8,451 |
Purchase consideration: | |||
Cash paid as purchase consideration | $ | 8,214 | |
Fair value of notes payable issued to sellers as consideration | 3,715 | ||
Fair value of contingent consideration | 390 | ||
Total purchase consideration | 12,319 | ||
Less: cash and cash equivalents acquired | (384 | ) | |
Total purchase price-net of cash and cash equivalents acquired | 11,935 | ||
Fair value of net assets acquired and liabilities assumed: | |||
Current assets | 174 | ||
Property and equipment | 31 | ||
Indefinite-lived identifiable intangible asset-trade name | 9,000 | ||
Definite-lived identifiable intangible assets-customer relationships | 1,310 | ||
Current liabilities | (307 | ) | |
Total fair value of net assets acquired and liabilities assumed | 10,208 | ||
Excess purchase consideration over fair value of net assets acquired (goodwill) | $ | 1,727 |
September 30, 2016 | December 31, 2015 | ||||||
Raw materials and packaging | $ | 9,814 | $ | 4,433 | |||
Finished goods | 9,129 | 2,396 | |||||
Inventories, net | $ | 18,943 | $ | 6,829 |
September 30, 2016 | December 31, 2015 | ||||||
Machinery and equipment | $ | 39,773 | $ | 1,128 | |||
Furniture and fixtures | 2,071 | 664 | |||||
Building | 5,622 | — | |||||
Land | 888 | — | |||||
Leasehold improvements | 4,949 | 911 | |||||
Property and equipment, gross | 53,303 | 2,703 | |||||
Less: accumulated depreciation | (1,344 | ) | (550 | ) | |||
Property and equipment, net | $ | 51,959 | $ | 2,153 |
September 30, 2016 | December 31, 2015 | ||||||
Beginning balance | $ | 47,421 | $ | 45,694 | |||
Acquired during the period (1) | 132,810 | 1,727 | |||||
Foreign currency translation | (2,690 | ) | — | ||||
Ending balance | $ | 177,541 | $ | 47,421 |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Intangible assets with indefinite lives: | |||||||||||||||||||||||
Trade names (1) | $ | 468,132 | $ | — | $ | 468,132 | $ | 211,900 | $ | — | $ | 211,900 | |||||||||||
Intangible assets with finite lives: | — | — | — | ||||||||||||||||||||
Customer relationships (1) | 98,935 | (9,527 | ) | 89,408 | 63,610 | (6,113 | ) | 57,497 | |||||||||||||||
Non-competition agreement | 90 | (28 | ) | 62 | 90 | (19 | ) | 71 | |||||||||||||||
Trade name (1) | 20 | (8 | ) | 12 | — | — | — | ||||||||||||||||
Total | $ | 567,177 | $ | (9,563 | ) | $ | 557,614 | $ | 275,600 | $ | (6,132 | ) | $ | 269,468 |
Remainder of 2016 | $ | 1,657 | ||
2017 | 6,615 | |||
2018 | 6,609 | |||
2019 | 6,609 | |||
2020 | 6,609 | |||
Thereafter | 61,383 |
September 30, 2016 | December 31, 2015 | ||||||
Accrued income taxes | $ | 1,028 | $ | 437 | |||
Unbilled inventory | 1,953 | 693 | |||||
Accrued commissions | 434 | 629 | |||||
Accrued bonuses | 1,592 | 2,545 | |||||
Accrued professional fees | 3,717 | 398 | |||||
Accrued interest | 3,239 | — | |||||
VAT | 559 | — | |||||
Other accrued liabilities | 2,334 | 528 | |||||
Total accrued liabilities | $ | 14,856 | $ | 5,230 |
September 30, 2016 | December 31, 2015 | ||||||
Term loans, net of unamortized original issue discount of $6,519 and $-0-, respectively | $ | 593,481 | $ | 197,313 | |||
Revolving loans | 5,500 | — | |||||
Notes payable, net of unamortized discount of $279 and $147, respectively | 7,626 | 3,757 | |||||
Deferred financing costs, net of accumulated amortization of $189 and $1,094, respectively (1) | (16,556 | ) | (2,859 | ) | |||
Total debt | 590,051 | 198,211 | |||||
Less: Current portion | (6,984 | ) | (12,750 | ) | |||
Long-term debt | $ | 583,067 | $ | 185,461 |
(1) | Upon adoption of ASU 2015-03, the Company is now presenting deferred financing costs, net as a reduction to the related liability in the condensed consolidated balance sheets as of September 30, 2016 and December 31, 2015. As a result, the deferred financing costs, net balance of approximately $2.9 million was reclassified from Other assets to Senior term loan on the condensed consolidated balance sheet as of December 31, 2015. |
Remainder of 2016 | $ | 1,500 | |
2017 | 7,000 | ||
2018 | 12,905 | ||
2019 | 6,000 | ||
2020 | 6,000 | ||
Thereafter | 580,000 | ||
Total | $ | 613,405 |
Share consideration in pound sterling (£) | £ | 22,000,000 | ||
Pound sterling (£) to US dollar ($) exchange rate on August 5, 2016 | 1.3042 | |||
Share consideration in US dollars ($) | $ | 28,692,400 | ||
Closing stock price on August 5, 2016 | $ | 13.77 | ||
Number of common shares issued as consideration | 2,083,689 |
Remainder of 2016 | $ | 7 | |
2017 | 20 | ||
Total | $ | 27 |
Remainder of 2016 | $ | 256 | |
2017 | 1,022 | ||
2018 | 820 | ||
2019 | 698 | ||
2020 | 695 | ||
Thereafter | 2,116 | ||
Total | $ | 5,607 |
Nine Months Ended September 30, 2016 | ||
Expected volatility (1) | 26% - 34% | |
Expected dividend yield (2) | —% | |
Expected option term (3) | 5 years | |
Risk-free interest rate (4) | 1.16% - 1.45% |
(1) | The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a five-year look back period ending on the grant date. |
(2) | We have not paid and do not anticipate paying a cash dividend on our common stock. |
(3) | We utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. |
(4) | The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options. |
Number of Options | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | |||||||||||
Outstanding as of January 1, 2016 | 150,000 | 9.22 | $ | 10.72 | $ | 3.50 | ||||||||
Granted | 342,667 | 9.61 | 12.64 | 4.05 | ||||||||||
Exercised | — | — | — | — | ||||||||||
Forfeited | (150,000 | ) | (1) | 9.22 | 10.72 | 3.50 | ||||||||
Outstanding as of September 30, 2016 | 342,667 | 9.61 | $ | 12.64 | $ | 4.05 | ||||||||
Exercisable as of September 30, 2016 | 37,500 | (1) |
(1) | In September 2016, the Company accelerated vesting of 37,500 options concurrent with the termination of an employee and the original award of 150,000 options was forfeited. As a result, the Company reversed equity-based compensation expense of approximately$0.1 million previously recognized for the original unvested award and recognized equity-based compensation expense of approximately $0.3 million equal to the fair value of the modified award. |
Number of RSUs | Weighted Average Grant Date Fair Value | ||||||
Unvested as of January 1, 2016 | 98,500 | $ | 12.65 | ||||
Issued | 1,404,200 | (1) | 16.30 | ||||
Forfeited | (12,250 | ) | 12.65 | ||||
Vested | — | — | |||||
Unvested as of September 30, 2016 | 1,490,450 | $ | 16.09 |
Number of RSAs | Weighted Average Grant Date Fair Value | ||||||
Unvested as of January 1, 2016 | 4,991,858 | $ | 1.45 | ||||
Issued | — | — | |||||
Forfeited | (45,238 | ) | 1.21 | ||||
Vested | (1,442,099 | ) | 1.52 | ||||
Unvested as of June 30, 2016 | 3,504,521 | $ | 1.43 |
Three Months Ended September 30, 2016 | % of Net Sales | Three Months Ended September 30, 2015 | % of Net Sales | ||||||||||
Net sales | $ | 67,982 | 100.0 | % | $ | 45,914 | 100.0 | % | |||||
Cost of goods sold | 35,646 | 52.4 | % | 20,260 | 44.1 | % | |||||||
Gross profit | 32,336 | 47.6 | % | 25,654 | 55.9 | % | |||||||
Sales & marketing expenses | 8,903 | 13.1 | % | 5,146 | 11.2 | % | |||||||
General & administrative expenses | 15,971 | 23.5 | % | 16,068 | 35.0 | % | |||||||
Gain on change in fair value of contingent consideration | (505 | ) | (0.7 | )% | — | — | % | ||||||
Total operating expenses | 24,369 | 35.9 | % | 21,214 | 46.2 | % | |||||||
Operating income | 7,967 | 11.7 | % | 4,440 | 9.7 | % | |||||||
Interest expense | 5,636 | 8.3 | % | 3,311 | 7.2 | % | |||||||
Other income | (4,221 | ) | (6.2 | )% | — | — | % | ||||||
Loss on extinguishment of debt | 1,100 | 1.6 | % | — | — | % | |||||||
Income before income taxes | 5,452 | 8.0 | % | 1,129 | 2.5 | % | |||||||
Income tax expense | 3,807 | 5.6 | % | 4,118 | 9.0 | % | |||||||
Net income (loss) | $ | 1,645 | 2.4 | % | $ | (2,989 | ) | (6.5 | )% |
Nine Months Ended September 30, 2016 | % of Net Sales | Nine Months Ended September 30, 2015 | % of Net Sales | ||||||||||
Net sales | $ | 182,193 | 100.0 | % | $ | 137,543 | 100.0 | % | |||||
Cost of goods sold | 88,891 | 48.8 | % | 60,787 | 44.2 | % | |||||||
Gross profit | 93,302 | 51.2 | % | 76,756 | 55.8 | % | |||||||
Sales & marketing expenses | 22,551 | 12.4 | % | 13,780 | 10.0 | % | |||||||
General & administrative expenses | 27,688 | 15.2 | % | 37,085 | 27.0 | % | |||||||
Gain on change in fair value of contingent consideration | (505 | ) | (0.3 | )% | — | — | % | ||||||
Total operating expenses | 49,734 | 27.3 | % | 50,865 | 37.0 | % | |||||||
Operating income | 43,568 | 23.9 | % | 25,891 | 18.8 | % | |||||||
Interest expense | 11,788 | 6.5 | % | 9,324 | 6.8 | % | |||||||
Other income | (4,221 | ) | (2.3 | )% | — | — | % | ||||||
Loss on extinguishment of debt | 1,100 | 0.6 | % | — | — | % | |||||||
Income before income taxes | 34,901 | 19.1 | % | 16,567 | 12.0 | % | |||||||
Income tax expense | 16,086 | 8.8 | % | 11,092 | 8.1 | % | |||||||
Net income | $ | 18,815 | 10.3 | % | $ | 5,475 | 3.9 | % |
Nine Months Ended September 30, | |||||||||||
(In thousands) | 2016 | 2015 | Change | ||||||||
Cash flows (used in) provided by: | |||||||||||
Operating activities | $ | (2,319 | ) | $ | 30,935 | $ | (33,254 | ) | |||
Investing activities | (385,117 | ) | (8,456 | ) | (376,661 | ) | |||||
Financing activities | 386,090 | (21,194 | ) | 407,284 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (218 | ) | — | (218 | ) | ||||||
Net (decrease) increase in cash | $ | (1,564 | ) | $ | 1,285 | $ | (2,849 | ) |
• | Adjusted EBITDA metric does not reflect our cash expenditures for capital equipment or other contractual commitments; |
• | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements; |
• | Adjusted EBITDA metrics may not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; and |
• | Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 1,645 | $ | (2,989 | ) | $ | 18,815 | $ | 5,475 | ||||||
Non-GAAP adjustments: | |||||||||||||||
Interest expense | 5,636 | 3,311 | 11,788 | 9,324 | |||||||||||
Income tax expense | 3,807 | 4,118 | 16,086 | 11,092 | |||||||||||
Depreciation | 539 | 98 | 814 | 206 | |||||||||||
Amortization of intangible assets | 1,279 | 1,064 | 3,433 | 3,165 | |||||||||||
Equity-based compensation expense | 1,803 | 997 | 3,972 | 2,435 | |||||||||||
Loss on extinguishment of debt | 1,100 | — | 1,100 | — | |||||||||||
Gain on change in fair value of contingent consideration | (505 | ) | — | (505 | ) | — | |||||||||
Other income (1) | (4,221 | ) | — | (4,221 | ) | — | |||||||||
Founder contingent compensation | — | 4,602 | — | 13,805 | |||||||||||
Transaction-related expenses: | |||||||||||||||
IPO-related expenses (2) | — | 6,715 | — | 9,352 | |||||||||||
Secondary offering-related expenses (3) | — | — | 615 | — | |||||||||||
Acquisition-related expenses (4) | 9,024 | 67 | 9,498 | 462 | |||||||||||
Executive recruitment (5) | — | 127 | — | 742 | |||||||||||
Recapitalization expenses (6) | — | — | — | 91 | |||||||||||
Adjusted EBITDA | $ | 20,107 | $ | 18,110 | $ | 61,395 | $ | 56,149 |
(1) | Includes a gain of approximately $3.6 million, recognized in September 2016 associated with the settlement of a forward currency exchange contract entered into in connection with our acquisition of Tyrrells. The remaining amount in other income represents gains from foreign currency transactions. |
(2) | Includes performance bonuses and related payroll taxes paid to employees upon the completion of the IPO, a financial |
(3) | Includes legal, accounting, printing and filing fees paid in connection with our secondary equity public offering, which closed in May 2016. |
(4) | Includes legal, accounting, consulting and ratings agency fees along with severance expenses and integration costs incurred in connection with our acquisition of Tyrrells in September 2016, Boundless Nutrition in April 2016 and Paqui in April 2015. |
(5) | Represents the recognized expense associated with sign-on and retention bonuses for certain executive hires and certain recruiting fees. |
(6) | Represents the expenses we incurred in connection with a distribution paid in May 2015 to members of the former parent entity of the Company. |
• | the introduction of competitive products; |
• | changes in consumer preferences among RTE popcorn and other snack food products; |
• | changes in consumer eating and snacking habits, including trends away from certain categories, including major allergen-free, gluten-free and non-GMO products; |
• | changes in awareness of the social effects of farming and food production; |
• | changes in consumer perception about trendy snack products; |
• | changes in consumer perception regarding the healthfulness or BFY nature of our products; |
• | the level and effectiveness of our sales and marketing efforts; |
• | any unfavorable publicity regarding RTE popcorn products or similar products; |
• | any unfavorable publicity regarding the SkinnyPop brand; |
• | litigation or threats of litigation with respect to our products; |
• | the price of our products relative to other competing products; |
• | price increases resulting from rising commodity costs; |
• | any changes in government policies and practices related to our products, labeling and markets; |
• | regulatory developments affecting the manufacturing, labeling, marketing or use of our products; |
• | new science or research that disputes the healthfulness of our products; and |
• | adverse decisions or rulings limiting our ability to promote the benefits of popcorn products. |
• | increased commitments for the management team, including the need to divert management's attention to integration matters, particularly if we are unable to retain key personnel; |
• | difficulties realizing the revenue projections, financial benefits, synergies and other strategic opportunities anticipated in connection with the transaction; |
• | our inexperience with maintaining multiple geographic locations spread out across the world; |
• | challenges in leveraging our commercial expertise, which could result in unforeseen expenses and disrupt our business operations; and |
• | difficulties in the assimilation and retention of employees, including key personnel responsible for the success of Tyrrells. |
• | make it more difficult for us to satisfy our financial obligations under our current debt obligations, or other indebtedness, as well as our contractual and commercial commitments, and could increase the risk that we may default on our debt obligations; |
• | require us to use a substantial portion of our cash flow from operations to pay interest and principal on our current debt obligations, or other indebtedness, which would reduce the funds available for working capital, capital expenditures and other general corporate purposes; |
• | limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other investments, or general corporate purposes, which may limit the ability to execute our business strategy; |
• | heighten our vulnerability to downturns in our business, our industry or in the general economy and restrict us from exploiting business opportunities or making acquisitions; |
• | place us at a competitive disadvantage compared to those of our competitors that may have proportionately less debt; |
• | limit management’s discretion in operating our business; |
• | limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy; and |
• | result in higher interest expense if interest rates increase and we have outstanding floating rate borrowings. |
• | food and drug laws (including FDA regulations and other applicable regulations including those of the Food Standards Agency in the United Kingdom and the European Food Safety); |
• | laws related to product labeling; |
• | advertising and marketing laws and practices; |
• | laws and programs restricting the sale and advertising of certain of our products; |
• | laws and programs aimed at reducing, restricting or eliminating ingredients present in certain of our products; |
• | laws and programs aimed at discouraging the consumption of products or ingredients or altering the package or portion size of certain of our products; |
• | increased regulatory scrutiny of, and increased litigation involving, product claims and concerns regarding the effects on health of ingredients in, or attributes of, certain of our products; |
• | state consumer protection and disclosure laws; |
• | taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws; |
• | anti-corruption laws; |
• | employment laws; |
• | privacy laws; |
• | laws regulating the price we may charge for our products; and |
• | farming and environmental laws. |
• | borrow money or guarantee debt; |
• | create liens; |
• | make specified types of investments and acquisitions; |
• | pay dividends on or redeem or repurchase stock; |
• | enter into new lines of business; |
• | enter into transactions with affiliates; and |
• | sell assets or merge with other companies. |
• | market conditions or trends in the BFY packaged food industry or in the economy as a whole; |
• | actions by competitors; |
• | actual or anticipated growth rates relative to our competitors; |
• | the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission, or SEC; |
• | economic, legal and regulatory factors unrelated to our performance; |
• | any future guidance we may provide to the public, any changes in such guidance or any difference between our guidance and actual results; |
• | changes in financial estimates or recommendations by any securities analysts who follow our common stock; |
• | speculation by the press or investment community regarding our business; |
• | litigation; |
• | changes in key personnel; and |
• | future sales of our common stock by our officers, directors and significant stockholders. |
• | increase or decrease the authorized number of members of our board of directors; |
• | amend our amended and restated certificate of incorporation or amended and restated bylaws or the organizational documents of any of our subsidiaries; |
• | issue, create or assume any debt or equity security or debt obligation, or refinance, repurchase or prepay any security (other than repurchases of our common stock in accordance with agreements previously approved by our board of directors, including at least one director designated by TA Associates) or debt obligation; |
• | pay or declare any dividend or make any distribution on, or repurchase or redeem shares of our common stock (other than repurchases of our common stock in accordance with agreements previously approved by our board of directors, including at least one director designated by TA Associates); |
• | effect any sale, liquidation or dissolution of the Company, or sell, transfer or otherwise dispose of any of the material assets or properties of the Company or any of its subsidiaries, or merge with or into, or consolidate with, another entity or effect any recapitalization, reorganization, change of form of organization, forward or reverse split, dividend or similar transaction; |
• | acquire any business, material assets or property for consideration in excess of $15,000,000, whether by acquisition of assets, capital stock or otherwise, and whether in consideration of the payment of cash, the issuance of capital stock or otherwise or make any investment in any person or entity in an amount in excess of $15,000,000; |
• | hire or terminate any our executive officers, or enter into, amend or modify, or waive any material term of any employment agreement or material term of employment with any of our executive officers; or |
• | take any action to initiate, to cause or that would result in, the voluntary bankruptcy, insolvency, dissolution, liquidation or winding up of the Company or any of its subsidiaries. |
Amplify Snack Brands, Inc. | |||
Date: November 14, 2016 | /s/ Brian Goldberg | ||
Brian Goldberg | |||
Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit | Incorporated by Reference | |||||||||
Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | |||||
2.1 | Share Purchase Agreement by and among Crisps Holdings Limited, individual selling equityholders, Thunderball Bidco Limited and SkinnyPop Popcorn LLC, dated August 6, 2016. | 8-K | 001-37530 | 2.1 | August 8, 2016 | |||||
2.2 | Warranty Deed Relating to the Sale and Purchase of Crisps Topco Limited, by and among certain individual warrantors and Thunderball Bidco Limited, dated August 6, 2016. | 8-K | 001-37530 | 2.2 | August 8, 2016 | |||||
4.1 | Amended and Restated Registration Rights Agreement, by and among the Company and certain of its stockholders. | 8-K | 001-37530 | 4.1 | September 2, 2016 | |||||
10.1+ | 2015 Stock Option and Incentive Plan, and related form agreements thereunder. | 8-K | 001-37530 | 10.1 | September 2, 2016 | |||||
10.2 | Credit Agreement, dated as of September 2 2016, by and among the Company, certain subsidiaries of the Company, the financial institutions and agents listed therein, and Jefferies Finance LLC. | 8-K | 001-37530 | 10.2 | September 2, 2016 | |||||
10.3+ | Employment Agreement by and between the Company and David Milner dated as of June 24, 2010, as amended August 1, 2013 and September 2, 2016. | 8-K | 001-37530 | 10.3 | September 2, 2016 | |||||
31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | Filed herewith | ||||||||
31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | Filed herewith | ||||||||
32.1* | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. | Furnished herewith | ||||||||
32.2* | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. | Furnished herewith | ||||||||
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 |
* | The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. |
+ | Indicates management contract or compensatory plan, contract, or agreement. |
Date: November 14, 2016 | By: | /s/ Thomas Ennis | ||||
Thomas Ennis | ||||||
Chief Executive Officer (Principal Executive Officer) |
Date: November 14, 2016 | By: | /s/ Brian Goldberg | ||||
Brian Goldberg | ||||||
Chief Financial Officer (Principal Financial and Accounting Officer) |
Date: November 14, 2016 | By: | /s/ Thomas Ennis | ||||
Thomas Ennis | ||||||
Chief Executive Officer (Principal Executive Officer) |
Date: November 14, 2016 | By: | /s/ Brian Goldberg | ||||
Brian Goldberg | ||||||
Chief Financial Officer (Principal Financial and Accounting Officer) |
Document Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 09, 2016 |
|
Document Entity Information [Abstract] | ||
Entity Registrant Name | Amplify Snack Brands, Inc. | |
Entity Central Index Key | 0001640313 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 76,784,345 |
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 8,481 | $ 2,272 |
Common stock - par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 375,000,000 | 375,000,000 |
Common stock, shares issued (in shares) | 76,881,921 | 74,843,470 |
Common stock, shares outstanding (in shares) | 76,881,921 | 74,843,470 |
Treasury stock, shares held (in shares) | 3,504,521 | 4,991,858 |
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Net Sales | $ 67,982,000 | $ 45,914,000 | $ 182,193,000 | $ 137,543,000 |
Cost of goods sold | 35,646,000 | 20,260,000 | 88,891,000 | 60,787,000 |
Gross profit | 32,336,000 | 25,654,000 | 93,302,000 | 76,756,000 |
Sales & marketing expenses | 8,903,000 | 5,146,000 | 22,551,000 | 13,780,000 |
General & administrative expenses | 15,971,000 | 16,068,000 | 27,688,000 | 37,085,000 |
Gain on change in fair value of contingent consideration | (505,000) | 0 | (505,000) | 0 |
Total operating expenses | 24,369,000 | 21,214,000 | 49,734,000 | 50,865,000 |
Operating income | 7,967,000 | 4,440,000 | 43,568,000 | 25,891,000 |
Interest expense | 5,636,000 | 3,311,000 | 11,788,000 | 9,324,000 |
Other income | (4,221,000) | 0 | (4,221,000) | 0 |
Loss on extinguishment of debt | 1,100,000 | 0 | 1,100,000 | 0 |
Income before income taxes | 5,452,000 | 1,129,000 | 34,901,000 | 16,567,000 |
Income tax expense | 3,807,000 | 4,118,000 | 16,086,000 | 11,092,000 |
Net income (loss) | 1,645,000 | (2,989,000) | 18,815,000 | 5,475,000 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (9,030,000) | 0 | (9,030,000) | 0 |
Comprehensive (loss) income | $ (7,385,000) | $ (2,989,000) | $ 9,785,000 | $ 5,475,000 |
Basic and diluted earnings per share (USD per share) | $ 0.02 | $ (0.04) | $ 0.25 | $ 0.07 |
Weighted average shares outstanding: | ||||
Basic weighted average shares outstanding (in shares) | 75,455,047 | 74,982,461 | 75,032,287 | 74,707,855 |
Diluted weighted average shares outstanding (in shares) | 75,557,760 | 74,982,461 | 75,094,446 | 74,707,855 |
Business Overview |
9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Business Overview | BUSINESS OVERVIEW Amplify Snack Brands, Inc., a Delaware corporation, and its subsidiaries (collectively, the "Company," and herein referred to as "we", "us", and "our") is a high growth, snack food company focused on developing and marketing products that appeal to consumers’ growing preference for better-for-you ("BFY") snacks. Corporate Reorganization and Initial Public Offering Prior to the consummation of our initial public offering ("IPO") on August 4, 2015, a series of related reorganization transactions (hereinafter referred to as the "Corporate Reorganization") occurred in the following sequence:
Refer to Note 9 for additional details regarding the Company's IPO and secondary public offering. Crisps Topco Limited Acquisition On September 2, 2016, the Company completed its acquisition of Crisps Topco Limited (“Tyrrells”), a company incorporated under the laws of England and Wales, which owns the Tyrrells international portfolio of premium snack brands, through Thunderball Bidco Limited (the “Purchaser”), a direct, wholly-owned subsidiary of the Company. The acquisition was completed pursuant to a Share Purchase Agreement (the “Purchase Agreement”) with SkinnyPop Popcorn LLC, a direct wholly-owned subsidiary of the Company (the “Purchaser Guarantor”), Crisps Holdings Limited, a company incorporated under the laws of the Cayman Islands (the “Institutional Seller”) and individual selling equityholders (the “Management Sellers”). The Company acquired all of the outstanding equity interests of Tyrrells for total consideration of approximately $416.4 million. Refer to Note 3 for more details regarding this transaction. SkinnyPop Popcorn LLC Acquisition On July 17, 2014, SkinnyPop Popcorn LLC ("SkinnyPop") was acquired by investment funds affiliated with TA Associates for aggregate purchase consideration of $320 million, which included rollover stock from existing equity holders in SkinnyPop valued at $25 million. The aggregate purchase consideration, plus transaction-related expenses and financing costs, was funded by TA Associates' equity investment in Topco, as well as from certain members of management and net proceeds from a $150 million term loan borrowing. |
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying interim condensed consolidated balance sheets as of September 30, 2016 and December 31, 2015, the interim condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2016 and September 30, 2015, the interim condensed consolidated statement of shareholders' equity for the nine months ended September 30, 2016 and September 30, 2015, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2016 and September 30, 2015, are unaudited. Interim Financial Statements The accompanying unaudited interim condensed consolidated financial statements of Amplify Snack Brands, Inc. (“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 with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required for annual financial statements. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The Condensed Consolidated Financial Statements have been prepared on the same basis as the audited consolidated financial statements at and for the fiscal year ended December 31, 2015, and in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, with the exception of retrospective adoption of ASU 2015-03 as discussed herein, necessary for the fair presentation of the financial position as of September 30, 2016 and results of our operations for the three and nine months ended September 30, 2016 and September 30, 2015, and cash flows for the nine months ended September 30, 2016 and September 30, 2015. The interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. Therefore, the Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2016. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for any future periods. Use of Estimates The unaudited interim condensed consolidated financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. The Company routinely evaluates its estimates, including those related to accruals and allowances for customer programs and incentives, bad debts, income taxes, long-lived assets, inventories, equity-based compensation, accrued broker commissions and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Foreign Currency The financial statements of our foreign subsidiaries are translated to U.S. Dollars. The functional currency of our foreign subsidiaries is the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. Dollars at period-end exchange rates. Income and expense items are translated at the average rates prevailing during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses. Our transaction gains and losses are reflected in earnings in our consolidated statements of comprehensive income. The cumulative translation adjustment in accumulated other comprehensive income loss reflects the unrealized adjustments resulting from translating the financial statements of our foreign subsidiaries. Segment Reporting On September 2, 2016, the Company acquired Tyrrells, which owns an international portfolio of premium snack brands. The Company is currently evaluating how the Tyrrells business will be integrated into the Company's current operations and whether the acquisition will qualify as a separate reportable segment(s). The Company will make a determination over the next quarter and disclose the impact in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Currently, the Company's operating segments are aggregated into one reportable segment because they have similar economic characteristics and meet the other aggregation criteria within the accounting standard on segment reporting, including similarities in the nature of the services provided, methods of service delivery, customers served and the regulatory environment in which they operate. Our chief executive officer is considered to be our chief operating decision maker. He currently reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The carrying amounts of the Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. Our term loan and revolving credit facility bear interest at a variable interest rate plus an applicable margin and, therefore, carrying amount approximates fair value. The fair value of our term loan and revolving credit facility are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. The following table presents liabilities measured at fair value on a recurring basis (in thousands):
(1) Contingent consideration is reported in Other liabilities in the accompanying Condensed Consolidated Balance Sheets. Founder Contingent Compensation Considerable judgment was required in developing the estimate of the fair value of the Founder Contingent Compensation. The use of different assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. The fair value measurement of the Founder Contingent Compensation obligation relates to the employment agreements entered into in connection with the Company's acquisition of SkinnyPop in July 2014. As of December 31, 2015, the Company had accrued the entire liability balance of $25.2 million ratably over the contractual service period as expense in our condensed consolidated statements of comprehensive income. To determine the fair value, the Company valued the total contingent compensation liability based on the expected probability weighted compensation payments corresponding to certain contribution margin benchmarks defined in the employment agreements, as well as the associated income tax benefit using the estimated tax rates that will be in effect (Level 3). The current estimate represents the recognizable portion based on the maximum potential obligation allowable under the employment agreements. The obligation totaled $25.2 million at December 31, 2015, which consisted of $18.5 million in remaining payments based on the Company's achievement of certain contribution margin benchmarks defined in the employment agreements, and $6.7 million based on estimated tax savings to the Company associated with the tax deductibility of the payments under these employment agreements. In March 2016, the Company paid $23.0 million of the Founder Contingent Compensation obligation, leaving a remaining obligation of $2.2 million, which the Company satisfied with a final payment in October 2016. Refer to Note 10 for additional details regarding the founders' employment agreements. The following table summarizes the Level 3 activity related to the Founder Contingent Compensation (in thousands):
Contingent Consideration In connection with the acquisition of Boundless Nutrition, LLC (“Boundless Nutrition”) in April 2016, payment of a portion of the purchase price is contingent upon the achievement for the year ended December 31, 2018 ("Boundless Earn-out Period") of a defined contribution margin in excess of the sum of the original principal amount and accrued interest of the notes issued to the sellers of Boundless Nutrition (see Notes Payable discussion below for additional details). As of the acquisition date, the Company estimated the fair value of the contingent consideration to be approximately $1.7 million. At September 30, 2016, the Company adjusted the fair value of the contingent consideration to be approximately $1.1 million, based on a change in estimate used in the fair value calculation as of the acquisition date. This adjustment resulted in a decrease to goodwill and intangible assets on the accompanying condensed consolidated balance sheet. The Company is required to reassess the fair value of the contingent consideration at each reporting period. As of September 30, 2016, the Company has finalized the valuation of the acquired intangible assets (see Note 3). In connection with the acquisition of Paqui, LLC (“Paqui”) in April 2015, payment of a portion of the purchase price is contingent upon the achievement for the year ended December 31, 2018 ("Paqui Earn-out Period" and with the Boundless Earn-out Period, the "Earn-out Periods") of a defined contribution margin in excess of the sum of the original principal amount and accrued interest of the notes issued to the sellers of Paqui (see Notes Payable discussion below for additional details). As of the acquisition date, the Company estimated the fair value of the contingent consideration to be approximately $0.4 million (see Note 3) and the Company is required to reassess the fair value of the contingent consideration at each reporting period. At December 31, 2015, the Company remeasured the fair value of the contingent consideration to be approximately $1.9 million, based on a revised forecast of Paqui operating results for the Paqui Earn-out Period. At September 30, 2016, the Company remeasured the fair value of the contingent consideration to be approximately $1.4 million, based on a revised forecast of Paqui operating results for the Paqui Earn-out Period. These adjustments resulted in an increase to net earnings of $0.5 million on the accompanying condensed consolidated statement of comprehensive income. The significant inputs used in this fair value estimates include numerous gross sales scenarios for the Earn-out Periods for which probabilities are assigned to each scenario to arrive at a single estimated outcome (Level 3). The estimated outcome is then discounted based on the individual risk analysis of the liability. The present value of the estimated outcome is used as the underlying price and the sum of the original principal amount and accrued interest of the notes issued to the sellers of Paqui and Boundless Nutrition ("Earn-Out Threshold") is used as the exercise price in the Black-Scholes option pricing model. Although the Company believes its estimates and assumptions are reasonable, different assumptions, including those regarding the operating results of Paqui and Boundless Nutrition, or changes in the future may result in different estimated amounts. The contingent consideration is included in Other liabilities in the accompanying condensed consolidated balance sheets. The Company will satisfy this obligation with a cash payment to the sellers of each of Paqui and Boundless Nutrition upon the achievement of the respective milestone discussed above. The following table summarizes the Level 3 activity related to the Contingent Consideration (in thousands):
Notes Payable As discussed in more detail in Note 3, in April 2016, the Company issued $4.0 million in unsecured notes to the sellers of Boundless Nutrition in connection with its acquisition. The notes bear interest at a rate per annum of 0.67% with principal and interest due at varying maturity dates between April 29, 2017 and December 31, 2018. The Company recorded an acquisition-date fair value discount of approximately $0.2 million based on market rates for debt instruments with similar terms (Level 3), which is amortized to interest expense over the term of the notes using the effective-interest method. As discussed in more detail in Note 3, in April 2015, the Company issued $3.9 million in unsecured notes to the sellers of Paqui in connection with its acquisition. The notes bear interest at a rate per annum of 1.5% with principal and interest due at maturity on March 31, 2018. The Company recorded an acquisition-date fair value discount of approximately $0.2 million based on market rates for debt instruments with similar terms (Level 3), which is amortized to interest expense over the term of the notes using the effective-interest method. Inventories In our North America operations, inventories are valued at the lower of cost or market using the weighted-average cost method. The Company procures certain raw material inputs and packaging from suppliers and contracts with third-party firms to assemble and warehouse finished product. The third-party co-manufacturers invoice the Company monthly for labor inputs upon the production or shipment of finished product during that period. In our international operations, inventories are valued at the lower of cost or market using the first-in, first-out method. The Company owns the manufacturing facilities used for production. The costs of finished goods inventories include raw materials, direct labor, indirect production, and overhead costs. Write-downs are provided for finished goods expected to become non-saleable due to age and provisions are specifically made for slow moving or obsolete raw ingredients and packaging. The Company also adjusts the carrying value of its inventories when it believes that the net realizable value is less than the carrying value. These write-downs are measured as the difference between the cost of the inventory, including estimated costs to complete, and estimated selling prices. Charges related to slow moving or obsolete items are recorded as a component of cost of goods sold. Charges related to packaging redesigns are recorded as a component of selling and marketing. Once inventory is written down, a new, lower-cost basis for that inventory is established. Recognition of Net Sales, Sales Incentives and Trade Accounts Receivable The Company offers its customers a variety of sales and incentive programs, including price discounts, coupons, slotting fees, in-store displays and trade advertising. Slotting fees are capitalized and amortized over the greater of twelve months or the life of the agreement and recorded as a reduction in net sales. Capitalized slotting fees are evaluated for impairment on an ongoing basis. The costs of the remaining programs are recognized at the time the related sales are recorded and are classified as a reduction in net sales. These program costs are estimated based on a number of factors including customer participation and performance levels. As of September 30, 2016 and December 31, 2015, the Company recorded total allowances related to sales and incentive programs against trade accounts receivable of approximately $8.5 million and $2.3 million, respectively. Acquisition of Tyrrells in September 2016 contributed $6.4 million. Recoveries of receivables previously written off are recorded when received. Concentration Risk Customers with 10% or more of the Company’s net sales consist of the following:
As of September 30, 2016, Costco and Sam’s Club represented 10% and 4%, respectively, of the accounts receivable balance outstanding. The same two customers represented 15% and 13%, respectively, of the accounts receivable balance as of December 31, 2015. The decrease in customer concentration as of September 30, 2016 is due to the Tyrrells acquisition (See Note 3 for more details). The Company outsources a significant percentage of the manufacturing of its products to a single co-manufacturer in the United States. This co-manufacturer represented 17% and 36% of the accounts payable balance as of September 30, 2016 and December 31, 2015, respectively. Earnings per Share Basic earnings per share has been computed based upon the weighted average number of common shares outstanding. The Company's unvested shares of restricted common stock contain non-forfeitable rights to dividends and are considered to be participating securities in accordance with GAAP and, therefore are included in the computation of basic earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating securities according to dividends declared and participation rights in undistributed earnings. Diluted earnings per share has been computed based upon the weighted average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, except when the effect would be anti-dilutive. The dilutive effect of unvested restricted stock units ("RSUs") and unvested stock options has been accounted for using the two-class method or the treasury stock method, if more dilutive. As discussed in Note 1, in August 2015, the Company completed the Corporate Reorganization immediately prior to the Company's IPO. For purposes of computing net income per share, it is assumed that the reorganization of the Company had occurred for all periods presented and therefore the outstanding shares have been adjusted to reflect the conversion of shares that took place in contemplation of the IPO. Accordingly, the denominators in the computations of basic and diluted net income per share for the three and nine months ended September 30, 2015, reflect the Company's reorganization.
(1) Excludes the weighted average impact of 373,848 and 131,848 unvested RSUs for the three and nine months ended September 30, 2016, respectively, because the effects of their inclusion would be anti-dilutive. (2) Excludes the weighted average impact of 87,703 and 179,174 unvested stock options for the three and nine months ended September 30, 2016, because the effects of their inclusion would be anti-dilutive. Tax Receivable Agreement ("TRA") As discussed in Notes 1 and 10, immediately prior to the consummation of the IPO in August 2015, the Company entered into a TRA with the former holders of units in Topco. In December 2015, all of the former holders of units in Topco collectively assigned their interests to a new counterparty. The Company estimated an obligation of approximately $96.1 million based on the full and undiscounted amount of expected future payments under the TRA in consideration of a reduction in the Company's future U.S. federal, state and local taxes resulting from the utilization of certain tax attributes. The Company accounted for the obligation under the TRA as a dividend and elected to reduce additional paid in capital. Subsequent adjustments of the TRA obligation due to certain events, such as potential changes in tax rates or insufficient taxable income, will be recognized in the consolidated statements of comprehensive income. Future cash payments under the TRA will be classified as a financing activity on the condensed consolidated statements of cash flows. Recent Accounting Pronouncements In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". ASU 2016-15 clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. This ASU is effective for interim and annual periods beginning after December 15, 2017. Early application is permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-15 on its financial position, results of operations, cash flows and financial statement disclosures. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)". ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing". ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. In May 2019, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients." ASU 2016-12 addresses narrow-scope improvements to the guidance on collectibility, noncash consideration, and completed contracts at transition. Additionally, this ASU provides a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. These ASUs apply to all companies that enter into contracts with customers to transfer goods or services. These ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. The Company is in the process of assessing both the method and the impact of the adoption of these ASUs on its financial position, results of operations, cash flows and financial statement disclosures. In March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting", which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-09 on its financial position, results of operations, cash flows and financial statement disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", which requires lessees to recognize assets and liabilities related to lease arrangements longer than twelve months on the balance sheet. This standard also requires additional disclosures by lessees and contains targeted changes to accounting by lessors. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company is in the process of assessing the impact of the adoption of ASU No. 2016-02 on its financial position, results of operations, cash flows and financial statement disclosures. In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments", which simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. This revised guidance was effective for annual reporting periods beginning after December 15, 2015, and related interim periods. The amendments in the update were applied prospectively to adjustments to provisional amounts that occurred after the effective date of the update with early application permitted for financial statements not yet issued. We have adopted this guidance and will apply it as necessary in our financial statements. In August 2015, the FASB issued ASU No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements-Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting” to clarify that given the absence of authoritative guidance within ASU No. 2015-03 for debt issuance costs related to the line-of-credit arrangements, such costs may be presented as an asset and subsequently amortized ratably over the term of the line-of-credit arrangement. See discussion below regarding adoption of ASU 2015-03. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory", which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively. The Company is currently assessing the impact of the adoption of ASU No. 2015-11 on its financial position, results of operations and financial statement disclosures. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The Company adopted the provisions of ASU 2015-03 retrospectively on January 1, 2016. Debt issuance costs are now presented as a reduction to the Senior term loan balance on the condensed consolidated balance sheet as of June 30, 2016 and December 31, 2015. As a result, the Company reclassified $2.9 million of debt issuance costs from Other assets to Senior term loan on the condensed consolidated balance sheet as of December 31, 2015. The adoption of ASU 2015-03 did not impact the Company's condensed consolidated statements of comprehensive income or condensed consolidated statements of cash flows. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern: Disclosures about an Entity’s Ability to Continue as a Going Concern”. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter. The Company is currently assessing the impact of the adoption of ASU No. 2014-15 on its financial position, results of operations and financial statement disclosures. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition”, and most industry-specific guidance throughout the Codification. The standard requires entities to recognize the amount of revenue that reflects the consideration to which the company expects to be entitled in exchange for the transfer of promised goods or services to customers. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU No. 2014- 09 by one year, to December 15, 2017 for interim and annual reporting periods beginning after that date. The FASB will permit early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is in the process of assessing both the method and the impact of the adoption of ASU No. 2014-09 on its financial position, results of operations, cash flows and financial statement disclosures. |
Acquisition |
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Acquisition | ACQUISITION Tyrrells Acquisition On September 2, 2016, the Company acquired Tyrrells, an international manufacturer and distributor of BFY snacks, for total consideration of approximately $416.4 million. The Company paid approximately $381.1 million in cash and issued approximately 2.1 million shares of its common stock with an acquisition date fair value of approximately $35.3 million. Refer to Note 9 for additional information regarding equity issued as consideration for Tyrrells. The Company financed the cash portion of the transaction with proceeds from term loans totaling $600 million. Refer to Note 8 for additional details regarding the financing arrangement entered into in connection with this transaction. This acquisition has been accounted for under the acquisition method of accounting, whereby the purchase consideration was allocated to tangible and intangible net assets acquired and liabilities assumed at their estimated fair values on the date of acquisition. The excess purchase consideration over fair value of net assets acquired and liabilities assumed was recorded as goodwill and represents a value attributable to brand recognition associated with Tyrrells' products and position in the BFY snack category. The Company incurred approximately $8.4 million and $8.5 million of acquisition-related costs during the three and nine months ended September 30, 2016, respectively, which is included as part of general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. Since the acquisition date, Tyrrells contributed approximately $8.6 million of net sales to the Company for the three and nine months ended September 30, 2016. The Company has one year from the acquisition date to finalize the valuation of the acquired intangible assets, including goodwill. Management is responsible for these internal and third-party valuations and appraisals and is continuing to review the amounts and allocations. The following table summarizes the preliminary allocation of the purchase consideration for Tyrrells to the estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, organic growth and other benefits that are expected to arise from integrating Tyrrells into our operations. None of the goodwill recorded in this transaction is expected to be tax deductible. Pro Forma Combined Statements of Operations (Unaudited) The following unaudited pro forma combined statements of operations presents the Company's operations as if the Tyrrells acquisition and related financing activities had occurred on January 1, 2015. The pro forma information includes the following adjustments (i) amortization of acquired definite-lived intangible assets; (ii) depreciation based on the fair value of acquired property and equipment; (iii) interest expense incurred in connection with incremental term loan borrowings used to finance the acquisition of Tyrrells; (iv) inclusion of equity-based compensation expense associated with equity awards granted to certain Tyrrells' employees in connection with the acquisition; and (v) inclusion of acquisition-related expenses in the earliest period presented. The pro forma combined statements of operations are not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date and are not intended to be a projection of future results (in thousands, except per share data):
Boundless Nutrition Acquisition In April 2016, the Company acquired Boundless Nutrition, a manufacturer and distributor of BFY protein bars and cookies for total consideration of approximately $21.4 million. This acquisition has been accounted for under the acquisition method of accounting and the excess purchase consideration over fair value of net assets acquired and liabilities assumed was recorded as goodwill and represents a value attributable to brand recognition associated with Boundless Nutrition's products and position in the BFY snack category. The Company incurred approximately $0.1 million and $0.4 million of acquisition-related costs during the three and nine months ended September 30, 2016, respectively, which is included as part of general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. The Company completed its review of the purchase consideration and estimated fair value of assets acquired and liabilities assumed at the date of acquisition, with an adjustment to fair value of contingent consideration identified during the measurement period (see Note 2). The following table summarizes the final allocation of the purchase consideration for Boundless Nutrition to the estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Management evaluated the impact to the Company's financial statements of the Boundless Nutrition acquisition and concluded that the impact was not significant enough to require or separately warrant the inclusion of pro forma financial results inclusive of Boundless Nutrition. Paqui Acquisition In April 2015, the Company acquired Paqui, a manufacturer and marketer of tortilla chips and pre-packaged tortillas for total consideration of approximately $11.9 million. This acquisition was accounted for under the acquisition method of accounting and the excess purchase consideration over fair value of net assets acquired and liabilities assumed was recorded as goodwill and represented a value attributable to brand recognition associated with Paqui’s products and position in the BFY snack category. The Company completed its review of the purchase consideration and estimated fair value of assets acquired and liabilities assumed at the date of acquisition, with adjustments to provisional amounts that were identified during the measurement period considered not significant. The following table summarizes the purchase consideration and final estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Management evaluated the impact to the Company's financial statements of the Paqui acquisition and concluded that the impact was not significant enough to require or separately warrant the inclusion of pro forma financial results inclusive of Paqui. |
Inventory |
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Inventory | INVENTORY Inventories, net of reserves and provisions, consist of the following (in thousands):
As of September 30, 2016 and December 31, 2015, we had approximately $1.0 million and $0.7 million in reserves, respectively, for finished goods deemed unsaleable and raw materials and packaging deemed obsolete. If future demand or market conditions are less favorable than those projected by our management, additional inventory write-downs may be required. |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Accumulated depreciation is recognized ratably over the expected useful life of the asset. Property and equipment, net consist of the following (in thousands):
Depreciation expense was approximately $0.5 million and $0.1 million for the three months ended September 30, 2016 and September 30, 2015, respectively, and approximately $0.8 million and $0.2 million for the nine months ended September 30, 2016 and September 30, 2015, respectively. Depreciation expense is included in cost of goods sold and general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill consists of the following (in thousands):
(1) Refer to Note 3 for more details regarding goodwill recorded in connection with the Company's acquisition of Tyrrells in September 2016, Boundless Nutrition in April 2016 and Paqui in April 2015. Intangible assets consist of the following (in thousands):
(1) The change in the gross carrying amount of trade names and customer relationships is the result of the Company's acquisition of Tyrrells in September 2016 and Boundless Nutrition in April 2016. Refer to Note 3 for more details. Amortization of finite-lived intangibles was approximately $1.3 million and $1.1 million for the three months ended September 30, 2016 and September 30, 2015, respectively, and $3.4 million and $3.2 million for the nine months ended September 30, 2016 and September 30, 2015, respectively. Amortization of finite-lived intangible assets is included as part of general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. The estimated future amortization expense related to finite-lived intangible assets is as follows as of September 30, 2016 (in thousands):
ASC 350, "Intangibles- Goodwill and Other", requires companies to test goodwill and indefinite-lived intangibles for impairment annually and more frequently if indicators of impairment exist. Accordingly, the Company performed its annual assessment of fair value as of July 1, 2016 for its SkinnyPop, Boundless Nutrition and Paqui reporting units and concluded there was no impairment related to goodwill and indefinite-lived intangibles. |
Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | ACCRUED LIABILITIES The following table shows the components of accrued liabilities (in thousands):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT Debt consists of the following (in thousands):
New Credit Facility In connection with the acquisition of Tyrrells, the Company entered into a Credit Agreement on September 2, 2016 (the "New Credit Facility"), which provided for term loans in the aggregate principal amount of $600 million (the "Term Loans") and revolving loans in the aggregate principal amount of $50 million (the "Revolving Loans"). The Company borrowed from the Term Loans in full to finance the acquisition of Tyrrells and pay down all outstanding indebtedness under the Credit Agreement entered into on July 17, 2014 (the "Prior Credit Facility"). The Company drew $5.5 million from the Revolving Loans as of September 30, 2016. In connection with the issuance of the New Credit Facility, the Company incurred an original issue discount ("OID") of approximately $6.6 million and paid lender and legal fees of approximately $15.4 million, which are capitalized and presented as a direct reduction to the related debt instrument in the condensed consolidated balance sheets. These costs are recognized as additional interest expense over the term of the related debt instrument using the effective interest method. In addition, the Company recognized a loss on extinguishment of debt of approximately $1.1 million related to the write-off of unamortized deferred financing costs incurred under the Prior Credit Facility. The Company must repay the Term Loans in installments of $1.5 million per quarter due on the last day of each quarter beginning with the quarter ending December 31, 2016, with the remaining balance due at maturity in a final installment of $559.5 million. The Term Loans and Revolving Loans are scheduled to mature on September 2, 2023 and September 2, 2021, respectively. In addition to the installment payments described above, the New Credit Facility includes an annual mandatory prepayment of the Term Loans from 50% of the Company's excess cash flow as measured on annual basis, with step- downs to 25% and 0% of the Company's excess cash flow if the Company's Total Leverage Ratio (as defined in the New Credit Facility), tested as of the last day of the Company's fiscal year, is less than 4.50 to 1.00 but greater than 3.75 to 1.00, and less than or equal to 3.75 to 1.00, respectively. Excess cash flow is generally defined as the Company's Consolidated Net Income (as defined in the New Credit Facility) less debt service costs, unfinanced capital expenditures, unfinanced acquisition expenditures, and certain restricted payments, as adjusted for changes in the Company's working capital and less other customary items. In addition, the New Credit Facility requires mandatory prepayment of the Term Loans from the net cash proceeds of (i) certain debt issuances and (ii) certain asset sales outside the ordinary course of business and from proceeds of property insurance and condemnation events, in each case of this clause (ii) subject to the Company’s right in some circumstances to reinvest such proceeds in the Company’s business. Any voluntary prepayment as part of a repricing transaction shall be accompanied by a prepayment premium equal to 1.0% of the principal amount of such prepayment, if such prepayment is made on or prior to the date that is twelve months after September 2, 2016. Interest The Term Loans bear interest, at the Company's option, at either the Eurodollar rate plus a margin of 5.50% or the prime rate plus a margin of 4.50%, with step-downs to 5.00% and 4.00%, respectively, if the Company's First Lien Leverage Ratio (as defined in the New Credit Facility) is less than or equal to 4.50 to 1.00. The Eurodollar rate is subject to no floor with respect to the Revolving Loans and an annual 1.00% floor with respect to the Term Loans and the prime rate is subject to a 1.00% floor with respect to the Revolving Loans and a 2.00% floor with respect to the Term Loans. The interest rate on the outstanding balance of our Term Loans and Revolving Loans was 6.50% and 6.36% per annum, respectively, at September 30, 2016. The Company is also required to pay a commitment fee on the unused commitments under the Revolving Loans at a rate equal to 0.50% per annum with a step-down to 0.375% per annum, if the Company's First Lien Leverage Ratio is less than or equal to 3.25 to 1.00. Guarantees The New Credit Facility is secured by liens on substantially all the Company's assets, including a pledge of 100% of the equity interests in the Company's domestic subsidiaries and a pledge of 65% of the voting equity interests and 100% of the non-voting equity interests in the Company's direct foreign subsidiaries. All obligations under the New Credit Facility are unconditionally guaranteed by substantially all of the Company's direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions. Covenants As of the last day of any fiscal quarter of the Company, the terms of the New Credit Facility require the Company and its subsidiaries (on a consolidated basis and subject to certain customary exceptions) to maintain a maximum First Lien Leverage Ratio of not more than 8.50 to 1.0, initially, and decreasing to 6.25 to 1.0 over the term of the New Credit Facility. As of September 30, 2016, the Company was in compliance with our financial covenant. The New Credit Facility contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the parties, including, among others, the provision of annual and quarterly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters. The New Credit Facility contains customary negative covenants, including, among others, restrictions on the incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, repurchases of equity interests in the Company, entering into affiliate transactions and asset sales. The New Credit Facility also provides for a number of customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control and judgment defaults. Other Certain of the lenders under the New Credit Facility (or their affiliates) may provide, certain commercial banking, financial advisory and investment banking services in the ordinary course of business for the Company and its subsidiaries, for which they receive customary fees and commissions. Notes Payable As discussed in more detail in Note 3, in April 2016, the Company issued $4.0 million in unsecured notes to the sellers of Boundless Nutrition in connection with its acquisition. The notes bear interest at a rate per annum of 0.67% with principal and interest due at varying maturity dates between April 29, 2017 and December 31, 2018. The Company recorded an acquisition-date fair value discount of approximately $0.2 million based on market rates for debt instruments with similar terms, which is amortized to interest expense over the term of the notes using the effective-interest method. As discussed in more detail in Note 3, in April 2015, the Company issued $3.9 million in unsecured notes to the sellers of Paqui in connection with its acquisition. The notes bear interest at a rate per annum of 1.5% with principal and interest due at maturity on March 31, 2018. The Company recorded an acquisition-date fair value discount of approximately $0.2 million based on market rates for debt instruments with similar terms, which is amortized to interest expense over the term of the notes using the effective-interest method. Annual maturities of debt (excluding the fair value discount of approximately $0.3 million, deferred financing costs, net of approximately $16.6 million and OID of approximately $6.6 million) as of September 30, 2016 are as follows (in thousands):
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Shareholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
Shareholders' Equity | SHAREHOLDERS' EQUITY Tyrrells Acquisition The Company issued 2,083,689 shares of common stock to the Institutional Seller and Management Sellers (collectively referred to as the "Sellers") as share consideration for Tyrrells. The number of shares issued to the Sellers was based upon the calculation illustrated below:
Secondary Public Offering On May 19, 2016, the Company completed a secondary public offering in which 11,500,000 common shares of the Company were sold by selling stockholders to the public at a price of $11.25 per share. The selling stockholders, which included certain of our directors, received all the proceeds from the sale of shares in the offering. The Company did not receive any proceeds from the sale of shares in the offering and incurred approximately $0.6 million of offering-related expenses during the nine months ended September 30, 2016, which is included as part of general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. Initial Public Offering As discussed in Note 1, immediately following the Corporate Reorganization, 15,000,000 common shares of the Company were sold by selling stockholders to the public at a price of $18.00 per share. The selling stockholders (formerly holders of units in Topco), which includes certain of our directors and officers, received all the proceeds from the sale of shares in this offering. The Company did not receive any proceeds from the sale of shares in this offering. Immediately following the IPO, former holders of units in Topco collectively owned 53,656,964 common shares of the Company and 6,343,036 shares of the Company's restricted stock, which is subject to vesting conditions. Refer to Note 13 for more details on the Company's restricted stock. Common Stock Ownership As of September 30, 2016, investment funds affiliated with TA Associates, L.P., a private equity entity ("TA Associates") beneficially owned 43.1% of the Company's outstanding common shares and are able to exercise a significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. The Company's executive officers and directors beneficially owned 13.3% of the Company's outstanding common shares as of September 30, 2016. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||
Related Party Transactions | RELATED PARTY TRANSACTIONS Employment Agreements In July 2014, the Company entered into employment agreements with the founders of SkinnyPop. Under the terms of the founders' employment agreements, which ended on December 31, 2015, each founder received an annual base salary of $200,000 and were also each eligible to receive a cash payment of up to $10 million (the “Cash Payment”), based on achievement by the Company of certain contribution margin metrics during the period commencing on January 1, 2015 and ending on December 31, 2015. Furthermore, in connection with the Cash Payment, the Company will provide each founder with an additional payment equal to (i) in the case of the taxable year in which the cash payment is paid or any subsequent taxable year, the net excess (if any) of (A) the taxes that would have been paid by the Company in respect of such taxable year calculated without taking into account the Cash Payment over (B) the actual taxes payable by the Company in respect of such taxable year and (ii) in the case of any taxable year prior to the year in which the cash payment is paid, the amount of any tax refund resulting from carrying back any operating losses to the extent attributable to the Cash Payment. Refer to Note 2 for additional details regarding the estimated obligation related to the employment agreements and the associated payments. Tax Receivable Agreement Immediately prior to the consummation of the IPO in August 2015, the Company entered into a Tax Receivable Agreement ("TRA") with the former holders of units in Topco. In December 2015, all of the former holders of units in Topco collectively assigned their interests to a new counterparty. The TRA generally provides for payment by the Company to the counterparty of 85% of the U.S. federal, state and local tax benefits realized by the Company and its subsidiaries from the utilization of certain tax attributes that were generated when SkinnyPop was acquired by investment funds affiliated with TA Associates in July 2014. The Company will retain approximately 15% of the U.S. federal, state and local tax benefits realized from the utilization of such tax attributes. Unless earlier terminated in accordance with its terms, the TRA will continue in force and effect until there is no further potential for tax benefit payments to be made by the Company to the counterparty in respect of the U.S. federal, state and local tax benefits that are subject of the agreement. Based on current tax rules and regulations, the Company would expect the potential for tax benefit payments to cease no later than 2030. The amount payable to the counterparty is based on an annual calculation of the reduction in the Company's U.S. federal, state and local taxes resulting from the utilization of these tax attributes. For purposes of determining the reduction in taxes resulting from the utilization of these pre-IPO tax attributes, the Company was required to assume that pre-IPO tax attributes are utilized before any other attributes. The Company expects the payments that it may make under the TRA will be substantial. In addition if the IRS were to successfully challenge the tax benefits that give rise to any payments under the TRA, the Company's future payments under the TRA would be reduced by the amount of such payments, but the TRA does not require the counterparty to reimburse the Company for the amount of such payments to the extent they exceed any future amounts payable under the TRA. In August 2015, the Company recorded an obligation of approximately $96.1 million based on the full and undiscounted amount of expected future payments under the TRA, with a corresponding reduction to additional paid in capital. The Company's first annual payment in the amount of approximately $6.6 million was paid out in October 2016. Subsequent adjustments of the TRA obligation due to certain events, such as potential changes in tax rates or insufficient taxable income, will be recognized as a period expense in the statement of comprehensive income. Monticello Partners LLC Lease Agreement The Company leases office space from a related party, Monticello Partners LLC, which is wholly owned by one of the Company's shareholders. The lease agreement expires on August 31, 2017 and the Company is responsible for all taxes and utilities. Payments under this agreement were not material to the periods presented. Future minimum lease payments for this lease, which had a non-cancelable lease term in excess of one year as of September 30, 2016, were as follows (in thousands):
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Purchase Commitments The Company entered into certain supply contracts for their popcorn kernels and sunflower oil for various periods through October 2018. As of September 30, 2016, the Company’s purchase commitments remaining under these contracts totaled $29.3 million. The contracts also stipulate that if the Company fails to purchase the stated quantities within the time period specified, the Company has the option to purchase all remaining quantities under the contract, or the seller has the right to assess liquidated damages, including payment of the excess of the contract price over the market price for all remaining contracted quantities not purchased. On April 29, 2015, the Company and a third-party co-manufacturer amended their manufacture and supply agreement dated February 27, 2014 (the “Amended Contract”). The Amended Contract extends the initial term through February 27, 2022. Pursuant to the terms of the Amended Contract, the Company is required to pay an early termination fee and is obligated to make certain annual minimum purchases from the third-party co-manufacturer. As part of the Amended Contract, the Company purchased $1.9 million of film and corrugate raw materials from the third-party co-manufacturer in June 2015. Lease Commitments The Company entered into an operating lease on February 26, 2015 ("Effective Date") for its corporate headquarters located in Austin, Texas. The lease in non-cancellable and has a nine year term. Boundless Nutrition entered into an operating lease for an office space and manufacturing facility in November 2014, which the Company assumed as part of the acquisition. This lease is non-cancellable and has a seven year term. Tyrrells has several operating leases for office space and manufacturing facilities which the Company assumed as part of the acquisition. These leases are non-cancellable and each have a five year term. Rent expense from operating leases totaled approximately $0.1 million and $0.3 million for the three and nine months ended September 30, 2016, respectively, and approximately $0.1 million and $0.2 million for the three and nine months ended September 30, 2015, respectively. As of September 30, 2016, minimum rental commitments under non-cancellable operating leases were as follows (in thousands):
Legal Matters From time to time, the Company is subject to claims and assessments in the ordinary course of business. The Company is not currently a party to any litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results from operations or cash flow. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company's effective tax rate for the year is dependent on many factors, including the impact of enacted tax laws in jurisdictions in which the Company operates and the amount of taxable income the Company earns. The effective tax rate was 69.8% and 46.1% for the three and nine months ended September 30, 2016, respectively. The effective tax rate was 364.7% and 66.9% for the three and nine months ended September 30, 2015, respectively. The effective tax rate for the three and nine months ended September 30, 2016 was driven by acquisition-related costs as well as certain equity based compensation charges, both of which are not tax deductible. The effective tax rate for the three and nine months ended September 30, 2015 was driven by significant IPO-related costs as well as certain equity based compensation charges, both of which are not tax deductible. |
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Equity-Based Compensation | EQUITY-BASED COMPENSATION In July 2015, the Amplify Snack Brands, Inc. 2015 Stock Option and Incentive Plan (the "2015 Plan") was adopted by the Company's board of directors, approved by the Company's stockholders and became effective immediately prior to the consummation of the Company's IPO in August 2015. The 2015 Plan provides for the grant of various equity-based incentive awards to officers, employees, non-employee directors and consultants of the Company and its subsidiaries. The types of awards that may be granted under the 2015 Plan include incentive stock options, non-qualified stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), stock appreciation rights ("SARs") and other equity-based awards. The Company initially reserved 13,050,000 shares of common stock for issuance under the 2015 Plan, which is subject to certain adjustments for changes in the Company's capital structure, as defined in the 2015 Plan. As of September 30, 2016, 4,007,388 shares were available for issuance under the 2015 Plan. Stock Options The Company awards stock options to certain employees under the 2015 Plan, which are subject to the following time-based vesting conditions, 33.333% on the first anniversary of the grant date, and thereafter, 2.778% on the monthly anniversary of the grant date for the remaining 24 months, subject to continued service through each applicable vesting date. Upon a termination of service relationship by the Company, all unvested options will be forfeited and the shares of common stock underlying such award will become available for issuance under the 2015 Plan. The maximum contractual term for stock options is 10 years. The fair value of these equity awards is amortized to equity-based compensation expense over the vesting periods described above, which totaled approximately $0.3 million and $0 for the three months ended September 30, 2016 and 2015, respectively, and $0.4 million and $0 for the nine months ended September 30, 2016 and 2015, respectively. The fair value of stock option awards are estimated on the grant date using the Black-Scholes valuation model with the following assumptions:
The following table summarizes the Company's stock option activity for the nine months ended September 30, 2016:
As of September 30, 2016, the total compensation cost related to nonvested stock options not yet recognized was approximately $1.0 million with a weighted average remaining period of 2.59 years over which it is expected to be recognized. The aggregate intrinsic value of outstanding stock options at September 30, 2016 was approximately $1.2 million. Restricted Stock Units ("RSUs") The Company awards RSUs to certain employees under the 2015 Plan, which vest over a three or four year period. RSUs that vest over a three year period are subject to the following time-based vesting conditions, 33.333% on the first anniversary of the grant date, and thereafter, 2.778% on the monthly anniversary of the grant date for the remaining 24 months, subject to continued service through each applicable vesting date. RSUs that vest over a four year period are generally subject to the following time-based vesting conditions, 25% on the first anniversary of the grant date, and thereafter, 6.25% on the quarterly anniversary of the grant date for the remaining 36 months, subject to continued service through each applicable vesting date. Upon a termination of service relationship by the Company, all unvested units will be forfeited and the shares of common stock underlying such award will become available for issuance under the 2015 Plan. The fair value of RSUs is calculated based on the closing market value of the Company’s common stock on the date of grant. The fair value of these equity awards is amortized to equity-based compensation expense over the vesting periods described above, which totaled approximately $0.7 million and $0 for the three months ended September 30, 2016 and 2015, respectively, and approximately $1.0 million and $0 for the nine months ended September 30, 2016 and 2015, respectively. The following table summarizes the activity of the Company's unvested RSUs for the nine months ended September 30, 2016:
(1) The Company granted certain employees of Tyrrells and its subsidiaries RSUs under the 2015 Plan covering approximately 1.2 million shares of the Company's common stock. As of September 30, 2016, the total compensation cost related to unvested RSUs not yet recognized was approximately $23.0 million with a weighted average remaining period of 3.77 years over which it is expected to be recognized. Restricted Stock Awards ("RSAs") As discussed in Note 1, in connection with the Corporate Reorganization in August 2015, all of the outstanding equity awards (which were comprised of Class C-1 and C-2 units of Topco) that were granted under the TA Topco 1, LLC 2014 Equity Incentive Plan, were converted into shares of the common stock and restricted stock of the Company. The portion of outstanding Class C units that had vested as of the consummation of the Corporate Reorganization were converted into shares of the Company’s common stock and the remaining portion of unvested outstanding Class C units were converted into shares of the Company’s restricted stock, which were granted under the 2015 Plan. The shares of restricted stock of the Company are generally subject to the following time-based vesting conditions, in accordance with the terms and conditions of the Class C units from which such shares were converted, 25% on the first anniversary of the vesting reference date applicable to individual grants, and thereafter, 2.0833% on the final day of each of the following 36 months, subject to continued service through each applicable vesting date. Upon a termination of service relationship by the Company, all unvested awards will be forfeited and the shares of common stock underlying such award will become available for issuance under the 2015 Plan. The fair value of these equity awards is amortized to equity-based compensation expense over the vesting periods described above, which totaled approximately $0.9 million and $1.0 million for the three months ended September 30, 2016 and 2015, respectively, and $2.6 million and $2.4 million for the nine months ended September 30, 2016 and 2015, respectively. Equity-based compensation expense is included as part of general and administrative expense in the accompanying condensed consolidated statements of comprehensive income. The following table summarizes the activity of the Company's unvested RSAs for the nine months ended September 30, 2016:
As of September 30, 2016, the total compensation cost related to unvested RSAs not yet recognized was approximately $6.3 million with a weighted average remaining period of 1.92 years over which it is expected to be recognized. |
Derivative Financial Instruments |
9 Months Ended |
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Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS The Company entered into a foreign currency option contract in August 2016, to hedge its exposure to currency fluctuations in connection with the anticipated acquisition of Tyrrells, because the purchase price was denominated in pounds sterling (£). The Company subsequently terminated this foreign currency option contract and entered into a forward currency exchange contract to purchase £278 million at a US dollar to pound sterling forward rate of 1.3157. In connection with the acquisition of Tyrrells on September 2, 2016, the Company settled this forward currency exchange contract and recorded a gain of approximately $3.6 million, representing the difference between the forward rate of 1.3157 and the spot rate on the settlement date. The Company did not designate this forward currency exchange contract as a cash flow hedge for accounting purposes and the resulting gain was recognized within other income in the accompanying condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2016. |
Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Interim Financial Statements | Basis of Presentation The accompanying interim condensed consolidated balance sheets as of September 30, 2016 and December 31, 2015, the interim condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2016 and September 30, 2015, the interim condensed consolidated statement of shareholders' equity for the nine months ended September 30, 2016 and September 30, 2015, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2016 and September 30, 2015, are unaudited. Interim Financial Statements The accompanying unaudited interim condensed consolidated financial statements of Amplify Snack Brands, Inc. (“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 with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required for annual financial statements. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The Condensed Consolidated Financial Statements have been prepared on the same basis as the audited consolidated financial statements at and for the fiscal year ended December 31, 2015, and in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, with the exception of retrospective adoption of ASU 2015-03 as discussed herein, necessary for the fair presentation of the financial position as of September 30, 2016 and results of our operations for the three and nine months ended September 30, 2016 and September 30, 2015, and cash flows for the nine months ended September 30, 2016 and September 30, 2015. The interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. Therefore, the Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2016. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for any future periods. |
Use of Estimates | Use of Estimates The unaudited interim condensed consolidated financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. The Company routinely evaluates its estimates, including those related to accruals and allowances for customer programs and incentives, bad debts, income taxes, long-lived assets, inventories, equity-based compensation, accrued broker commissions and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
Foreign Currency | Foreign Currency The financial statements of our foreign subsidiaries are translated to U.S. Dollars. The functional currency of our foreign subsidiaries is the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated to U.S. Dollars at period-end exchange rates. Income and expense items are translated at the average rates prevailing during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses. Our transaction gains and losses are reflected in earnings in our consolidated statements of comprehensive income. The cumulative translation adjustment in accumulated other comprehensive income loss reflects the unrealized adjustments resulting from translating the financial statements of our foreign subsidiaries. |
Segment Reporting | Segment Reporting On September 2, 2016, the Company acquired Tyrrells, which owns an international portfolio of premium snack brands. The Company is currently evaluating how the Tyrrells business will be integrated into the Company's current operations and whether the acquisition will qualify as a separate reportable segment(s). The Company will make a determination over the next quarter and disclose the impact in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Currently, the Company's operating segments are aggregated into one reportable segment because they have similar economic characteristics and meet the other aggregation criteria within the accounting standard on segment reporting, including similarities in the nature of the services provided, methods of service delivery, customers served and the regulatory environment in which they operate. Our chief executive officer is considered to be our chief operating decision maker. He currently reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The carrying amounts of the Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. Our term loan and revolving credit facility bear interest at a variable interest rate plus an applicable margin and, therefore, carrying amount approximates fair value. The fair value of our term loan and revolving credit facility are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. |
Inventories | Inventories In our North America operations, inventories are valued at the lower of cost or market using the weighted-average cost method. The Company procures certain raw material inputs and packaging from suppliers and contracts with third-party firms to assemble and warehouse finished product. The third-party co-manufacturers invoice the Company monthly for labor inputs upon the production or shipment of finished product during that period. In our international operations, inventories are valued at the lower of cost or market using the first-in, first-out method. The Company owns the manufacturing facilities used for production. The costs of finished goods inventories include raw materials, direct labor, indirect production, and overhead costs. Write-downs are provided for finished goods expected to become non-saleable due to age and provisions are specifically made for slow moving or obsolete raw ingredients and packaging. The Company also adjusts the carrying value of its inventories when it believes that the net realizable value is less than the carrying value. These write-downs are measured as the difference between the cost of the inventory, including estimated costs to complete, and estimated selling prices. Charges related to slow moving or obsolete items are recorded as a component of cost of goods sold. Charges related to packaging redesigns are recorded as a component of selling and marketing. Once inventory is written down, a new, lower-cost basis for that inventory is established. |
Recognition of Net Sales, Sales Incentives and Trade Accounts Receivable | Recoveries of receivables previously written off are recorded when received. Recognition of Net Sales, Sales Incentives and Trade Accounts Receivable The Company offers its customers a variety of sales and incentive programs, including price discounts, coupons, slotting fees, in-store displays and trade advertising. Slotting fees are capitalized and amortized over the greater of twelve months or the life of the agreement and recorded as a reduction in net sales. Capitalized slotting fees are evaluated for impairment on an ongoing basis. The costs of the remaining programs are recognized at the time the related sales are recorded and are classified as a reduction in net sales. These program costs are estimated based on a number of factors including customer participation and performance levels. |
Earnings Per Share/Unit | Earnings per Share Basic earnings per share has been computed based upon the weighted average number of common shares outstanding. The Company's unvested shares of restricted common stock contain non-forfeitable rights to dividends and are considered to be participating securities in accordance with GAAP and, therefore are included in the computation of basic earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating securities according to dividends declared and participation rights in undistributed earnings. Diluted earnings per share has been computed based upon the weighted average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, except when the effect would be anti-dilutive. The dilutive effect of unvested restricted stock units ("RSUs") and unvested stock options has been accounted for using the two-class method or the treasury stock method, if more dilutive. As discussed in Note 1, in August 2015, the Company completed the Corporate Reorganization immediately prior to the Company's IPO. For purposes of computing net income per share, it is assumed that the reorganization of the Company had occurred for all periods presented and therefore the outstanding shares have been adjusted to reflect the conversion of shares that took place in contemplation of the IPO. Accordingly, the denominators in the computations of basic and diluted net income per share for the three and nine months ended September 30, 2015, reflect the Company's reorganization. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". ASU 2016-15 clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. This ASU is effective for interim and annual periods beginning after December 15, 2017. Early application is permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-15 on its financial position, results of operations, cash flows and financial statement disclosures. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)". ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing". ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. In May 2019, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients." ASU 2016-12 addresses narrow-scope improvements to the guidance on collectibility, noncash consideration, and completed contracts at transition. Additionally, this ASU provides a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. These ASUs apply to all companies that enter into contracts with customers to transfer goods or services. These ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. The Company is in the process of assessing both the method and the impact of the adoption of these ASUs on its financial position, results of operations, cash flows and financial statement disclosures. In March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting", which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-09 on its financial position, results of operations, cash flows and financial statement disclosures. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", which requires lessees to recognize assets and liabilities related to lease arrangements longer than twelve months on the balance sheet. This standard also requires additional disclosures by lessees and contains targeted changes to accounting by lessors. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company is in the process of assessing the impact of the adoption of ASU No. 2016-02 on its financial position, results of operations, cash flows and financial statement disclosures. In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments", which simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. This revised guidance was effective for annual reporting periods beginning after December 15, 2015, and related interim periods. The amendments in the update were applied prospectively to adjustments to provisional amounts that occurred after the effective date of the update with early application permitted for financial statements not yet issued. We have adopted this guidance and will apply it as necessary in our financial statements. In August 2015, the FASB issued ASU No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements-Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting” to clarify that given the absence of authoritative guidance within ASU No. 2015-03 for debt issuance costs related to the line-of-credit arrangements, such costs may be presented as an asset and subsequently amortized ratably over the term of the line-of-credit arrangement. See discussion below regarding adoption of ASU 2015-03. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory", which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively. The Company is currently assessing the impact of the adoption of ASU No. 2015-11 on its financial position, results of operations and financial statement disclosures. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The Company adopted the provisions of ASU 2015-03 retrospectively on January 1, 2016. Debt issuance costs are now presented as a reduction to the Senior term loan balance on the condensed consolidated balance sheet as of June 30, 2016 and December 31, 2015. As a result, the Company reclassified $2.9 million of debt issuance costs from Other assets to Senior term loan on the condensed consolidated balance sheet as of December 31, 2015. The adoption of ASU 2015-03 did not impact the Company's condensed consolidated statements of comprehensive income or condensed consolidated statements of cash flows. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern: Disclosures about an Entity’s Ability to Continue as a Going Concern”. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter. The Company is currently assessing the impact of the adoption of ASU No. 2014-15 on its financial position, results of operations and financial statement disclosures. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition”, and most industry-specific guidance throughout the Codification. The standard requires entities to recognize the amount of revenue that reflects the consideration to which the company expects to be entitled in exchange for the transfer of promised goods or services to customers. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU No. 2014- 09 by one year, to December 15, 2017 for interim and annual reporting periods beginning after that date. The FASB will permit early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is in the process of assessing both the method and the impact of the adoption of ASU No. 2014-09 on its financial position, results of operations, cash flows and financial statement disclosures. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liabilities Measured at Fair Value on a Recurring Basis | The following table presents liabilities measured at fair value on a recurring basis (in thousands):
(1) Contingent consideration is reported in Other liabilities in the accompanying Condensed Consolidated Balance Sheets. |
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Schedule of Fair Value Level 3 Activity | The following table summarizes the Level 3 activity related to the Founder Contingent Compensation (in thousands):
The following table summarizes the Level 3 activity related to the Contingent Consideration (in thousands):
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Schedule of Concentration of Risk | Customers with 10% or more of the Company’s net sales consist of the following:
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Schedule of Earnings per Share |
(1) Excludes the weighted average impact of 373,848 and 131,848 unvested RSUs for the three and nine months ended September 30, 2016, respectively, because the effects of their inclusion would be anti-dilutive. (2) Excludes the weighted average impact of 87,703 and 179,174 unvested stock options for the three and nine months ended September 30, 2016, because the effects of their inclusion would be anti-dilutive. |
Acquisition (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquisition | The following table summarizes the preliminary allocation of the purchase consideration for Tyrrells to the estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
The following table summarizes the purchase consideration and final estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
The following table summarizes the final allocation of the purchase consideration for Boundless Nutrition to the estimated fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
|
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Pro Forma Combined Statements of Operations (Unaudited) | The pro forma combined statements of operations are not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date and are not intended to be a projection of future results (in thousands, except per share data):
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Inventory (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories, net of reserves and provisions, consist of the following (in thousands):
|
Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment, net consist of the following (in thousands):
|
Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Goodwill consists of the following (in thousands):
(1) Refer to Note 3 for more details regarding goodwill recorded in connection with the Company's acquisition of Tyrrells in September 2016, Boundless Nutrition in April 2016 and Paqui in April 2015. |
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following (in thousands):
(1) The change in the gross carrying amount of trade names and customer relationships is the result of the Company's acquisition of Tyrrells in September 2016 and Boundless Nutrition in April 2016. Refer to Note 3 for more details. |
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Schedule of Schedule of Finite-Lived Intangible Assets | Intangible assets consist of the following (in thousands):
(1) The change in the gross carrying amount of trade names and customer relationships is the result of the Company's acquisition of Tyrrells in September 2016 and Boundless Nutrition in April 2016. Refer to Note 3 for more details. |
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Schedule of Estimated Future Amortization Expenses | The estimated future amortization expense related to finite-lived intangible assets is as follows as of September 30, 2016 (in thousands):
|
Accrued Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | The following table shows the components of accrued liabilities (in thousands):
|
Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Debt consists of the following (in thousands):
|
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Schedule of Maturities of Long-term Debt | Annual maturities of debt (excluding the fair value discount of approximately $0.3 million, deferred financing costs, net of approximately $16.6 million and OID of approximately $6.6 million) as of September 30, 2016 are as follows (in thousands):
|
Shareholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule Equity Interest Issued for Business Acquisition | The number of shares issued to the Sellers was based upon the calculation illustrated below:
|
Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments | Future minimum lease payments for this lease, which had a non-cancelable lease term in excess of one year as of September 30, 2016, were as follows (in thousands):
As of September 30, 2016, minimum rental commitments under non-cancellable operating leases were as follows (in thousands):
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Commitments for Noncancellable Operating Leases | Future minimum lease payments for this lease, which had a non-cancelable lease term in excess of one year as of September 30, 2016, were as follows (in thousands):
As of September 30, 2016, minimum rental commitments under non-cancellable operating leases were as follows (in thousands):
|
Equity-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock options valuation assumptions | The fair value of stock option awards are estimated on the grant date using the Black-Scholes valuation model with the following assumptions:
|
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Schedule stock options activity | The following table summarizes the Company's stock option activity for the nine months ended September 30, 2016:
|
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Schedule of nonvested restricted stock units activity | The following table summarizes the activity of the Company's unvested RSUs for the nine months ended September 30, 2016:
(1) The Company granted certain employees of Tyrrells and its subsidiaries RSUs under the 2015 Plan covering approximately 1.2 million shares of the Company's common stock. |
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Schedule of nonvested restricted stock award activity | The following table summarizes the activity of the Company's unvested RSAs for the nine months ended September 30, 2016:
|
Business Overview - Narrative (Details) - USD ($) |
Sep. 02, 2016 |
Aug. 03, 2015 |
Jul. 17, 2014 |
---|---|---|---|
Tyrrells | |||
Business Acquisition [Line Items] | |||
Total purchase consideration | $ 416,388,000 | ||
Rollovers stock from existing equity holders | 35,319,000 | ||
SkinnyPop | |||
Business Acquisition [Line Items] | |||
Total purchase consideration | $ 320,000,000 | ||
Rollovers stock from existing equity holders | 25,000,000 | ||
Term Loan | New Credit Facility | |||
Business Acquisition [Line Items] | |||
Debt instrument, face amount | $ 600,000,000 | ||
Term Loan | New Credit Facility | SkinnyPop | |||
Business Acquisition [Line Items] | |||
Debt instrument, face amount | $ 150,000,000 | ||
Topco | |||
Business Acquisition [Line Items] | |||
Percent of common shares owned (in shares) | 100.00% | ||
Liquidation, price per share (USD per share) | $ 18.00 |
Summary of Significant Accounting Policies - Schedule of Concentration Risk (Details) - Customer Concentration Risk - Sales Revenue, Net |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Costco | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 22.00% | 29.00% | 26.00% | 32.00% |
Sam's Club | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 10.00% | 18.00% | 13.00% | 17.00% |
Acquisitions - Pro Forma Combined Statements of Operations (Unaudited) (Details) - Tyrrells - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business Acquisition [Line Items] | ||||
Net sales | $ 90,048 | $ 73,747 | $ 269,781 | $ 212,500 |
Net (loss) income | $ (2,345) | $ (6,025) | $ 6,610 | $ (9,934) |
Basic net (loss) income per share (usd per share) | $ (0.03) | $ (0.08) | $ 0.09 | $ (0.13) |
Diluted net (loss) income per share (usd per share) | $ (0.03) | $ (0.08) | $ 0.08 | $ (0.13) |
Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and packaging | $ 9,814 | $ 4,433 |
Finished goods | 9,129 | 2,396 |
Inventories, net | 18,943 | 6,829 |
Obsolete inventory reserve | $ 1,000 | $ 700 |
Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 53,303 | $ 53,303 | $ 2,703 | ||
Less: accumulated depreciation | (1,344) | (1,344) | (550) | ||
Property and equipment, net | 51,959 | 51,959 | 2,153 | ||
Depreciation | 500 | $ 100 | 814 | $ 206 | |
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 39,773 | 39,773 | 1,128 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 2,071 | 2,071 | 664 | ||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 5,622 | 5,622 | 0 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 888 | 888 | 0 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 4,949 | $ 4,949 | $ 911 |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 47,421 | $ 45,694 |
Acquired during the year | 132,810 | 1,727 |
Foreign currency translation | (2,690) | 0 |
Goodwill, ending balance | $ 177,541 | $ 47,421 |
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expenses (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2016 | $ 1,657 |
2017 | 6,615 |
2018 | 6,609 |
2019 | 6,609 |
2020 | 6,609 |
Thereafter | $ 61,383 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued income taxes | $ 1,028 | $ 437 |
Unbilled inventory | 1,953 | 693 |
Accrued commissions | 434 | 629 |
Accrued bonuses | 1,592 | 2,545 |
Accrued professional fees | 3,717 | 398 |
Accrued interest | 3,239 | 0 |
VAT | 559 | 0 |
Other accrued liabilities | 2,334 | 528 |
Total accrued liabilities | $ 14,856 | $ 5,230 |
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Apr. 30, 2016 |
Dec. 31, 2015 |
Apr. 30, 2015 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Total debt | $ 590,051 | $ 198,211 | ||
Deferred financing costs | (16,556) | (2,859) | ||
Less: Current portion | (6,984) | (12,750) | ||
Long-term debt | 583,067 | 185,461 | ||
Unamortized discount | 300 | |||
Accumulated amortization, deferred finance costs | 1,189 | 1,094 | ||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Total debt | 593,481 | 197,313 | ||
Unamortized discount | 6,519 | 0 | ||
Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Total debt | 7,626 | 3,757 | ||
Unamortized discount | 279 | $ 200 | 147 | $ 200 |
Senior Term Loan | Accounting Standards Update 2015-03 | ||||
Debt Instrument [Line Items] | ||||
Deferred financing costs | (2,900) | |||
Other Assets | Accounting Standards Update 2015-03 | ||||
Debt Instrument [Line Items] | ||||
Deferred financing costs | 2,900 | |||
Revolving Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 5,500 | $ 0 |
Debt - Schedule of Maturities of Long-term Debt (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2016 | $ 1,500 |
2017 | 7,000 |
2018 | 12,905 |
2019 | 6,000 |
2020 | 6,000 |
Thereafter | 580,000 |
Total debt | $ 613,405 |
Shareholders' Equity - Equity Interest Issued for Business Acquisition (Details) - Tyrrells - Common Stock |
Sep. 02, 2016
USD ($)
shares
|
Aug. 05, 2016
GBP (£)
£ / $
|
Aug. 05, 2016
USD ($)
$ / shares
£ / $
|
---|---|---|---|
Class of Stock [Line Items] | |||
Share consideration | $ 35,300,000 | £ 22,000,000 | $ 28,692,400 |
Foreign currency exchange rate, translation | £ / $ | 1.3042 | 1.3042 | |
Shares issued, price per share (USD per share) | $ / shares | $ 13.77 | ||
Equity interest issued as purchase consideration (in shares) | shares | 2,083,689 |
Related Party transactions - Future Minimum Lease Payments (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Related Party Transaction [Line Items] | |
Remainder of 2016 | $ 256 |
2017 | 1,022 |
Total | 5,607 |
Monticello Partners LLC | Monticello Partners LLC Lease Agreement | Affiliated Entity | |
Related Party Transaction [Line Items] | |
Remainder of 2016 | 7 |
2017 | 20 |
Total | $ 27 |
Commitments and Contingencies - Future Minimum Rental Commitments for Noncancellable Operating Leases (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2016 | $ 256 |
2017 | 1,022 |
2018 | 820 |
2019 | 698 |
2020 | 695 |
Thereafter | 2,116 |
Total | $ 5,607 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 69.80% | 364.70% | 46.10% | 66.90% |
Equity-Based Compensation - Schedule of Fair Value Assumptions of Stock Options (Details) - 2015 Plan - Employee Stock Option |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility minimum | 26.00% |
Expected volatility maximum | 34.00% |
Expected dividend yield | 0.00% |
Expected option term | 5 years |
Risk-free interest rate minimum | 1.16% |
Risk-free interest rate maximum | 1.45% |
Expected volatility assumption, look back period | 5 years |
Equity-Based Compensation - Schedule of Unvested Restricted Stock Award Activity (Details) - 2015 Plan - Restricted Stock |
9 Months Ended |
---|---|
Sep. 30, 2016
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested as of January 1, 2016 (in shares) | shares | 4,991,858 |
Issued (in shares) | shares | 0 |
Forfeited (in shares) | shares | (45,238) |
Vested (in shares) | shares | (1,442,099) |
Unvested as of June 30, 2016 (in shares) | shares | 3,504,521 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested as of January 1, 2016 (usd per share) | $ / shares | $ 1.45 |
Issued (usd per share) | $ / shares | 0.00 |
Forfeited (usd per share) | $ / shares | 1.21 |
Vested (usd per share) | $ / shares | 1.52 |
Unvested as of June 30, 2016 (usd per share) | $ / shares | $ 1.43 |
Derivative Finanical Instruments - Narrative (details) - Not Designated as Hedging Instrument - Foreign Exchange Forward $ in Millions |
Sep. 02, 2016
USD ($)
|
Aug. 31, 2016
GBP (£)
$ / £
|
---|---|---|
Derivative [Line Items] | ||
Derivative, notional amount | £ | £ 278,000,000 | |
Derivative, forward exchange rate | $ / £ | 1.3157 | |
Other Income | ||
Derivative [Line Items] | ||
Gain (loss) on derivative, net | $ | $ 3.6 |
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