x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 46-4007249 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification Number) |
Large accelerated filer ¨ | Accelerated filer x | Non-accelerated filer ¨ | Smaller reporting company ¨ | Emerging growth company x |
(Do not check if a smaller reporting company) |
Page | |||
June 30, 2017 | December 31, 2016 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 78,592 | $ | 77,312 | ||
Accounts receivable, net of allowance for doubtful accounts of $2,031 and $1,242, respectively | 30,270 | 63,675 | ||||
Inventories | 18,220 | 15,467 | ||||
Other current assets | 13,782 | 14,047 | ||||
Total current assets | 140,864 | 170,501 | ||||
Property and equipment, net | 8,186 | 8,048 | ||||
Intangible assets, net | 757,935 | 776,584 | ||||
Deferred income tax assets | 8,379 | 8,459 | ||||
Other assets | 2,193 | 2,252 | ||||
TOTAL ASSETS | $ | 917,557 | $ | 965,844 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 9,228 | $ | 12,133 | ||
Current portion of long-term debt | 4,250 | 15,250 | ||||
Income taxes payable | 5,531 | 3,121 | ||||
Accrued expenses and other current liabilities | 32,946 | 66,366 | ||||
Total current liabilities | 51,955 | 96,870 | ||||
Long-term debt | 402,877 | 392,996 | ||||
Other noncurrent liabilities | 70,857 | 140,833 | ||||
Deferred income tax liabilities | 20,455 | — | ||||
Total liabilities | 546,144 | 630,699 | ||||
Commitments and contingencies (see Note 17) | ||||||
Stockholders’ equity: | ||||||
Common stock, par value $0.0001; 400,000,000 shares authorized, 50,999,086 and 50,698,587 shares issued and 50,337,705 and 50,037,206 shares outstanding at June 30, 2017 and December 31, 2016, respectively | 5 | 5 | ||||
Preferred stock; par value $0.0001, 1 share authorized and outstanding at June 30, 2017 and December 31, 2016 | — | — | ||||
Treasury stock; par value $0.0001, 661,381 shares at June 30, 2017 and December 31, 2016 | (3,885 | ) | (3,885 | ) | ||
Additional paid-in capital | 531,573 | 475,598 | ||||
Accumulated deficit | (141,622 | ) | (132,200 | ) | ||
Accumulated other comprehensive loss | (14,658 | ) | (4,373 | ) | ||
Total stockholders' equity | 371,413 | 335,145 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 917,557 | $ | 965,844 |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||||||
Net sales | $ | 16,389 | $ | 18,385 | $ | 49,119 | $ | 46,796 | |||||
Cost of sales (excluding amortization, shown separately below) | 3,906 | 15,833 | 9,745 | 39,653 | |||||||||
Gross profit | 12,483 | 2,552 | 39,374 | 7,143 | |||||||||
Research and development expenses | 3,735 | 3,808 | 7,032 | 8,237 | |||||||||
Selling, general, and administrative expenses | 13,435 | 14,546 | 29,866 | 34,212 | |||||||||
Amortization of intangibles | 10,445 | 9,899 | 20,890 | 19,798 | |||||||||
Change in fair value of contingent consideration | (1,211 | ) | (300 | ) | (996 | ) | (3,400 | ) | |||||
Operating loss | (13,921 | ) | (25,401 | ) | (17,418 | ) | (51,704 | ) | |||||
Other income (expense) | 215 | (1 | ) | 255 | 54 | ||||||||
Gain (loss) on foreign currency exchange | 7,968 | (1,072 | ) | 11,071 | (242 | ) | |||||||
Interest expense, net | (8,564 | ) | (14,316 | ) | (18,857 | ) | (29,324 | ) | |||||
Loss before income taxes | (14,302 | ) | (40,790 | ) | (24,949 | ) | (81,216 | ) | |||||
Income tax benefit | (16,909 | ) | (15,626 | ) | (15,527 | ) | (30,915 | ) | |||||
Net income (loss) | $ | 2,607 | $ | (25,164 | ) | $ | (9,422 | ) | $ | (50,301 | ) | ||
Net income (loss) per share: | |||||||||||||
Basic | $ | 0.05 | $ | (0.51 | ) | $ | (0.19 | ) | $ | (1.02 | ) | ||
Diluted | $ | 0.05 | $ | (0.51 | ) | $ | (0.19 | ) | $ | (1.02 | ) | ||
Weighted average shares outstanding: | |||||||||||||
Basic | 49,670,621 | 49,279,167 | 49,941,993 | 49,294,817 | |||||||||
Diluted | 50,035,343 | 49,279,167 | 49,941,993 | 49,294,817 |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||||||
Net income (loss) | $ | 2,607 | $ | (25,164 | ) | $ | (9,422 | ) | $ | (50,301 | ) | ||
Other comprehensive loss: | |||||||||||||
Foreign currency translation adjustments | (8,415 | ) | 5,277 | (10,285 | ) | 4,733 | |||||||
Comprehensive loss | $ | (5,808 | ) | $ | (19,887 | ) | $ | (19,707 | ) | $ | (45,568 | ) |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | |||||||||||||||||||||
Balance at December 31, 2015 | 1 | $ | — | 49,940,548 | $ | 5 | $ | (2,397 | ) | $ | 472,494 | $ | (20,640 | ) | $ | (5,559 | ) | $ | 443,903 | ||||||
Stock-based compensation | — | — | — | — | — | 1,687 | — | — | 1,687 | ||||||||||||||||
Issuance of restricted stock | — | — | 692,269 | — | — | — | — | — | — | ||||||||||||||||
Repurchase of stock for treasury | — | — | — | — | (1,488 | ) | — | — | — | (1,488 | ) | ||||||||||||||
Comprehensive loss | — | — | — | — | — | — | (50,301 | ) | 4,733 | (45,568 | ) | ||||||||||||||
Balance at June 30, 2016 | 1 | $ | — | 50,632,817 | $ | 5 | $ | (3,885 | ) | $ | 474,181 | $ | (70,941 | ) | $ | (826 | ) | $ | 398,534 |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | |||||||||||||||||||||
Balance at December 31, 2016 | 1 | $ | — | 50,698,587 | $ | 5 | $ | (3,885 | ) | $ | 475,598 | $ | (132,200 | ) | $ | (4,373 | ) | $ | 335,145 | ||||||
Stock-based compensation | — | — | — | — | — | 806 | — | — | 806 | ||||||||||||||||
Transfer of director compensation from liability to equity | — | — | — | — | — | 80 | — | — | 80 | ||||||||||||||||
Issuance of restricted stock | — | — | 300,499 | — | — | — | — | — | — | ||||||||||||||||
Settlement of Dow liabilities, net of income tax | — | — | — | — | — | 55,089 | — | — | 55,089 | ||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | (9,422 | ) | (10,285 | ) | (19,707 | ) | |||||||||||||
Balance at June 30, 2017 | 1 | $ | — | 50,999,086 | $ | 5 | $ | (3,885 | ) | $ | 531,573 | $ | (141,622 | ) | $ | (14,658 | ) | $ | 371,413 |
(in thousands) | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||
Cash flows from operating activities: | ||||||
Net loss | $ | (9,422 | ) | $ | (50,301 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Depreciation and amortization | 22,046 | 21,339 | ||||
Provision for bad debts | 789 | — | ||||
Stock-based compensation for equity classified awards | 806 | 1,687 | ||||
Pension expense | 153 | — | ||||
Amortization of inventory fair value adjustment | — | 30,377 | ||||
Amortization of deferred financing costs | 1,166 | 1,121 | ||||
Accretion of contingent consideration | 5,515 | 15,838 | ||||
Decrease in fair value of contingent consideration | (996 | ) | (3,400 | ) | ||
Deferred income taxes | (19,726 | ) | (33,798 | ) | ||
Loss on sales of property | 80 | 1 | ||||
Provision for inventory obsolescence | 89 | — | ||||
Other | 43 | 299 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 37,232 | 29,617 | ||||
Inventories | (2,758 | ) | (3,764 | ) | ||
Prepaid expenses and other current assets | 198 | (7,984 | ) | |||
Accounts payable | (19,864 | ) | 1,181 | |||
Accrued expenses and other liabilities | (1,987 | ) | 3,482 | |||
Income taxes payable | 2,581 | 1,008 | ||||
Other assets and liabilities | 205 | 1,244 | ||||
Net cash provided by operating activities | 16,150 | 7,947 | ||||
Cash flows from investing activities: | ||||||
Cash paid for property and equipment | (2,835 | ) | (3,194 | ) | ||
Proceeds from sale of property | 9 | 8 | ||||
Other investments | (1,050 | ) | — | |||
Net cash used in investing activities | (3,876 | ) | (3,186 | ) | ||
Cash flows from financing activities: | ||||||
Payment of Dow liabilities settlement | (10,000 | ) | — | |||
Repayment of long term debt | (2,125 | ) | (2,125 | ) | ||
Repurchase of stock for treasury | — | (1,488 | ) | |||
Net cash used in financing activities | (12,125 | ) | (3,613 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | 1,131 | 1,400 | ||||
Net increase in cash and cash equivalents | 1,280 | 2,548 | ||||
Cash and cash equivalents, beginning of period | 77,312 | 57,765 | ||||
Cash and cash equivalents, end of period | $ | 78,592 | $ | 60,313 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for: | ||||||
Cash paid for interest | $ | 12,309 | $ | 12,227 | ||
Cash paid for income taxes | $ | 1,291 | $ | 2,213 | ||
Supplemental schedule of non-cash investing and financing activities: | ||||||
Accrued purchases of property and equipment | $ | 254 | $ | 796 | ||
Settlement of Dow liabilities not resulting from cash payment, net of deferred income taxes | $ | 55,089 | $ | — |
1. | Description of Business |
2. | Basis of Presentation and Summary of Significant Accounting Policies |
3. | Settlement with Dow |
(amounts in millions) | Three Months Ended June 30, 2017 | ||
Amendment Agreement | $ | 18.2 | |
Warrant Purchase Agreement | 1.6 | ||
TRA Amendment | 75.3 | ||
Deferred tax adjustment related to Dow settlement | (40.0 | ) | |
Total reduction in related liabilities | $ | 55.1 |
4. | Related Party Transactions |
(amounts in thousands) | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||
Amortization of prepayment related to set-up of transition services | $ | 414 | $ | 1,150 | ||
Ongoing costs of transition services agreement | 1,485 | 2,742 | ||||
Rent expense | 496 | 707 | ||||
Amortization of prepayment related to Dow importation services | — | 264 | ||||
Other expenses | 319 | 684 | ||||
Total incurred expenses | $ | 2,714 | $ | 5,547 |
5. | Inventories |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||
Raw material | $ | 1,371 | $ | 1,649 | ||
Work-in-process | 8,706 | 7,963 | ||||
Finished goods | 7,372 | 5,132 | ||||
Supplies | 771 | 723 | ||||
Total inventories | $ | 18,220 | $ | 15,467 |
6. | Other Current Assets |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||
VAT receivable | $ | 10,375 | $ | 9,306 | ||
Prepaid income tax asset | 1,671 | 1,910 | ||||
Other | 1,736 | 2,831 | ||||
Total other current assets | $ | 13,782 | $ | 14,047 |
7. | Property and Equipment |
(in thousands, except for useful life data) | Useful life (years) | June 30, 2017 | December 31, 2016 | ||||
Leasehold improvements | 7-20 | $ | 1,570 | $ | 1,463 | ||
Machinery & equipment | 1-12 | 6,743 | 6,066 | ||||
Furniture | 1-12 | 830 | 843 | ||||
Construction in progress | 731 | 781 | |||||
9,874 | 9,153 | ||||||
Less: accumulated depreciation | (1,688 | ) | (1,105 | ) | |||
Total property and equipment, net | $ | 8,186 | $ | 8,048 |
8. | Intangible Assets |
June 30, 2017 | December 31, 2016 | |||||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Impairment | Net | |||||||||||||||
Other intangible assets: | ||||||||||||||||||||||
Developed technology | $ | 757,000 | $ | (75,255 | ) | $ | 681,745 | $ | 757,000 | $ | (55,623 | ) | $ | — | $ | 701,377 | ||||||
In-process research and development | 39,000 | (1,806 | ) | 37,194 | 39,000 | (722 | ) | — | 38,278 | |||||||||||||
Trade name | 26,000 | — | 26,000 | 35,500 | — | (9,500 | ) | 26,000 | ||||||||||||||
Service provider network | 2,000 | — | 2,000 | 2,000 | — | — | 2,000 | |||||||||||||||
Customer relationships | 8,000 | (639 | ) | 7,361 | 8,000 | (472 | ) | — | 7,528 | |||||||||||||
Software | 1,172 | (238 | ) | 934 | 660 | (104 | ) | — | 556 | |||||||||||||
Software not yet placed in service | 2,618 | — | 2,618 | 753 | — | — | 753 | |||||||||||||||
Other | 100 | (17 | ) | 83 | 100 | (8 | ) | — | 92 | |||||||||||||
Total intangible assets | $ | 835,890 | $ | (77,955 | ) | $ | 757,935 | $ | 843,013 | $ | (56,929 | ) | $ | (9,500 | ) | $ | 776,584 |
(in thousands) | Amount | ||
2017 (remaining) | $ | 21,033 | |
2018 | 42,068 | ||
2019 | 42,050 | ||
2020 | 41,918 | ||
2021 | 41,814 | ||
Thereafter | 538,434 | ||
Total | $ | 727,317 |
9. | Accrued and Other Current Liabilities |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||
Warrant consideration | $ | — | $ | 1,080 | ||
Tax amortization benefit contingency | 3,531 | 17,535 | ||||
Working capital settlement | — | 17,000 | ||||
Additional consideration due seller | — | 9,263 | ||||
Dow settlement liability | 10,000 | — | ||||
Accrued compensation and benefits | 6,621 | 6,352 | ||||
Accrued rebates payable | 2,223 | 4,701 | ||||
Insurance premium financing payable | — | 578 | ||||
Severance | 461 | 1,564 | ||||
Accrued taxes | 5,577 | 4,598 | ||||
Other | 4,533 | 3,695 | ||||
Total accrued and other current liabilities | $ | 32,946 | $ | 66,366 |
10. | Debt |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||
Total Term Loan outstanding | $ | 407,127 | $ | 408,246 | ||
Less: Amounts due within one year | 4,250 | 15,250 | ||||
Total long-term debt due after one year | $ | 402,877 | $ | 392,996 |
(in thousands) | Amount | ||
2017 (remaining) | $ | 2,125 | |
2018 | 4,250 | ||
2019 | 4,250 | ||
2020 | 4,250 | ||
2021 | 401,625 | ||
Thereafter | — | ||
Total | $ | 416,500 |
11. | Other Noncurrent Liabilities |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||
Tax amortization benefit contingency | $ | 65,085 | $ | 132,724 | ||
Deferred payment | — | 2,498 | ||||
Other | 5,772 | 5,611 | ||||
Total other noncurrent liabilities | $ | 70,857 | $ | 140,833 |
12. | Severance |
13. | Stockholders’ Equity |
14. | Stock-based Compensation |
15. | Earnings Per Share |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||
Basic weighted-average common shares outstanding | 49,670,621 | 49,279,167 | 49,941,993 | 49,294,817 | |||||
Effect of dilutive options, performance stock units and restricted stock | 364,722 | — | — | — | |||||
Dilute weighted-average shares outstanding | 50,035,343 | 49,279,167 | 49,941,993 | 49,294,817 |
(in thousands, except share data) | Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||
Stock-based compensation awards(1): | |||||||||
Stock options | 577,500 | 584,375 | 921,970 | 584,375 | |||||
Restricted stock to non-directors | — | 606,523 | 934,819 | 606,523 | |||||
Restricted stock to directors | — | 86,016 | 141,957 | 86,016 | |||||
Warrants: | |||||||||
Private placement warrants | 6,160,000 | 6,160,000 | 6,160,000 | 6,160,000 | |||||
Public warrants | 9,823,072 | 9,823,072 | 9,823,072 | 9,823,072 |
(1) | SARs and Phantom Shares are payable in cash and will, therefore, have no impact on number of shares. |
16. | Income Taxes |
17. | Commitments and Contingencies |
18. | Fair Value Measurements |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Tax amortization benefit contingency(2) | — | — | 68,616 | 68,616 | ||||||||
Deferred acquisition payment(3) | — | — | 1,249 | 1,249 | ||||||||
Stock appreciation rights(4) | — | — | 214 | 214 | ||||||||
Phantom shares(5) | — | — | 64 | 64 | ||||||||
Total | $ | — | $ | — | $ | 70,143 | $ | 70,143 |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Warrant consideration(1) | $ | — | $ | 1,080 | $ | — | $ | 1,080 | ||||
Tax amortization benefit contingency(2) | — | — | 150,260 | 150,260 | ||||||||
Deferred acquisition payment(3) | — | — | 2,498 | 2,498 | ||||||||
Stock appreciation rights(4) | — | — | 22 | 22 | ||||||||
Phantom shares(5) | — | — | 4 | 4 | ||||||||
Total | $ | — | $ | 1,080 | $ | 152,784 | $ | 153,864 |
(1) | This liability relates to warrants to purchase the Company's common stock and future obligations to deliver additional such warrants in relation to the Business Combination. The inputs used in the fair value measurement were directly observable quoted prices for identical assets in an inactive market. Refer to Note 3 for additional details. |
(2) | The fair value of the tax amortization benefit contingency is measured using an income approach based on the Company's best estimate of the undiscounted cash payments to be made, tax effected at 37% and discounted to present value utilizing an appropriate market discount rate. The valuation technique used did not change during the six months ended June 30, 2017. Refer to Note 3 for additional details. |
(3) | The fair value of the deferred acquisition payment is measured using a Black-Scholes option pricing model and based on the Company's best estimate of the Company's average Business EBITDA, as defined in the Purchase Agreement (as defined in Note 3), over the two year period from January 1, 2016 to December 31, 2017. The valuation technique used did not change during the six months ended June 30, 2017. |
(4) | The fair value of the stock appreciation rights were measured using a Black Scholes pricing model during the six months ended June 30, 2017. The valuation technique used did not change during the six months ended June 30, 2017. |
(5) | The fair value of phantom shares are based on the fair value of the Company's common stock. The valuation technique used did not change during the six months ended June 30, 2017. |
(in thousands) | Tax amortization benefit contingency | Deferred acquisition payment | Stock appreciation rights | Phantom shares | Total | ||||||||||
Balance, December 31, 2016 | $ | 150,260 | $ | 2,498 | $ | 22 | $ | 4 | $ | 152,784 | |||||
Awards granted | — | — | — | — | — | ||||||||||
Settlement of Dow liabilities | (86,931 | ) | — | — | — | (86,931 | ) | ||||||||
Accretion | 5,514 | — | — | — | 5,514 | ||||||||||
Mark to market adjustment | (227 | ) | (1,249 | ) | 192 | 60 | (1,224 | ) | |||||||
Balance, June 30, 2017 | $ | 68,616 | $ | 1,249 | $ | 214 | $ | 64 | $ | 70,143 |
(in thousands) | Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||||||
Net sales | $ | 16,389 | $ | 18,385 | $ | 49,119 | $ | 46,796 | |||||
Cost of sales (excluding amortization, shown separately below) | 3,906 | 15,833 | 9,745 | 39,653 | |||||||||
Gross profit | 12,483 | 2,552 | 39,374 | 7,143 | |||||||||
Research and development expenses | 3,735 | 3,808 | 7,032 | 8,237 | |||||||||
Selling, general, and administrative expenses | 13,435 | 14,546 | 29,866 | 34,212 | |||||||||
Amortization of intangibles | 10,445 | 9,899 | 20,890 | 19,798 | |||||||||
Change in fair value of contingent consideration | (1,211 | ) | (300 | ) | (996 | ) | (3,400 | ) | |||||
Operating loss | (13,921 | ) | (25,401 | ) | (17,418 | ) | (51,704 | ) | |||||
Other income (expense) | 215 | (1 | ) | 255 | 54 | ||||||||
Gain (loss) on foreign currency exchange | 7,968 | (1,072 | ) | 11,071 | (242 | ) | |||||||
Interest expense, net | (8,564 | ) | (14,316 | ) | (18,857 | ) | (29,324 | ) | |||||
Loss before income taxes | (14,302 | ) | (40,790 | ) | (24,949 | ) | (81,216 | ) | |||||
Income tax benefit | (16,909 | ) | (15,626 | ) | (15,527 | ) | (30,915 | ) | |||||
Net income (loss) | $ | 2,607 | $ | (25,164 | ) | $ | (9,422 | ) | $ | (50,301 | ) |
(in thousands) | Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||||||
GAAP net income (loss) | $ | 2,607 | $ | (25,164 | ) | $ | (9,422 | ) | $ | (50,301 | ) | ||
Benefit for income taxes | (16,909 | ) | (15,626 | ) | (15,527 | ) | (30,915 | ) | |||||
Amortization of inventory step-up(1) | — | 11,872 | — | 30,377 | |||||||||
Interest expense(2) | 8,564 | 14,316 | 18,857 | 29,324 | |||||||||
Depreciation and amortization | 11,068 | 10,502 | 22,046 | 21,339 | |||||||||
Non-GAAP EBITDA | $ | 5,330 | $ | (4,100 | ) | $ | 15,954 | $ | (176 | ) |
(1) | The amortization of inventory step-up related to the acquisition of AgroFresh was charged to income based on the pace of inventory usage. |
(2) | Interest on the term loan and accretion for debt discounts, debt issuance costs and contingent consideration. |
(in thousands) | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||
Net cash provided by operating activities | 16,150 | 7,947 | ||
Net cash (used in) investing activities | (3,876 | ) | (3,186 | ) |
Net cash (used in) financing activities | (12,125 | ) | (3,613 | ) |
Exhibit No. | Description | |
3.1 | (1) | Second Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2015. |
3.2 | (4) | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation. |
3.3 | (1) | Series A Certificate of Designation. |
3.4 | (2) | Amended and Restated Bylaws. |
3.5 | (3) | Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of September 3, 2015. |
4.1 | (1) | Specimen Common Stock Certificate. |
4.2 | (1) | Specimen Warrant Certificate. |
10.1 | (5) | Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company, Boulevard Acquisition Sponsor, LLC, AgroFresh Inc., Avenue Capital Management II, L.P. |
10.2 | (5) | First Amendment to Tax Receivables Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company and AgroFresh Inc. |
10.3 | (5) | Letter Agreement, dated April 4, 2017, between the registrant and The Dow Chemical Company. |
10.4 | (5) | Letter Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company and Boulevard Acquisition Sponsor, LLC. |
10.5 | (4) | First Amendment to 2015 Incentive Compensation Plan. |
31.1 | * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
31.2 | * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended. |
32.1 | * | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | * | XBRL Instance Document |
101.SCH | * | XBRL Taxonomy Extension Schema Document |
101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | * | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | * | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
(1) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on August 6, 2015. |
(2) | Incorporated by reference to Annex A to the Company’s definitive proxy statement (File No. 001-36197) filed with the Securities and Exchange Commission on July 16, 2015. |
(3) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 10, 2015. |
(4) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on June 7, 2017. |
(5) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 6, 2017. |
AgroFresh Solutions, Inc. | ||
Date: | August 9, 2017 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer | |
Exhibit No. | Description | |
3.1 | (1) | Second Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2015. |
3.2 | (4) | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation. |
3.3 | (1) | Series A Certificate of Designation. |
3.4 | (2) | Amended and Restated Bylaws. |
3.5 | (3) | Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of September 3, 2015. |
4.1 | (1) | Specimen Common Stock Certificate. |
4.2 | (1) | Specimen Warrant Certificate. |
10.1 | (5) | Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company, Boulevard Acquisition Sponsor, LLC, AgroFresh Inc., Avenue Capital Management II, L.P. |
10.2 | (5) | First Amendment to Tax Receivables Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company and AgroFresh Inc. |
10.3 | (5) | Letter Agreement, dated April 4, 2017, between the registrant and The Dow Chemical Company. |
10.4 | (5) | Letter Agreement, dated April 4, 2017, among the registrant, The Dow Chemical Company, Rohm and Haas Company and Boulevard Acquisition Sponsor, LLC. |
10.5 | (4) | First Amendment to 2015 Incentive Compensation Plan. |
31.1 | * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
31.2 | * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended. |
32.1 | * | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | * | XBRL Instance Document |
101.SCH | * | XBRL Taxonomy Extension Schema Document |
101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | * | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | * | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
(1) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on August 6, 2015. |
(2) | Incorporated by reference to Annex A to the Company’s definitive proxy statement (File No. 001-36197) filed with the Securities and Exchange Commission on July 16, 2015. |
(3) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 10, 2015. |
(4) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on June 7, 2017. |
(5) | Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 6, 2017. |
1. | I have reviewed this quarterly report on Form 10-Q of AgroFresh Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2017 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of AgroFresh Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2017 | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer |
AgroFresh Solutions, Inc. | ||
Date: | August 9, 2017 | |
/s/ Jordi Ferre | ||
By: | Jordi Ferre | |
Title: | Chief Executive Officer | |
/s/ Katherine Harper | ||
By: | Katherine Harper | |
Title: | Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 04, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | AgroFresh Solutions, Inc. | |
Entity Central Index Key | 0001592016 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,337,705 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Par value of common stock (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares outstanding (in shares) | 50,337,705 | 50,037,206 |
Common stock, shares issued (in shares) | 50,999,086 | 50,698,587 |
Treasury stock (in shares) | 661,381 | 661,381 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1 | 1 |
Preferred stock, shares outstanding (in shares) | 1 | 1 |
Accounts receivable, net of allowance for doubtful accounts of $2,031 and $1,242, respectively | $ 2,031 | $ 1,242 |
Treasury Stock | ||
Par value of common stock (in dollars per share) | $ 0.0001 | $ 0.0001 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Statement [Abstract] | ||||
Net sales | $ 16,389 | $ 18,385 | $ 49,119 | $ 46,796 |
Cost of sales (excluding amortization, shown separately below) | 3,906 | 15,833 | 9,745 | 39,653 |
Gross profit | 12,483 | 2,552 | 39,374 | 7,143 |
Research and development expenses | 3,735 | 3,808 | 7,032 | 8,237 |
Selling, general, and administrative expenses | 13,435 | 14,546 | 29,866 | 34,212 |
Amortization of intangibles | 10,445 | 9,899 | 20,890 | 19,798 |
Change in fair value of contingent consideration | (1,211) | (300) | (996) | (3,400) |
Operating loss | (13,921) | (25,401) | (17,418) | (51,704) |
Other income (expense) | 215 | (1) | 255 | 54 |
Gain (loss) on foreign currency exchange | 7,968 | (1,072) | 11,071 | (242) |
Interest expense, net | (8,564) | (14,316) | (18,857) | (29,324) |
Loss before income taxes | (14,302) | (40,790) | (24,949) | (81,216) |
Income tax benefit | (16,909) | (15,626) | (15,527) | (30,915) |
Net income (loss) | $ 2,607 | $ (25,164) | $ (9,422) | $ (50,301) |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.05 | $ (0.51) | $ (0.19) | $ (1.02) |
Diluted (in dollars per share) | $ 0.05 | $ (0.51) | $ (0.19) | $ (1.02) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 49,670,621 | 49,279,167 | 49,941,993 | 49,294,817 |
Diluted (in shares) | 50,035,343 | 49,279,167 | 49,941,993 | 49,294,817 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 2,607 | $ (25,164) | $ (9,422) | $ (50,301) |
Other comprehensive loss: | ||||
Foreign currency translation adjustments | (8,415) | 5,277 | (10,285) | 4,733 |
Comprehensive loss | $ (5,808) | $ (19,887) | $ (19,707) | $ (45,568) |
Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business AgroFresh Solutions, Inc. (the “Company”) is a global leader in the food quality preservation and waste reduction space, providing proprietary advanced technologies and innovative data-driven specialty solutions aimed at enabling growers and packers of fresh produce to preserve and enhance its freshness, quality and value to maximize the percentage of produce supplied to the market relative to the amount of produce grown, as well as increase consumer appeal of product at retail. The Company currently offers SmartFreshTM applications at customer sites through a direct service model and provides advisory services relying on its extensive knowledge on the use of its products over thousands of monitored applications. The Company operates in over 40 countries and currently derives the majority of its revenue working with customers to protect the value of apples, pears, and other produce during storage. Additionally the Company has a number of different solutions and application technologies that have either been launched (Harvista, RipeLock, LandSpring) or will be launched in the future that will seek to extend its footprint to other crops and steps of the global produce supply chain. The end markets that the Company serves are seasonal and are generally aligned with the seasonal growing patterns of the Company’s customers. For those customers growing, harvesting or storing apples, the Company’s primary target market, the peak season in the southern hemisphere is the first and second quarters of each year, while the peak season in the northern hemisphere is the third and fourth quarters of each year. Within each half-year period (i.e., January through June for the southern hemisphere, and July through December for the northern hemisphere) the apple growing season has historically occurred during both quarters. A variety of factors, including weather, may affect the timing of the growing, harvesting and storing patterns of the Company’s customers and therefore shift the consumption of the Company’s services and products between the first and second quarters primarily in the southern hemisphere or between the third and fourth quarters primarily in the northern hemisphere. The Company was originally incorporated as Boulevard Acquisition Corp. (“Boulevard”), a blank check company, in Delaware on October 24, 2013, and was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. On July 31, 2015, the Company completed a business combination (the "Business Combination") with The Dow Chemical Company ("Dow") and changed its name to AgroFresh Solutions, Inc. Prior to consummation of the Business Combination, the Company’s efforts were limited to organizational activities, its initial public offering and related financings, and the search for suitable business acquisition transactions. |
Basis of Presentation and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements include all adjustments that are necessary for a fair presentation of the Company's condensed consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. For additional information, these condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements and notes included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2016. Recently Issued Accounting Guidance In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. ASU 2017-09 addresses the changes to the terms and conditions of share-based awards. The ASU is effective for periods beginning after December 15, 2017 and interim periods therein on a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes nearly all existing revenue recognition guidance. The core principle of ASU No. 2014-09 is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of the standard by one year which results in the new standard being effective for the Company at the beginning of its first quarter of fiscal year 2018. In addition, during March, April, May and December 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 No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively, which clarified the guidance on certain items such as reporting revenue as a principal versus agent, identifying performance obligations, accounting for intellectual property licenses, assessing collectability, presentation of sales taxes, impairment testing for contract costs and disclosure of performance obligations. The Company plans to adopt the new standard on January 1, 2018 and is still assessing the impact it will have on the financial statements. The new standard will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows from customer contracts, including judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company expects to use the modified retrospective method of adoption, reflecting the cumulative effect of initially applying the new standard to revenue recognition in the first quarter of 2018. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU No. 2017-07 requires employers to separate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently in the process of assessing the impact this guidance will have on its financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on its financial statements. In February 2015, the FASB issued ASU 2016-2, “Leases.” This update requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial statements. |
Related Party Transactions |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Settlement with Dow On April 4, 2017, the Company entered into an agreement (the “Amendment Agreement”) with Dow, Rohm and Haas Company (“R&H”), Boulevard Acquisition Sponsor, LLC (the “Sponsor”), AgroFresh Inc., a wholly-owned subsidiary of the Company, Avenue Capital Management II, L.P. (“Avenue”) and, solely as to certain sections of the Amendment Agreement, Joel Citron, Darren Thompson and Robert J. Campbell (collectively, the “Founding Holders”), Marc Lasry and Stephen Trevor. Pursuant to the Amendment Agreement and certain related agreements entered into on the same date (as described below), among other things, the Company and Dow agreed to modify certain obligations of the Company pursuant to (i) the Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), between the Company and Dow, (ii) the Tax Receivables Agreement, dated July 31, 2015 (the “Tax Receivables Agreement”), among the Company, Dow, R&H and AgroFresh Inc., and (iii) the Warrant Purchase Agreement, dated July 31, 2015 (the “Warrant Purchase Agreement”), among the Company, Dow, R&H and the Sponsor. Each of Mr. Campbell and Mr. Lasry is a member of the Company's board of directors, Mr. Trevor was a member of the Company’s board of directors at the time the Amendment Agreement was entered into, and each of Dow and the Sponsor is a significant stockholder of the Company. Amendment Agreement Pursuant to the Amendment Agreement, the Company agreed to pay Dow the aggregate amount of $20.0 million, of which $10.0 million was paid on April 4, 2017 and the remaining $10.0 million is payable on or before January 31, 2018, in full satisfaction of the Company’s obligations with respect to (i) the working capital adjustment under the Purchase Agreement, (ii) certain transfer and value added tax reimbursement obligations under the Purchase Agreement, and (iii) the amount payable to Dow pursuant to the Tax Receivables Agreement on account of the 2015 tax year. As of March 31, 2017, these liabilities, inclusive of accrued interest, were approximately $17.0 million, $9.3 million, and $12.0 million, respectively. During the three months ended June 30, 2017, the liabilities were reduced by approximately $18.2 million. Also pursuant to the Amendment Agreement, each of Avenue and Dow agreed to make available to the Company a credit facility, providing for loans of up to $50.0 million each, for use to complete one or more potential acquisitions prior to December 31, 2019, in each case subject to approval by both Avenue and Dow. First Amendment to Tax Receivables Agreement The Company, Dow, R&H and AgroFresh Inc. entered into a First Amendment to the Tax Receivables Agreement (the “TRA Amendment”). The TRA Amendment reduces, from 85% to 50%, the percentage that the Company is required to pay to Dow pursuant to the Tax Receivables Agreement of the annual tax savings, if any, in U.S. Federal, state and local income tax or franchise tax that the Company actually realizes as a result of the increase in tax basis of the AgroFresh assets resulting from a Section 338(h)(10) election that the Company and Dow made in connection with the transactions contemplated by the Purchase Agreement. During the three months ended June 30, 2017 the liability to Dow was reduced by approximately $75.3 million as a result of the TRA Amendment. Stock Buyback Agreement The Company and Dow entered into a letter agreement (the “Stock Buyback Agreement”), pursuant to which Dow agreed to use its reasonable best efforts to purchase up to 5,070,358 shares of the Company’s common stock in the open market (representing approximately 10% of the total number of shares of the Company’s common stock then outstanding), over a period of up to 18 months. Termination of Warrant Purchase Agreement The Company, Dow, R&H and the Sponsor entered into a letter agreement, pursuant to which the Warrant Purchase Agreement was terminated effective immediately. As a result of the Amendment Agreement, the TRA Amendment and the termination of the Warrant Purchase Agreement, the Company reduced the related liabilities during the second quarter of 2017 as follows:
The Company recorded an increase to additional paid in capital, net of deferred income taxes of $40.0 million, as an offset to the reduction in related liabilities, as the Company entered into the April 4, 2017 agreements with related parties and the transaction has been treated as a capital transaction. Related Party Transactions The Company is a party to ongoing agreements with Dow, a related party, including, but not limited to, operating-related agreements for certain transition services, seconded employees and occupancy. In connection with the Transition Services Agreement, the Company paid Dow a $5.0 million set-up fee which is being amortized from September 2015 through December 2017, which is the period during which the services are expected to be provided. The Company incurred expenses for such services for the six months ended June 30, 2017 and June 30, 2016 as follows:
As of June 30, 2017 and June 30, 2016, the Company had an outstanding payable to Dow of $0.3 million and $1.8 million, respectively. In addition, during 2016, the Company made a minority investment in RipeLocker, LCC ("RipeLocker"), a company led by George Lobisser, a director of AgroFresh. On November 29, 2016, the Company entered into a Mutual Services Agreement (the “Services Agreement”) with George Lobisser and RipeLocker, LLC. Pursuant to the Services Agreement, (i) the Company may provide RipeLocker with technical support, in the form of access to the Company’s research and development personnel for a specified number of hours for purposes of providing advice and input relating to RipeLocker’s products and services, and (ii) Mr. Lobisser may provide consulting services to the Company as may be reasonably requested by the Company from time to time. Pursuant to the Services Agreement, Mr. Lobisser is entitled to receive a consulting fee of $5,000 per full day for time spent performing consulting services under this Agreement (pro-rated for any partial day), plus reimbursement for out-of-pocket expenses, provided that for each hour of technical support provided by the Company to RipeLocker, Mr. Lobisser will provide one-half hour of consulting services for no consideration. In February 2017, the Company and Mr. Lobisser agreed to substantially curtail any mutual consulting services to be provided under the Services Agreement, and that any further services would be provided at no charge. For the six months ended June 30, 2017, there were no material amounts paid and as of June 30, 2017, there were no material amounts owed to RipeLocker or Mr. Lobisser for consulting services. Refer to Note 3 for a description of other related party transactions. |
Settlement with Dow |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement with Dow | Settlement with Dow On April 4, 2017, the Company entered into an agreement (the “Amendment Agreement”) with Dow, Rohm and Haas Company (“R&H”), Boulevard Acquisition Sponsor, LLC (the “Sponsor”), AgroFresh Inc., a wholly-owned subsidiary of the Company, Avenue Capital Management II, L.P. (“Avenue”) and, solely as to certain sections of the Amendment Agreement, Joel Citron, Darren Thompson and Robert J. Campbell (collectively, the “Founding Holders”), Marc Lasry and Stephen Trevor. Pursuant to the Amendment Agreement and certain related agreements entered into on the same date (as described below), among other things, the Company and Dow agreed to modify certain obligations of the Company pursuant to (i) the Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), between the Company and Dow, (ii) the Tax Receivables Agreement, dated July 31, 2015 (the “Tax Receivables Agreement”), among the Company, Dow, R&H and AgroFresh Inc., and (iii) the Warrant Purchase Agreement, dated July 31, 2015 (the “Warrant Purchase Agreement”), among the Company, Dow, R&H and the Sponsor. Each of Mr. Campbell and Mr. Lasry is a member of the Company's board of directors, Mr. Trevor was a member of the Company’s board of directors at the time the Amendment Agreement was entered into, and each of Dow and the Sponsor is a significant stockholder of the Company. Amendment Agreement Pursuant to the Amendment Agreement, the Company agreed to pay Dow the aggregate amount of $20.0 million, of which $10.0 million was paid on April 4, 2017 and the remaining $10.0 million is payable on or before January 31, 2018, in full satisfaction of the Company’s obligations with respect to (i) the working capital adjustment under the Purchase Agreement, (ii) certain transfer and value added tax reimbursement obligations under the Purchase Agreement, and (iii) the amount payable to Dow pursuant to the Tax Receivables Agreement on account of the 2015 tax year. As of March 31, 2017, these liabilities, inclusive of accrued interest, were approximately $17.0 million, $9.3 million, and $12.0 million, respectively. During the three months ended June 30, 2017, the liabilities were reduced by approximately $18.2 million. Also pursuant to the Amendment Agreement, each of Avenue and Dow agreed to make available to the Company a credit facility, providing for loans of up to $50.0 million each, for use to complete one or more potential acquisitions prior to December 31, 2019, in each case subject to approval by both Avenue and Dow. First Amendment to Tax Receivables Agreement The Company, Dow, R&H and AgroFresh Inc. entered into a First Amendment to the Tax Receivables Agreement (the “TRA Amendment”). The TRA Amendment reduces, from 85% to 50%, the percentage that the Company is required to pay to Dow pursuant to the Tax Receivables Agreement of the annual tax savings, if any, in U.S. Federal, state and local income tax or franchise tax that the Company actually realizes as a result of the increase in tax basis of the AgroFresh assets resulting from a Section 338(h)(10) election that the Company and Dow made in connection with the transactions contemplated by the Purchase Agreement. During the three months ended June 30, 2017 the liability to Dow was reduced by approximately $75.3 million as a result of the TRA Amendment. Stock Buyback Agreement The Company and Dow entered into a letter agreement (the “Stock Buyback Agreement”), pursuant to which Dow agreed to use its reasonable best efforts to purchase up to 5,070,358 shares of the Company’s common stock in the open market (representing approximately 10% of the total number of shares of the Company’s common stock then outstanding), over a period of up to 18 months. Termination of Warrant Purchase Agreement The Company, Dow, R&H and the Sponsor entered into a letter agreement, pursuant to which the Warrant Purchase Agreement was terminated effective immediately. As a result of the Amendment Agreement, the TRA Amendment and the termination of the Warrant Purchase Agreement, the Company reduced the related liabilities during the second quarter of 2017 as follows:
The Company recorded an increase to additional paid in capital, net of deferred income taxes of $40.0 million, as an offset to the reduction in related liabilities, as the Company entered into the April 4, 2017 agreements with related parties and the transaction has been treated as a capital transaction. Related Party Transactions The Company is a party to ongoing agreements with Dow, a related party, including, but not limited to, operating-related agreements for certain transition services, seconded employees and occupancy. In connection with the Transition Services Agreement, the Company paid Dow a $5.0 million set-up fee which is being amortized from September 2015 through December 2017, which is the period during which the services are expected to be provided. The Company incurred expenses for such services for the six months ended June 30, 2017 and June 30, 2016 as follows:
As of June 30, 2017 and June 30, 2016, the Company had an outstanding payable to Dow of $0.3 million and $1.8 million, respectively. In addition, during 2016, the Company made a minority investment in RipeLocker, LCC ("RipeLocker"), a company led by George Lobisser, a director of AgroFresh. On November 29, 2016, the Company entered into a Mutual Services Agreement (the “Services Agreement”) with George Lobisser and RipeLocker, LLC. Pursuant to the Services Agreement, (i) the Company may provide RipeLocker with technical support, in the form of access to the Company’s research and development personnel for a specified number of hours for purposes of providing advice and input relating to RipeLocker’s products and services, and (ii) Mr. Lobisser may provide consulting services to the Company as may be reasonably requested by the Company from time to time. Pursuant to the Services Agreement, Mr. Lobisser is entitled to receive a consulting fee of $5,000 per full day for time spent performing consulting services under this Agreement (pro-rated for any partial day), plus reimbursement for out-of-pocket expenses, provided that for each hour of technical support provided by the Company to RipeLocker, Mr. Lobisser will provide one-half hour of consulting services for no consideration. In February 2017, the Company and Mr. Lobisser agreed to substantially curtail any mutual consulting services to be provided under the Services Agreement, and that any further services would be provided at no charge. For the six months ended June 30, 2017, there were no material amounts paid and as of June 30, 2017, there were no material amounts owed to RipeLocker or Mr. Lobisser for consulting services. Refer to Note 3 for a description of other related party transactions. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories at June 30, 2017 and December 31, 2016 consisted of the following:
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Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other Current Assets The Company's other current assets at June 30, 2017 and December 31, 2016 consisted of the following:
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment at June 30, 2017 and December 31, 2016 consisted of the following:
Depreciation expense for the three and six months ended June 30, 2017 was $0.3 million and $0.6 million, respectively. Depreciation expense for the three and six months ended June 30, 2016 was $0.2 million and $0.4 million, respectively. Depreciation expense is recorded in cost of sales, selling, general and administrative expense and research and development expense in the condensed consolidated statements of income (loss). |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The Company’s intangible assets at June 30, 2017 and December 31, 2016 consisted of the following:
At June 30, 2017, the weighted-average amortization period remaining for the finite-lived intangible assets was 17.8 years. At June 30, 2017, the weighted-average amortization periods remaining for developed technology, customer relationships, in-process R&D, software and other was 17.8, 22.2, 17.3, 3.5, and 5.0 years, respectively. Estimated annual amortization expense for finite-lived intangible assets, excluding amounts not placed in service, subsequent to June 30, 2017 is as follows:
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Accrued and Other Current Liabilities |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities The Company’s accrued and other current liabilities at June 30, 2017 and December 31, 2016 consisted of the following:
Refer to Notes 3 and 17 regarding the contingent consideration owed to Dow as part of the Business Combination. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The Company’s debt, net of unamortized discounts and deferred financing fees, at June 30, 2017 and December 31, 2016 consisted of the following:
At June 30, 2017, the Company evaluated the amount recorded under the Term Loan (defined below) and determined that the fair value was approximately $410.3 million. The fair value of the debt is based on quoted inactive market prices and is therefore classified as Level 2 within the fair value hierarchy. The Term Loan is presented net of deferred issuance costs, which are amortized using the effective interest method over the term of the Term Loan. Gross deferred issuance costs at the inception of the Term Loan were $12.9 million and as of June 30, 2017 there were $9.4 million of unamortized deferred issuance costs. Scheduled principal repayments under the Term Loan subsequent to June 30, 2017 are as follows:
Credit Facility (Successor) On July 31, 2015, in connection with the consummation of the Business Combination, AgroFresh Inc. as the borrower and its parent, AF Solutions Holdings LLC (“AF Solutions Holdings”), a wholly-owned subsidiary of the Company, as the guarantor, entered into a Credit Agreement with Bank of Montreal, as administrative agent (the “Credit Facility”). The Credit Facility consists of a $425 million term loan (the “Term Loan”), with an amortization equal to 1.00% per year, and a $25 million revolving loan facility (the “Revolving Loan”). The Revolving Loan includes a $10 million letter-of-credit sub-facility, issuances against which reduce the available capacity for borrowing. As of June 30, 2017, the Company has issued $0.9 million of letters of credit, against which no funds have been drawn. The Term Loan has a scheduled maturity date of July 31, 2021, and the Revolving Loan has a scheduled maturity date of July 31, 2019. The interest rates on borrowings under the facilities are either the alternate base rate plus 3.75% or LIBOR plus 4.75% per annum, with a 1.00% LIBOR floor (with step-downs in respect of borrowings under the Revolving Loan dependent upon the achievement of certain financial ratios). At June 30, 2017, the effective interest rate was 6.53%. The obligations under the Credit Facility are secured by liens on substantially all of the assets of (a) AgroFresh Inc. and its direct wholly-owned domestic subsidiaries and (b) AF Solutions Holdings, including the common stock of AgroFresh Inc. Certain restrictive covenants are contained in the Credit Facility, which the Company was in compliance with as of June 30, 2017. The Credit Facility imposes an overall cap on the total amount of dividends the Company can pay, together with the total amount of shares and warrants the Company can repurchase, of $12 million per fiscal year, and imposes certain other conditions on the Company’s ability to pay dividends. Beginning with the year ended December 31, 2016, the Company is required to prepay Term Loan Borrowings and Incremental Term Loan Borrowings in an aggregate amount equal to 50% of the Excess Cash Flow for the fiscal year; provided that such amount of the Excess Cash Flow in any fiscal year shall be reduced by (i) the aggregate amount of prepayments of Term Loans and Incremental Term Loans made, (ii) to the extent accompanied by permanent reductions of Revolving Commitments, the aggregate amount of prepayments of Revolving Loans (other than prepayments financed with the proceeds of Indebtedness), (iii) repaid borrowings of Revolving Loans made on the Effective Date to account for any additional original issue discount or upfront fees that are implemented pursuant to the Fee Letter and (iv) the aggregate amount of cash dividends paid by the Company or Holdings to Holdings or Boulevard for the payment of the Seller Earnout; provided further that, prepayments of Term Loan Borrowings and Incremental Term Loan Borrowings shall only be required if 50% of the Excess Cash Flow for such fiscal year exceeds $5 million. The amount due under this provision for the year ended December 31, 2016 was originally estimated to be $11.0 million, but it was subsequently determined that no amount was payable for such year. There are no amounts due under this provision as of June 30, 2017. At June 30, 2017, there was $416.5 million outstanding under the Term Loan and no balance outstanding under the Revolving Loan. In July 2015, the Company incurred approximately $12.9 million in debt issuance costs related to the Term Loan and $1.3 million in costs related to the Revolving Loan. The debt issuance costs associated with the Term Loan were capitalized against the principal balance of the debt, and the Revolving Loan costs were capitalized in Other Assets. All issuance costs will be accreted through interest expense for the duration of each respective debt facility. The interest expense related to the amortization of the debt issuance costs during the three and six months ended June 30, 2017 was approximately $0.6 million and $1.2 million. |
Other Noncurrent Liabilities |
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Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Noncurrent Liabilities | Other Noncurrent Liabilities The Company’s other noncurrent liabilities at June 30, 2017 and December 31, 2016 consisted of the following:
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Severance |
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Jun. 30, 2017 | |
Compensation Related Costs [Abstract] | |
Severance | Severance There was no severance expense for the three and six months ended June 30, 2017. There was no severance expense for the three months ended June 30, 2016. Severance expense for the six months ended June 30, 2016 was $1.4 million. This amount, which does not include stock compensation expense, was recorded in selling, general and administrative expense in the condensed consolidated statements of income (loss). As of June 30, 2017, the Company had $0.6 million of severance liability, of which $0.5 million will be paid out over the next year. |
Stockholders' Equity |
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Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity The authorized common stock of the Company consists of 400,000,000 shares with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share of common stock. As of June 30, 2017, there were 50,337,705 shares of common stock outstanding. As of June 30, 2017, there were warrants to purchase 15,983,072 shares of the Company’s common stock outstanding at a strike price of $11.50. Of the 15,983,072 warrants, 9,823,072 were issued as part of the units sold in the Company's initial public offering in February 2014 and 6,160,000 warrants were sold in a private placement at the time of such public offering. In connection with and as a condition to the consummation of the Business Combination, the Company issued Rohm and Haas one share of Series A Preferred Stock. Rohm and Haas, voting as a separate class, is entitled to appoint one director to the Company’s board of directors for so long as Rohm and Haas beneficially holds 10% or more of the aggregate amount of the outstanding shares of common stock and non-voting common stock of the Company. The Series A Preferred Stock has no other rights. |
Stock-based Compensation |
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Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation Stock compensation expense for both equity-classified and liability-classified awards for the three and six months ended June 30, 2017 was $0.9 million and $1.2 million, respectively. Stock compensation expense for both equity-classified and liability-classified awards for the three and six months ended June 30, 2016 was $0.7 million and $1.9 million, respectively. Stock compensation expense is recognized in cost of goods sold, selling, general and administrative expenses, and research and development expenses. At June 30, 2017, there was $5.7 million of unrecognized compensation cost relating to outstanding unvested equity instruments expected to be recognized over the weighted average period of 2.2 years. |
Earnings Per Share |
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Earnings Per Share | Earnings Per Share Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including stock options, restricted stock and warrants. The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net income (loss) per common share:
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company's common stock during the period, because their inclusion would result in an anti-dilutive effect on per share amounts. The following amounts were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive:
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Warrants and options are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period. Performance share units are considered anti-dilutive if the performance targets upon which the issuance of the shares is contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. |
Income Taxes |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate for the three and six months ended June 30, 2017 was 118.2% and 62.2%, respectively, compared to the effective tax rate for the three and six months ended June 30, 2016 of 38.3% and 38.1%, respectively. The effective tax rate for the three and six months ended June 30, 2017 differs from the US statutory tax rate of 35% due to the release of the valuation allowance related to net deferred tax assets in the U.S. tax jurisdiction. There were a series of tax adjustments as a result of the settlement with Dow that resulted in $40.0 million additional U.S. deferred tax liabilities. The reductions of Dow’s obligations on the balance sheet impacted purchase price consideration, ultimately decreasing the Company’s intangible’s tax basis determined for ASC 740 purposes. The Company considered these future sources of taxable income as additional positive evidence when concluding the deferred tax assets within the U.S. were more likely than not to be realized and reversed a valuation allowance of $15.4 million at June 30, 2017. |
Commitments and Contingencies |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is currently involved in various claims and legal actions that arise in the ordinary course of business. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date and can be reasonably estimated. Although the results of litigation and claims can never be predicted with certainty, the Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, financial condition or results of operations. Purchase Commitments The Company has various purchasing contracts for contract manufacturing and research and development services which are based on the requirements of the business. Generally, the contracts are at prices not in excess of current market prices and do not commit the business to obligations outside the normal customary terms for similar contracts. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Liabilities Measured at Fair Value on a Recurring Basis The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2017:
The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2016:
———————————————————————————————
There were no transfers between Level 1 and Level 2 and no transfers out of Level 3 of the fair value hierarchy during the six months ended June 30, 2017. At June 30, 2017, the Company evaluated the amount recorded under the Term Loan and determined that the fair value was approximately $410.3 million. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value. Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis The following table presents the changes during the period presented in our Level 3 financial instruments that are measured at fair value on a recurring basis. These instruments relate to contingent consideration payable to Dow in connection to the Business Combination.
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Basis of Presentation and Summary of Significant Accounting Policies (Policy) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements include all adjustments that are necessary for a fair presentation of the Company's condensed consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. For additional information, these condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements and notes included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2016. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. ASU 2017-09 addresses the changes to the terms and conditions of share-based awards. The ASU is effective for periods beginning after December 15, 2017 and interim periods therein on a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes nearly all existing revenue recognition guidance. The core principle of ASU No. 2014-09 is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of the standard by one year which results in the new standard being effective for the Company at the beginning of its first quarter of fiscal year 2018. In addition, during March, April, May and December 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 No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively, which clarified the guidance on certain items such as reporting revenue as a principal versus agent, identifying performance obligations, accounting for intellectual property licenses, assessing collectability, presentation of sales taxes, impairment testing for contract costs and disclosure of performance obligations. The Company plans to adopt the new standard on January 1, 2018 and is still assessing the impact it will have on the financial statements. The new standard will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows from customer contracts, including judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company expects to use the modified retrospective method of adoption, reflecting the cumulative effect of initially applying the new standard to revenue recognition in the first quarter of 2018. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU No. 2017-07 requires employers to separate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently in the process of assessing the impact this guidance will have on its financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on its financial statements. In February 2015, the FASB issued ASU 2016-2, “Leases.” This update requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial statements. |
Related Party Transactions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of incurred expenses for services | As a result of the Amendment Agreement, the TRA Amendment and the termination of the Warrant Purchase Agreement, the Company reduced the related liabilities during the second quarter of 2017 as follows:
The Company incurred expenses for such services for the six months ended June 30, 2017 and June 30, 2016 as follows:
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Settlement with Dow (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reduced Liabilities | As a result of the Amendment Agreement, the TRA Amendment and the termination of the Warrant Purchase Agreement, the Company reduced the related liabilities during the second quarter of 2017 as follows:
The Company incurred expenses for such services for the six months ended June 30, 2017 and June 30, 2016 as follows:
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories at June 30, 2017 and December 31, 2016 consisted of the following:
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Other Current Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Current Assets | The Company's other current assets at June 30, 2017 and December 31, 2016 consisted of the following:
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Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Property and equipment at June 30, 2017 and December 31, 2016 consisted of the following:
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other finite-lived intangible assets | The Company’s intangible assets at June 30, 2017 and December 31, 2016 consisted of the following:
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Schedule of other indefinite-lived intangible assets | The Company’s intangible assets at June 30, 2017 and December 31, 2016 consisted of the following:
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Estimated annual amortization expense for finite-lived intangible assets | Estimated annual amortization expense for finite-lived intangible assets, excluding amounts not placed in service, subsequent to June 30, 2017 is as follows:
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Accrued and Other Current Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and other current liabilities | The Company’s accrued and other current liabilities at June 30, 2017 and December 31, 2016 consisted of the following:
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of debt, net of unamortized disount and deferred financing fees | The Company’s debt, net of unamortized discounts and deferred financing fees, at June 30, 2017 and December 31, 2016 consisted of the following:
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Schedule of principal repayments under the Term Loan | Scheduled principal repayments under the Term Loan subsequent to June 30, 2017 are as follows:
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Other Noncurrent Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other noncurrent liabilities | The Company’s other noncurrent liabilities at June 30, 2017 and December 31, 2016 consisted of the following:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Common Shares Outstanding | The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net income (loss) per common share:
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Amounts that could potentially dilute basic earnings per share | The following amounts were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive:
———————————————————————————————
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Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tabular disclosure of financial instruments measured at fair value on a recurring basis | The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2017:
The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2016:
———————————————————————————————
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Changes in financial instruments measured at level 3 fair value on a recurring basis | The following table presents the changes during the period presented in our Level 3 financial instruments that are measured at fair value on a recurring basis. These instruments relate to contingent consideration payable to Dow in connection to the Business Combination.
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Description of Business (Details) |
Jun. 30, 2017
country
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating countries (over 40) | 40 |
Inventories (Detail) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw material | $ 1,371 | $ 1,649 |
Work-in-process | 8,706 | 7,963 |
Finished goods | 7,372 | 5,132 |
Supplies | 771 | 723 |
Total inventories | $ 18,220 | $ 15,467 |
Other Current Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
VAT receivable | $ 10,375 | $ 9,306 |
Prepaid income tax asset | 1,671 | 1,910 |
Other | 1,736 | 2,831 |
Total other current assets | $ 13,782 | $ 14,047 |
Intangible Assets - Future Amortization (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Estimated annual amortization expense | |
2017 (remaining) | $ 21,033 |
2018 | 42,068 |
2019 | 42,050 |
2020 | 41,918 |
2021 | 41,814 |
Thereafter | 538,434 |
Net, finite-lived intangible assets | $ 727,317 |
Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Warrant consideration | $ 0 | $ 1,080 |
Tax amortization benefit contingency | 3,531 | 17,535 |
Working capital settlement | 0 | 17,000 |
Additional consideration due seller | 0 | 9,263 |
Dow settlement liability | 10,000 | 0 |
Accrued compensation and benefits | 6,621 | 6,352 |
Accrued rebates payable | 2,223 | 4,701 |
Insurance premium financing payable | 0 | 578 |
Severance | 461 | 1,564 |
Accrued taxes | 5,577 | 4,598 |
Other | 4,533 | 3,695 |
Accrued and other current liabilities | $ 32,946 | $ 66,366 |
Debt - Principal Repayments (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Schedule of principal repayments under the Term Loan | |
2017 (remaining) | $ 2,125 |
2018 | 4,250 |
2019 | 4,250 |
2020 | 4,250 |
2021 | 401,625 |
Thereafter | 0 |
Total | $ 416,500 |
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Non-Current Liabilities [Line Items] | ||
Other | $ 5,772 | $ 5,611 |
Total other noncurrent liabilities | 70,857 | 140,833 |
Tax amortization benefit contingency | ||
Other Non-Current Liabilities [Line Items] | ||
Tax amortization benefit contingency | 65,085 | 132,724 |
Deferred acquisition payment | ||
Other Non-Current Liabilities [Line Items] | ||
Deferred payment | $ 0 | $ 2,498 |
Severance (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Compensation Related Costs [Abstract] | ||||
Severance expense | $ 0.0 | $ 0.0 | $ 0.0 | $ 1.4 |
Severance liability | 0.6 | 0.6 | ||
Severance liability, current | $ 0.5 | $ 0.5 |
Stock-based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $ 0.9 | $ 0.7 | $ 1.2 | $ 1.9 |
Share-based compensation, nonvested awards, compensation cost not yet recognized | $ 5.7 | $ 5.7 | ||
Period for recognition of compensation on unvested stock option | 2 years 2 months 12 days |
Earnings Per Share - Schedule of Weighted Average COmmon Shares Outstanding (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted-average common shares outstanding (in shares) | 49,670,621 | 49,279,167 | 49,941,993 | 49,294,817 |
Effect of dilutive options, performance stock units and restricted stock (in shares) | 364,722 | 0 | 0 | 0 |
Dilute weighted-average shares outstanding (in shares) | 50,035,343 | 49,279,167 | 49,941,993 | 49,294,817 |
Earnings Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Stock options | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 577,500 | 584,375 | 921,970 | 584,375 |
Restricted stock units (RSUs) | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 0 | 606,523 | 934,819 | 606,523 |
Warrants | Private placement | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 6,160,000 | 6,160,000 | 6,160,000 | 6,160,000 |
Warrants | Public | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 9,823,072 | 9,823,072 | 9,823,072 | 9,823,072 |
Director | Restricted stock to non-directors | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 0 | 86,016 | 141,957 | 86,016 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Apr. 04, 2017 |
|
Income Tax Contingency [Line Items] | |||||
Effective tax rate (as a percent) | 118.20% | 38.30% | 62.20% | 38.10% | |
Statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | 35.00% | |
Reversal of valuation allowance | $ 15.4 | ||||
Dow | Amendment agreement | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax liabilities | $ 40.0 |
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