DELAWARE
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75-1256622
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(State or other jurisdiction of
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(I.R.S. employer incorporation or
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organization)
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identification no.)
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1650 Hwy 6 South, Suite 190
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77478
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Sugar Land, Texas
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(Zip code)
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(Address of principal executive offices)
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1
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4
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15
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22
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22
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22
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22
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JUNE 30,
2014
(unaudited)
|
DECEMBER 31,
2013
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|||||||
ASSETS
|
(thousands of dollars)
|
|||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 6,379 | $ | 7,608 | ||||
Trade receivables, net
|
28,176 | 22,069 | ||||||
Advance to AMAK
|
- | 536 | ||||||
Inventories
|
11,702 | 12,063 | ||||||
Prepaid expenses and other assets
|
2,269 | 2,075 | ||||||
Contractual based intangible assets, net
|
- | 104 | ||||||
Taxes receivable
|
- | 571 | ||||||
Deferred income taxes
|
1,113 | 1,324 | ||||||
Total current assets
|
49,639 | 46,350 | ||||||
Plant, pipeline and equipment, net
|
43,222 | 41,925 | ||||||
Investment in AMAK
|
53,751 | 54,095 | ||||||
Mineral properties in the United States
|
588 | 588 | ||||||
Other assets
|
586 | 709 | ||||||
TOTAL ASSETS
|
$ | 147,786 | $ | 143,667 | ||||
LIABILITIES
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$ | 7,006 | $ | 7,362 | ||||
Accrued interest
|
80 | 102 | ||||||
Current portion of derivative instruments
|
215 | 292 | ||||||
Accrued liabilities
|
4,338 | 3,060 | ||||||
Accrued liabilities in Saudi Arabia
|
140 | 140 | ||||||
Current portion of post-retirement benefit
|
282 | 278 | ||||||
Current portion of long-term debt
|
1,400 | 1,400 | ||||||
Current portion of other liabilities
|
1,425 | 1,654 | ||||||
Total current liabilities
|
14,886 | 14,288 | ||||||
Long-term debt, net of current portion
|
8,139 | 11,839 | ||||||
Post-retirement benefit, net of current portion
|
649 | 649 | ||||||
Derivative instruments, net of current portion
|
251 | 319 | ||||||
Other liabilities, net of current portion
|
775 | 1,369 | ||||||
Deferred income taxes
|
11,141 | 11,984 | ||||||
Total liabilities
|
35,841 | 40,448 | ||||||
EQUITY
|
||||||||
Common stock-authorized 40 million shares of $.10 par value; issued and outstanding 23.9 million and 23.8 million shares in 2014 and 2013, respectively
|
2,386 | 2,383 | ||||||
Additional paid-in capital
|
47,125 | 46,064 | ||||||
Accumulated other comprehensive loss
|
(303 | ) | (366 | ) | ||||
Retained earnings
|
62,448 | 54,849 | ||||||
Total Trecora Resources Stockholders’ Equity
|
111,656 | 102,930 | ||||||
Noncontrolling Interest
|
289 | 289 | ||||||
Total equity
|
111,945 | 103,219 | ||||||
|
||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 147,786 | $ | 143,667 |
THREE MONTHS ENDED
|
SIX MONTHS ENDED
|
|||||||||||||||
JUNE 30,
|
JUNE 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
REVENUES
|
||||||||||||||||
Petrochemical Product Sales
|
$ | 72,842 | $ | 54,762 | $ | 135,234 | $ | 106,382 | ||||||||
Processing Fees
|
1,711 | 1,213 | 3,419 | 2,338 | ||||||||||||
74,553 | 55,975 | 138,653 | 108,720 | |||||||||||||
OPERATING COSTS AND EXPENSES
|
||||||||||||||||
Cost of Sales and Processing
|
||||||||||||||||
(including depreciation of $868, $838, $1,733, and $1,663, respectively)
|
62,853 | 47,408 | 118,239 | 93,474 | ||||||||||||
|
||||||||||||||||
GROSS PROFIT
|
11,700 | 8,567 | 20,414 | 15,246 | ||||||||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
||||||||||||||||
General and Administrative
|
4,154 | 3,452 | 8,343 | 6,957 | ||||||||||||
Depreciation
|
136 | 131 | 275 | 260 | ||||||||||||
4,290 | 3,583 | 8,618 | 7,217 | |||||||||||||
OPERATING INCOME
|
7,410 | 4,984 | 11,796 | 8,029 | ||||||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Interest Income
|
9 | -- | 18 | 1 | ||||||||||||
Interest Expense
|
11 | (123 | ) | (99 | ) | (238 | ) | |||||||||
Losses on Cash Flow Hedge Reclassified from OCI
|
(63 | ) | (80 | ) | (130 | ) | (158 | ) | ||||||||
Equity in earnings (loss) of AMAK
|
6 | 4,732 | (344 | ) | 7,696 | |||||||||||
Miscellaneous Expense
|
(4 | ) | (69 | ) | (49 | ) | (89 | ) | ||||||||
(41 | ) | 4,460 | (604 | ) | 7,212 | |||||||||||
INCOME BEFORE INCOME TAXES
|
7,369 | 9,444 | 11,192 | 15,241 | ||||||||||||
INCOME TAXES
|
2,369 | 3,135 | 3,593 | 4,146 | ||||||||||||
|
||||||||||||||||
NET INCOME
|
5,000 | 6,309 | 7,599 | 11,095 | ||||||||||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
-- | -- | -- | -- | ||||||||||||
NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES
|
$ | 5,000 | $ | 6,309 | $ | 7,599 | $ | 11,095 | ||||||||
Basic Earnings per Common Share
|
||||||||||||||||
Net Income Attributable to Trecora Resources (dollars)
|
$ | 0.21 | $ | 0.26 | $ | 0.32 | $ | 0.46 | ||||||||
Basic Weighted Average Number of Common Shares Outstanding
|
24,165 | 24,110 | 24,158 | 24,108 | ||||||||||||
Diluted Earnings per Common Share
|
||||||||||||||||
Net Income Attributable to Trecora Resources (dollars)
|
$ | 0.20 | $ | 0.26 | $ | 0.31 | $ | 0.45 | ||||||||
Diluted Weighted Average Number of Common Shares Outstanding
|
24,813 | 24,652 | 24,866 | 24,655 |
THREE MONTHS ENDED
|
SIX MONTHS ENDED
|
|||||||||||||||
JUNE 30,
|
JUNE 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
NET INCOME
|
$ | 5,000 | $ | 6,309 | $ | 7,599 | $ | 11,095 | ||||||||
OTHER COMPREHENSIVE GAIN, NET OF TAX
|
||||||||||||||||
Unrealized holding gains arising during period
|
82 | 152 | 193 | 285 | ||||||||||||
Less: reclassification adjustment for losses included in net income
|
63 | 80 | 130 | 158 | ||||||||||||
OTHER COMPREHENSIVE GAIN, NET OF TAX
|
19 | 72 | 63 | 127 | ||||||||||||
COMPREHENSIVE INCOME
|
$ | 5,019 | $ | 6,381 | $ | 7,662 | $ | 11,222 |
TRECORA RESOURCES STOCKHOLDERS
|
||||||||||||||||||||||||||||||||
COMMON STOCK
|
ADDITIONAL
PAID-IN
|
ACCUMULATED
OTHER COMPREHENSIVE
|
RETAINED
|
NON-
CONTROLLING
|
TOTAL
|
|||||||||||||||||||||||||||
SHARES
|
AMOUNT
|
CAPITAL
|
LOSS
|
EARNINGS
|
TOTAL
|
INTEREST
|
EQUITY
|
|||||||||||||||||||||||||
(thousands)
|
(thousands of dollars)
|
|||||||||||||||||||||||||||||||
JANUARY 1, 2014
|
23,832 | $ | 2,383 | $ | 46,064 | $ | (366 | ) | $ | 54,849 | $ | 102,930 | $ | 289 | $ | 103,219 | ||||||||||||||||
Stock options
|
||||||||||||||||||||||||||||||||
Issued to Directors
|
- | - | 218 | - | - | 218 | - | 218 | ||||||||||||||||||||||||
Issued to Employees
|
- | - | 701 | - | - | 701 | - | 701 | ||||||||||||||||||||||||
Warrants
|
- | - | 54 | - | - | 54 | - | 54 | ||||||||||||||||||||||||
Common stock
|
||||||||||||||||||||||||||||||||
Issued to Employees
|
32 | 3 | 88 | - | - | 91 | - | 91 | ||||||||||||||||||||||||
Unrealized Gain on Interest Rate Swap (net of income tax expense of $34)
|
- | - | - | 63 | - | 63 | - | 63 | ||||||||||||||||||||||||
Net Income
|
- | - | - | - | 7,599 | 7,599 | - | 7,599 | ||||||||||||||||||||||||
JUNE 30, 2014
|
23,864 | $ | 2,386 | $ | 47,125 | $ | (303 | ) | $ | 62,448 | $ | 111,656 | $ | 289 | $ | 111,945 |
SIX MONTHS ENDED
|
||||||||
JUNE 30,
|
||||||||
2014
|
2013
|
|||||||
(thousands of dollars)
|
||||||||
OPERATING ACTIVITIES
|
||||||||
Net Income Attributable to Trecora Resources
|
$ | 7,599 | $ | 11,095 | ||||
Adjustments to Reconcile Net Income Attributable to Trecora Resources
|
||||||||
To Net Cash Provided by Operating Activities:
|
||||||||
Depreciation
|
2,008 | 1,923 | ||||||
Amortization of Contractual Based Intangible Asset
|
104 | 125 | ||||||
Accretion of Notes Receivable Discounts
|
(18 | ) | (2 | ) | ||||
Unrealized Gain on Derivative Instruments
|
(48 | ) | - | |||||
Stock-based Compensation
|
973 | 548 | ||||||
Deferred Income Taxes
|
(665 | ) | 1,148 | |||||
Postretirement Obligation
|
4 | 5 | ||||||
Equity in (earnings) losses of AMAK
|
344 | (3,700 | ) | |||||
Gain from additional equity issuance by AMAK
|
- | (3,996 | ) | |||||
Changes in Operating Assets and Liabilities:
|
||||||||
Increase in Trade Receivables
|
(6,107 | ) | (5,279 | ) | ||||
Decrease in Notes Receivable
|
141 | 20 | ||||||
Decrease in Taxes Receivable
|
571 | 1,182 | ||||||
(Increase) Decrease in Inventories
|
361 | (2,476 | ) | |||||
Increase in Prepaid Expenses
|
(196 | ) | (547 | ) | ||||
Increase in Accounts Payable and Accrued Liabilities
|
922 | 249 | ||||||
Increase (Decrease) in Accrued Interest
|
(22 | ) | 2 | |||||
Increase in Other Liabilities
|
- | 500 | ||||||
Net Cash Provided by Operating Activities
|
5,971 | 797 | ||||||
INVESTING ACTIVITIES
|
||||||||
Additions to Plant, Pipeline and Equipment
|
(4,127 | ) | (3,142 | ) | ||||
Addition to Investment in AMAK
|
- | (7,500 | ) | |||||
Advance to AMAK, net
|
536 | 1,719 | ||||||
Net Cash Used in Investing Activities
|
(3,591 | ) | (8,923 | ) | ||||
FINANCING ACTIVITIES
|
||||||||
Issuance of Common Stock
|
91 | 44 | ||||||
Additions to Long-Term Debt
|
3,000 | 6,000 | ||||||
Repayment of Long-Term Debt
|
(6,700 | ) | (2,700 | ) | ||||
Net Cash Provided by (Used in) Financing Activities
|
(3,609 | ) | 3,344 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,229 | ) | (4,782 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
7,608 | 9,508 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 6,379 | $ | 4,726 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash payments for interest
|
$ | 245 | $ | 388 | ||||
Cash payments for taxes
|
$ | 2,659 | $ | 1,390 | ||||
Supplemental disclosure of non-cash items:
|
||||||||
Capital expansion amortized to depreciation expense
|
$ | 823 | $ | 540 | ||||
Unrealized gain on interest rate swap, net of tax expense
|
$ | 63 | $ | 127 |
June 30, 2014
|
December 31, 2013
|
|||||||
(thousands of dollars)
|
||||||||
Trade receivables
|
$ | 28,386 | $ | 22,279 | ||||
Less allowance for doubtful accounts
|
(210 | ) | (210 | ) | ||||
Trade receivables, net
|
$ | 28,176 | $ | 22,069 |
June 30, 2014
|
December 31, 2013
|
|||||||
(thousands of dollars)
|
||||||||
Raw material
|
$ | 3,059 | $ | 2,403 | ||||
Petrochemical products
|
8,643 | 9,660 | ||||||
Total inventory
|
$ | 11,702 | $ | 12,063 |
|
Plant, pipeline and equipment at June 30, 2014, and December 31, 2013, consisted of the following:
|
June 30, 2014
|
December 31, 2013
|
|||||||
(thousands of dollars)
|
||||||||
Platinum catalyst
|
$ | 1,612 | $ | 1,612 | ||||
Land
|
1,577 | 1,577 | ||||||
Plant, pipeline and equipment
|
73,458 | 71,115 | ||||||
Construction in progress
|
2,606 | 824 | ||||||
Total plant, pipeline and equipment
|
79,253 | 75,128 | ||||||
Less accumulated depreciation and amortization
|
(36,031 | ) | (33,203 | ) | ||||
Net plant, pipeline and equipment
|
$ | 43,222 | $ | 41,925 |
Three Months Ended
June 30, 2014
|
Three Months Ended
June 30, 2013
|
|||||||||||||||||||||||
Per Share
|
Per Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$ | 5,000 | 24,165 | $ | 0.21 | $ | 6,309 | 24,110 | $ | 0.26 | ||||||||||||||
Dilutive stock options outstanding
|
648 | 542 | ||||||||||||||||||||||
Diluted Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$ | 5,000 | 24,813 | $ | 0.20 | $ | 6,309 | 24,652 | $ | 0.26 |
Six Months Ended
June 30, 2014
|
Six Months Ended
June 30, 2013
|
|||||||||||||||||||||||
Per Share
|
Per Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$ | 7,599 | 24,158 | $ | 0.32 | $ | 11,095 | 24,108 | $ | 0.46 | ||||||||||||||
Dilutive stock options outstanding
|
708 | 547 | ||||||||||||||||||||||
Diluted Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$ | 7,599 | 24,866 | $ | 0.31 | $ | 11,095 | 24,655 | $ | 0.45 |
Fair Value Measurements Using
|
||||||||||||||||
June 30, 2014
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$ | 466 | $ | - | $ | 466 | $ | - |
Fair Value Measurements Using
|
||||||||||||||||
December 31, 2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$ | 563 | $ | - | $ | 563 | $ | - | ||||||||
Commodity financial instruments
|
48 | 48 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Unrealized loss
|
$ | - | $ | - | $ | (48 | ) | $ | - | |||||||
Realized gain
|
- | - | 87 | - | ||||||||||||
Net gain
|
$ | - | $ | - | $ | 39 | $ | - |
June 30, 2014
|
December 31, 2013
|
|||||||
Fair value of financial contracts – liability
|
$ | - | $ | 48 |
June 30,
|
||||||||
2014
|
2013
|
|||||||
Other Comprehensive Loss
|
||||||||
Cumulative loss
|
$ | (466 | ) | $ | (696 | ) | ||
Deferred tax benefit
|
163 | 243 | ||||||
Net cumulative loss
|
$ | (303 | ) | $ | (453 | ) | ||
Interest expense reclassified from other comprehensive loss
|
$ | 130 | $ | 158 |
June 30, 2014
|
December 31, 2013
|
|||||||
Fair value of interest rate swap - liability
|
$ | 466 | $ | 563 |
Expected volatility
|
84%
|
Expected dividends
|
None
|
Expected term (in years)
|
6.25
|
Risk free interest rate
|
1.95%
|
Number of Stock Options & Warrants
|
Weighted Average Exercise Price per Share
|
Weighted
Average
Remaining
Contractual
Life
|
||||||||||
Outstanding at January 1, 2014
|
1,326,360 | $ | 4.75 | |||||||||
Granted
|
500,000 | 12.26 | ||||||||||
Exercised
|
(31,820 | ) | 2.86 | |||||||||
Expired
|
-- | -- | ||||||||||
Cancelled
|
-- | -- | ||||||||||
Forfeited
|
(20,000 | ) | $ | 2.82 | ||||||||
Outstanding at June 30, 2014
|
1,774,540 | $ | 6.92 | 7.1 | ||||||||
Exercisable at June 30, 2014
|
662,068 | $ | 4.53 | 5.9 |
|
Results of Operations
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
(Thousands of Dollars)
|
||||||||||||||||
Sales
|
$ | 30,431 | $ | 15,333 | $ | 30,698 | $ | 46,495 | ||||||||
Gross Profit
|
4,045 | 8,128 | 4,684 | 18,034 | ||||||||||||
General, administrative and other expenses
|
4,982 | 7,029 | 7,570 | 9,815 | ||||||||||||
Net Income (loss)
|
$ | (937 | ) | $ | 1,099 | $ | (2,886 | ) | $ | 8,219 |
|
Financial Position
|
June 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
(Thousands of Dollars)
|
||||||||
Current assets
|
$ | 26,558 | $ | 32,923 | ||||
Noncurrent assets
|
263,961 | 264,997 | ||||||
Total assets
|
$ | 290,519 | $ | 297,920 | ||||
Current liabilities
|
$ | 16,109 | $ | 22,497 | ||||
Long term liabilities
|
77,700 | 75,826 | ||||||
Shareholders' equity
|
196,710 | 199,597 | ||||||
$ | 290,519 | $ | 297,920 |
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
(Thousands of Dollars)
|
||||||||||||||||
Company’s share of income (loss) reported by AMAK
|
$ | (331 | ) | $ | 399 | $ | (1,018 | ) | $ | 3,026 | ||||||
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK
|
337 | 337 | 674 | 674 | ||||||||||||
Gain from additional equity issuance by AMAK
|
- | 3,996 | - | 3,996 | ||||||||||||
Equity in income (loss) of AMAK
|
$ | 6 | $ | 4,732 | $ | (344 | ) | $ | 7,696 |
June 30, 2014
|
December 31, 2013
|
June 30, 2013
|
||||||||||
Days sales outstanding in accounts receivable
|
36.8 | 34.1 | 35.1 | |||||||||
Days sales outstanding in inventory
|
15.3 | 18.6 | 20.5 | |||||||||
Days sales outstanding in accounts payable
|
9.1 | 11.4 | 9.9 | |||||||||
Days of working capital
|
42.9 | 41.4 | 45.7 |
2014
|
2013
|
|||||||
Net cash provided by (used in)
|
(thousands of dollars)
|
|||||||
Operating activities
|
$ | 5,971 | $ | 797 | ||||
Investing activities
|
(3,591 | ) | (8,923 | ) | ||||
Financing activities
|
(3,609 | ) | 3,344 | |||||
Decrease in cash and equivalents
|
$ | (1,229 | ) | $ | (4,782 | ) | ||
Cash and cash equivalents
|
$ | 6,379 | $ | 4,726 |
·
|
Inventory decreased approximately $0.4 million (due to increased demand for our products) as compared to an increase of approximately $2.5 million (due to an increase in the amount of deferred sales at the end of the second quarter and an intentional build in preparation for hurricane season) in 2013 and
|
·
|
Accounts payable and accrued liabilities increased approximately $0.9 million (due to an increase in transportation, fuel gas, and property tax accruals and additional purchases relating to the D Train expansion) as compared to an increase of approximately $0.2 million in 2013.
|
·
|
Trade receivables increased approximately $6.1 million (due to a 5.3% increase of volume sold and a 6.6% increase in average selling price as compared to the fourth quarter of 2013 and an increase in foreign sales with longer payment terms) as compared to an increase of approximately $5.3 million in 2013 (due to a 13.5% increase of volume sold compared to the fourth quarter of 2012 and an increase in foreign sales with longer payment terms),
|
·
|
Income tax receivable decreased approximately $0.6 million (due to the receivable being used for estimated taxes) as compared to a decrease of $1.2 million in 2013 (due to the receivable being used for the 2013 estimated tax payment).
|
|
Comparison of Three Months Ended June 30, 2014 and 2013
|
2014
|
2013
|
Change
|
%Change
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Petrochemical Product Sales
|
$ | 72,842 | $ | 54,762 | $ | 18,080 | 33.0 | % | ||||||||
Processing
|
1,711 | 1,213 | 498 | 41.1 | % | |||||||||||
Gross Revenue
|
$ | 74,553 | $ | 55,975 | $ | 18,578 | 33.2 | % | ||||||||
Volume of Sales (gallons)
|
||||||||||||||||
Petrochemical Products
|
20,745 | 15,711 | 5,034 | 32.0 | % | |||||||||||
Cost of Sales
|
$ | 62,853 | $ | 47,408 | $ | 15,445 | 32.6 | % | ||||||||
Total Operating Expense**
|
12,890 | 11,499 | 1,391 | 12.1 | % | |||||||||||
Natural Gas Expense**
|
1,573 | 1,535 | 38 | 2.5 | % | |||||||||||
Operating Labor Costs**
|
2,973 | 2,627 | 346 | 13.2 | % | |||||||||||
Transportation Costs**
|
5,837 | 4,916 | 921 | 18.7 | % | |||||||||||
General & Administrative Expense
|
4,154 | 3,452 | 702 | 20.3 | % | |||||||||||
Depreciation*
|
1,004 | 969 | 35 | 3.6 | % | |||||||||||
Equity in Earnings of AMAK
|
6 | 735 | (729 | ) | (99.2 | %) | ||||||||||
Gain on Equity Issuance AMAK
|
- | 3,996 | (3,996 | ) | (100.0 | %) | ||||||||||
Capital Expenditures
|
2,407 | 1,650 | 757 | 45.9 | % |
|
*Includes $868 and $838 for 2014 and 2013, respectively, which is included in operating expense
|
|
** Included in cost of sales
|
|
Comparison of Six Months Ended June 30, 2014 and 2013
|
2014
|
2013
|
Change
|
%Change
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Petrochemical Product Sales
|
$ | 135,234 | $ | 106,382 | $ | 28,852 | 27.1 | % | ||||||||
Processing
|
3,419 | 2,338 | 1,081 | 46.2 | % | |||||||||||
Gross Revenue
|
$ | 138,653 | $ | 108,720 | $ | 29,933 | 27.5 | % | ||||||||
Volume of sales (thousand gallons)
|
||||||||||||||||
Petrochemical products
|
39,570 | 30,432 | 9,138 | 30.0 | % | |||||||||||
Cost of Sales
|
$ | 118,239 | $ | 93,474 | $ | 24,765 | 26.5 | % | ||||||||
Total Operating Expense**
|
24,951 | 21,732 | 3,219 | 14.8 | % | |||||||||||
Natural Gas Expense**
|
3,400 | 2,777 | 623 | 22.4 | % | |||||||||||
Operating Labor Costs**
|
5,722 | 5,138 | 584 | 11.4 | % | |||||||||||
Transportation Costs**
|
10,645 | 8,957 | 1,688 | 18.8 | % | |||||||||||
General & Administrative Expense
|
8,343 | 6,957 | 1,386 | 19.9 | % | |||||||||||
Depreciation*
|
2,008 | 1,923 | 85 | 4.4 | % | |||||||||||
Equity in Earnings (Losses) of AMAK
|
(344 | ) | 3,699 | (4,043 | ) | (109.3 | %) | |||||||||
Gain on Equity Issuance AMAK
|
- | 3,996 | (3,996 | ) | (100.0 | %) | ||||||||||
Capital Expenditures
|
4,127 | 3,142 | 985 | 31.3 | % |
|
*Includes $1,733 and $1,663 for 2014 and 2013, respectively, which is included in operating expense
|
|
** Included in cost of sales
|
Actual
|
Budgeted
|
Variance
|
||||||||||
Ore tons processed
|
328,394 | 341,020 | (12,626 | ) | ||||||||
Concentrate to the port
|
||||||||||||
Copper
|
14,997 | 14,699 | 298 | |||||||||
Zinc
|
15,830 | 16,215 | (385 | ) | ||||||||
30,827 | 30,914 | (87 | ) | |||||||||
Shipments
|
||||||||||||
Copper
|
11,856 | 14,699 | (2,843 | ) | ||||||||
Zinc
|
15,057 | 16,216 | (1,159 | ) | ||||||||
26,913 | 30,915 | (4,002 | ) |
Payments due by period
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||||||||
Operating Lease Obligations
|
$ | 5,781 | $ | 1,821 | $ | 2,764 | $ | 738 | $ | 458 | ||||||||||
Long-Term Debt Obligations
|
9,539 | 1,400 | 2,800 | 5,339 | - | |||||||||||||||
Total
|
$ | 15,320 | $ | 3,221 | $ | 5,564 | $ | 6,077 | $ | 458 |
(a)
|
Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this report.
|
(b)
|
Changes in internal control. There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
|
Exhibit
Number
|
Description
|
3(a)
|
- Certificate of Incorporation of the Company as amended through the Certificate of Amendment filed with the Delaware Secretary of State on May 22, 2014
|
3(b)
|
- Restated Bylaws of the Company dated August 1, 2014
|
10(a)*
|
- Retirement Awards Program dated January 15, 2008 between Arabian American Development Company and Hatem El Khalidi (incorporated by reference to Exhibit 10(h) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (file No. 001-33926))
|
Exhibit
Number
|
Description
|
10(b)*
|
- Arabian American Development Company Stock and Incentive Plan adopted April 3, 2012 (incorporated by reference to Exhibit A to the Company’s Form DEF 14A filed April 25, 2012 (file No. 001-33926))
|
10(c)
|
- Articles of Association of Al Masane Al Kobra Mining Company, dated July 10, 2006 (incorporated by reference to Exhibit 10(m) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
|
10(d)
|
- Bylaws of Al Masane Al Kobra Mining Company (incorporated by reference to Exhibit 10(n) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
|
10(e)
|
- Letter Agreement dated August 5, 2009, between Arabian American Development Company and the other Al Masane Al Kobra Company shareholders named therein (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 27, 2009 (file No. 001-33926))
|
10(f)
|
- Limited Guarantee dated October 24, 2010, between Arabian American Development Company and the Saudi Industrial Development Fund (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 27, 2010 (file No. 001-33926))
|
10(g)
|
- Fourteenth Amendment to Credit Agreement dated July 10, 2014, between South Hampton Resources, Inc. and Bank of America, N.A. (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on July 16, 2014 (file No. 001-33926))
|
31.1
|
- Certification of Chief Executive Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
|
31.2
|
- Certification of Chief Financial Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
|
32.1
|
- Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
- Certification of 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 Schema Document
|
101.CAL
|
- XBRL Taxonomy Calculation Linkbase Document
|
101.LAB
|
- XBRL Taxonomy Label Linkbase Document
|
101.PRE
|
- XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
- XBRL Taxonomy Extension Definition Linkbase Document
|
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1.
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I have reviewed this quarterly report on Form 10-Q of Trecora Resources;
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2.
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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;
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3.
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Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly 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;
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4.
|
The registrant's other certifying officers 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
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|
(d)
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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 that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting.
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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 independent registered public accounting firm and the audit committee of 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
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|
(b)
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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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Trecora Resources;
|
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 consolidated financial statements, and other financial information included in this quarterly 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 officers 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 that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting.
|
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 independent registered public accounting firm and the audit committee of 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.
|
FAIR VALUE MEASUREMENTS (Details) (USD $)
|
Jun. 30, 2014
|
Mar. 31, 2008
|
Jun. 30, 2014
Recurring [Member]
|
Dec. 31, 2013
Recurring [Member]
|
Jun. 30, 2014
Recurring [Member]
Level 1 [Member]
|
Dec. 31, 2013
Recurring [Member]
Level 1 [Member]
|
Jun. 30, 2014
Recurring [Member]
Level 2 [Member]
|
Dec. 31, 2013
Recurring [Member]
Level 2 [Member]
|
Jun. 30, 2014
Recurring [Member]
Level 3 [Member]
|
Dec. 31, 2013
Recurring [Member]
Level 3 [Member]
|
---|---|---|---|---|---|---|---|---|---|---|
Liabilities [Abstract] | ||||||||||
Interest rate swap | $ 466,000 | $ 563,000 | $ 0 | $ 0 | $ 466,000 | $ 563,000 | $ 0 | $ 0 | ||
Commodity financial instruments | 48,000 | 48,000 | ||||||||
Term loan secured by plant, pipeline and equipment | $ 14,000,000 | $ 10,000,000 |
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