Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 31, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 001-38880 | |
Entity Registrant Name | Whole Earth Brands, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Trading Symbol | FREE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,426,669 | |
Entity Central Index Key | 0001753706 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 61,607 | $ 10,395 |
Accounts receivable (net of allowances of $0 and $2,832, respectively) | 49,112 | 55,031 |
Inventories | 108,785 | 121,129 |
Prepaid expenses and other current assets | 3,063 | 7,283 |
Total current assets | 222,567 | 193,838 |
Property, Plant and Equipment, net | 21,927 | 20,340 |
Other Assets | ||
Operating lease right-of-use assets | 15,436 | |
Goodwill | 131,109 | 130,870 |
Other intangible assets, net | 157,309 | 251,243 |
Deferred tax assets, net | 1,202 | 1,368 |
Other assets | 2,860 | 2,192 |
Total assets | 552,410 | 599,851 |
Current Liabilities | ||
Accounts payable | 21,858 | 26,240 |
Accrued expenses and other current liabilities | 31,695 | 28,040 |
Current portion of operating lease liabilities | 3,292 | |
Current portion of long-term debt | 7,000 | |
Total current liabilities | 63,845 | 54,280 |
Non-Current Liabilities | ||
Long-term debt | 127,758 | |
Due to related party | 8,400 | |
Deferred tax liabilities, net | 23,983 | 31,538 |
Operating lease liabilities, less current portion | 12,208 | |
Other liabilities | 16,440 | 17,883 |
Total Liabilities | 244,234 | 112,101 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | ||
Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,426,669 shares issued and outstanding | 4 | |
Additional paid-in capital | 325,365 | |
Net parent investment | 487,750 | |
Accumulated other comprehensive income | 15 | |
Accumulated deficit | (17,208) | |
Total stockholders' equity | 308,176 | 487,750 |
Total Liabilities and Stockholders' equity | $ 552,410 | $ 599,851 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowances | $ 0 | $ 2,832 |
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 220,000,000 | 220,000,000 |
Common Stock, Shares Issued | 38,426,669 | 38,426,669 |
Common Stock, Shares Outstanding | 38,426,669 | 38,426,669 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
Condensed Consolidated Statements of Operations | |||||
Product revenues, net | $ 4,478 | $ 62,356 | $ 68,993 | $ 128,328 | $ 139,294 |
Cost of goods sold | 2,708 | 37,515 | 41,324 | 77,627 | 82,864 |
Gross Profit | 1,770 | 24,841 | 27,669 | 50,701 | 56,430 |
Selling, general and administrative expenses | 1,946 | 27,307 | 18,674 | 43,355 | 34,250 |
Amortization of intangible assets | 141 | 2,393 | 2,656 | 4,927 | 5,312 |
Asset impairment charges | 40,600 | ||||
Restructuring and other expenses | 394 | 542 | |||
Operating (loss) income | (317) | (4,859) | 5,945 | (38,181) | 16,326 |
Interest expense, net | (116) | (66) | (53) | (238) | (105) |
Other (expense) income, net | (62) | (920) | (1,410) | 801 | 50 |
(Loss) income before income taxes | (495) | (5,845) | 4,482 | (37,618) | 16,271 |
Provision (benefit) for income taxes | 10 | (364) | 976 | (3,482) | 3,601 |
Net (loss) income | $ (505) | $ (5,481) | $ 3,506 | $ (34,136) | $ 12,670 |
Loss per share - Basic and diluted | $ (0.01) | ||||
Weighted-average shares outstanding - Basic and diluted | 38,426,669 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
Condensed Consolidated Statements of Comprehensive Income | |||||
Net (loss) income | $ (505) | $ (5,481) | $ 3,506 | $ (34,136) | $ 12,670 |
Other comprehensive income (loss), net of tax: | |||||
Net change in pension benefit obligations recognized | 270 | 318 | |||
Foreign currency translation adjustments | 15 | (402) | 1,385 | (2,286) | (1,054) |
Total other comprehensive income (loss), net of tax | 15 | (132) | 1,385 | (1,968) | (1,054) |
Comprehensive (loss) income | $ (490) | $ (5,613) | $ 4,891 | $ (36,104) | $ 11,616 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Predecessors | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning Balance at Dec. 31, 2018 | $ (5,947) | $ 484,492 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Funding to Parent, net | 12,117 | |||||
Net (loss) income | 9,164 | |||||
Other comprehensive loss, net of tax | (2,439) | |||||
Ending balance at Mar. 31, 2019 | (10,523) | 479,100 | ||||
Beginning Balance at Dec. 31, 2018 | (5,947) | 484,492 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | 12,670 | |||||
Other comprehensive loss, net of tax | (1,054) | |||||
Ending balance at Jun. 30, 2019 | (9,138) | 480,754 | ||||
Beginning Balance at Mar. 31, 2019 | (10,523) | 479,100 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Funding to Parent, net | 3,237 | |||||
Net (loss) income | 3,506 | |||||
Other comprehensive loss, net of tax | 1,385 | |||||
Ending balance at Jun. 30, 2019 | (9,138) | 480,754 | ||||
Beginning Balance at Dec. 31, 2019 | (8,144) | 487,750 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Funding to Parent, net | (12,262) | |||||
Net (loss) income | (28,655) | |||||
Other comprehensive loss, net of tax | (1,836) | |||||
Ending balance at Mar. 31, 2020 | (9,980) | 444,997 | ||||
Beginning Balance at Dec. 31, 2019 | (8,144) | 487,750 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | (34,136) | |||||
Other comprehensive loss, net of tax | (1,968) | |||||
Ending balance at Jun. 25, 2020 | $ 439,722 | $ 3 | $ 250,366 | $ (16,703) | (10,112) | 233,666 |
Ending balance (in shares) at Jun. 25, 2020 | 30,926,669 | |||||
Beginning Balance at Mar. 31, 2020 | (9,980) | 444,997 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | (5,481) | |||||
Other comprehensive loss, net of tax | (132) | |||||
Ending balance at Jun. 25, 2020 | 439,722 | $ 3 | 250,366 | (16,703) | (10,112) | 233,666 |
Ending balance (in shares) at Jun. 25, 2020 | 30,926,669 | |||||
Beginning Balance at Mar. 31, 2020 | (9,980) | 444,997 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Funding to Parent, net | 338 | |||||
Ending balance at Jun. 30, 2020 | $ 4 | 325,365 | (17,208) | 15 | 308,176 | |
Ending balance (in shares) at Jun. 30, 2020 | 38,426,669 | |||||
Beginning Balance at Jun. 25, 2020 | $ 439,722 | $ 3 | 250,366 | (16,703) | (10,112) | 233,666 |
Beginning balance (in shares) at Jun. 25, 2020 | 30,926,669 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | (505) | (505) | ||||
Other comprehensive loss, net of tax | 15 | 15 | ||||
Ending balance at Jun. 30, 2020 | $ 4 | $ 325,365 | $ (17,208) | $ 15 | $ 308,176 | |
Ending balance (in shares) at Jun. 30, 2020 | 38,426,669 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 |
Operating activities | |||
Net (loss) income | $ (505) | $ (34,136) | $ 12,670 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation | 43 | 1,334 | 1,514 |
Amortization of intangible assets | 141 | 4,927 | 5,312 |
Deferred income taxes | 9 | (5,578) | 564 |
Asset impairment charges | 40,600 | ||
Pension expense, net | 126 | 1,047 | |
Changes in current assets and liabilities: | |||
Accounts receivable | (1,834) | 7,726 | (3,953) |
Inventories | 311 | 3,576 | 2,941 |
Prepaid expenses and other current assets | (29) | 3,330 | 58 |
Accounts payable, accrued liabilities and income taxes | (2,161) | 507 | (5,274) |
Other, net | 28 | (2,504) | 140 |
Net cash (used in) provided by operating activities | (3,997) | 19,908 | 15,019 |
Investing activities | |||
Capital expenditures | (10) | (3,532) | (1,294) |
Acquisitions | (386,736) | ||
Transfer from trust account | 178,875 | ||
Net cash used in investing activities | (207,871) | (3,532) | (1,294) |
Financing activities | |||
Proceeds from revolving credit facility | 3,500 | ||
Repayments of revolving credit facility | (8,500) | ||
Long-term borrowings | 140,000 | ||
Debt issuance costs | (7,139) | ||
Proceeds from sale of common stock and warrants | 75,000 | ||
Funding to Parent, net | (11,924) | (15,354) | |
Net cash provided by (used in) financing activities | 207,861 | (16,924) | (15,354) |
Effect of exchange rate changes on cash and cash equivalents | 17 | 215 | (23) |
Net change in cash and cash equivalents | (3,990) | (333) | (1,652) |
Cash and cash equivalents, beginning of period | 65,597 | 10,395 | 7,205 |
Cash and cash equivalents, end of period | 61,607 | 65,597 | 5,553 |
Supplemental disclosure of cash flow information | |||
Interest paid | 113 | 798 | |
Taxes paid, net of refunds | 2,244 | $ 3,066 | |
Predecessors | |||
Financing activities | |||
Cash and cash equivalents, beginning of period | $ 10,062 | ||
Cash and cash equivalents, end of period | $ 10,062 |
BASIS OF PRESENTAION AND SIGNIF
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES Whole Earth Brands, Inc. and its consolidated subsidiaries (“Whole Earth Brands” or the “Company”) is a global industry-leading platform, focused on the “better for you” consumer packaged goods (“CPG”) and ingredients space. The Company’s branded products and ingredients are uniquely positioned to capitalize on the global secular consumer shift away from sugar toward clean label products and natural alternatives. On June 24, 2020, Act II Global Acquisition Corp., a Cayman Islands exempted company (“Act II”), domesticated into a Delaware corporation (the “Domestication”), and on June 25, 2020 (the “Closing”), consummated the indirect acquisition (the “Acquisition”) of (i) all of the issued and outstanding equity interests of Merisant Company (“Merisant”), Merisant Luxembourg Sarl (“Merisant Luxembourg”), Mafco Worldwide LLC (“Mafco Worldwide”), Mafco Shanghai LLC (“Mafco Shanghai”), EVD Holdings LLC (“EVD Holdings”), and Mafco Deutschland GmbH (together with Merisant, Merisant Luxembourg, Mafco Worldwide, Mafco Shanghai, and EVD Holdings, and their respective direct and indirect subsidiaries, “Merisant and Mafco”), and (ii) certain assets and liabilities of Merisant and Mafco included in the Transferred Assets and Liabilities (as defined in the Purchase Agreement (as hereafter defined)), from Flavors Holdings Inc. (“Flavors Holdings”), MW Holdings I LLC (“MW Holdings I”), MW Holdings III LLC (“MW Holdings III”), and Mafco Foreign Holdings, Inc. (“Mafco Foreign Holdings,” and together with Flavors Holdings, MW Holdings I, and MW Holdings III, the “Sellers”), pursuant to that certain Purchase Agreement (the “Purchase Agreement”) entered into by and among Act II and the Sellers dated as of December 19, 2019, as amended. In connection with the Domestication, Act II changed its name to “Whole Earth Brands, Inc.” Upon the completion of the Domestication, each of Act II’s then-issued and outstanding ordinary shares converted, on a one-for-one basis, into shares of common stock of Whole Earth Brands. Additionally, immediately after the Acquisition, the Company issued an aggregate of 7,500,000 shares of Whole Earth Brands common stock and 5,263,500 private placement warrants exercisable for 2,631,750 shares of Whole Earth Brands common stock to certain investors. On the date of Closing, the Company’s common stock and warrants began trading on The Nasdaq Stock Market under the symbols “FREE” and “FREEW,” respectively. As a result of the Acquisition, for accounting purposes, Act II is the acquirer and Mafco Worldwide and Merisant Company are the acquired parties and accounting predecessor. The Company’s financial statement presentation includes the combined financial statements of Mafco Worldwide and Merisant Company as the “Predecessor” for periods prior to the completion of the Acquisition and includes the consolidation of Mafco Worldwide and Merisant Company, for periods after the Closing (referred to as the “Successor”). All significant intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation —The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2019 was derived from the audited Combined Financial Statements for Mafco Worldwide and Merisant included in the final prospectus and definitive proxy statement (the “proxy statement/prospectus”) filed with the Securities and Exchange Commission on May 13, 2020 by Act II. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the proxy statement/prospectus. In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of June 30, 2020 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated financial statements, which management believes are necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year presentation. Principles of Consolidation —The consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries: Merisant Company, Merisant Luxembourg Sarl, Mafco Worldwide LLC Mafco Shanghai LLC, EVD Holdings LLC, and Mafco Deutschland GmbH. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Recently Adopted Accounting Pronouncements —The Company qualifies as an emerging growth company (“EGC”) and as such, has elected not to opt out of the extended transition period for complying with certain new or revised accounting pronouncements. During the extended transition period, the Company is not subject to certain new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”, and issued subsequent amendments to the initial guidance. The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. The lessee needs to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases with a term of less than 12 months). The lease liabilities should be equal to the present value of lease payments not yet paid. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial indirect costs. For public entities, the updated standard is effective for fiscal years beginning after December 15, 2018. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. Act II adopted the standard as of January 1, 2020. The Company recognized the leases acquired as part of the Acquisition on June 25, 2020, which were recorded pursuant to the aforementioned ASU. Refer to Note 3 for additional details. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company adopted ASU 2017-07 effective in the second quarter of 2020. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which increased the Company’s historically reported operating profit by $0.1 million for the six month period ended June 25, 2020. In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220),” which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 was effective for years beginning after December 15, 2018, and early adoption was permitted. On January 1, 2019, the Predecessor elected to adopt this standard on a full retrospective approach and reclassified $2.1 million from accumulated other comprehensive income within net parent investment. New Accounting Standards — In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of adopting this standard but does not expect it to have a material impact on its Condensed Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for Income Taxes”. The standard enhances and simplifies various aspects of the income tax accounting guidance. For public entities, the standard is effective for annual periods and interim periods beginning after December 15, 2020. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The standard modifies certain disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The amendments in ASU 2018-14 should be applied retrospectively to each period presented. The Company is currently evaluating the impact of adopting ASU 2018-14. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate losses on financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 2: BUSINESS COMBINATION On June 25, 2020, pursuant to the Acquisition, the Company indirectly acquired Merisant and Mafco Worldwide in a transaction accounted for as a business combination under ASC Topic 805, “Business Combinations,” and is accounted for using the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values. The following summarizes the preliminary purchase consideration (in thousands): Base cash consideration $ 387,500 Closing adjustment estimate 9,316 Total Purchase Price $ 396,816 The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands): Cash and cash equivalents $ 10,062 Accounts receivable 47,278 Inventories 109,095 Prepaid expenses and other current assets 12,819 Property, plant and equipment, net 21,960 Operating lease right-of-use assets 15,216 Intangible assets 157,450 Deferred tax assets, net 1,202 Other assets 986 Total assets acquired 376,068 Accounts payable 18,993 Accrued expenses and other current liabilities 35,747 Current portion of operating lease liabilities 3,007 Operating lease liabilities, less current portion 12,208 Deferred tax liabilities, net 23,974 Other liabilities 16,432 Total liabilities assumed 110,361 Net assets acquired 265,707 Goodwill 131,109 Total Purchase Price $ 396,816 The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows: Fair Value Useful life Identifiable intangible assets (in thousands) (in Years) Customer relationships $ 52,720 0.5 to 10 Tradenames 97,030 25 Product formulations 7,700 Indefinite $ 157,450 Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and expected future market opportunities. The Company’s preliminary allocation of purchase price is based upon preliminary valuations performed to determine the fair value of the net assets as of the acquisition date. The amounts recorded to goodwill, identifiable intangible assets and inventory are based on preliminary valuations and are subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above. Direct transaction-related costs consist of costs incurred in connection with the Acquisition. Act II incurred transaction costs of $16.7 million prior to the Acquisition which are reflected within the opening accumulated deficit within the Condensed Consolidated Statement of Changes in Equity. Pro Forma Financial Information —The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Acquisition had occurred on January 1, 2019 (in thousands): Pro Forma Statements of Operations Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Revenue $ 66,834 $ 68,993 $ 132,806 $ 139,294 Net (loss) income $ (3,759) $ (1,576) $ (33,849) $ 8,160 The unaudited pro forma financial information does not include any costs related to the Acquisition. In addition, the unaudited pro forma financial information does not assume any impacts from revenue, cost or other operating synergies that could be generated as a result of the acquisition. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2019. The Successor and Predecessor periods have been combined in the pro forma for the three and six months ended June 30, 2020 and 2019 and include adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets, interest expense on the new debt financing and the elimination of non-recurring expense related to Predecessor transaction bonuses. These adjustments are net of taxes. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
LEASES | NOTE 3: LEASES The Company measured Merisant and Mafco’s legacy lease agreements as if the leases were new at the Acquisition date and applied the provisions of Topic 842. This resulted in the recognition of right-of-use assets and operating lease liabilities of $15.2 million. The right-of-use assets and operating lease liabilities at June 30, 2020 also include approximately $0.3 million related to one lease that Act II had applied the provisions of Topic 842 to effective January 1, 2020. All leases are classified as operating leases. The Company’s lease portfolio includes one factory building, office space, warehouses, material handling equipment, vehicles and office equipment. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to eight years or more. The exercise of lease renewal options is at the Company’s sole discretion. For purposes of calculating operating lease liabilities, lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company’s lease agreements do not contain any residual value guarantees. Some leases include variable payments that are based on the usage and occupancy of the leased asset. The Company has elected not to record leases with an initial term of twelve months or less on the balance sheet. For real estate and vehicle leases, the Company elected the practical expedient to not separate lease from non-lease components within the contract. Electing this practical expedient means the Company would account for each lease component and the related non-lease component together as a single component. For equipment leases, the Company has not elected this practical expedient and will be separating the non-lease components from the lease component. The right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense for the period from June 26, 2020 through June 30, 2020 was not material. The following table presents the future maturities of the Company’s lease obligations as of June 30, 2020 (in thousands): Remainder of 2020 $ 1,797 2021 3,683 2022 3,374 2023 3,300 2024 1,839 Thereafter 2,874 Total lease payments 16,867 Less: imputed interest 1,367 Total operating lease liabilities $ 15,500 The weighted-average remaining lease term is 5.1 years and the weighted-average discount rate is 3.44%. Cash paid for amounts included in the measurement of the lease liability and for supplemental non-cash information for the period from June 26, 2020 through June 30, 2020 was not material. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2020 | |
INVENTORIES | |
INVENTORIES | NOTE 4: INVENTORIES Inventories consisted of the following (in thousands): June 30, December 31, 2020 2019 (Successor) (Predecessor) Raw materials and supplies $ 58,160 $ 89,611 Work in process 909 387 Finished goods 49,716 31,131 $ 108,785 $ 121,129 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangible assets consisted of the following (in thousands): June 30, 2020 December 31, 2019 (Successor) (Predecessor) Accumulated Accumulated Gross Amortization Net Gross Amortization Net Other intangible assets subject to amortization Customer relationships (useful life of 0.5 to 10 years $ 52,720 $ (88) $ 52,632 $ 105,000 $ (38,731) $ 66,269 Tradenames (useful life of 25 years 97,030 (53) 96,977 95,055 (19,939) 75,116 Total $ 149,750 $ (141) $ 149,609 $ 200,055 $ (58,670) $ 141,385 Other intangible assets not subject to amortization Product formulations 7,700 109,858 Total other intangible assets, net 157,309 251,243 Goodwill 131,109 130,870 Total goodwill and other intangible assets $ 288,418 $ 382,113 The Successor’s amortization expense for intangible assets was $0.1 million for the period from June 26, 2020 through June 30, 2020. The Predecessor’s amortization expense for intangible assets was $2.4 million and $4.9 million for the periods from April 1, 2020 to June 25, 2020 and January 1, 2020 to June 25, 2020, respectively. The Predecessor’s amortization expense for intangible assets was $2.7 million and $5.3 million for the three and six months ended June 30, 2019, respectively. Amortization expense relating to amortizable intangible assets as of June 30, 2020 for the next five years is expected to be as follows (in thousands): Remainder of 2020 $ 6,600 2021 10,362 2022 10,362 2023 10,362 2024 10,362 2025 10,128 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
DEBT | |
DEBT | NOTE 6: DEBT Debt consisted of the following (in thousands): June 30, 2020 December 31, 2019 (Successor) (Predecessor) Term Loan $ 140,000 $ — Less: current portion (7,000) — Less: debt issuance costs (5,242) — Total non-current borrowings $ 127,758 $ — Loan Agreement —The Company entered into a Loan Agreement (the “Loan Agreement”) on June 25, 2020, with Toronto Dominion (Texas) LLC, as administrative agent, BMO Capital Markets Corp. and Truist Bank, as documentation agents, and the other lenders party thereto, which provided (x) a senior secured first lien term loan facility of $140 million that matures in five years on June 25, 2025 and (y) a first lien revolving loan facility of up to $50 million that also matures in five years. Loans outstanding under the first lien term loan facility and the first lien revolving loan facility accrue interest at a rate per annum equal to LIBOR subject to a floor of 1% plus a margin ranging from 3.00% to 3.75% or, at Company’s option, a Base Rate subject to a floor of 2% plus a margin ranging from 2.00% to 2.75%, depending on the achievement of certain leverage ratios. Undrawn amounts under the first lien revolving loan facility are expected to accrue a commitment fee at a rate per annum of 0.40% on the average daily undrawn portion of the commitments thereunder, with step downs to 0.30% upon achievement of certain leverage ratios. On June 30, 2020, there was a $0.7 million outstanding letter of credit that reduced the Company’s availability under the revolving loan facility. Additionally, approximately $1.9 million of issuance costs allocated to the Revolving Credit Facility were capitalized as an asset as of June 30, 2020 and will be amortized ratably over the commitment period of five years. There were no borrowings under the revolving loan facility at June 30, 2020. The Company converted the Base Rate term loan to a LIBOR loan on July 1, 2020 at an interest rate of 4.50%. The Loan Agreement is collateralized by substantially all of the Company’s assets, and includes restrictive qualitative and quantitative covenants, as defined in the Loan Agreement. The Company was in compliance with its covenants under the Loan Agreement on June 30, 2020. The unpaid principal amount of the term loan is payable in quarterly installments on the last day of each fiscal quarter commencing on September 30, 2020. The payment for each of the first 12 fiscal quarters is equal to 1.25% of the beginning principal amount, or $1.75 million, and for the following seven fiscal quarters thereafter is 2.50%, or $3.5 million. The remaining principal payment on the term loan is due upon maturity. The Company’s debt outstanding as of June 30, 2020 matures as shown below (in thousands): 2020 $ 3,500 2021 7,000 2022 7,000 2023 10,500 2024 14,000 2025 98,000 $ 140,000 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2020 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820 “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels: · Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. · Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data. · Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement. Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Current Assets and Other Financial Assets and Liabilities —Cash and cash equivalents, trade accounts receivable and trade accounts payable are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments. Debt— The Company measures its first lien term loan and revolving facilities at original carrying value including accrued interest, net of unamortized deferred financing costs and fees. The fair value of the credit facilities approximates carrying value, as they consist of variable rate loans. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 8: COMMITMENTS AND CONTINGENCIES The Company is subject to various claims, pending and possible legal actions for product liability and other damages, and other matters arising out of the conduct of the business. The Company believes, based on current knowledge and consultation with counsel, that the outcome of such claims and actions will not have a material adverse effect on the Company’s consolidated financial position or results of operations. As of June 30, 2020, the Company had obligations to purchase $26.3 million of raw materials through 2025; however, it is unable to make reasonably reliable estimates of the timing of such payments. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 9: INCOME TAXES Income taxes as presented herein attribute current and deferred income taxes of the Company’s financial statements in a manner that is systematic, rational, and consistent with the asset and liability method described by ASC 740, “Income Taxes.” Accordingly, the Company’s income tax provision was prepared following the separate return method. The separate return method applies ASC 740 to the stand-alone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise. Use of the separate return method may result in differences when the sum of the amounts allocated to stand-alone tax provisions are compared with amounts presented in consolidated financial statements. In that event, the related deferred tax assets and liabilities could be significantly different from those presented herein. The consolidated financial statements reflect the Company’s portion of income taxes currently payable as if the Company had been a separate taxpayer during the Predecessor period. The Company’s provision for income taxes consists of U.S., state and local and foreign taxes. The Company has significant operations in various locations outside the U.S. The annual effective tax rate is a composite rate reflecting earnings in the various locations at their applicable statutory tax rates. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of alternative minimum tax credit carryforwards. The income tax provisions of the CARES Act had limited applicability to the Company and did not have a material impact on the Company’s consolidated financial statements. The Successor’s income tax provision was $.01 million for the period from June 26, 2020 through June 30, 2020. The Predecessor’s income tax benefit was $0.4 million and $3.5 million for the periods from April 1, 2020 to June 25, 2020 and January 1, 2020 to June 25, 2020, respectively. The Predecessor’s income tax provision was $1.0 million and $3.6 million for the three and six months ended June 30, 2019, respectively. The effective tax rate for the six months ended June 25, 2020 was an income tax benefit of 9.3% compared to an income tax provision of 22.1% for the six months ended June 30, 2019. The effective tax rate for the period ended June 25, 2020 was computed using a discrete method as if the Company closed its books and records. The effective tax rate for the period from June 26, 2020 through June 30, 2020 was computed by applying an estimate of the annual effective tax rate for the Successor period to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Successor’s effective tax rate was (2.0%) from June 26, 2020 through June 30, 2020. The effective tax rate from June 26, 2020 through June 30, 2020 differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period. The Predecessor’s effective tax rate was 6.2% and 9.3% for the periods from April 1, 2020 to June 25, 2020 and January 1, 2020 to June 25, 2020, respectively. The effective tax rate for the period ended June 25, 2020 differs from the statutory federal rate of 21% primarily due to the impact of the impairment charges of non-deductible goodwill and the U.S. effect of international operations including GILTI recorded during the period. The effective tax rate of 22.1% for the six months ended June 30, 2019 differs from the statutory federal rate of 21% primarily due to state and local taxes and the U.S. effect of international operations including GILTI. At June 30, 2020, the Company had an uncertain tax position liability of $1.0 million, including interest and penalties. The unrecognized tax benefits include amounts related to various foreign tax issues. |
PENSION BENEFITS
PENSION BENEFITS | 6 Months Ended |
Jun. 30, 2020 | |
PENSION BENEFITS | |
PENSION BENEFITS | NOTE 10: PENSION BENEFITS Certain current and former employees of the Company are covered under a funded defined benefit retirement plan. Plan provisions covering certain of the Company’s salaried employees generally provide pension benefits based on years of service and compensation. Plan provisions covering the Company’s union members generally provide stated benefits for each year of credited service. The Company’s funding policy is to contribute annually the statutory required amount as actuarially determined. The Company uses December 31 as a measurement date for the plan. The Company froze the pension plan on December 31, 2019. The components of net periodic benefit (credit) expense for the Company’s defined benefit pension plan for the Successor and Predecessor were as follows (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Service cost $ — $ — $ — $ 152 $ 304 Interest cost — 452 452 275 566 Expected return on plan assets — (818) (818) (365) (731) Recognized actuarial loss — 108 108 276 552 Amortization of prior service cost — — — 21 42 Net periodic benefit (credit) expense $ — $ (258) $ (258) $ 359 $ 733 Net periodic benefit (credit) expense is reflected in the Company’s consolidated financial statements as follows for the Successor and Predecessor periods presented (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Cost of Goods Sold $ — $ — $ — $ 125 $ 262 Selling, general and administrative expense — — — 234 471 Other (income) expense, net — (258) (258) — — Net periodic benefit (credit) expense $ — $ (258) $ (258) $ 359 $ 733 The Company currently does not expect to make contributions to its funded defined benefit pension plan in 2020 due to the funded status. In addition to the expense shown above, the Company has an unfunded supplemental benefit plan to provide certain salaried employees with additional retirement benefits due to limitations established by U.S. income tax regulation. The net periodic benefit cost for April 1, 2020 to June 25, 2020 and the three months ended June 30, 2019 was $0.3 million and $0.2 million, respectively. The net periodic benefit cost for January 1, 2020 to June 25, 2020 and the six months ended June 30, 2019 was $0.4 million and $0.3 million, respectively. The net periodic benefit cost for the period June 26, 2020 to June 30, 2020 was insignificant. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 11: EARNINGS PER SHARE Basic earnings per share of common stock is computed by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is computed by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding adjusted to give effect to potentially dilutive elements. During the Successor period from June 26, 2020 to June 30, 2020, basic and diluted net loss per common share are the same since the inclusion of any convertible securities would have been anti-dilutive. The following table summarizes net loss attributable to the Company and the weighted average basic and diluted shares outstanding during the Successor period (in thousands, except for share and per share data). From June 26, 2020 to June 30, 2020 (Successor) Net loss $ (505) Weighted average share of common stock outstanding – basic and diluted 38,426,669 Loss per share of common stock outstanding – basic and diluted $ (0.01) |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 12: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes accumulated other comprehensive income, net of taxes, by component (in thousands): Total Accumulated Net Currency Funded Other Translation Gains Status of Comprehensive (Losses) Benefit Plans Loss Balance at December 31, 2018 (Predecessor) $ 4,428 $ (10,375) $ (5,947) Other comprehensive income before reclassifications (2,439) — (2,439) Amounts reclassified from AOCI — — — Adoption of ASU 2018-02 — (2,137) (2,137) Balance at March 31, 2019 (Predecessor) 1,989 (12,512) (10,523) Other comprehensive income before reclassifications 1,385 — 1,385 Balance at June 30, 2019 (Predecessor) $ 3,374 $ (12,512) $ (9,138) Balance at December 31, 2019 (Predecessor) $ 2,836 $ (10,980) $ (8,144) Other comprehensive income before reclassifications (1,884) — (1,884) Amounts reclassified from AOCI — 48 48 Balance at March 31, 2020 (Predecessor) 952 (10,932) (9,980) Other comprehensive income before reclassifications (402) — (402) Amounts reclassified from AOCI — 270 270 Balance at June 25, 2020 (Predecessor) 550 (10,662) (10,112) Purchase accounting adjustments to eliminate Predecessor's accumulated other comprehensive loss (550) 10,662 10,112 Balance at June 26, 2020 (Successor) — — — Other comprehensive income before reclassifications — — — Amounts reclassified from AOCI 15 — 15 Balance at June 30, 2020 (Successor) $ 15 $ — $ 15 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13: RELATED PARTY TRANSACTIONS The Predecessor participated in MacAndrews & Forbes’ (“MacAndrews”) directors and officer’s insurance program, which covered the Predecessor along with MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. For the period January 1, 2020 to June 25, 2020 and the six months ended June 30, 2019, the Predecessor reimbursed MacAndrews an immaterial amount for its allocable portion of the premiums for such coverage, which the Predecessor believed was more favorable than the premiums that it could have secured were it to secure its own coverage. The Predecessor also participated in certain other insurance programs with MacAndrews under which it paid premiums directly to the insurance broker. In March 2018, the Predecessor entered into a revolving credit agreement with Wesco US LLC, an indirect and wholly-owned subsidiary of Merisant. This revolving credit facility, as amended, matured on January 3, 2022 and provided for maximum outstanding borrowings of up $9.0 million. The revolving credit facility was unsecured and bore interest at 3-month LIBOR plus 4.0% and provided for periodic interest payments with all principal due upon maturity. MacAndrews had the right to accept or reject any borrowing request made by the Predecessor pursuant to the revolving credit agreement in its sole discretion. The outstanding balance on the revolving credit agreement at June 25, 2020 was $3.4 million and was forgiven by MacAndrews in connection with the Acquisition. Outstanding borrowings at December 31, 2019 were $8.4 million and the interest rate at December 31, 2019 was 5.95%. The interest expense for the period from April 1, 2020 to June 25, 2020 and January 1, 2020 to June 25, 2020 was approximately $0.1 million and $0.2 million, respectively. The interest expense for the three and six months ended June 30, 2019 was approximately $0.1 million and $0.2 million, respectively. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS SEGMENTS | |
BUSINESS SEGMENTS | NOTE 14: BUSINESS SEGMENTS The Company has two reportable segments: Branded CPG and Flavors & Ingredients. The Branded CPG and Flavors & Ingredients segments are managed and organized through the Company’s indirect and wholly-owned subsidiaries Merisant and Mafco Worldwide, respectively. The Company does not present assets by reportable segments as they are not reviewed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources. The following table presents selected financial information relating to the Company’s business segments (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Product revenues, net Branded CPG $ 2,551 $ 40,530 $ 80,749 $ 41,323 $ 82,806 Flavors & Ingredients 1,927 21,826 47,579 27,670 56,488 Total Product revenues, net 4,478 62,356 128,328 68,993 139,294 Operating (loss) income Branded CPG (106) (5,151) (14,463) 737 4,517 Flavors & Ingredients (211) 292 (23,718) 5,208 11,809 Total operating (loss) income $ (317) $ (4,859) $ (38,181) $ 5,945 $ 16,326 The following table presents revenues disaggregated by geographic operating segments (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Branded CPG: North America $ 873 $ 14,678 $ 29,926 $ 14,603 $ 29,751 Europe, Middle East and Africa 1,105 17,389 35,360 19,513 37,946 Asia-Pacific 376 5,357 9,584 3,979 8,709 Latin America 197 3,106 5,879 3,228 6,400 Flavors & Ingredients 1,927 21,826 47,579 27,670 56,488 Total product revenues, net $ 4,478 $ 62,356 $ 128,328 $ 68,993 $ 139,294 |
BASIS OF PRESENTAION AND SIGN_2
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation —The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2019 was derived from the audited Combined Financial Statements for Mafco Worldwide and Merisant included in the final prospectus and definitive proxy statement (the “proxy statement/prospectus”) filed with the Securities and Exchange Commission on May 13, 2020 by Act II. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the proxy statement/prospectus. In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of June 30, 2020 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated financial statements, which management believes are necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year presentation. |
Principles of Consolidation | Principles of Consolidation —The consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries: Merisant Company, Merisant Luxembourg Sarl, Mafco Worldwide LLC Mafco Shanghai LLC, EVD Holdings LLC, and Mafco Deutschland GmbH. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements —The Company qualifies as an emerging growth company (“EGC”) and as such, has elected not to opt out of the extended transition period for complying with certain new or revised accounting pronouncements. During the extended transition period, the Company is not subject to certain new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”, and issued subsequent amendments to the initial guidance. The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. The lessee needs to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases with a term of less than 12 months). The lease liabilities should be equal to the present value of lease payments not yet paid. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial indirect costs. For public entities, the updated standard is effective for fiscal years beginning after December 15, 2018. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. Act II adopted the standard as of January 1, 2020. The Company recognized the leases acquired as part of the Acquisition on June 25, 2020, which were recorded pursuant to the aforementioned ASU. Refer to Note 3 for additional details. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company adopted ASU 2017-07 effective in the second quarter of 2020. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which increased the Company’s historically reported operating profit by $0.1 million for the six month period ended June 25, 2020. In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220),” which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 was effective for years beginning after December 15, 2018, and early adoption was permitted. On January 1, 2019, the Predecessor elected to adopt this standard on a full retrospective approach and reclassified $2.1 million from accumulated other comprehensive income within net parent investment. |
New Accounting Standards | New Accounting Standards — In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of adopting this standard but does not expect it to have a material impact on its Condensed Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for Income Taxes”. The standard enhances and simplifies various aspects of the income tax accounting guidance. For public entities, the standard is effective for annual periods and interim periods beginning after December 15, 2020. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The standard modifies certain disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The amendments in ASU 2018-14 should be applied retrospectively to each period presented. The Company is currently evaluating the impact of adopting ASU 2018-14. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate losses on financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13. |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS COMBINATION | |
Summary of preliminary purchase consideration | The following summarizes the preliminary purchase consideration (in thousands): Base cash consideration $ 387,500 Closing adjustment estimate 9,316 Total Purchase Price $ 396,816 |
Summary of preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed | The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands): Cash and cash equivalents $ 10,062 Accounts receivable 47,278 Inventories 109,095 Prepaid expenses and other current assets 12,819 Property, plant and equipment, net 21,960 Operating lease right-of-use assets 15,216 Intangible assets 157,450 Deferred tax assets, net 1,202 Other assets 986 Total assets acquired 376,068 Accounts payable 18,993 Accrued expenses and other current liabilities 35,747 Current portion of operating lease liabilities 3,007 Operating lease liabilities, less current portion 12,208 Deferred tax liabilities, net 23,974 Other liabilities 16,432 Total liabilities assumed 110,361 Net assets acquired 265,707 Goodwill 131,109 Total Purchase Price $ 396,816 |
Summary of preliminary values allocated to identifiable intangible assets and their estimated useful lives | Fair Value Useful life Identifiable intangible assets (in thousands) (in Years) Customer relationships $ 52,720 0.5 to 10 Tradenames 97,030 25 Product formulations 7,700 Indefinite $ 157,450 |
Summary of unaudited pro forma financial information summarizes the combined results of operations for the Company as though the Acquisition had occurred on January 1, 2019 | Pro Forma Financial Information —The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Acquisition had occurred on January 1, 2019 (in thousands): Pro Forma Statements of Operations Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Revenue $ 66,834 $ 68,993 $ 132,806 $ 139,294 Net (loss) income $ (3,759) $ (1,576) $ (33,849) $ 8,160 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
Schedule of future maturities of the Company's lease obligations | The following table presents the future maturities of the Company’s lease obligations as of June 30, 2020 (in thousands): Remainder of 2020 $ 1,797 2021 3,683 2022 3,374 2023 3,300 2024 1,839 Thereafter 2,874 Total lease payments 16,867 Less: imputed interest 1,367 Total operating lease liabilities $ 15,500 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
INVENTORIES | |
Summary of Inventories | Inventories consisted of the following (in thousands): June 30, December 31, 2020 2019 (Successor) (Predecessor) Raw materials and supplies $ 58,160 $ 89,611 Work in process 909 387 Finished goods 49,716 31,131 $ 108,785 $ 121,129 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of components of goodwill and other intangible assets | Goodwill and other intangible assets consisted of the following (in thousands): June 30, 2020 December 31, 2019 (Successor) (Predecessor) Accumulated Accumulated Gross Amortization Net Gross Amortization Net Other intangible assets subject to amortization Customer relationships (useful life of 0.5 to 10 years $ 52,720 $ (88) $ 52,632 $ 105,000 $ (38,731) $ 66,269 Tradenames (useful life of 25 years 97,030 (53) 96,977 95,055 (19,939) 75,116 Total $ 149,750 $ (141) $ 149,609 $ 200,055 $ (58,670) $ 141,385 Other intangible assets not subject to amortization Product formulations 7,700 109,858 Total other intangible assets, net 157,309 251,243 Goodwill 131,109 130,870 Total goodwill and other intangible assets $ 288,418 $ 382,113 |
Schedule of expected amortization expense relating to amortizable intangible assets | Amortization expense relating to amortizable intangible assets as of June 30, 2020 for the next five years is expected to be as follows (in thousands): Remainder of 2020 $ 6,600 2021 10,362 2022 10,362 2023 10,362 2024 10,362 2025 10,128 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
DEBT | |
Schedule of components of debt | Debt consisted of the following (in thousands): June 30, 2020 December 31, 2019 (Successor) (Predecessor) Term Loan $ 140,000 $ — Less: current portion (7,000) — Less: debt issuance costs (5,242) — Total non-current borrowings $ 127,758 $ — |
Summary of principal maturities of longterm debt | The Company’s debt outstanding as of June 30, 2020 matures as shown below (in thousands): 2020 $ 3,500 2021 7,000 2022 7,000 2023 10,500 2024 14,000 2025 98,000 $ 140,000 |
PENSION BENEFITS (Tables)
PENSION BENEFITS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
PENSION BENEFITS | |
Schedule of components of net periodic benefit (credit) expense for the Company's defined benefit pension plan and reflected in the Company's consolidated financial statements | The components of net periodic benefit (credit) expense for the Company’s defined benefit pension plan for the Successor and Predecessor were as follows (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Service cost $ — $ — $ — $ 152 $ 304 Interest cost — 452 452 275 566 Expected return on plan assets — (818) (818) (365) (731) Recognized actuarial loss — 108 108 276 552 Amortization of prior service cost — — — 21 42 Net periodic benefit (credit) expense $ — $ (258) $ (258) $ 359 $ 733 Net periodic benefit (credit) expense is reflected in the Company’s consolidated financial statements as follows for the Successor and Predecessor periods presented (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Cost of Goods Sold $ — $ — $ — $ 125 $ 262 Selling, general and administrative expense — — — 234 471 Other (income) expense, net — (258) (258) — — Net periodic benefit (credit) expense $ — $ (258) $ (258) $ 359 $ 733 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
Summary of net loss attributable to the Company and the weighted average basic and basic and diluted shares outstanding | The following table summarizes net loss attributable to the Company and the weighted average basic and diluted shares outstanding during the Successor period (in thousands, except for share and per share data). From June 26, 2020 to June 30, 2020 (Successor) Net loss $ (505) Weighted average share of common stock outstanding – basic and diluted 38,426,669 Loss per share of common stock outstanding – basic and diluted $ (0.01) |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Summary of change in the components of accumulated other comprehensive loss, net of tax | The following table summarizes accumulated other comprehensive income, net of taxes, by component (in thousands): Total Accumulated Net Currency Funded Other Translation Gains Status of Comprehensive (Losses) Benefit Plans Loss Balance at December 31, 2018 (Predecessor) $ 4,428 $ (10,375) $ (5,947) Other comprehensive income before reclassifications (2,439) — (2,439) Amounts reclassified from AOCI — — — Adoption of ASU 2018-02 — (2,137) (2,137) Balance at March 31, 2019 (Predecessor) 1,989 (12,512) (10,523) Other comprehensive income before reclassifications 1,385 — 1,385 Balance at June 30, 2019 (Predecessor) $ 3,374 $ (12,512) $ (9,138) Balance at December 31, 2019 (Predecessor) $ 2,836 $ (10,980) $ (8,144) Other comprehensive income before reclassifications (1,884) — (1,884) Amounts reclassified from AOCI — 48 48 Balance at March 31, 2020 (Predecessor) 952 (10,932) (9,980) Other comprehensive income before reclassifications (402) — (402) Amounts reclassified from AOCI — 270 270 Balance at June 25, 2020 (Predecessor) 550 (10,662) (10,112) Purchase accounting adjustments to eliminate Predecessor's accumulated other comprehensive loss (550) 10,662 10,112 Balance at June 26, 2020 (Successor) — — — Other comprehensive income before reclassifications — — — Amounts reclassified from AOCI 15 — 15 Balance at June 30, 2020 (Successor) $ 15 $ — $ 15 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
BUSINESS SEGMENTS | |
Schedule of selected financial information relating to the Business' reportable segments | The following table presents selected financial information relating to the Company’s business segments (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Product revenues, net Branded CPG $ 2,551 $ 40,530 $ 80,749 $ 41,323 $ 82,806 Flavors & Ingredients 1,927 21,826 47,579 27,670 56,488 Total Product revenues, net 4,478 62,356 128,328 68,993 139,294 Operating (loss) income Branded CPG (106) (5,151) (14,463) 737 4,517 Flavors & Ingredients (211) 292 (23,718) 5,208 11,809 Total operating (loss) income $ (317) $ (4,859) $ (38,181) $ 5,945 $ 16,326 |
Summary of revenue disaggregated by geographic operating segments | The following table presents revenues disaggregated by geographic operating segments (in thousands): From From From Three Months Six Months June 26, 2020 April 1, 2020 January 1, 2020 Ended Ended to June 30, 2020 to June 25, 2020 to June 25, 2020 June 30, 2019 June 30, 2019 (Successor) (Predecessor) Branded CPG: North America $ 873 $ 14,678 $ 29,926 $ 14,603 $ 29,751 Europe, Middle East and Africa 1,105 17,389 35,360 19,513 37,946 Asia-Pacific 376 5,357 9,584 3,979 8,709 Latin America 197 3,106 5,879 3,228 6,400 Flavors & Ingredients 1,927 21,826 47,579 27,670 56,488 Total product revenues, net $ 4,478 $ 62,356 $ 128,328 $ 68,993 $ 139,294 |
BASIS OF PRESENTAION AND SIGN_3
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES - Share information (Details) | Jun. 25, 2020shares |
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES | |
Conversion basis for conversion of the then-issued and outstanding ordinary shares of predecessor into successor shares | 1 |
Shares issued (in shares) | 7,500,000 |
Private placement warrants issued (in shares) | 5,263,500 |
Shares called upon by private placement warrants (in shares) | 2,631,750 |
BASIS OF PRESENTAION AND SIGN_4
BASIS OF PRESENTAION AND SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | May 31, 2020 | Jun. 25, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Operating profit | $ (317) | $ (4,859) | $ 5,945 | $ (38,181) | $ 16,326 | |||||
Accumulated other comprehensive income | $ 15 | |||||||||
Net parent investment | $ 487,750 | |||||||||
ASU 2017-07 | Restatement adjustment | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Operating profit | $ 100 | $ 100 | $ 100 | |||||||
ASU 2018-02 | Restatement adjustment | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Accumulated other comprehensive income | $ (2,100) | |||||||||
Net parent investment | $ 2,100 |
BUSINESS COMBINATION - Prelimin
BUSINESS COMBINATION - Preliminary purchase consideration (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 |
BusinessAcquisitionLineItems | ||
Base cash consideration | $ 386,736 | |
Merisant and Mafco Worldwide | ||
BusinessAcquisitionLineItems | ||
Base cash consideration | $ 387,500 | |
Closing adjustment estimate | 9,316 | |
Total Purchase Price | $ 396,816 |
BUSINESS COMBINATION - Prelim_2
BUSINESS COMBINATION - Preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Jun. 25, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
BusinessAcquisitionLineItems | |||
Goodwill | $ 131,109 | $ 130,870 | |
Merisant and Mafco Worldwide | |||
BusinessAcquisitionLineItems | |||
Cash and cash equivalents | $ 10,062 | ||
Accounts receivable | 47,278 | ||
Inventories | 109,095 | ||
Prepaid expenses and other current assets | 12,819 | ||
Property, plant and equipment, net | 21,960 | ||
Operating lease right-of-use assets | 15,216 | ||
Fair value | 157,450 | ||
Deferred tax assets, net | 1,202 | ||
Other assets | 986 | ||
Total assets acquired | 376,068 | ||
Accounts payable | 18,993 | ||
Accrued expenses and other current liabilities | 35,747 | ||
Current portion of operating lease liabilities | 3,007 | ||
Operating lease liabilities, less current portion | 12,208 | ||
Deferred tax liabilities, net | 23,974 | ||
Other liabilities | 16,432 | ||
Total liabilities assumed | 110,361 | ||
Net assets acquired | 265,707 | ||
Goodwill | 131,109 | ||
Total Purchase Price | $ 396,816 |
BUSINESS COMBINATION - Prelim_3
BUSINESS COMBINATION - Preliminary values allocated to identifiable intangible assets and their estimated useful lives (Details) - Merisant and Mafco Worldwide $ in Thousands | Jun. 25, 2020USD ($) |
BusinessAcquisitionLineItems | |
Fair value | $ 157,450 |
Product formulations | |
BusinessAcquisitionLineItems | |
Fair value | 7,700 |
Customer relationships | |
BusinessAcquisitionLineItems | |
Fair value | $ 52,720 |
Customer relationships | Minimum | |
BusinessAcquisitionLineItems | |
Useful life (in Years) | 6 months |
Customer relationships | Maximum | |
BusinessAcquisitionLineItems | |
Useful life (in Years) | 10 years |
Tradenames | |
BusinessAcquisitionLineItems | |
Fair value | $ 97,030 |
Useful life (in Years) | 25 years |
BUSINESS COMBINATION - Addition
BUSINESS COMBINATION - Additional information (Details) - Merisant and Mafco Worldwide $ in Millions | Jun. 25, 2020USD ($) |
BusinessAcquisitionLineItems | |
Closing adjustment period | 1 year |
Act II Global Acquisition Corp | |
BusinessAcquisitionLineItems | |
Transaction costs | $ 16.7 |
BUSINESS COMBINATION - Pro Form
BUSINESS COMBINATION - Pro Forma Financial Information (Details) - Merisant and Mafco Worldwide - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
BusinessAcquisitionLineItems | ||||
Revenue | $ 66,834 | $ 68,993 | $ 132,806 | $ 139,294 |
Net (loss) income | $ (3,759) | $ (1,576) | $ (33,849) | $ 8,160 |
LEASES (Details)
LEASES (Details) $ in Thousands | Jun. 30, 2020USD ($)lease | Jan. 01, 2020USD ($) |
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Right-of-Use Asset | $ 15,436 | |
Operating lease, lease liabilities | $ 15,500 | |
Number of factory building, office space, warehouses, material handling equipment, cars and office equipment included in the lease portfolio | lease | 1 | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | |
Weighted-average remaining lease term (in years) | 5 years 1 month 6 days | |
Weighted-average discount rate (as a percent) | 3.44% | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Extended lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Extended lease term | 8 years | |
Act II Global Acquisition Corp | ||
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Right-of-Use Asset | $ 300 | |
Operating lease, lease liabilities | $ 300 | |
Operating Lease, Number Of Leases | lease | 1 |
LEASES - Future - maturities of
LEASES - Future - maturities of the Company's lease obligations (Details) $ in Thousands | Jun. 30, 2020USD ($) |
LEASES | |
Remainder of 2020 | $ 1,797 |
2021 | 3,683 |
2022 | 3,374 |
2023 | 3,300 |
2024 | 1,839 |
Thereafter | 2,874 |
Total lease payments | 16,867 |
Less: imputed interest | 1,367 |
Total operating lease liabilities | $ 15,500 |
INVENTORIES - Summary of Invent
INVENTORIES - Summary of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
INVENTORIES | ||
Raw materials and supplies | $ 58,160 | $ 89,611 |
Work in process | 909 | 387 |
Finished goods | 49,716 | 31,131 |
Total inventories | $ 108,785 | $ 121,129 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of goodwill and other intangible assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Gross | $ 149,750 | $ 200,055 |
Other intangible assets subject to amortization, Accumulated Amortization | (141) | (58,670) |
Other intangible assets subject to amortization, Net | 149,609 | 141,385 |
Total other intangible assets, net | 157,309 | 251,243 |
Goodwill | 131,109 | 130,870 |
Total goodwill and other intangible assets | 288,418 | 382,113 |
Product formulations | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets not subject to amortization | 7,700 | 109,858 |
Customer relationships | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Gross | 52,720 | 105,000 |
Other intangible assets subject to amortization, Accumulated Amortization | (88) | (38,731) |
Other intangible assets subject to amortization, Net | $ 52,632 | 66,269 |
Customer relationships | Minimum | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Useful life (in years) | 6 months | |
Customer relationships | Maximum | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Useful life (in years) | 10 years | |
Tradenames | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Gross | $ 97,030 | 95,055 |
Other intangible assets subject to amortization, Accumulated Amortization | (53) | (19,939) |
Other intangible assets subject to amortization, Net | $ 96,977 | $ 75,116 |
Other intangible assets subject to amortization, Useful life (in years) | 25 years |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
GOODWILL AND OTHER INTANGIBLE ASSETS | |||||
Amortization expense related to intangible assets | $ 141 | $ 2,393 | $ 2,656 | $ 4,927 | $ 5,312 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Remainder of 2020 | 6,600 | ||||
2021 | 10,362 | ||||
2022 | 10,362 | ||||
2023 | 10,362 | ||||
2024 | 10,362 | ||||
2025 | $ 10,128 |
DEBT - Components (Details)
DEBT - Components (Details) $ in Thousands | Jun. 30, 2020USD ($) |
DEBT | |
Term Loan | $ 140,000 |
Less: current portion | (7,000) |
Less: debt issuance costs | (5,242) |
Total non-current borrowings | $ 127,758 |
DEBT - Additional information (
DEBT - Additional information (Details) | Sep. 30, 2020USD ($)installment | Jul. 01, 2020 | Jun. 25, 2020USD ($) | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | ||||
Borrowings | $ 140,000,000 | |||
Subsequent Event [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate on conversion (as a percent) | 4.50% | |||
Senior secured first lien term loan facility | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 140,000,000 | |||
Term of debt | 5 years | |||
First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Term of debt | 5 years | |||
Maximum borrowing capacity | $ 50,000,000 | |||
Commitment fee (as a percent) | 0.40% | |||
Commitment fee upon achievement of certain leverage ratios (as a percent) | 0.30% | |||
Outstanding letter of credit | 700,000 | |||
Issuance costs capitalized | 1,900,000 | |||
Borrowings | $ 0 | |||
LIBOR | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Floor rate (as a percent) | 1.00% | |||
LIBOR | Minimum | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 3.00% | |||
LIBOR | Maximum | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 3.75% | |||
Base Rate | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Floor rate (as a percent) | 2.00% | |||
Base Rate | Minimum | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 2.00% | |||
Base Rate | Maximum | First lien revolving loan facility | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 2.75% | |||
First 12 fiscal quarters | Subsequent Event [Member] | ||||
Debt Instrument [Line Items] | ||||
Number of fiscal quarters for repayment | installment | 12 | |||
Percentage of beginning principal amount repaid | 1.25% | |||
Periodic repayment amount | $ 1,750,000 | |||
Following seven fiscal quarters | Subsequent Event [Member] | ||||
Debt Instrument [Line Items] | ||||
Number of fiscal quarters for repayment | installment | 7 | |||
Percentage of beginning principal amount repaid | 2.50% | |||
Periodic repayment amount | $ 3,500,000 |
DEBT - Summary of principal mat
DEBT - Summary of principal maturities of longterm debt (Details) $ in Thousands | Jun. 30, 2020USD ($) |
DEBT | |
2020 | $ 3,500 |
2021 | 7,000 |
2022 | 7,000 |
2023 | 10,500 |
2024 | 14,000 |
2025 | 98,000 |
Total | $ 140,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jun. 30, 2020USD ($) |
Future minimum payments under non-cancelable operating leases | |
Obligations to purchase raw materials | $ 26.3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
INCOME TAXES | |||||
Total (benefit) provision for income taxes | $ 10 | $ (364) | $ 976 | $ (3,482) | $ 3,601 |
Statutory federal rate | 21.00% | 21.00% | |||
Effective tax rate (as a percent) | (2.00%) | 6.20% | 9.30% | 22.10% | |
Income tax (benefit) provision (as a percent) | (2.00%) | 6.20% | 9.30% | 22.10% | |
Pre-tax (loss) income | $ (495) | $ (5,845) | $ 4,482 | $ (37,618) | $ 16,271 |
Uncertain tax position liability | $ 1,000 |
PENSION BENEFITS - Components o
PENSION BENEFITS - Components of net periodic benefit (credit) expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 | |
PENSION BENEFITS | ||||
Service cost | $ 152 | $ 304 | ||
Interest cost | $ 452 | 275 | $ 452 | 566 |
Expected return on plan assets | (818) | (365) | (818) | (731) |
Recognized actuarial loss | 108 | 276 | 108 | 552 |
Amortization of prior service cost | 21 | 42 | ||
Total net periodic benefit cost | $ (258) | $ 359 | $ (258) | $ 733 |
PENSION BENEFITS - Net periodic
PENSION BENEFITS - Net periodic benefit costs reflected in the Company's Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 | |
Defined Benefit Plan Disclosure | ||||
Net periodic pension cost | $ (258) | $ 359 | $ (258) | $ 733 |
Cost of Goods Sold | ||||
Defined Benefit Plan Disclosure | ||||
Net periodic pension cost | 125 | 262 | ||
Selling, general and administrative expense | ||||
Defined Benefit Plan Disclosure | ||||
Net periodic pension cost | $ 234 | $ 471 | ||
Other (income) expense, net | ||||
Defined Benefit Plan Disclosure | ||||
Net periodic pension cost | $ (258) | $ (258) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
EARNINGS PER SHARE | |||||||
Net (loss) income | $ (505) | $ (5,481) | $ (28,655) | $ 3,506 | $ 9,164 | $ (34,136) | $ 12,670 |
Weighted average share of common stock outstanding - basic and diluted | 38,426,669 | ||||||
Loss per share of common stock outstanding - basic and diluted | $ (0.01) |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 26, 2020 | Jun. 25, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
AOCI Attributable to Parent, Net of Tax | |||||||||
Beginning Balance | $ 233,666 | $ 233,666 | $ 444,997 | $ 487,750 | $ 479,100 | $ 484,492 | $ 487,750 | $ 484,492 | |
Net current-period other comprehensive income | 15 | (132) | (1,836) | 1,385 | (2,439) | (1,968) | (1,054) | ||
Ending balance | 308,176 | $ 308,176 | 233,666 | 444,997 | 480,754 | 479,100 | 233,666 | 480,754 | |
Accumulated Other Comprehensive Loss | |||||||||
AOCI Attributable to Parent, Net of Tax | |||||||||
Beginning Balance | (10,112) | (10,112) | (9,980) | (8,144) | (10,523) | (5,947) | (8,144) | (5,947) | |
Other comprehensive income before reclassifications | (402) | (1,884) | 1,385 | (2,439) | |||||
Amounts reclassified from AOCI | 15 | 270 | 48 | ||||||
Purchase accounting adjustments to eliminate Predecessor's accumulated other comprehensive loss | 10,112 | ||||||||
Net current-period other comprehensive income | 15 | ||||||||
Ending balance | 15 | 15 | (10,112) | (9,980) | (9,138) | (10,523) | (10,112) | (9,138) | |
Accumulated Other Comprehensive Loss | ASU 2018-02 | |||||||||
AOCI Attributable to Parent, Net of Tax | |||||||||
Net current-period other comprehensive income | (2,137) | ||||||||
Net Currency Translation Gains (Losses) | |||||||||
AOCI Attributable to Parent, Net of Tax | |||||||||
Beginning Balance | 550 | 550 | 952 | 2,836 | 1,989 | 4,428 | 2,836 | 4,428 | |
Other comprehensive income before reclassifications | (402) | (1,884) | 1,385 | (2,439) | |||||
Amounts reclassified from AOCI | 15 | ||||||||
Purchase accounting adjustments to eliminate Predecessor's accumulated other comprehensive loss | (550) | ||||||||
Ending balance | 15 | $ 15 | 550 | 952 | 3,374 | 1,989 | 550 | 3,374 | |
Funded Status of Benefit Plans | |||||||||
AOCI Attributable to Parent, Net of Tax | |||||||||
Beginning Balance | $ (10,662) | (10,662) | (10,932) | (10,980) | (12,512) | (10,375) | (10,980) | (10,375) | |
Amounts reclassified from AOCI | 270 | 48 | |||||||
Purchase accounting adjustments to eliminate Predecessor's accumulated other comprehensive loss | $ 10,662 | ||||||||
Ending balance | $ (10,662) | $ (10,932) | $ (12,512) | (12,512) | $ (10,662) | $ (12,512) | |||
Funded Status of Benefit Plans | ASU 2018-02 | |||||||||
AOCI Attributable to Parent, Net of Tax | |||||||||
Net current-period other comprehensive income | $ (2,137) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||||
Outstanding borrowings | $ 8,400 | |||||
Wesco US LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Maximum outstanding borrowings | $ 9,000 | |||||
Outstanding borrowings | $ 8,400 | |||||
Interest rate | 5.95% | |||||
Interest expense | $ 100 | $ 100 | $ 200 | $ 200 | ||
Remaining balance forgiven | $ 3,400 | $ 3,400 | ||||
Wesco US LLC | LIBOR | ||||||
Related Party Transaction [Line Items] | ||||||
Basis spread on variable rate | 4.00% |
BUSINESS SEGMENTS - Selected fi
BUSINESS SEGMENTS - Selected financial information relating to the Company's business segments (Details) $ in Thousands | Jun. 30, 2020USD ($) | Jun. 25, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020segment | Jun. 25, 2020USD ($) | Jun. 30, 2019USD ($) |
Segment Reporting Information [Line Items] | ||||||
Number of reportable segment | segment | 2 | |||||
Product revenues, net | $ 4,478 | $ 62,356 | $ 68,993 | $ 128,328 | $ 139,294 | |
Operating (loss) income | (317) | (4,859) | 5,945 | (38,181) | 16,326 | |
Branded CPG | ||||||
Segment Reporting Information [Line Items] | ||||||
Product revenues, net | 2,551 | 40,530 | 41,323 | 80,749 | 82,806 | |
Operating (loss) income | (106) | (5,151) | 737 | (14,463) | 4,517 | |
Flavors & Ingredients | ||||||
Segment Reporting Information [Line Items] | ||||||
Product revenues, net | 1,927 | 21,826 | 27,670 | 47,579 | 56,488 | |
Operating (loss) income | $ (211) | $ 292 | $ 5,208 | $ (23,718) | $ 11,809 |
BUSINESS SEGMENTS - Revenues di
BUSINESS SEGMENTS - Revenues disaggregated by geographic operating segments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 25, 2020 | Jun. 30, 2019 | Jun. 25, 2020 | Jun. 30, 2019 |
Segment Reporting Information [Line Items] | |||||
Product revenues, net | $ 4,478 | $ 62,356 | $ 68,993 | $ 128,328 | $ 139,294 |
Branded CPG | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | 2,551 | 40,530 | 41,323 | 80,749 | 82,806 |
Branded CPG | North America | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | 873 | 14,678 | 14,603 | 29,926 | 29,751 |
Branded CPG | Europe, Middle East and Africa | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | 1,105 | 17,389 | 19,513 | 35,360 | 37,946 |
Branded CPG | Asia-Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | 376 | 5,357 | 3,979 | 9,584 | 8,709 |
Branded CPG | Latin America | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | 197 | 3,106 | 3,228 | 5,879 | 6,400 |
Flavors & Ingredients | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues, net | $ 1,927 | $ 21,826 | $ 27,670 | $ 47,579 | $ 56,488 |