COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 08, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38880 | |
Entity Registrant Name | Whole Earth Brands, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-4101973 | |
Entity Address, Address Line One | 125 S. Wacker Drive | |
Entity Address, Address Line Two | Suite 1250 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60606 | |
City Area Code | 312 | |
Local Phone Number | 840-6000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,850,915 | |
Entity Central Index Key | 0001753706 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | FREE | |
Security Exchange Name | NASDAQ | |
Warrant | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants to purchase one-half of one share of common stock | |
Trading Symbol | FREEW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 24,249 | $ 28,676 |
Accounts receivable (net of allowances of $1,185 and $1,614, respectively) | 68,181 | 66,653 |
Inventories | 216,803 | 218,975 |
Prepaid expenses and other current assets | 5,624 | 10,530 |
Total current assets | 314,857 | 324,834 |
Property, Plant and Equipment, net | 54,630 | 58,092 |
Other Assets | ||
Operating lease right-of-use assets | 21,233 | 18,238 |
Goodwill | 192,506 | 193,139 |
Other intangible assets, net | 231,189 | 245,376 |
Deferred tax assets, net | 490 | 539 |
Other assets | 10,486 | 8,785 |
Total Assets | 825,391 | 849,003 |
Current Liabilities | ||
Accounts payable | 51,201 | 47,002 |
Accrued expenses and other current liabilities | 30,327 | 27,488 |
Current portion of operating lease liabilities | 8,414 | 8,804 |
Current portion of long-term debt | 3,750 | 3,750 |
Total current liabilities | 93,692 | 87,044 |
Non-Current Liabilities | ||
Long-term debt | 424,480 | 432,172 |
Deferred tax liabilities, net | 33,466 | 32,585 |
Operating lease liabilities, less current portion | 15,883 | 12,664 |
Other liabilities | 10,192 | 9,987 |
Total Liabilities | 577,713 | 574,452 |
Commitments and Contingencies (Note 8) | 0 | 0 |
Stockholders’ Equity | ||
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at September 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.0001 par value; 220,000,000 shares authorized; 42,797,861 and 41,994,355 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 4 | 4 |
Additional paid-in capital | 366,313 | 360,777 |
Accumulated deficit | (115,932) | (85,188) |
Accumulated other comprehensive loss | (2,707) | (1,042) |
Total stockholders’ equity | 247,678 | 274,551 |
Total Liabilities and Stockholders’ Equity | $ 825,391 | $ 849,003 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Accounts receivable, allowances | $ 1,185 | $ 1,614 |
Stockholders’ Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 220,000,000 | 220,000,000 |
Common stock, shares issued (in shares) | 42,797,861 | 41,994,355 |
Beginning balance (in shares) | 42,797,861 | 41,994,355 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Product revenues, net | $ 134,430 | $ 135,280 | $ 399,749 | $ 399,375 |
Cost of goods sold | 96,902 | 100,263 | 296,500 | 287,486 |
Gross profit | 37,528 | 35,017 | 103,249 | 111,889 |
Selling, general and administrative expenses | 26,226 | 23,566 | 76,549 | 76,314 |
Amortization of intangible assets | 4,641 | 4,629 | 13,989 | 13,998 |
Operating income | 6,661 | 6,822 | 12,711 | 21,577 |
Interest expense, net | (11,117) | (8,214) | (32,884) | (20,674) |
Other (expense) income, net | (448) | 278 | (1,333) | 3,985 |
(Loss) income before income taxes | (4,904) | (1,114) | (21,506) | 4,888 |
Provision for income taxes | 526 | 1,407 | 9,238 | 3,357 |
Net (loss) income | $ (5,430) | $ (2,521) | $ (30,744) | $ 1,531 |
Net (loss) earnings per share: | ||||
Basic (in dollars per share) | $ (0.13) | $ (0.06) | $ (0.73) | $ 0.04 |
Diluted (in dollars per share) | $ (0.13) | $ (0.06) | $ (0.73) | $ 0.04 |
Revenue from Contract with Customer, Product and Service [Extensible List] | Product [Member] | Product [Member] |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (5,430) | $ (2,521) | $ (30,744) | $ 1,531 |
Other comprehensive income (loss), net of tax: | ||||
Net change in pension benefit obligations recognized, net of taxes of $(4), $(63), $(12) and $(129), respectively | (12) | 21 | (35) | (186) |
Unrealized gains and losses on cash flow hedges, net of taxes of $383, $0, $602 and $0, respectively | 1,149 | 0 | 1,804 | 0 |
Gains and losses on cash flow hedges reclassified to net income, net of taxes of $(113), $0, $(113), and $0, respectively | (339) | 0 | (339) | 0 |
Foreign currency translation adjustments | (5,140) | (13,522) | (3,095) | (30,373) |
Total other comprehensive income (loss), net of tax | (4,342) | (13,501) | (1,665) | (30,559) |
Comprehensive loss | $ (9,772) | $ (16,022) | $ (32,409) | $ (29,028) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net change in pension benefit obligations recognized, tax | $ (4) | $ (63) | $ (12) | $ (129) |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax | 383 | 0 | 602 | 0 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax | $ 113 | $ 0 | $ 113 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance at Dec. 31, 2021 | $ 313,871 | $ 4 | $ 330,616 | $ (26,436) | $ 9,687 |
Beginning balance (in shares) at Dec. 31, 2021 | 38,871,646 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Transfer of Private Warrants to Public Warrants | 605 | 605 | |||
Net (loss) income | 2,726 | 2,726 | |||
Other comprehensive income, net of tax | (2,227) | (2,227) | |||
Stock-based compensation | 1,354 | 1,354 | |||
Net share settlements of stock-based awards | (291) | (291) | |||
Net share settlements of stock-based awards (in shares) | 146,444 | ||||
Shares issued for contingent consideration (in shares) | 2,659,574 | ||||
Shares issued for payment of contingent consideration | 23,936 | 23,936 | |||
Ending balance at Mar. 31, 2022 | 339,974 | $ 4 | 356,220 | (23,710) | 7,460 |
Ending balance (in shares) at Mar. 31, 2022 | 41,677,664 | ||||
Beginning balance at Dec. 31, 2021 | 313,871 | $ 4 | 330,616 | (26,436) | 9,687 |
Beginning balance (in shares) at Dec. 31, 2021 | 38,871,646 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 1,531 | ||||
Other comprehensive income, net of tax | (30,559) | ||||
Ending balance at Sep. 30, 2022 | 315,053 | $ 4 | 360,826 | (24,905) | (20,872) |
Ending balance (in shares) at Sep. 30, 2022 | 41,977,814 | ||||
Beginning balance at Mar. 31, 2022 | 339,974 | $ 4 | 356,220 | (23,710) | 7,460 |
Beginning balance (in shares) at Mar. 31, 2022 | 41,677,664 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 1,326 | 1,326 | |||
Other comprehensive income, net of tax | (14,831) | (14,831) | |||
Stock-based compensation | 1,564 | 1,564 | |||
Net share settlements of stock-based awards | (91) | (91) | |||
Net share settlements of stock-based awards (in shares) | 92,253 | ||||
Net shares issued under management bonus plan (in shares) | 203,763 | ||||
Net share settlements under management bonus plan | 1,402 | 1,402 | |||
Ending balance at Jun. 30, 2022 | 329,344 | $ 4 | 359,095 | (22,384) | (7,371) |
Ending balance (in shares) at Jun. 30, 2022 | 41,973,680 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (2,521) | (2,521) | |||
Other comprehensive income, net of tax | (13,501) | (13,501) | |||
Stock-based compensation | 1,743 | 1,743 | |||
Net share settlements of stock-based awards | (12) | (12) | |||
Net share settlements of stock-based awards (in shares) | 4,134 | ||||
Ending balance at Sep. 30, 2022 | 315,053 | $ 4 | 360,826 | (24,905) | (20,872) |
Ending balance (in shares) at Sep. 30, 2022 | 41,977,814 | ||||
Beginning balance at Dec. 31, 2022 | $ 274,551 | $ 4 | 360,777 | (85,188) | (1,042) |
Beginning balance (in shares) at Dec. 31, 2022 | 41,994,355 | 41,994,355 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | $ (19,797) | (19,797) | |||
Other comprehensive income, net of tax | 4,404 | 4,404 | |||
Stock-based compensation | 1,792 | 1,792 | |||
Net share settlements of stock-based awards | (405) | (405) | |||
Net share settlements of stock-based awards (in shares) | 250,611 | ||||
Ending balance at Mar. 31, 2023 | 260,545 | $ 4 | 362,164 | (104,985) | 3,362 |
Ending balance (in shares) at Mar. 31, 2023 | 42,244,966 | ||||
Beginning balance at Dec. 31, 2022 | $ 274,551 | $ 4 | 360,777 | (85,188) | (1,042) |
Beginning balance (in shares) at Dec. 31, 2022 | 41,994,355 | 41,994,355 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | $ (30,744) | ||||
Other comprehensive income, net of tax | (1,665) | ||||
Ending balance at Sep. 30, 2023 | $ 247,678 | $ 4 | 366,313 | (115,932) | (2,707) |
Ending balance (in shares) at Sep. 30, 2023 | 42,797,861 | 42,797,861 | |||
Beginning balance at Mar. 31, 2023 | $ 260,545 | $ 4 | 362,164 | (104,985) | 3,362 |
Beginning balance (in shares) at Mar. 31, 2023 | 42,244,966 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (5,517) | (5,517) | |||
Other comprehensive income, net of tax | (1,727) | (1,727) | |||
Stock-based compensation | 2,883 | 2,883 | |||
Net share settlements of stock-based awards | (349) | (349) | |||
Net share settlements of stock-based awards (in shares) | 217,929 | ||||
Ending balance at Jun. 30, 2023 | 255,835 | $ 4 | 364,698 | (110,502) | 1,635 |
Ending balance (in shares) at Jun. 30, 2023 | 42,462,895 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Transfer of Private Warrants to Public Warrants | 133 | 133 | |||
Net (loss) income | (5,430) | (5,430) | |||
Other comprehensive income, net of tax | (4,342) | (4,342) | |||
Stock-based compensation | 2,172 | 2,172 | |||
Net share settlements of stock-based awards | (690) | (690) | |||
Net share settlements of stock-based awards (in shares) | 334,966 | ||||
Ending balance at Sep. 30, 2023 | $ 247,678 | $ 4 | $ 366,313 | $ (115,932) | $ (2,707) |
Ending balance (in shares) at Sep. 30, 2023 | 42,797,861 | 42,797,861 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating activities | ||
Net (loss) income | $ (30,744) | $ 1,531 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Stock-based compensation | 7,340 | 4,957 |
Depreciation | 5,038 | 4,324 |
Amortization of intangible assets | 13,989 | 13,998 |
Deferred income taxes | 686 | (4,586) |
Amortization of inventory fair value adjustments | 0 | (2,537) |
Amortization of debt issuance costs and original issue discount | 1,664 | 1,450 |
Change in fair value of warrant liabilities | (75) | (1,240) |
Changes in current assets and liabilities: | ||
Accounts receivable | (1,733) | (3,746) |
Inventories | 952 | (20,926) |
Prepaid expenses and other current assets | 1,348 | (1,972) |
Accounts payable, accrued liabilities and income taxes | 10,972 | (5,196) |
Other, net | 1,178 | (3,321) |
Net cash provided by (used in) operating activities | 10,615 | (17,264) |
Investing activities | ||
Capital expenditures | (4,112) | (6,947) |
Proceeds from the sale of fixed assets | 18 | 50 |
Net cash used in investing activities | (4,094) | (6,897) |
Financing activities | ||
Proceeds from revolving credit facility | 0 | 54,000 |
Repayments of revolving credit facility | (6,000) | 0 |
Repayments of long-term borrowings | (2,813) | (2,812) |
Debt issuance costs | (447) | (682) |
Payment of contingent consideration | 0 | (29,108) |
Tax withholdings related to net share settlements of stock awards | (1,444) | (874) |
Net cash (used in) provided by financing activities | (10,704) | 20,524 |
Effect of exchange rate changes on cash and cash equivalents | (244) | (3,813) |
Net change in cash and cash equivalents | (4,427) | (7,450) |
Cash and cash equivalents, beginning of period | 28,676 | 28,296 |
Cash and cash equivalents, end of period | 24,249 | 20,846 |
Supplemental disclosure of cash flow information | ||
Interest paid | 31,323 | 19,161 |
Taxes paid, net of refunds | $ 3,844 | $ 7,510 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: BASIS OF PRESENTATION 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 has a global platform of branded products and ingredients, focused on the consumer transition towards natural alternatives and clean label products. 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 “Business Combination”) 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 Worldwide”), and (ii) certain assets and liabilities of Merisant and Mafco Worldwide 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 Business Combination, the Company issued an aggregate of 7,500,000 shares of Whole Earth Brands common stock and 5,263,500 private placement warrants (the “Private 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 Business Combination, for accounting purposes, Act II was deemed to be the acquirer and Mafco Worldwide and Merisant Company were deemed to be the acquired parties. Basis of Presentation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2022 was derived from the audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of September 30, 2023 and the results of operations and cash flows for all periods presented. All adjustments in the accompanying unaudited condensed 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. Principles of Consolidation —The condensed consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries. 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 condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Reclassifications —Certain previously reported amounts have been reclassified to conform to the current presentation. Recently Adopted Accounting Pronouncements —The Company qualifies as an emerging growth company (an “EGC”) and as such, has elected 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. 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 model should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. This guidance also includes enhanced requirements for disclosures related to credit loss estimates. 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. The Company adopted this standard on January 1, 2023. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures and a cumulative-effect adjustment was not deemed necessary. Warrant Liabilities —The Company accounts for the Private Warrants in accordance with ASC Topic 815, “Derivatives and Hedging.” Under the guidance contained in ASC Topic 815-40, the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the Company’s statement of operations. Derivative Instruments —The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates. The Company uses derivative financial instruments, including interest rate swaps, to manage interest rate exposures and hedge the variability of interest payments on future debt obligations. The Company does not use derivative financial instruments for trading or speculative purposes. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking hedge transactions. This process includes linking the derivatives designated as cash flow hedges to specific forecasted transactions or variability of cash flows. The Company also formally assesses, both at the inception of a hedge transaction and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flow of the hedged items as well as monitors the credit worthiness of the counterparties to ensure no issues exist which would affect the value of the derivatives. When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, the Company discontinues hedge accounting prospectively and reclassifies any hedge related gains or losses previously recorded in other comprehensive income (loss) to other expense (income) within the statement of operations. To the extent the hedge is effective, the Company records derivative financial instruments at fair value in its condensed consolidated balance sheet and changes in the fair value are recorded in accumulated other comprehensive income (loss) and reclassified to earnings when the hedged item affects earnings. Cash flows from derivative instruments are classified in the condensed consolidated statements of cash flows based on the nature of the derivative contract. Additional information pertaining to the Company’s derivative instruments is provided in Note 7. No other significant accounting policies and estimates have changed from those detailed in Note 1 to the Company’s audited consolidated and combined financial statements for the year ended December 31, 2022. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 2: BUSINESS COMBINATION On December 17, 2020, the Company entered into a stock purchase agreement (the “Wholesome Purchase Agreement”) with WSO Investments, Inc. (“WSO Investments” and together with its subsidiaries, “Wholesome” and affiliates). WSO Investments is the direct parent of its wholly-owned subsidiary Wholesome Sweeteners, Incorporated, which was formed to import, market, distribute, and sell organic sugars, unrefined specialty sugars, and related products. Wholesome is included within the Company’s Branded CPG reportable segment. Wholesome’s results are included in the Company’s consolidated statement of operations from the date of acquisition. On February 5, 2021, pursuant to the terms of the Wholesome Purchase Agreement, the Company purchased and acquired all of the issued and outstanding shares of capital stock for an initial cash purchase price of $180 million plus up to an additional $55 million (the “Earn-Out Amount”) upon the satisfaction of certain post-closing financial metrics. Subject to the terms and conditions of the Wholesome Purchase Agreement, payment of the Earn-Out Amount, in whole or in part, was subject to Wholesome achieving certain EBITDA thresholds at or above approximately $30 million during the period beginning August 29, 2020, and ending December 31, 2021 (the “Earn-Out Period”). A portion of the Earn-Out Amount (up to $27.5 million) could be paid, at the Company’s election, in freely tradeable, registered shares of Company common stock calculated using the 20-day volume weighted average trading price per share as of the date of determination. Calculation of the achievement of the Earn-Out Amount was subject to certain adjustments more thoroughly described in the Wholesome Purchase Agreement. Following the completion of the Earn-Out Period, the Company determined, in accordance with the terms of the Purchase Agreement, that the sellers were entitled to receive the Earn-Out Amount in full. The Company elected to satisfy part of the Earn-Out Amount in common stock and on February 23, 2022, issued 2,659,574 shares of the Company’s common stock. The remaining $30 million portion of the $55 million Earn-Out Amount was paid in cash which was funded from available capacity under the Company’s revolving credit facility. The settlement of the earn-out resulted in a non-cash gain of $1.1 million that was recorded in the first quarter of 2022 which represents the difference in the value of the common stock issued using the 20-day volume weighted average trading price per share as compared to the trading price on the date of issuance. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3: INVENTORIES Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials and supplies $ 133,231 $ 129,131 Work in process 1,696 1,835 Finished goods 81,876 88,009 Total inventories $ 216,803 $ 218,975 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangible assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Gross Accumulated Net Gross Accumulated Net Other intangible assets subject to amortization Customer relationships (useful life of 5 to 10 years) $ 105,150 $ (34,921) $ 70,229 $ 105,298 $ (26,137) $ 79,161 Tradenames (useful life of 25 years) 170,801 (20,541) 150,260 171,013 (15,498) 155,515 Total $ 275,951 $ (55,462) 220,489 $ 276,311 $ (41,635) 234,676 Other intangible assets not subject to amortization Product formulations 10,700 10,700 Total other intangible assets, net 231,189 245,376 Goodwill 192,506 193,139 Total goodwill and other intangible assets $ 423,695 $ 438,515 At September 30, 2023 and December 31, 2022, goodwill at Branded CPG was $188.9 million and $189.5 million, respectively. At September 30, 2023 and December 31, 2022, goodwill at Flavors & Ingredients was $3.6 million and $3.7 million, respectively. The change in the goodwill balances is due to fluctuations in foreign exchange rates. The amortization expense for intangible assets was $4.6 million and $14.0 million for the three and nine months ended September 30, 2023, respectively, and $4.6 million and $14.0 million for the three and nine months ended September 30, 2022, respectively. Amortization expense relating to amortizable intangible assets as of September 30, 2023 for the next five years is expected to be as follows (in thousands): Remainder of 2023 $ 4,718 2024 18,708 2025 18,464 2026 18,234 2027 17,017 2028 15,024 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 5: DEBT Debt consisted of the following (in thousands): September 30, 2023 December 31, 2022 Term loan, due 2028 $ 365,625 $ 368,438 Revolving credit facility, due 2026 70,000 76,000 Less: current portion (3,750) (3,750) Less: unamortized discount and debt issuance costs (7,395) (8,516) Total long-term debt $ 424,480 $ 432,172 Loan Agreement —At both September 30, 2023 and December 31, 2022, the Company’s senior secured loan agreement consisted of a senior secured term loan facility (the “Term Loan Facility”) of $375 million and a revolving credit facility of up to $125 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Credit Facilities”). As of September 30, 2023 and December 31, 2022, term loan borrowings were $358.2 million and $359.9 million, respectively, net of unamortized discount and debt issuance costs of $7.4 million and $8.5 million, respectively. There were $70.0 million and $76.0 million of borrowings under the revolving credit facility as of September 30, 2023 and December 31, 2022, respectively. Additionally, as of September 30, 2023 and December 31, 2022, the Company’s unamortized debt issuance costs related to the revolving credit facility were $1.9 million and $2.0 million, respectively, which are included in other assets in the condensed consolidated balance sheet. As of September 30, 2023 and December 31, 2022, there were $2.8 million and $2.1 million, respectively, of outstanding letters of credit that reduced the Company’s availability under the revolving credit facility. See Note 7 to the Company’s consolidated and combined financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022 for further information and significant terms and conditions associated with the Term Loan Facility and Revolving Facility. As further described in Note 2, following the completion of the Wholesome Earn-Out Period, the Company determined, in accordance with the terms of the Purchase Agreement, that the sellers were entitled to receive the Earn-Out Amount in full. The Company elected to satisfy part of the Earn-Out Amount in common stock and on February 23, 2022, issued 2,659,574 shares of the Company’s common stock. The remaining $30 million portion of the $55 million Earn-Out Amount was paid in cash which was funded from available capacity under the Company’s revolving credit facility. On June 15, 2022, the Company and certain of its subsidiaries entered into a first amendment (the “First Amendment”) to the Amended and Restated Loan Agreement dated as of February 5, 2021 (the “Amended and Restated Loan Agreement”). The First Amendment increased the aggregate principal amount of the Revolving Credit Facility from $75 million to $125 million (the “Amended Revolving Credit Facility”) and transitioned from LIBOR to Secured Overnight Financing Rate (“SOFR”) as the benchmark for purposes of calculating interest for all loans outstanding under the Amended and Restated Loan Agreement. At the election of the Company, loans outstanding under the Amended and Restated Loan Agreement will accrue interest at a rate per annum equal to (i) term SOFR plus 0.10%, 0.15%, or 0.25% in case of, respectively, a one-month, three-month, or six-month interest period (“Adjusted Term SOFR”), or (ii) the greater of the prime rate, the federal funds effective rate plus 0.50%, and one-month Adjusted Term SOFR plus 1.00%, in each case plus the applicable margin which is equal to (i) with respect to Amended Revolving Credit Facility and letters of credit, (A) 2.75%, in the case of base rate advances, and (B) 3.75% in the case of SOFR advances, and (ii) with respect to the Term Loan Facility, (A) 3.50%, in the case of base rate advances, and (B) 4.50% in the case of SOFR advances, with a SOFR floor of 1.00%. In connection with the Amendment, the Company paid fees and incurred transaction costs of $0.7 million, all of which was deferred. The transition to SOFR did not materially impact the interest rates applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Amended and Restated Loan Agreement as a result of the First Amendment. On April 24, 2023, the Company and certain of its subsidiaries entered into a second amendment (the “Second Amendment”) to the Amended and Restated Loan Agreement. The Second Amendment changed the maximum consolidated total leverage ratio covenant as follows: (i) the consolidated total leverage ratio will temporarily increase by 0.25 turns for the first quarter of 2023, 0.5 turns on a quarterly basis through the fourth quarter of 2023, and 0.25 turns in the first quarter of 2024; and (ii) beginning in the second quarter of 2024, the consolidated total leverage ratio will return to a level not to exceed 5.5x. No other material changes were made in terms of the Company’s Amended and Restated Agreement as a result of the Second Amendment. On October 5, 2023, the Company and certain of its subsidiaries entered into a third amendment (the “Third Amendment”) to the Amended and Restated Loan Agreement. The Third Amendment revised a clause in the definition of consolidated EBITDA used for determining compliance with financial covenants effective beginning with the second quarter of 2023 through the first quarter of 2024. The amendment did not impact the calculation of consolidated EBITDA previously determined for the second quarter of 2023. |
WARRANTS
WARRANTS | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities [Abstract] | |
WARRANTS | NOTE 6: WARRANTSAs of the date of the Business Combination, the Company had approximately 20,263,500 warrants outstanding, consisting of (i) 15,000,000 public warrants originally sold as part of the units issued in Act II’s initial public offering (the “Public Warrants”) and (ii) 5,263,500 Private Warrants that were sold by Act II to the PIPE Investors in conjunction with the Business Combination (collectively with the Public Warrants, the “Warrants”). Each warrant is exercisable for one-half of one share of the Company’s common stock at a price of $11.50 per whole share, subject to adjustment. Warrants may only be exercised for a whole number of shares as no fractional shares will be issued. As of September 30, 2023 and December 31, 2022, the Company had 20,193,120 and 19,491,320 Public Warrants outstanding, respectively, and 70,180 and 771,980 Private Warrants outstanding, respectively. There were no Warrants exercised for shares of the Company’s common stock in the nine months ended September 30, 2023 and 2022. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 7: FAIR VALUE MEASUREMENTS 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. On June 9, 2023, the Company entered into an interest rate swap with a notional value of $183.3 million that matures on February 5, 2026 to exchange variable for fixed rate interest payments related to the Term Loan Facility. The effective date of the interest rate swap was June 30, 2023. The interest rate swap is designated as a cash flow hedge and is considered highly effective. As a result, no ineffectiveness has been recognized in the condensed consolidated statement of operations during the three and nine months ended September 30, 2023. As of September 30, 2023, the fair value of the interest rate swap was recorded in other assets in the condensed consolidated balance sheet in the amount of approximately $2.0 million with the unrealized gain recognized in other comprehensive income (loss). The change in fair value will subsequently be reclassified from other comprehensive income (loss) to interest expense, net in the periods when the hedge transaction affects earnings. Realized gains, net of tax of $0.3 million were reclassified to net income in the three and nine months ended September 30, 2023. As of September 30, 2023, the Company expects approximately $1.9 million of the unrealized gain to be reclassified from other comprehensive income (loss) to interest expense, net over the next twelve months. The interest rate swap fair value is considered Level 2 within the fair value hierarchy as it includes quoted market prices for similar instruments as well as interest rates and yield curves that are observable in the market. 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. Investment in securities —The Company has assets in an investment fund that holds surplus funds from its terminated qualified pension plan that will be used to fund future contributions to the defined contribution plan at Flavors & Ingredients and is presented in other assets in the condensed consolidated balance sheet. The investment is classified as available-for-sale and carried at fair market value. At September 30, 2023, both the estimated fair value and cost basis of the investment fund was $2.3 million and utilized Level 2 inputs. Debt —The Company measures its term loan and revolving facilities at original carrying value, net of unamortized deferred financing costs and fees. At September 30, 2023, the estimated fair value of the term loan was $332.7 million as compared to a carrying value of $358.2 million. At December 31, 2022, the estimated fair value of the term loan was $338.0 million as compared to a carrying value of $359.9 million. The estimated fair value of the outstanding principal balance of the term loan utilized Level 2 inputs as it is based on quoted market prices for identical or similar instruments. The fair value of the revolving facility at both September 30, 2023 and December 31, 2022 approximated carrying value. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 condensed consolidated financial position or results of operations. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9: INCOME TAXES 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 the earnings in the various locations at their applicable statutory tax rates. The Company’s income tax provision was $0.5 million for the three months ended September 30, 2023, which includes a discrete tax benefit of $0.6 million related primarily to the finalization of the Company’s 2022 U.S. federal tax return and certain foreign tax returns during the quarter ended September 30, 2023. The effective tax rate for the three months ended September 30, 2023 was (10.7%) on a pre-tax loss of $4.9 million. The effective tax rate differs from the statutory federal rate of 21% primarily due to an increase in the valuation allowance related to interest expense for which deductibility is limited under IRC §163(j), foreign income at different rates, non-deductible permanent differences, state and local taxes, and the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period, partially offset with the discrete tax benefit described above. The Company’s income tax provision was $9.2 million for the nine months ended September 30, 2023, which includes a discrete tax provision of $0.6 million primarily related to tax expense for a shortfall of the tax benefits on stock-based awards that have vested and the remeasurement of state deferred tax assets as a result of state law changes enacted during the first nine months of 2023, offset by the $0.6 million tax benefit related to the finalization of the Company’s 2022 U.S. federal tax return and foreign tax returns during the quarter ended September 30, 2023. The effective tax rate for the nine months ended September 30, 2023 was (43.0%) on a pre-tax loss of $21.5 million which differs from the statutory federal rate of 21% primarily due to an increase in the valuation allowance related to interest expense for which deductibility is limited under IRC §163(j), foreign income at different rates, non-deductible permanent differences, state and local taxes, the U.S. tax effect of international operations including GILTI recorded during the period, and the discrete tax provision described above. The Company’s income tax provision was $1.4 million for the three months ended September 30, 2022, which includes a discrete tax provision of $0.4 million related primarily to the finalization of the Company’s 2021 U.S. federal and state tax returns during the quarter ended September 30, 2022. The effective tax rate for the three months ended September 30, 2022 was (126.3%) on pre-tax loss of $1.1 million which differs from the statutory federal rate of 21% primarily due to state and local taxes, non-deductible permanent differences, limited benefit on current year interest deductions and losses in certain jurisdictions, the change in the fair value of warrant liabilities, foreign income at different rates and the U.S. tax effect of international operations including GILTI recorded during the period, and the discrete tax provision described above. The Company’s income tax provision was $3.4 million for the nine months ended September 30, 2022, which includes a discrete tax provision of $0.5 million related primarily to the finalization of the Company’s 2021 U.S. federal and state tax returns during the quarter ended September 30, 2022. The effective tax rate for the nine months ended September 30, 2022 was an income tax provision of 68.7% on pre-tax income of $4.9 million which differs from the statutory federal rate of 21% primarily due to state and local taxes, non-deductible permanent differences, limited benefit on current year interest deductions and losses in certain jurisdictions, the change in the fair value of warrant liabilities, foreign income at different rates and the U.S. tax effect of international operations including GILTI recorded during the period, and the discrete tax provision described above. At both September 30, 2023 and December 31, 2022, the Company had an uncertain tax position liability of $0.2 million, including interest and penalties. The unrecognized tax benefits include amounts related primarily to various state tax issues. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 10: STOCK-BASED COMPENSATION On June 24, 2020, the Whole Earth Brands, Inc. 2020 Long-Term Incentive Plan (the “2020 Plan”) was approved for the purpose of promoting the long-term financial interests and growth of the Company and its subsidiaries by attracting and retaining management and other personnel and key service providers. On June 8, 2023, the Company’s stockholders’ approved the Amended and Restated Whole Earth Brands, Inc. 2020 Long-Term Incentive Plan (the “Amended 2020 Plan”), which increased the number of shares authorized under the Amended 2020 Plan by 4,000,000 shares. Subsequent to the amendment and restatement, an aggregate of 13,300,000 shares of common stock are authorized for issuance under the Amended 2020 Plan. The Plan provides for the granting of stock options (“SOs”), stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, performance share units (“PSUs”) and other stock-based awards to officers, employees and non-employee directors of, and certain other service providers to, the Company and its subsidiaries. These awards are settled in shares of the Company’s stock and therefore classified as equity awards. RSUs generally vest ratably on the anniversary of the grant date over a period of one PSU awards generally cliff vest subsequent to the completion of the cumulative three-year performance period, depending on the period specified in each respective PSU agreement. The number of PSUs that ultimately vest depends on the Company’s performance relative to specified cumulative financial targets established for each grant and are expected to be settled in stock. Stock-based compensation expense for the three and nine months ended September 30, 2023 was $2.5 million and $7.3 million, respectively. Stock-based compensation expense for the three and nine months ended September 30, 2022 was $1.7 million and $5.0 million, respectively. A summary of activity and weighted average fair values related to the RSUs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 1,538,759 $ 6.65 Granted 3,014,658 2.56 Vested (1,205,687) 6.29 Forfeited (361,178) 3.99 Outstanding and nonvested at September 30, 2023 2,986,552 $ 3.02 A summary of activity and weighted average fair values related to the RSAs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 131,470 $ 8.75 Granted 141,280 4.07 Vested (14,862) 8.75 Outstanding and nonvested at September 30, 2023 257,888 $ 6.18 A summary of activity and weighted average fair values related to the PSUs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 631,377 $ 8.49 Granted 1,934,388 2.20 Forfeited (209,885) 4.73 Outstanding and nonvested at September 30, 2023 2,355,880 $ 3.66 As of September 30, 2023, the Company had not yet recognized compensation costs on nonvested awards as follows (in thousands): Unrecognized Compensation Cost Weighted Avg. Remaining Recognition Period (in years) Nonvested awards $ 9,976 1.33 The nonvested awards excludes unvested PSUs that are deemed not probable of vesting constituting $4.7 million of unrecognized compensation expense at September 30, 2023. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 11: EARNINGS PER SHARE Basic earnings (loss) per common share (“EPS”) is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Warrants issued are not considered outstanding at the date of issuance. RSUs and RSAs also are not considered outstanding until they have vested. Contingently issuable shares associated with outstanding PSUs that have cliff vesting based on achievement of a performance condition were not included in the earnings per share calculations for the periods presented as the applicable vesting conditions had not been satisfied. Diluted EPS is calculated by dividing net income (loss) by the weighted average shares outstanding assuming dilution. Dilutive common shares outstanding is computed using the treasury stock method and reflects the additional shares that would be outstanding if dilutive warrants were exercised and restricted stock units and restricted stock awards were settled for common shares during the period. For warrants that are liability-classified, during the periods when the impact would be dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in the fair value of warrant liability and adjusts the denominator to include the dilutive shares using the treasury stock method. The computation of basic and diluted earnings (loss) per common share is shown below (in thousands, except for share and per share data): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 EPS numerator: Net (loss) income attributable to common shareholders $ (5,430) $ (2,521) $ (30,744) $ 1,531 EPS denominator: Weighted average shares outstanding - basic 42,683,990 41,976,865 42,361,816 41,311,366 Effect of dilutive securities — — — 17,719 Weighted average shares outstanding - diluted 42,683,990 41,976,865 42,361,816 41,329,085 Net (loss) earnings per share: Basic $ (0.13) $ (0.06) $ (0.73) $ 0.04 Diluted $ (0.13) $ (0.06) $ (0.73) $ 0.04 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2023 | |
AOCI Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 12: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes accumulated other comprehensive income (loss) (“AOCI”), net of taxes, by component (in thousands): Net Currency Translation Gains (Losses) Cash Flow Hedges Funded Status of Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2021 $ 8,758 $ — $ 929 $ 9,687 Other comprehensive loss before reclassifications (2,003) — — (2,003) Amounts reclassified from AOCI — — (224) (224) Balance at March 31, 2022 6,755 — 705 7,460 Other comprehensive loss before reclassifications (14,848) — — (14,848) Amounts reclassified from AOCI — — 17 17 Balance at June 30, 2022 (8,093) — 722 (7,371) Other comprehensive loss before reclassifications (13,522) — — (13,522) Amounts reclassified from AOCI — — 21 21 Balance at September 30, 2022 $ (21,615) $ — $ 743 $ (20,872) Balance at December 31, 2022 $ (4,711) $ — $ 3,669 $ (1,042) Other comprehensive income before reclassifications 4,416 — — 4,416 Amounts reclassified from AOCI — — (12) (12) Balance at March 31, 2023 (295) — 3,657 3,362 Other comprehensive (loss) income before reclassifications (2,371) 655 — (1,716) Amounts reclassified from AOCI — — (11) (11) Balance at June 30, 2023 (2,666) 655 3,646 1,635 Other comprehensive (loss) income before reclassifications (5,140) 1,149 — (3,991) Amounts reclassified from AOCI — (339) (12) (351) Balance at September 30, 2023 $ (7,806) $ 1,465 $ 3,634 $ (2,707) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 13: RELATED PARTY TRANSACTIONSIn December 2019, Wholesome entered into a partnership agreement to form WS Services, LLC (“WS Services”), in which Wholesome received a 50% interest and accounts for the partnership as an equity method investment. Wholesome’s investment in the partnership, which is classified as other assets in the condensed consolidated balance sheet, was $0.7 million as of both September 30, 2023 and December 31, 2022. During the three and nine months ended September 30, 2023 and 2022, the Company expensed $0.1 million, $0.5 million, $0.2 million, and $0.7 million respectively, related to costs incurred by WS Services for Wholesome’s use of a warehouse space for storage of raw materials. The Company has a liability to WS Services of approximately $0.1 million as of both September 30, 2023 and December 31, 2022. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 14: BUSINESS SEGMENTS The Company has two reportable segments: Branded CPG and Flavors & Ingredients. In addition, the Company’s corporate office functions are reported and included under Corporate. Corporate is not a reportable or operating segment but is included for reconciliation purposes and includes the costs for the corporate office administrative activities as well as transaction-related and other costs. 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): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Product revenues, net Branded CPG $ 103,270 $ 105,373 $ 307,581 $ 313,207 Flavors & Ingredients 31,160 29,907 92,168 86,168 Total product revenues, net $ 134,430 $ 135,280 $ 399,749 $ 399,375 Operating income Branded CPG $ 7,202 $ 5,518 $ 7,820 $ 17,555 Flavors & Ingredients 8,448 7,287 26,989 24,137 15,650 12,805 34,809 41,692 Corporate (8,989) (5,983) (22,098) (20,115) Total operating income $ 6,661 $ 6,822 $ 12,711 $ 21,577 The following table presents disaggregated revenue information for the Company (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Branded CPG: North America $ 73,785 $ 75,823 $ 217,146 $ 220,071 Europe 17,326 15,223 52,986 51,479 India, Middle East and Africa 2,925 4,526 10,064 13,007 Asia-Pacific 5,207 5,607 16,519 17,650 Latin America 4,027 4,194 10,866 11,000 Flavors & Ingredients 31,160 29,907 92,168 86,168 Total product revenues, net $ 134,430 $ 135,280 $ 399,749 $ 399,375 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net (loss) income | $ (5,430) | $ (5,517) | $ (19,797) | $ (2,521) | $ 1,326 | $ 2,726 | $ (30,744) | $ 1,531 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2022 was derived from the audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. |
Principles of Consolidation | Principles of Consolidation —The condensed consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries. 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 condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
Reclassifications | Reclassifications —Certain previously reported amounts have been reclassified to conform to the current presentation. |
Recently Adopted Accounting Pronouncements and Accounting Standards Not Yet Adopted | Recently Adopted Accounting Pronouncements —The Company qualifies as an emerging growth company (an “EGC”) and as such, has elected 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. |
Warrant Liabilities | Warrant Liabilities—The Company accounts for the Private Warrants in accordance with ASC Topic 815, “Derivatives and Hedging.” Under the guidance contained in ASC Topic 815-40, the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the Company’s statement of operations. |
Derivatives, Policy | Derivative Instruments —The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates. The Company uses derivative financial instruments, including interest rate swaps, to manage interest rate exposures and hedge the variability of interest payments on future debt obligations. The Company does not use derivative financial instruments for trading or speculative purposes. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking hedge transactions. This process includes linking the derivatives designated as cash flow hedges to specific forecasted transactions or variability of cash flows. The Company also formally assesses, both at the inception of a hedge transaction and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flow of the hedged items as well as monitors the credit worthiness of the counterparties to ensure no issues exist which would affect the value of the derivatives. When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, the Company discontinues hedge accounting prospectively and reclassifies any hedge related gains or losses previously recorded in other comprehensive income (loss) to other expense (income) within the statement of operations. To the extent the hedge is effective, the Company records derivative financial instruments at fair value in its condensed consolidated balance sheet and changes in the fair value are recorded in accumulated other comprehensive income (loss) and reclassified to earnings when the hedged item affects earnings. Cash flows from derivative instruments are classified in the condensed consolidated statements of cash flows based on the nature of the derivative contract. Additional information pertaining to the Company’s derivative instruments is provided in Note 7. No other significant accounting policies and estimates have changed from those detailed in Note 1 to the Company’s audited consolidated and combined financial statements for the year ended December 31, 2022. |
Fair Value Measurements | 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. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials and supplies $ 133,231 $ 129,131 Work in process 1,696 1,835 Finished goods 81,876 88,009 Total inventories $ 216,803 $ 218,975 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Components of Goodwill and Other Intangible Assets | Goodwill and other intangible assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Gross Accumulated Net Gross Accumulated Net Other intangible assets subject to amortization Customer relationships (useful life of 5 to 10 years) $ 105,150 $ (34,921) $ 70,229 $ 105,298 $ (26,137) $ 79,161 Tradenames (useful life of 25 years) 170,801 (20,541) 150,260 171,013 (15,498) 155,515 Total $ 275,951 $ (55,462) 220,489 $ 276,311 $ (41,635) 234,676 Other intangible assets not subject to amortization Product formulations 10,700 10,700 Total other intangible assets, net 231,189 245,376 Goodwill 192,506 193,139 Total goodwill and other intangible assets $ 423,695 $ 438,515 |
Schedule of Amortization Expense | Amortization expense relating to amortizable intangible assets as of September 30, 2023 for the next five years is expected to be as follows (in thousands): Remainder of 2023 $ 4,718 2024 18,708 2025 18,464 2026 18,234 2027 17,017 2028 15,024 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Components of Debt | Debt consisted of the following (in thousands): September 30, 2023 December 31, 2022 Term loan, due 2028 $ 365,625 $ 368,438 Revolving credit facility, due 2026 70,000 76,000 Less: current portion (3,750) (3,750) Less: unamortized discount and debt issuance costs (7,395) (8,516) Total long-term debt $ 424,480 $ 432,172 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Activity Related to RSUs, RSAs and PSUs | A summary of activity and weighted average fair values related to the RSUs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 1,538,759 $ 6.65 Granted 3,014,658 2.56 Vested (1,205,687) 6.29 Forfeited (361,178) 3.99 Outstanding and nonvested at September 30, 2023 2,986,552 $ 3.02 A summary of activity and weighted average fair values related to the RSAs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 131,470 $ 8.75 Granted 141,280 4.07 Vested (14,862) 8.75 Outstanding and nonvested at September 30, 2023 257,888 $ 6.18 A summary of activity and weighted average fair values related to the PSUs is as follows: Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value (per share) Outstanding at December 31, 2022 631,377 $ 8.49 Granted 1,934,388 2.20 Forfeited (209,885) 4.73 Outstanding and nonvested at September 30, 2023 2,355,880 $ 3.66 |
Schedule of Unrecognized Compensation Cost on Nonvested Awards | As of September 30, 2023, the Company had not yet recognized compensation costs on nonvested awards as follows (in thousands): Unrecognized Compensation Cost Weighted Avg. Remaining Recognition Period (in years) Nonvested awards $ 9,976 1.33 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings (Loss) Per Common Share | The computation of basic and diluted earnings (loss) per common share is shown below (in thousands, except for share and per share data): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 EPS numerator: Net (loss) income attributable to common shareholders $ (5,430) $ (2,521) $ (30,744) $ 1,531 EPS denominator: Weighted average shares outstanding - basic 42,683,990 41,976,865 42,361,816 41,311,366 Effect of dilutive securities — — — 17,719 Weighted average shares outstanding - diluted 42,683,990 41,976,865 42,361,816 41,329,085 Net (loss) earnings per share: Basic $ (0.13) $ (0.06) $ (0.73) $ 0.04 Diluted $ (0.13) $ (0.06) $ (0.73) $ 0.04 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
AOCI Attributable to Parent [Abstract] | |
Summary of Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax | The following table summarizes accumulated other comprehensive income (loss) (“AOCI”), net of taxes, by component (in thousands): Net Currency Translation Gains (Losses) Cash Flow Hedges Funded Status of Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2021 $ 8,758 $ — $ 929 $ 9,687 Other comprehensive loss before reclassifications (2,003) — — (2,003) Amounts reclassified from AOCI — — (224) (224) Balance at March 31, 2022 6,755 — 705 7,460 Other comprehensive loss before reclassifications (14,848) — — (14,848) Amounts reclassified from AOCI — — 17 17 Balance at June 30, 2022 (8,093) — 722 (7,371) Other comprehensive loss before reclassifications (13,522) — — (13,522) Amounts reclassified from AOCI — — 21 21 Balance at September 30, 2022 $ (21,615) $ — $ 743 $ (20,872) Balance at December 31, 2022 $ (4,711) $ — $ 3,669 $ (1,042) Other comprehensive income before reclassifications 4,416 — — 4,416 Amounts reclassified from AOCI — — (12) (12) Balance at March 31, 2023 (295) — 3,657 3,362 Other comprehensive (loss) income before reclassifications (2,371) 655 — (1,716) Amounts reclassified from AOCI — — (11) (11) Balance at June 30, 2023 (2,666) 655 3,646 1,635 Other comprehensive (loss) income before reclassifications (5,140) 1,149 — (3,991) Amounts reclassified from AOCI — (339) (12) (351) Balance at September 30, 2023 $ (7,806) $ 1,465 $ 3,634 $ (2,707) |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
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): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Product revenues, net Branded CPG $ 103,270 $ 105,373 $ 307,581 $ 313,207 Flavors & Ingredients 31,160 29,907 92,168 86,168 Total product revenues, net $ 134,430 $ 135,280 $ 399,749 $ 399,375 Operating income Branded CPG $ 7,202 $ 5,518 $ 7,820 $ 17,555 Flavors & Ingredients 8,448 7,287 26,989 24,137 15,650 12,805 34,809 41,692 Corporate (8,989) (5,983) (22,098) (20,115) Total operating income $ 6,661 $ 6,822 $ 12,711 $ 21,577 |
Summary of Disaggregated Revenue Information | The following table presents disaggregated revenue information for the Company (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Branded CPG: North America $ 73,785 $ 75,823 $ 217,146 $ 220,071 Europe 17,326 15,223 52,986 51,479 India, Middle East and Africa 2,925 4,526 10,064 13,007 Asia-Pacific 5,207 5,607 16,519 17,650 Latin America 4,027 4,194 10,866 11,000 Flavors & Ingredients 31,160 29,907 92,168 86,168 Total product revenues, net $ 134,430 $ 135,280 $ 399,749 $ 399,375 |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Jun. 25, 2020 | Sep. 30, 2023 | Sep. 30, 2022 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Conversion basis for conversion of the then-issued and outstanding ordinary shares of predecessor into successor shares (in shares) | 1 | ||
Private placement warrants issued (in shares) | 5,263,500 | ||
Shares called upon by private placement warrants (in shares) | 2,631,750 | ||
Change in fair value of warrant liabilities | $ (75) | $ (1,240) | |
Common Stock | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Shares issued (in shares) | 7,500,000 |
BUSINESS COMBINATIONS - Narrati
BUSINESS COMBINATIONS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 23, 2022 | Feb. 05, 2021 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||||
Payment of contingent consideration | $ 0 | $ 29,108 | |||
Wholesome | |||||
Business Acquisition [Line Items] | |||||
Payments to Acquire Businesses, Gross | $ 180,000 | ||||
Additional earn-out amounts | $ 55,000 | 55,000 | |||
EBITDA Threshold | 30,000 | ||||
Earn-out amounts payable in common stock | $ 27,500 | ||||
Weighted average trading price period | 20 days | ||||
Shares issued (in shares) | 2,659,574 | ||||
Payment of contingent consideration | $ 30,000 | ||||
Gain on settlement of contingent consideration liability | $ 1,100 |
INVENTORIES - Summary of Invent
INVENTORIES - Summary of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 133,231 | $ 129,131 |
Work in process | 1,696 | 1,835 |
Finished goods | 81,876 | 88,009 |
Total inventories | $ 216,803 | $ 218,975 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, gross amount | $ 275,951 | $ 276,311 |
Other intangible assets subject to amortization, accumulated amortization | (55,462) | (41,635) |
Other intangible assets subject to amortization, net amount | 220,489 | 234,676 |
Total other intangible assets, net | 231,189 | 245,376 |
Goodwill | 192,506 | 193,139 |
Total goodwill and other intangible assets | 423,695 | 438,515 |
Product formulations | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets not subject to amortization | 10,700 | 10,700 |
Customer Relationships | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, gross amount | 105,150 | 105,298 |
Other intangible assets subject to amortization, accumulated amortization | (34,921) | (26,137) |
Other intangible assets subject to amortization, net amount | $ 70,229 | 79,161 |
Customer Relationships | Minimum | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Useful life (in years) | 5 years | |
Customer Relationships | Maximum | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, Useful life (in years) | 10 years | |
Trade Names | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Other intangible assets subject to amortization, gross amount | $ 170,801 | 171,013 |
Other intangible assets subject to amortization, accumulated amortization | (20,541) | (15,498) |
Other intangible assets subject to amortization, net amount | $ 150,260 | $ 155,515 |
Other intangible assets subject to amortization, Useful life (in years) | 25 years |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Goodwill [Line Items] | |||||
Goodwill | $ 192,506 | $ 192,506 | $ 193,139 | ||
Amortization of intangible assets | 4,641 | $ 4,629 | 13,989 | $ 13,998 | |
Branded CPG | |||||
Goodwill [Line Items] | |||||
Goodwill | 188,900 | 188,900 | 189,500 | ||
Flavors & Ingredients | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 3,600 | $ 3,600 | $ 3,700 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization Expense (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2022 | $ 4,718 |
2023 | 18,708 |
2024 | 18,464 |
2025 | 18,234 |
2026 | 17,017 |
2027 | $ 15,024 |
DEBT - Components of Debt (Deta
DEBT - Components of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Less: current portion | $ (3,750) | $ (3,750) |
Less: unamortized discount and debt issuance costs | (7,395) | (8,516) |
Long-term debt | 424,480 | 432,172 |
Secured Debt | Senior secured first lien term loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 365,625 | 368,438 |
First lien revolving loan facility | First Lien Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 70,000 | $ 76,000 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||||||
Jun. 15, 2022 USD ($) | Feb. 23, 2022 USD ($) shares | Sep. 30, 2024 | Sep. 30, 2023 USD ($) | Dec. 31, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Apr. 01, 2024 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Feb. 05, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||||||
Payment of contingent consideration | $ 0 | $ 29,108,000 | |||||||||
Wholesome | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Shares issued (in shares) | shares | 2,659,574 | ||||||||||
Payment of contingent consideration | $ 30,000,000 | ||||||||||
Additional earn-out amounts | $ 55,000,000 | $ 55,000,000 | |||||||||
Credit Facilities | One Month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 0.10% | ||||||||||
Credit Facilities | Three Month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 0.15% | ||||||||||
Credit Facilities | Six Month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 0.25% | ||||||||||
Credit Facilities | Fed Funds Effective Rate Overnight Index Swap Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 0.50% | ||||||||||
Credit Facilities | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 1% | ||||||||||
Amended Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Payments of fees to lenders | $ 700,000 | ||||||||||
Secured Debt | Senior secured first lien term loan facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Face amount | $ 375,000,000 | 375,000,000 | $ 375,000,000 | ||||||||
Debt issuance costs | 7,400,000 | 7,400,000 | 8,500,000 | ||||||||
Long-term debt | 358,200,000 | 358,200,000 | 359,900,000 | ||||||||
Secured Debt | Senior secured first lien term loan facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 4.50% | ||||||||||
Secured Debt | Senior secured first lien term loan facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 1% | ||||||||||
Secured Debt | Senior secured first lien term loan facility | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 3.50% | ||||||||||
First lien revolving loan facility | First Lien Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | 125,000,000 | 125,000,000 | 125,000,000 | ||||||||
Outstanding letter of credit | 2,100,000 | ||||||||||
Issuance costs capitalized | 2,000,000 | ||||||||||
Long-term line of credit | 70,000,000 | 70,000,000 | $ 76,000,000 | ||||||||
First lien revolving loan facility | Amended Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | $ 125,000,000 | ||||||||||
Outstanding letter of credit | 2,800,000 | 2,800,000 | |||||||||
Debt issuance costs | $ 1,900,000 | $ 1,900,000 | |||||||||
First lien revolving loan facility | Amended Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 3.75% | ||||||||||
First lien revolving loan facility | Amended Revolving Credit Facility | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate | 2.75% | ||||||||||
First lien revolving loan facility | Revolving Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Face amount | $ 75,000,000 | ||||||||||
First lien revolving loan facility | Second Amendment | Total Leverage Ratio | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Temporary increase in consolidated total leverage ratio | 0.0025 | ||||||||||
First lien revolving loan facility | Second Amendment | Total Leverage Ratio | Subsequent Event | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Temporary increase in consolidated total leverage ratio | 0.0025 | 0.005 | |||||||||
Consolidated total leverage ratio, maximum | 0.055 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jun. 25, 2020 | |
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 20,263,500 | |||
Exercise price of warrants or rights (in dollars per share) | $ 11.50 | |||
Warrants exercised (in shares) | 0 | 0 | ||
Shares called upon by private placement warrants (in shares) | 2,631,750 | |||
Common Class A | ||||
Class of Warrant or Right [Line Items] | ||||
Number of securities called by each warrant or right (in shares) | 0.50 | |||
Public Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 20,193,120 | 19,491,320 | 15,000,000 | |
Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 70,180 | 771,980 | 5,263,500 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2023 | Jun. 09, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||||
Realized gains recognized in interest expense | $ 0.3 | $ 0.3 | ||
Amount reclassified out of other comprehensive income (loss) | 1.9 | |||
Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Derivative, notional amount | $ 183.3 | |||
Derivative, fair value | 2 | 2 | ||
Investment Fund | ||||
Debt Instrument [Line Items] | ||||
Investment fund, estimated fair value | 2.3 | 2.3 | ||
Investment fund, cost basis | 2.3 | 2.3 | ||
Senior secured first lien term loan facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | 332.7 | 332.7 | $ 338 | |
Long-term debt | $ 358.2 | $ 358.2 | $ 359.9 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 526 | $ 1,407 | $ 9,238 | $ 3,357 | |
Discrete income tax expense (benefit) | $ (600) | $ 600 | |||
Income tax (benefit) provision (as a percent) | 10.70% | (126.30%) | 43% | 68.70% | |
Pretax income (loss) | $ (4,904) | $ (1,114) | $ (21,506) | $ 4,888 | |
Tax benefit related to U.S. federal and foreign tax return | 600 | ||||
Tax provision related to federal and state tax return | $ 400 | $ 500 | |||
Uncertain tax position liability | $ 200 | $ 200 | $ 200 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Jun. 08, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 09, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, shares authorized (in shares) | 220,000,000 | 220,000,000 | 220,000,000 | ||||
Stock compensation expense | $ 2,500 | $ 1,700 | $ 7,300 | $ 5,000 | |||
Unrecognized Compensation Cost | $ 9,976 | $ 9,976 | |||||
Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 20,263,300 | 20,263,300 | 20,263,300 | 20,263,300 | |||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,986,552 | 1,937,099 | 2,986,552 | 1,937,099 | |||
Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 257,888 | 131,470 | 257,888 | ||||
Restricted Stock Units (RSUs) | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 1 year | ||||||
Restricted Stock Units (RSUs) | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 3 years | ||||||
Performance Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 3 years | ||||||
Unrecognized Compensation Cost | $ 4,700 | $ 4,700 | |||||
2020 Long-Term Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of common shares authorized, increase (in shares) | 4,000,000 | ||||||
Amended 2020 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, shares authorized (in shares) | 13,300,000 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Activity Related to RSUs, RSAs and PSUs (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Restricted Stock Units (RSUs) | |
Shares | |
Beginning balance, outstanding (in shares) | shares | 1,538,759 |
Granted (in shares) | shares | 3,014,658 |
Vested (in shares) | shares | (1,205,687) |
Forfeited (in shares) | shares | (361,178) |
Ending balance, outstanding and nonvested (in shares) | shares | 2,986,552 |
Weighted Average Grant Date Fair Value (per share) | |
Beginning balance, outstanding (in dollars per share) | $ / shares | $ 6.65 |
Granted (in dollars per share) | $ / shares | 2.56 |
Vested (in dollars per share) | $ / shares | 6.29 |
Forfeited (in dollars per share) | $ / shares | 3.99 |
Ending balance, outstanding and nonvested (in dollars per share) | $ / shares | $ 3.02 |
Restricted Stock | |
Shares | |
Beginning balance, outstanding (in shares) | shares | 131,470 |
Granted (in shares) | shares | 141,280 |
Vested (in shares) | shares | (14,862) |
Ending balance, outstanding and nonvested (in shares) | shares | 257,888 |
Weighted Average Grant Date Fair Value (per share) | |
Beginning balance, outstanding (in dollars per share) | $ / shares | $ 8.75 |
Granted (in dollars per share) | $ / shares | 4.07 |
Vested (in dollars per share) | $ / shares | 8.75 |
Ending balance, outstanding and nonvested (in dollars per share) | $ / shares | $ 6.18 |
Performance Shares | |
Shares | |
Beginning balance, outstanding (in shares) | shares | 631,377 |
Granted (in shares) | shares | 1,934,388 |
Forfeited (in shares) | shares | (209,885) |
Ending balance, outstanding and nonvested (in shares) | shares | 2,355,880 |
Weighted Average Grant Date Fair Value (per share) | |
Beginning balance, outstanding (in dollars per share) | $ / shares | $ 8.49 |
Granted (in dollars per share) | $ / shares | 2.20 |
Forfeited (in dollars per share) | $ / shares | 4.73 |
Ending balance, outstanding and nonvested (in dollars per share) | $ / shares | $ 3.66 |
STOCK-BASED COMPENSATION - Unre
STOCK-BASED COMPENSATION - Unrecognized Compensation Cost on Nonvested Awards (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Share-Based Payment Arrangement [Abstract] | |
Unrecognized Compensation Cost | $ 9,976 |
Weighted Avg. Remaining Recognition Period (in years) | 1 year 3 months 29 days |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic and Diluted Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
EPS numerator: | ||||||||
Net (loss) income attributable to common shareholders | $ (5,430) | $ (5,517) | $ (19,797) | $ (2,521) | $ 1,326 | $ 2,726 | $ (30,744) | $ 1,531 |
EPS denominator: | ||||||||
Weighted average shares outstanding - basic (in shares) | 42,683,990 | 41,976,865 | 42,361,816 | 41,311,366 | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | 17,719 | ||||
Weighted average shares outstanding - diluted (in shares) | 42,683,990 | 41,976,865 | 42,361,816 | 41,329,085 | ||||
Net (loss) earnings per share: | ||||||||
Basic (in dollars per share) | $ (0.13) | $ (0.06) | $ (0.73) | $ 0.04 | ||||
Diluted (in dollars per share) | $ (0.13) | $ (0.06) | $ (0.73) | $ 0.04 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Warrant | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 20,263,300 | 20,263,300 | 20,263,300 | 20,263,300 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,986,552 | 1,937,099 | 2,986,552 | 1,937,099 |
Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 257,888 | 131,470 | 257,888 | |
Performance Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,355,880 | 784,822 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
AOCI Attributable to Parent, Net of Tax | ||||||
Beginning balance | $ 255,835 | $ 260,545 | $ 274,551 | $ 329,344 | $ 339,974 | $ 313,871 |
Other comprehensive loss before reclassifications | (3,991) | (1,716) | 4,416 | (13,522) | (14,848) | (2,003) |
Amounts reclassified from AOCI | (351) | (11) | (12) | 21 | 17 | (224) |
Ending balance | 247,678 | 255,835 | 260,545 | 315,053 | 329,344 | 339,974 |
Total Accumulated Other Comprehensive Income (Loss) | ||||||
AOCI Attributable to Parent, Net of Tax | ||||||
Beginning balance | 1,635 | 3,362 | (1,042) | (7,371) | 7,460 | 9,687 |
Ending balance | (2,707) | 1,635 | 3,362 | (20,872) | (7,371) | 7,460 |
Net Currency Translation Gains (Losses) | ||||||
AOCI Attributable to Parent, Net of Tax | ||||||
Beginning balance | (2,666) | (295) | (4,711) | (8,093) | 6,755 | 8,758 |
Other comprehensive loss before reclassifications | (5,140) | (2,371) | 4,416 | (13,522) | (14,848) | (2,003) |
Amounts reclassified from AOCI | 0 | 0 | 0 | 0 | 0 | 0 |
Ending balance | (7,806) | (2,666) | (295) | (21,615) | (8,093) | 6,755 |
Funded Status of Benefit Plans | ||||||
AOCI Attributable to Parent, Net of Tax | ||||||
Beginning balance | 3,646 | 3,657 | 3,669 | 722 | 705 | 929 |
Other comprehensive loss before reclassifications | 0 | 0 | 0 | 0 | 0 | 0 |
Amounts reclassified from AOCI | (12) | (11) | (12) | 21 | 17 | (224) |
Ending balance | 3,634 | 3,646 | 3,657 | 743 | 722 | 705 |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||||
AOCI Attributable to Parent, Net of Tax | ||||||
Beginning balance | 655 | 0 | 0 | 0 | 0 | 0 |
Other comprehensive loss before reclassifications | 1,149 | 655 | 0 | 0 | 0 | 0 |
Amounts reclassified from AOCI | (339) | 0 | 0 | 0 | 0 | 0 |
Ending balance | $ 1,465 | $ 655 | $ 0 | $ 0 | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Related Party - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Amount expensed for warehouse space | $ 0.1 | $ 0.2 | $ 0.5 | $ 0.7 | |
Accounts payable | $ 0.1 | $ 0.1 | $ 0.1 | ||
WS Services | |||||
Related Party Transaction [Line Items] | |||||
Interest in partnership (as a percent) | 50% | 50% | |||
WS Services | Other Assets | |||||
Related Party Transaction [Line Items] | |||||
Equity method investments | $ 0.7 | $ 0.7 | $ 0.7 |
BUSINESS SEGMENTS - Narrative (
BUSINESS SEGMENTS - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
BUSINESS SEGMENTS - Schedule of
BUSINESS SEGMENTS - Schedule of Selected Financial Information Relating to the Business' Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Product revenues, net | $ 134,430 | $ 135,280 | $ 399,749 | $ 399,375 |
Operating income | 6,661 | 6,822 | 12,711 | 21,577 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 15,650 | 12,805 | 34,809 | 41,692 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | (8,989) | (5,983) | (22,098) | (20,115) |
Branded CPG | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 103,270 | 105,373 | 307,581 | 313,207 |
Operating income | 7,202 | 5,518 | 7,820 | 17,555 |
Flavors & Ingredients | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 31,160 | 29,907 | 92,168 | 86,168 |
Operating income | $ 8,448 | $ 7,287 | $ 26,989 | $ 24,137 |
BUSINESS SEGMENTS - Disaggregat
BUSINESS SEGMENTS - Disaggregated Revenue Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Product revenues, net | $ 134,430 | $ 135,280 | $ 399,749 | $ 399,375 |
Branded CPG | North America | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 73,785 | 75,823 | 217,146 | 220,071 |
Branded CPG | Europe | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 17,326 | 15,223 | 52,986 | 51,479 |
Branded CPG | India, Middle East and Africa | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 2,925 | 4,526 | 10,064 | 13,007 |
Branded CPG | Asia-Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | 5,207 | 5,607 | 16,519 | 17,650 |
Branded CPG | Latin America | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues, net | $ 4,027 | $ 4,194 | $ 10,866 | $ 11,000 |