Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Entity Central Index Key | 0000844143 | |
Document Period End Date | Jun. 30, 2019 | |
Entity Registrant Name | CENTRIC BRANDS INC. | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 58,734,731 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 14,298 | $ 29,519 |
Accounts receivable, net | 24,667 | 27,910 |
Sold receivables, net | 72,332 | 33,825 |
Inventories | 416,210 | 342,952 |
Prepaid expenses and other current assets | 84,700 | 48,378 |
Total current assets | 612,207 | 482,584 |
Property and equipment, net | 93,503 | 93,044 |
Goodwill | 376,132 | 376,132 |
Intangible assets, net | 858,714 | 897,470 |
Operating lease right-of-use assets | 212,024 | |
Other assets | 12,031 | 9,725 |
Total assets | 2,164,611 | 1,858,955 |
Current liabilities | ||
Accounts payable and accrued expenses | 633,402 | 525,863 |
Current portion of operating lease liabilities | 19,767 | |
Current portion of long-term debt | 24,187 | 11,287 |
Revolving credit facilities | 125,411 | 315 |
Total current liabilities | 802,767 | 537,465 |
Convertible notes | 38,198 | 36,235 |
Long-term debt, net of current portion | 1,195,850 | 1,195,297 |
Operating lease liabilities | 200,565 | |
Other non-current liabilities | 127 | 6,581 |
Total liabilities | 2,237,507 | 1,775,578 |
Commitments and contingencies | ||
Equity (Deficit) | ||
Common stock, $0.10 par value: 100,000 shares authorized, 58,734 and 58,364 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 5,873 | 5,836 |
Additional paid-in capital | 223,504 | 218,240 |
Accumulated other comprehensive (loss) income | 28 | 487 |
Accumulated deficit | (302,301) | (141,186) |
Total equity (deficit) | (72,896) | 83,377 |
Total liabilities and equity | $ 2,164,611 | $ 1,858,955 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 58,734 | 58,364 |
Common stock, shares outstanding | 58,734 | 58,364 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Net sales | $ 423,207 | $ 35,965 | $ 952,104 | $ 74,784 |
Cost of goods sold | 311,555 | 21,485 | 721,506 | 44,103 |
Gross profit | 111,652 | 14,480 | 230,598 | 30,681 |
Operating expenses | ||||
Selling, general and administrative | 102,967 | 18,670 | 216,132 | 33,963 |
Depreciation and amortization | 23,615 | 1,412 | 46,571 | 2,874 |
Other operating expense, net | 17,744 | 34,842 | ||
Total operating expenses | 144,326 | 20,082 | 297,545 | 36,837 |
Operating loss | (32,674) | (5,602) | (66,947) | (6,156) |
Other expense, net | ||||
Interest expense | 46,875 | 2,419 | 92,888 | 4,635 |
Other (income) expense, net | (202) | 103 | (244) | 102 |
Total other expense, net | 46,673 | 2,522 | 92,644 | 4,737 |
Loss before income taxes | (79,347) | (8,124) | (159,591) | (10,893) |
Income tax provision (benefit) | (95) | (2,440) | 1,524 | (1,124) |
Net loss | (79,252) | (5,684) | (161,115) | (9,769) |
Net loss attributable to common stockholders | (79,252) | (7,531) | (161,115) | (13,378) |
Net loss | (79,252) | (5,684) | (161,115) | (9,769) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | (333) | (622) | (459) | 141 |
Other comprehensive income (loss) | (333) | (622) | (459) | 141 |
Comprehensive loss | $ (79,585) | $ (6,306) | $ (161,574) | $ (9,628) |
Loss per common share - basic | ||||
Loss per common share - basic (in dollars per share) | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Loss per common share - diluted | ||||
Loss per common share - diluted | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Weighted average shares outstanding | ||||
Basic (in shares) | 58,649 | 13,980 | 58,588 | 13,766 |
Diluted (in shares) | 58,649 | 13,980 | 58,588 | 13,766 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Preferred Series A | Preferred Series A-1 | Total |
Balance at Dec. 31, 2017 | $ 1,349 | $ 61,314 | $ 271 | $ (17,421) | $ 5 | $ 45,518 | |
Balance (in shares) at Dec. 31, 2017 | 13,488 | 50 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of Series A-1 convertible preferred stock | 13,305 | $ 459 | 13,764 | ||||
Issuance of Series A-1 convertible preferred stock (in shares) | 4,588 | ||||||
Stock-based compensation | 1,507 | 1,507 | |||||
Issuance of common stock, net of taxes withheld | $ 59 | (450) | (391) | ||||
Issuance of common stock, net of taxes withheld (in shares) | 591 | ||||||
Foreign currency translation | 141 | 141 | |||||
Net loss | (9,769) | (9,769) | |||||
Balance at Jun. 30, 2018 | $ 1,408 | 75,676 | 412 | (27,190) | $ 5 | $ 459 | 50,770 |
Balance (in shares) at Jun. 30, 2018 | 14,079 | 50 | 4,588 | ||||
Balance at Mar. 31, 2018 | $ 1,360 | 75,192 | 1,034 | (21,506) | $ 5 | $ 459 | 56,544 |
Balance (in shares) at Mar. 31, 2018 | 13,599 | 50 | 4,588 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock-based compensation | 870 | 870 | |||||
Issuance of common stock, net of taxes withheld | $ 48 | (386) | (338) | ||||
Issuance of common stock, net of taxes withheld (in shares) | 480 | ||||||
Foreign currency translation | (622) | (622) | |||||
Net loss | (5,684) | (5,684) | |||||
Balance at Jun. 30, 2018 | $ 1,408 | 75,676 | 412 | (27,190) | $ 5 | $ 459 | 50,770 |
Balance (in shares) at Jun. 30, 2018 | 14,079 | 50 | 4,588 | ||||
Balance at Dec. 31, 2018 | $ 5,836 | 218,240 | 487 | (141,186) | $ 83,377 | ||
Balance (in shares) at Dec. 31, 2018 | 58,364 | 58,364 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock, net of taxes withheld | $ 37 | (452) | $ (415) | ||||
Issuance of common stock, net of taxes withheld (in shares) | 370 | ||||||
Stock-based compensation | 5,716 | 5,716 | |||||
Foreign currency translation | (459) | (459) | |||||
Net loss | (161,115) | (161,115) | |||||
Balance at Jun. 30, 2019 | $ 5,873 | 223,504 | 28 | (302,301) | $ (72,896) | ||
Balance (in shares) at Jun. 30, 2019 | 58,734 | 58,734 | |||||
Balance at Mar. 31, 2019 | $ 5,857 | 221,522 | 361 | (223,049) | $ 4,691 | ||
Balance (in shares) at Mar. 31, 2019 | 58,570 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock, net of taxes withheld | $ 16 | (338) | (322) | ||||
Issuance of common stock, net of taxes withheld (in shares) | 164 | ||||||
Stock-based compensation | 2,320 | 2,320 | |||||
Foreign currency translation | (333) | (333) | |||||
Net loss | (79,252) | (79,252) | |||||
Balance at Jun. 30, 2019 | $ 5,873 | $ 223,504 | $ 28 | $ (302,301) | $ (72,896) | ||
Balance (in shares) at Jun. 30, 2019 | 58,734 | 58,734 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (161,115) | $ (9,769) |
Adjustments to reconcile net loss to net cash provided by(used in) operating activities: | ||
Depreciation and amortization | 46,571 | 2,874 |
Amortization of deferred financing costs and discounts | 10,101 | 588 |
Paid-in-kind interest | 9,861 | 828 |
Stock-based compensation | 5,716 | 1,507 |
Amortization of inventory step up | 9,036 | |
Amortization of operating lease right-of-use assets | 13,676 | |
Other non-cash adjustments | 1,494 | 100 |
Deferred income taxes, net | (482) | (1,318) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (354,210) | 6,176 |
Operating lease liability | (12,125) | |
Inventories | (82,188) | 88 |
Prepaid expenses and other assets | (40,290) | (1,426) |
Accounts payable and accrued expenses | 112,259 | 321 |
Other liabilities | (4,233) | 183 |
Net cash provided by (used in) operating activities | (445,929) | 152 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Collection of deferred purcahse price of sold receivables | 319,137 | |
Purchases of property and equipment | (6,339) | (770) |
Net cash provided by (used in) investing activities | 312,798 | (770) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of long-term debt | (3,226) | (938) |
Proceeds from (payments on) line of credit, net | 125,096 | (1,354) |
Repayment of financee lease | (1,685) | |
Payment of deferred financing costs | (1,500) | |
Taxes paid in lieu of shares issued for stock-based compensation | (415) | (391) |
Net cash provided by (used in) financing activities | 118,270 | (2,683) |
Effect of exchange rate changes on cash and cash equivalents | (360) | 80 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (15,221) | (3,221) |
CASH AND CASH EQUIVALENTS, at beginning of period | 29,519 | 8,250 |
CASH AND CASH EQUIVALENTS, at end of period | 14,298 | 5,029 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 71,055 | 3,252 |
Income taxes paid | 138 | 170 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Unpaid purchases of property and equipment | 20 | 41 |
Beneficial interest obtained in exchange for securitized trade receivables | 381,437 | |
Conversion of short-term convertible notes | $ 13,764 | |
Additions to operating lease liabilities | $ 232,497 |
Business Description and Basis
Business Description and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Business Description and Basis of Presentation | |
Business Description and Basis of Presentation | 1. Business Description and Basis of Presentation Centric Brands Inc. (“Centric” or the “Company”) is a leading lifestyle brands collective, bringing together creative minds from the worlds of fashion and commerce, sourcing, technology, marketing, digital and entertainment. The Company designs, produces, merchandises, manages and markets kidswear, accessories, and men’s and women’s apparel under owned, licensed and private label brands. The Company’s distinctive image has been developed across an expanding number of products, brands, sales channels and markets. The Company licenses over 100 brands or produces private label products across core product categories including kids, accessories, and men’s and women’s apparel. Licensed brands include Calvin Klein, Under Armour, Tommy Hilfiger, Nautica, Spyder, BCBG, Joe’s, Buffalo, Frye, Michael Kors, Kate Spade, AllSaints and Cole Haan, and entertainment properties including Disney, Marvel and Nickelodeon, among others. The Company’s products are sold through a cross section of leading retailers such as Walmart, Macy’s, Kohl’s, TJX Companies, Costco, Nordstrom, Dillard’s, Ross, Target, JC Penney and Amazon. The Company also sell products over the web through retail partners such as Walmart.com, Macy’s.com and Nordstrom.com. The Company also distributes apparel and other products through Company-owned retail stores, ecommerce websites, and partner shop-in-shops. Legacy company-owned brands include Hudson®, a designer and marketer of men’s and women’s premium, branded denim and apparel, Robert Graham®, a sophisticated, eclectic apparel and accessories brand seeking to inspire a global movement, and SWIMS®, a Scandinavian lifestyle brand best known for its range of fashion-forward, water-friendly footwear, apparel and accessories (collectively, the “Owned Brands”). Centric and its subsidiaries are collectively referred to herein as the “Company,” “we,” “us,” “our,” and “ourselves,” unless the context indicates otherwise. On October 29, 2018, the Company acquired from Global Brands Group Holding Limited (“ GBG ”) and GBG USA Inc., a wholly-owned subsidiary of GBG (“ GBG USA ”), a significant part of GBG’s North American business (“ GBG Acquisition ”), including the wholesale, retail and e-commerce operations comprising all of their North American kids business, all of their North American accessories business and a majority of their West Coast and Canadian fashion businesses (the “ GBG Business ”). Effective upon the consummation of the GBG Acquisition, the Company changed its name from Differential Brands Group Inc. to Centric Brands Inc. and changed its trading symbol on NASDAQ from DFBG to CTRC. Prior to the GBG Acquisition, the Company organized its business into the following three reportable segments: Wholesale, Consumer Direct and Corporate and other. Subsequent to the GBG Acquisition, the Company implemented organizational changes that have impacted the manner in which it manages itself. Accordingly, the Company realigned its business into the following three reportable segments: (i) Kids, (ii) Accessories and (iii) Men’s & Women’s Apparel. See “Note 15 – Segment Information.” The Company continues to be a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“ SEC ”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“ 2018 10-K ”) filed on May 16, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”) have been omitted pursuant to such rules and regulations. The condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial position, its results of operations and cash flows for the interim periods presented. The operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year 2019 or for any other interim period. The December 31, 2018 consolidated balance sheet is condensed from the audited financial statements as of that date. The condensed consolidated financial statements have been prepared in accordance with GAAP and include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Information regarding significant accounting policies is contained in “Note 2 – Summary of Significant Accounting Policies” of the consolidated financial statements in the 2018 10-K. Revenue Recognition The Company accounts for its revenues in accordance with Accounting Standards Codification, Revenue from Contracts with Customers, (“ ASC 606 ”). Wholesale revenues are recorded when a contract with the customer is agreed to by both parties and product has been transferred, which generally occurs at the point of shipment from the Company’s warehouse, and recorded at the transaction price based on the amount the Company expects to receive. Collection is probable as the majority of shipments occur to reputable credit worthy businesses and through factored relationships which guarantee payment. Estimated reductions to revenue for customer allowances are recorded based upon history as a percentage of sales and current outstanding chargebacks. The Company may allow for returns based upon pre-approval or in the case of damaged goods. Such returns are estimated based on historical experience and also specific claims filed by the customer. A refund liability is included in accounts payable and accrued expenses within the accompanying condensed consolidated balance sheets. Also, the Company records a return asset receivable in prepaid expenses and other current assets within the accompanying condensed consolidated balance sheets. The return asset receivable is evaluated for impairment each period. Retail store revenue is recognized at the time the customer takes possession of the related merchandise. Revenue for ecommerce sales of products ordered through the Company’s retail internet sites are recognized at the point of shipment to the customer. Retail store revenue and ecommerce revenue exclude sales taxes collected from the customer. Revenue from licensing arrangements is recognized based on actual sales when the Company expects royalties to exceed the minimum guarantee. For licensing arrangements in which the Company does not expect royalties to exceed the minimum guarantee, an estimate of the transaction price is recognized on a straight-line basis over the term of the contract. A contract asset is recorded for revenue recognized in advance of the contract payment terms, which is included in other assets within the accompanying condensed consolidated balance sheet. Nonrefundable upfront fees are recorded as a contract liability and revenue is recognized straight-line over the term of the contract. Contract liabilities are included in other liabilities within the accompanying condensed consolidated balance sheet. Amounts related to shipping and handling that are billed to customers are considered to be activities to fulfill a promise to transfer the goods and are reflected in net sales, and the related costs are reflected in cost of goods sold within the accompanying condensed consolidated statements of operations and comprehensive loss. Concentration of Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, accounts receivable and factored accounts receivable. The Company maintains cash and cash equivalents with various financial institutions, which is designed to limit exposure to any one institution. Periodic evaluations are performed of the relative credit rating of those financial institutions that are considered in the Company’s investment strategy. The vast majority of trade receivables from sales to customers are subsequently sold to a financial institution pursuant to a trade receivables securitization facility. The sale of trade receivables are made on a non-recourse basis; however, such sales are guaranteed through credit insurance purchased from an unrelated financial institution. When insured, the Company is not at risk if a customer fails to pay. For trade receivables not sold to a financial institution, the Company generally does not require collateral. As of June 30, 2019, the net deferred purchase price of trade receivables sold pursuant to the RPA (as defined below) totaled $72.3 million. The RPA was not in place as of June 30, 2018. See “Note 4 – Accounts Receivables.” The Company provides an allowance for estimated losses to be incurred in the collection of accounts receivable based upon the aging of outstanding balances, margin support and other dilution-related items. The net carrying value approximates the fair value for these assets. Such losses have historically been within management’s expectations. Uncollectible accounts are written off once collection efforts are deemed by management to have been exhausted. Financial Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (“ FASB ”) issued ASC Topic 842, Leases (“ ASC 842 ”), a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ ROU ”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASC 842 as of January 1, 2019, using the modified retrospective approach. The Company elected the ‘comparatives under ASC 840 option’ as a transitional practical expedient, which allows the Company to initially apply the new lease requirements at the effective date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. It also allows the Company to report comparative periods in the financial statements under previous GAAP under ASC 840, Leases (“ ASC 840 ”). There was no cumulative-effect adjustment recorded in connection with our adoption of ASC 842. The Company also elected the ‘package of practical expedients’ permitted under the transition guidance, which allowed the Company to (i) carry forward the historical lease classification, (ii) forgo reassessment of whether any expired or existing contracts contain leases, and (iii) forgo reassessment of whether any previously unamortized initial direct costs continue to meet the definition of initial direct costs under ASC 842. However, any initial direct costs after the effective date will be included within the ROU asset under ASC 842. The Company did not elect the ‘hindsight’ practical expedient to reassess the lease term for existing leases. For the accounting policy practical expedients, the Company elected not to recognize ROU assets and lease liabilities for short-term leases which have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Additionally, the Company elected the non-separation of lease and non-lease components, and as a result, the Company does not need to account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs) for all leases. The adoption of ASC 842 resulted in the recognition of ROU assets of $214.0 million with corresponding lease liabilities of $220.7 million. As a result of adopting the standard, $6.7 million of pre-existing liabilities for deferred rent, unfavorable leases and various lease incentives were reclassified as a component of the ROU assets. There was no adjustment to the opening balance of retained earnings upon adoption of ASC 842 given the nature of the impacts and the other transition practical expedients elected by the Company. Adoption of ASC 842 impacted the Company’s results on January 1, 2019, as follows (in thousands): Adjustments due December 31, 2018 to ASC 842 January 1, 2019 Operating lease ROU assets (1) (2) (4) $ — $ 214,000 $ 214,000 Current portion of operating lease liabilities (3) $ — $ 20,883 $ 20,883 Accounts payable and accrued expenses (1) 525,863 (367) 525,496 Operating lease liabilities (3) — 199,857 199,857 Other non-current liabilities (4) 6,581 (6,373) 208 Total $ 532,444 $ 214,000 $ 746,444 (1) Represents the reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. (2) Represents capitalization of operating lease assets. (3) Represents recognition of operating lease liabilities. (4) Represents reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. The standard did not materially impact the Company’s consolidated net earnings and had no material impact on the condensed consolidated statement of cash flows. For further information regarding leases, see “Note 10 – Leases.” Leases In general, leases are evaluated and classified as either operating or finance leases. The Company has finance leases, however, finance leases are not material to the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss or condensed consolidated statements of cash flows. The assets related to the Company’s operating leases are included in operating lease ROU assets, and the current and long-term portions of liabilities related to the Company’s operating leases are included in current portion of operating lease liabilities and operating lease liabilities, respectively, on the condensed consolidated balance sheet as of June 30, 2019. Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company cannot determine the implicit rate in its leases, the Company uses its estimated incremental borrowing rate based on information available at the date of the commencement of the lease in calculating the present value of its existing lease payments. The incremental borrowing rate is determined using the U.S. Treasury rate adjusted to account for the Company’s credit rating and the collateralized nature of operating leases. The operating lease asset also includes any lease payments made and unamortized lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line method over the term of the lease. Recently Issued Financial Accounting Standards In June 2016, the FASB issued Accounting Standards Update (“ ASU ”) No. 2016-13, Financial Instruments — Credit Losses — Measurement of Credit Losses on Financial Instruments, an accounting standards update that introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This includes accounts receivable, trade receivables, loans, held-to-maturity debt securities, net investments in leases and certain off-balance sheet credit exposures. The guidance also modifies the impairment model for available-for-sale debt securities. The update is effective for fiscal years beginning after December 15, 2019 and interim periods within that reporting period. The Company is currently assessing the potential effects this update may have on its condensed consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. This standard is effective beginning in the first quarter of 2020, with early adoption permitted. The Company is currently assessing the impact of the new guidance. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance is effective for the Company beginning on January 1, 2020, with early adoption permitted. Certain disclosures in the new guidance will need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact of the new guidance. |
GBG Acquisition
GBG Acquisition | 6 Months Ended |
Jun. 30, 2019 | |
GBG Acquisition | |
GBG Acquisition | 3. GBG Acquisition On October 29, 2018, the Company completed the GBG Acquisition for a preliminary purchase price of $1.2 billion. To finance the acquisition, the Company entered into the Credit Agreements (as defined below). The First Lien Credit Agreement (as defined below) provides for a senior secured asset based revolving credit facility with commitments in an aggregate principal amount of $150.0 million, which subsequently increased to $200.0 million, and a senior secured term loan credit facility in an aggregate principal amount of $645.0 million. The Second Lien Credit Agreement (as defined below) provides for a second lien term loan facility in an aggregate principal amount of $668.0 million. See “Note 8 – Debt” for a discussion of the terms of the Credit Agreements and amendments thereto. The purchase price allocation is subject to adjustment until the Company has completed its analysis within the measurement period. The purchase price allocation is preliminary and the finalization of the Company’s purchase price allocation may result in changes in the valuation of assets acquired and liabilities assumed. The Company will finalize the purchase price allocation as soon as practicable, but not to exceed one year following October 29, 2018. No material changes were made to the preliminary purchase price allocation during the three months ended June 30, 2019. Unaudited pro forma financial information The following table presents our unaudited pro forma results for the three months ended June 30, 2018 and six months ended June 30, 2018, as if the GBG Acquisition had occurred on January 1, 2018. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired tangible and intangible assets, and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees. Three months ended June 30, Six months ended June 30, 2018 2018 (in thousands) (in thousands) Net sales $ 381,346 $ 980,467 Cost of goods sold 305,954 754,980 Gross margin 75,392 225,487 Gross margin % of net sales 19.8 % 23.0 % Operating expenses Selling, general and administrative 144,596 279,884 Depreciation and amortization 22,915 46,349 Total operating expenses 167,511 326,233 Operating loss (92,119) (100,746) Interest expense 37,952 76,065 Other (income) expense, net 103 (17,573) Loss before income taxes (130,174) (159,238) Income tax provision (benefit) (2,439) (1,123) Net loss $ (127,735) $ (158,115) The unaudited pro forma financial information as presented above is for information purposes only and is not necessarily indicative of the actual results that would have been achieved had the GBG Acquisition occurred at the beginning of the earliest period presented or the results that may be achieved in future periods. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable | |
Accounts Receivable | 4. Accounts Receivable PNC Receivables Facility In October 2018, in connection with the GBG Acquisition, the Company entered into a three-year trade receivables securitization facility (the “ PNC Receivables Facility ” ) pursuant to (i) a Purchase and Sale Agreement, among certain subsidiaries of the Company, as “ Originators, ” and Spring Funding, LLC (“ Spring ”), a wholly owned, bankruptcy-remote special purpose subsidiary of the Company, as “ Buyer ” (the “ PSA ”) and (ii) a Receivables Purchase Agreement among Spring, as “ Seller ”, the Company, as initial “ Servicer ”, certain purchasers party thereto (the “ Purchasers ”), PNC Bank, National Association, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent (the “ RPA ”). Other subsidiaries of the Company may later enter into the PNC Receivables Facility. At the end of the initial three year term, the Purchasers may elect to renew their commitments under the RPA. Under the terms of the PSA, the Originators sell or contribute certain of their trade accounts receivable, related collections and security interests (the “ Receivables ”) to Spring on a revolving basis. Under the terms of the RPA, Spring sells to the Purchasers the Receivables for up to $450.0 million in cash proceeds. The proceeds from the Purchasers’ investment are used to finance Spring’s purchase of the Receivables from the Originators. Spring may also use the proceeds from a subordinated loan made by the Originators to Spring to finance purchases of the Receivables from the Originators. Rather than remitting to the Purchasers the amount received upon payment of the Receivables, Spring reinvests such Receivables payments to purchase additional Receivables from the Originators through the term of the agreement, subject to the Originators generating sufficient eligible Receivables to sell to Spring in replacement of collected balances. Advances under the RPA will accrue interest based on a variable rate plus a margin. On April 25, 2019, the Company amended its PNC Receivables Facility pursuant to (i) an amendment to the PSA (“ PSA Amendment ”) and (ii) an amendment to the RPA (“ RPA Amendment ”). Under the terms of the PSA Amendment, the Originators continue to sell or contribute certain of their Receivables to Spring on a revolving basis. However, the PSA Amendment redefined Originators to include an additional subsidiary of the Company. Under the terms of the RPA Amendment, Spring can sell the Receivables for up to $600.0 million in cash proceeds to Purchasers, an increase of $150.0 million. Accounts receivable consisted of the following (in thousands): As of As of June 30, 2019 December 31, 2018 Insured receivables sold $ 296,623 $ 380,595 Uninsured receivables sold 45,706 43,630 Total receivables sold 342,329 424,225 Purchase price of sold receivables (245,700) (364,900) Allowances (24,297) (25,500) Sold receivables, net $ 72,332 $ 33,825 Accounts receivable, net $ 24,667 $ 27,910 On July 30, 2019, the Company further amended the PNC Receivables Facility to enable the purchase and sale of Canadian receivables pursuant to the PNC Receivables Facility. See “Note 17 – Subsequent Events” below for additional information. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventories | |
Inventories | 5. Inventories Inventories are valued at the lower of cost or net realizable value with cost determined by the first-in, first-out method. Inventories consisted of the following (in thousands): As of As of June 30, 2019 December 31, 2018 Finished goods $ 400,696 $ 315,484 Raw materials and work in progress 15,514 27,468 Total inventories $ 416,210 $ 342,952 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2019 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 6. Intangible Assets and Goodwill Company’s intangible assets as of June 30, 2019 are comprised of trade names, customer relationships and non-compete agreements. Intangible assets are recorded at cost, less accumulated amortization. Amortization of intangible assets with finite lives is provided for over their estimated useful lives on a straight-line basis. The life of the trade names are indefinite. Amortization expense related to the intangible assets amounted to approximately $19.4 million and $0.7 million for the three months ended June 30, 2019 and 2018, respectively. Amortization expense related to intangible assets amounted to approximately $38.9 million and $1.5 million for the six months ended June 30, 2019 and 2018, respectively. There were no indicators present for impairment to intangible assets or goodwill during the three months ended June 30, 2019 and 2018. As a result, there were no impairment charges recorded related to intangible assets or goodwill during the three and six months ended June 30, 2019 and 2018. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies Litigation In the ordinary course of business, the Company is subject to periodic claims, investigations and lawsuits. Although the Company cannot predict with certainty the ultimate resolution of claims, investigations and lawsuits, asserted against the Company, it does not believe that any currently pending legal proceeding or proceedings to which it is a party could have a material adverse effect on its business, financial condition or results of operations. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt | |
Debt | 8 . Debt The five-year payment schedule of the Company’s debt as of June 30, 2019 is as follows (in thousands): Payment Due by Period Original Remainder of Issue (Discount) Carrying 2019 2020 2021 2022 2023 Thereafter Total Premium and Costs, Net Value Revolving facility $ 125,411 $ — $ — $ — $ — $ — $ 125,411 $ — $ 125,411 1L Term Loan 8,062 32,250 32,250 32,250 536,963 — 641,775 (16,309) 625,466 2L Term Loan — — — — — 681,077 681,077 (86,506) 594,571 Convertible notes — — 18,275 — — 25,000 43,275 (5,077) 38,198 Total $ 133,473 $ 32,250 $ 50,525 $ 32,250 $ 536,963 $ 706,077 $ 1,491,538 $ (107,892) $ 1,383,646 New Term Loans On October 29, 2018 (the “ GBG Closing Date ”), the Company and certain of its subsidiaries entered into a (i) first lien credit agreement with Ares Capital Corporation (“ Ares ”), as administrative agent, ACF FinCo I LP, as collateral agent, and certain other lenders party thereto (the “ First Lien Credit Agreement ”) and (ii) second lien credit agreement with U.S. Bank National Association, as administrative agent and collateral agent, and certain lenders party thereto (the “ Second Lien Credit Agreement ”, and together with the First Lien Credit Agreement, the “ Credit Agreements ”). The First Lien Credit Agreement provides for a senior secured asset based revolving credit facility with commitments in an aggregate principal amount of $150.0 million, which matures on April 29, 2023 (the “ New Revolving Facility ”) and a senior secured term loan credit facility in an aggregate principal amount of $645.0 million, which matures on October 29, 2023 (the “ First Lien Term Loan Facility ”, and together with the New Revolving Facility, are collectively referred to herein as “ First Lien Facilities ”). The Second Lien Credit Agreement provides for a second lien term loan facility in an aggregate principal amount of $668.0 million, which matures on October 29, 2024 (the “ Second Lien Term Loan Facility ”, and together with the First Lien Term Loan Facility are collectively referred to herein as the “ Term Loan Facilities ”). The obligations under the Credit Agreements are guaranteed by certain domestic subsidiaries of the Company and are secured by substantially all assets of the Company and its domestic subsidiaries. Cumulative paid-in-kind interest (“ PIK ”) under the Credit Agreements totaled $9.9 million and $13.1 million as of March 31, 2019 and June 30, 2019, respectively. As of June 30, 2019, the aggregate principal amount of the First Lien Term Loan Facility and Second Lien Term Loan Facility was $645.0 million and $668.0 million, respectively. The net proceeds from the issuance of the First Lien Term Loan Facility and Second Lien Term Loan Facility was $614.7 million and $646.8 million, respectively. As of June 30, 2019, the Company’s weighted average effective cash interest rate on the First Lien Term Loan Facility and Second Lien Term Loan Facility, including the effect of non-usage fees, was 9% and 10%, respectively. The Company’s weighted average effective interest rate on the First Lien Term Loan Facility and Second Lien Term Loan Facility including cash interest and non-cash interest related to deferred finance fees and original issue debt discount, was 10% and 14%, respectively. The Credit Agreements contain customary representations and warranties, events of default and covenants, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company and its subsidiaries to incur additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, dispose of assets, make prepayments of certain indebtedness, pay certain dividends and other restricted payments, make investments, and engage in transactions with affiliates. The Term Loan Facilities require the Company to comply with financial maintenance covenants to be tested quarterly (beginning with the fiscal quarter ending March 31, 2019), consisting of a maximum net first lien leverage ratio, a maximum net total leverage ratio and a minimum fixed charge coverage ratio. As of June 30, 2019, the Company was in compliance with these covenants. The Company incurred debt issuance costs totaling $51.5 million related to the Term Loan Facilities. In accordance with ASU No. 2015-15, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Term Loan Facilities, and are amortized using the effective interest method over the remaining life of the Term Loan Facilities. The Company used the proceeds from the Credit Agreements to consummate the GBG Acquisition and repay existing debt. On April 17, 2019, the Company entered into the first amendment and waiver (the “ 1L Amendment ”) to the First Lien Credit Agreement to, among other things: (i) increase the amount of the permitted securitization facility under the RPA from $550.0 million to $600.0 million; (ii) increase the borrowing base of the New Revolving Facility under the First Lien Credit Agreement as set forth in the 1L Amendment; and (iii) amend the Company’s consolidated fixed charge ratio covenant. Concurrent with the 1L Amendment, the Company also entered into the first amendment and waiver (the “ 2L Amendment ”) to the Second Lien Credit Agreement to, among other things, increase the amount of indebtedness of the New Revolving Facility under the First Lien Credit Agreement from $795.0 million to $845.0 million. The Company accounted for the 1L Amendment and 2L Amendment as modifications to the original credit agreements and capitalized the associated debt issuance costs. New Revolving Facility In addition to the First Lien Term Loan, the First Lien Credit Agreement provides for a senior secured asset based revolving credit facility with commitments in an aggregate principal amount of $150.0 million, which matures on April 29, 2023 (the “ New Revolving Facility ”). The amount available to be drawn under the New Revolving Facility is based on the borrowing base values attributed to eligible inventory. There are no scheduled periodic payments under the New Revolving Facility. The obligations under the Credit Agreements, including the New Revolving Facility, are guaranteed by certain domestic subsidiaries of the Company (the “ Guarantors ”) and are secured by substantially all assets of the Company and its domestic subsidiaries. The annual interest rates for the New Revolving Facility is the lender’s alternate base rate (“ ABR ”) (with a 1.00% floor) plus 4.50% for base rate loans and adjusted LIBOR (with a 0.00% floor) plus 5.50% for LIBOR rate loans. The New Revolving Facility includes mandatory prepayments customary for credit facilities of this nature. Subject to certain exceptions, permanent reductions of the commitments under the New Revolving Facility are subject to a prepayment premium of (i) 3.00% during the first year after the GBG Closing Date, (ii) 2.00% during the second year after the GBG Closing Date and (iii) 1.00% during the third year after the GBG Closing Date, plus, if applicable, customary “breakage” costs with respect to LIBOR rate loans. The New Revolving Facility, contains customary representations and warranties, events of default and covenants, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company and its subsidiaries to incur additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, dispose of assets, make prepayments of certain indebtedness, pay certain dividends and other restricted payments, make investments, and engage in transactions with affiliates. The Credit Agreements, inclusive of the provisions of the New Revolving Facility, require the Company to comply with financial maintenance covenants to be tested quarterly (beginning with the fiscal quarter ending March 31, 2019), consisting of a maximum net first lien leverage ratio, a maximum net total leverage ratio and a minimum fixed charge coverage ratio. As of June 30, 2019, the Company was in compliance with these covenants. The Company incurred debt issuance costs totaling $6.8 million related to the New Revolving Facility. The debt issuance costs have been deferred and are presented in Other Assets and are amortized using the effective interest method over the life of the New Revolving Facility. On April 17, 2019, the Company entered into the 1L Amendment to the First Lien Credit Agreement to, among other things, increase the aggregate commitments under the New Revolving Facility under the First Lien Credit Agreement from $150.0 million aggregate principal amount to $200.0 million. The Company incurred additional debt issuance costs totaling $1.5 million as a result of the 1L Amendment. The debt issuance costs have been deferred and are presented in Other Assets and are amortized using the effective interest method over the remaining life of the New Revolving Facility. The availability under the New Revolving Facility as of June 30, 2019 was $60.4 million. Borrowings under the New Revolving Facility as of June 30, 2019 were $125.0 million. Convertible Notes 2024 Convertible Notes On October 29, 2018, the Company issued convertible promissory notes (the “2024 Convertible Notes” ) in an aggregate principal amount of $25.0 million to funds managed by GSO Capital Partners LP (“ GSO ”) and funds managed by Blackstone Tactical Opportunities Advisors L.L.C. (collectively, the “GSO/BTO Affiliates” ). The 2024 Convertible Notes are convertible at the holder’s option beginning on or after October 29, 2019 until the earlier of (i) repayment in full of all principal and interest outstanding under the Second Lien Credit Agreement and (ii) October 29, 2024 (such earlier date, the “2024 Convertible Note Maturity Date” ), into shares of the Company’s common stock at a conversion price of $8.00 per share, subject to customary adjustments as described in agreement. The 2024 Convertible Notes shall not initially bear interest. From and after April 29, 2019, the 2024 Convertible Notes shall bear interest at the rate of 12.0% per annum multiplied by the principal amount as of the previous interest payment date. From and after October 29, 2019, the 2024 Convertible Notes shall bear interest at the rate of 16.0% per annum multiplied by the principal amount as of the previous interest payment date. Interest payments are due each January 31, April 30, July 31, and October 31. To the extent that the Company is unable to pay cash interest on the 2024 Convertible Notes on each interest payment date because of restrictions in the Credit Agreements or other debt agreements of the Company, an amount equal to the unpaid interest then due shall be added to the principal amount of this Note (such additional amount, the “PIK Principal” ), without any action by the Company or a holder of a 2024 Convertible Note. The Company may, at any time and at its sole option, elect to prepay the entirety of aggregate then-outstanding PIK Principal, plus any accrued and unpaid interest on such PIK Principal, at any time (an “Optional PIK Prepayment” ). Optional PIK Prepayments may be paid in cash. From and after the GBG Closing Date until October 29, 2019, upon consummation of any sales of common stock by the Company for cash, the Company may, on at least ten (10) days’ prior written notice to the holder of a 2024 Convertible Note, prepay such 2024 Convertible Note in whole but not in part solely with the net proceeds of such sale of common stock in an amount equal to the greater of (i) the principal amount, together with accrued interest through and including the date of prepayment, or (ii) the value equal to (a) the number of shares of common stock that would be received upon conversion of the 2024 Convertible Note on the repayment date multiplied by the market value of the common stock as of such date, plus (b) any accrued but unpaid interest that has not been added to the principal amount of the 2024 Convertible Note on the date of such prepayment (such greater amount, the “Prepayment Amount” ). Also, the 2024 Convertible Notes shall be prepayable in whole but not in part at the Prepayment Amount: (i) from October 29, 2019 through October 29, 2021 only upon a change in control or a liquidation of the Company, or (ii) from October 29, 2021 until the 2024 Convertible Note Maturity Date, in each case on at least ten (10) day’s prior written notice to the holder. Also, on the GBG Closing Date, the Company and the Guarantors entered into a Subordinated Convertible Promissory Notes Guaranty Agreement pursuant to which those subsidiaries agreed to guarantee the obligations due under the 2024 Convertible Notes. The following table is a summary of the recorded value of the 2024 Convertible Notes as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Convertible note - face value $ 25,000 $ 25,000 Less: Original issue discount (4,522) (4,522) Short-term convertible note recorded value on issue date 20,478 20,478 Accumulated accretion of original issue debt discount 2,138 534 Convertible note value $ 22,616 $ 21,012 Modified Convertible Notes On January 18, 2016, in partial satisfaction of certain outstanding convertible notes, the Company issued an aggregate principal amount of approximately $16.5 million of modified convertible notes (the “ Modified Convertible Notes ”). The Modified Convertible Notes are structurally and contractually subordinated to our senior debt and will mature on July 28, 2021. The Modified Convertible Notes accrue interest quarterly on the outstanding principal amount at a rate of 6.5% per annum (which increased to 7% as of October 1, 2016, with respect to the Modified Convertible Notes issued to Fireman Capital CPF Hudson Co-Invest LP (“ Fireman ” ) only), which is payable 50% in cash and 50% in additional paid-in-kind notes. However, the Company may elect to pay 100% of such interest in cash at its sole discretion. The Modified Convertible Notes are convertible at the option of the holders into either shares of the Company’s common stock, cash, or a combination thereof, at the Company’s election. If the Company elects to issue only shares of common stock upon conversion of the Modified Convertible Notes, each of the Modified Convertible Notes would be convertible, in whole but not in part into a number of shares of the Company’s common stock equal to the “conversion amount” divided by the “market price”. The “conversion amount” is (a) the product of (i) the “market price”, multiplied by (ii) the quotient of (A) the principal amount, divided by (B) the conversion price, minus (b) the aggregate optional prepayment amounts paid to the holder. The “market price” is the average of the closing prices for our common stock over the 20-trading-day period immediately preceding the notice of conversion. If the Company elects to pay cash with respect to a conversion of the Modified Convertible Notes, the amount of cash to be paid per share will be equal to the conversion amount. The Company will have the right to prepay all or any portion of the principal amount of the Modified Convertible Notes at any time so long as the Company makes a pro rata prepayment on all of the Modified Convertible Notes. The following table is a summary of the recorded value of the Modified Convertible Notes as of June 30, 2019 and December 31, 2018 (in thousands). The value of the Modified Convertible Notes reflects the present value of the contractual cash flows from the Modified Convertible Notes and resulted in an original issue discount of $4.7 million that was recorded on January 28, 2016, the issuance date. June 30, 2019 December 31, 2018 Modified convertible notes - face value $ 16,473 $ 16,473 Less: original issue discount (4,673) (4,673) Modified convertible notes recorded value on issue date 11,800 11,800 PIK interest issued 1,655 1,505 Accumulated accretion of original issue debt discount 2,127 1,918 Modified convertible notes value $ 15,582 $ 15,223 Total Interest Expense The following table is a summary of total interest expense recognized (in thousands): Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Contractual coupon interest $ 36,879 $ 2,121 $ 72,926 $ 4,047 Non-cash interest expense (including amortization of discounts and deferred financing costs) 9,996 298 19,962 588 Total interest expense $ 46,875 $ 2,419 $ 92,888 $ 4,635 |
Fair Value Measurement of Finan
Fair Value Measurement of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurement of Financial Instruments | |
Fair Value Measurement of Financial Instruments | 9. Fair Value Measurement of Financial Instruments The Company’s assets and liabilities measured at fair value on a nonrecurring basis include cash, accounts receivable, sold receivables, accounts payable, and the convertible notes. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 inputs. There were no impairments of long-lived assets during the three and six months ended June 30, 2019 and 2018. The carrying value of the 2024 Convertible Notes and the Modified Convertible Notes at June 30, 2019 was $38.2 million which approximates their fair value at June 30, 2019. The Company estimates the fair value of the 2024 Convertible Notes and the Modified Convertible Notes using commonly accepted valuation methodologies and unobservable inputs based on the low volume of similar market activity (Level 3). The Company carries the 2024 Convertible Notes and the Modified Convertible Notes at face value less unamortized debt discount and issuance costs on its condensed consolidated balance sheets. For further information on the 2024 Convertible Notes and the Modified Convertible Notes, see “Note 8 – Debt.” |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | 10. Leases The Company adopted ASC 842 on January 1, 2019. Because the Company adopted ASC 842 using the transition method that allowed the Company to initially apply ASC 842 as of January 1, 2019 and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption, prior year financial statements were not recast under the new standard and, therefore, those prior year amounts are not presented below. The Company has commitments under operating leases for retail stores, corporate offices, administrative offices and showrooms expiring on various dates through January 2029. The Company leases certain equipment under finance lease agreements expiring on various dates through January 2022. As of June 30, 2019, the Company’s finance leases were not material to the condensed consolidated balance sheets, condensed consolidated statements of operations or statement of cash flows. Lease agreements for office and showroom facilities expire on various dates through December 2028, and are generally non-cancelable. Initial lease terms for retail store leases generally range from three to ten years with an option to extend or renew the leases for 1 to 10 years. In most instances, at the commencement of the lease, the Company has determined that it is not reasonably certain to exercise either of these options; accordingly, these options are generally not considered in determining the initial lease term. Some of these leases require the Company to make periodic payments for property taxes, utilities and common area operating expenses. Most of the retail store leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume when specific sales volumes are exceeded. Some leases include lease incentives, rent abatements and fixed rent escalations, which are amortized and recorded over the initial lease term on a straight-line basis from the possession date. The components of lease cost for the three and six months ended June 30, 2019 are as follows (in thousands): Three months ended Six months ended June 30, 2019 June 30, 2019 Lease cost Operating lease cost $ 9,858 $ 18,420 Short-term lease cost 2,108 4,240 Variable lease cost (1) 2,908 6,343 Total lease cost $ 14,874 $ 29,003 (1) Variable components of the lease payments such as utilities, taxes and insurance, parking and maintenance costs. Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Amounts reported in the condensed consolidated balance sheet as of June 30, 2019 are as follows (in thousands): As of June 30, 2019 Operating Leases: Operating lease right-of-use assets $ 212,024 Operating lease liabilities $ 200,565 Current portion of operating lease liabilities 19,767 Total operating lease liabilities $ 220,332 Weighted-average remaining lease term Operating leases 7.58 Years Weighted-average discount rate Operating leases 8.20 % Cash flow information related to operating leases for the three and six months ended June 30, 2019 are as follows (in thousands): Three months ended Six months ended June 30, 2019 June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10,004 $ 19,960 Future minimum lease payments under non-cancellable leases as of the period ended June 30, 2019 are as follows (in thousands): 2019 (excluding the six months ended June 30, 2019) $ 21,837 2020 43,018 2021 39,661 2022 36,349 2023 31,543 Thereafter 127,300 Total undiscounted lease payments 299,708 Less: imputed interest (79,376) Total lease liabilities $ 220,332 Reported as: Current portion of operating lease liabilities $ 19,767 Operating lease liabilities 200,565 Total lease liabilities $ 220,332 As of June 30, 2019, the Company has additional operating leases, primarily for buildings, that have not yet commenced of $13.5 million. These operating leases will commence in fiscal year 2019 with lease terms of 1 year to 5 years. As of December 31, 2018, for the period prior to adoption of ASC 842, the future minimum rental payments under non-cancelable operating leases with lease terms in excess of one year were as follows (in thousands): 2019 $ 44,295 2020 39,771 2021 37,722 2022 35,554 2023 31,110 Thereafter 125,863 Total $ 314,315 Rent expense was $14.2 million for the year ended December 31, 2018. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity | |
Equity | 11. Equity Amended and Restated 2004 Stock Incentive Plan In 2004, the Board of Directors adopted, and the Company’s shareholders approved the 2004 Stock Incentive Plan. In October 2011, the Board of Directors adopted, and the Company’s shareholders approved, the Amended and Restated 2004 Stock Incentive Plan (the “ Amended and Restated Plan ”) to update the 2004 Stock Incentive Plan with respect to certain provisions and changes in the tax code since its original adoption. 2016 Stock Incentive Plan On October 5, 2016, the Board of Directors adopted the 2016 Stock Incentive Compensation Plan (the “ 2016 Stock Incentive Plan ”) which was approved by the Company’s shareholders on November 7, 2016. Under the 2016 Stock Incentive Plan, 3,529,109 shares of common stock have been reserved for issuance in connection with grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“ RSUs ”), performance-based compensation awards, other stock-based awards, dividend equivalents and cash-based awards. Effective October 29, 2018, the 2016 Stock Incentive Plan was amended to increase the reservation of the total shares available for issuance to 12,725,963 shares of common stock. The maximum number of shares with respect to which awards may be granted to any participant in any calendar year under the 2016 Stock Incentive Plan may not exceed 500,000 shares. The Company has granted and continues to grant RSUs, performance stock units (“ PSUs ”) and stock options to its officers, non-employee directors and employees pursuant to the 2016 Stock Incentive Plan or as “inducement grants,” as permitted under NASDAQ rules. The RSUs, PSUs and stock options represent the right to receive one share of common stock for each unit on the vesting date provided that the individual meets the applicable vesting criteria. The exercise price of stock options granted under the 2016 Stock Incentive Plan are determined by the Compensation and Stock Option Committee (the “ Compensation Committee ”) of the Board of Directors or by any other committee designated by the Board of Directors, but may not be less than the fair market value of the Company’s shares of common stock on the date the option is granted. In general, unvested stock options are forfeited when a participant terminates employment or service with the Company or its affiliates. Shares underlying awards that are forfeited, cancelled, terminated or expire unexercised, or settled in cash in lieu of issuance of shares, shall be available for issuance pursuant to future awards to the extent that such shares are forfeited, repurchased or not issued under any such award. Any shares tendered to pay the exercise price of an option or other purchase price of an award, or withholding tax obligations with respect to an award, shall be available for issuance pursuant to future awards. In addition, if any shares subject to an award are not delivered to a participant because (i) such shares are withheld to pay the exercise price or other purchase price of such award, or withholding tax obligations with respect to such award (or other award), or (ii) a payment upon exercise of an award is made in shares, the number of shares subject to the exercised or purchased portion of any such award that are not delivered to the participant shall be available for issuance pursuant to future awards. As of June 30, 2019, shares reserved for future issuance under the incentive plans include: (i) 444 shares of common stock issuable upon exercise of stock options granted under the Amended and Restated Plan; (ii) 2,299,197 shares of common stock issuable upon vesting of RSUs, PSUs and exercise of stock options granted under the 2016 Stock Incentive Plan; and (iii) 8,676,488 shares of common stock are available for future grant under the 2016 Stock Incentive Plan. As of December 31, 2018, the Company no longer granted shares under the Amended and Restated Plan. Also, as of June 30, 2019, there were 5,200,000 shares of common stock issuable upon vesting of RSUs and PSUs granted pursuant to “inducement grants” to certain of our officers. Stock Options As of January 1, 2019, the Company had 320,721 shares of stock options outstanding, comprised of 444 and 320,277 stock options outstanding under the Amended and Restated Plan and 2016 Stock Incentive Plan, respectively. There was no activity related to stock options for the six months ended June 30, 2019. There were no options exercised during the six months ended June 30, 2019. The following table summarizes exercise prices for options exercisable as of June 30, 2019 (in actual amounts): Options Exercisable Weighted-Average Remaining Contractual Exercise Price Number of Shares Life (Years) $ 4.02 70,277 4.9 $ 11.40 444 5.5 70,721 For all stock compensation awards that contain graded vesting with time‑based service conditions, the Company has elected to apply a straight‑line recognition method to account for these awards. Stock-based compensation expense related to stock options was immaterial during the three and six months ended June 30, 2019. As of June 30, 2019, there was $0.6 million of unrecognized compensation cost related to unvested stock options. Stock option awards are measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility over the option’s expected term, the risk-free interest rate over the option’s expected term and the expected annual dividend yield, if any. The Company accounts for forfeitures as they occur. Shares of common stock will be issued when the options are exercised. Restricted Stock Units The following table summarizes RSU activity for the six months ended June 30, 2019 (in actual amounts): Restricted Stock Units Number Of Weighted Average Grant Units Date Fair Value Outstanding at January 1, 2019 5,820,560 $ 4.06 Granted 527,680 3.90 Vested (499,320) 3.04 Forfeited (20,000) 2.85 Outstanding at June 30, 2019 5,828,920 $ 4.14 A total of $2.7 million and $0.9 million of stock-based compensation expense was recognized related to RSUs during the three months ended June 30, 2019 and 2018, respectively. A total of $4.8 million and $0.9 million of stock-based compensation expense was recognized related to RSUs during the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there was $19.9 million of total unrecognized compensation cost related to unvested RSUs. The unrecognized compensation cost is expected to be recognized over a weighted‑average of 2.4 years. Performance Share Units In the second quarter of 2019, the Company did not grant any performance share units. No performance share units were forfeited during the period ended June 30, 2019 and 1,350,000 unvested performance shares are outstanding as of June 30, 2019. The Company did not recognize stock compensation expense for the three months ended June 30, 2019 and 2018, respectively. Stock compensation expense in the amount of $0.8 million and $0 million was recognized for the six months ended June 30, 2019 and 2018, respectively. Management Incentive Plan On October 29, 2018, the Company entered into a letter agreement with GSO (the “ MIP Letter ”). Under the MIP Letter, the Company agreed to create a new stock incentive compensation plan for the amount of 1,776,500 shares of common stock (the “ MIP Plan ”), which will be allocated by the Board in accordance with the Stockholder Agreement. The parties are in process of finalizing an amendment to the MIP Letter, pursuant to which the Company expects the shares to be allocated under its 2016 Stock Incentive Plan instead of a newly created plan and such grants would be subject to the same terms as the 2016 Stock Incentive Plan. Upon the forfeit of any awards granted at the direction of the Special Committee under the 2016 Stock Incentive Plan, the Company expects to issue the equivalent amount of shares of common stock to GSO for no additional consideration. |
Disaggregation of Revenue
Disaggregation of Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Disaggregation of Revenue | |
Disaggregation of Revenue | 12. Disaggregation of Revenue In accordance with ASC 606, the Company elected to disclose its net sales by segment. Each segment presents its own characteristics with respect to the timing of revenue recognition and type of customer. Prior to the GBG Acquisition, the Company organized its business into the following three reportable segments: (1) Wholesale, (2) Consumer Direct and (3) Corporate and other. Following the GBG Acquisition, the Company implemented significant organizational changes that have impacted the manner in which it manages the Company, and realigned its business into the following three reportable segments: (1) Kids, (2) Accessories, and (3) Men’s and Women’s Apparel, to better reflect its internal organization, management and oversight structure. The following tables disaggregate our operating segment net sales by product category and sales channel, which the Company believes provides a meaningful depiction of how the nature, timing and uncertainty of net sales are affected by economic factors: Three months ended June 30, 2019 Three months ended June 30, 2018 Wholesale & Direct to Wholesale & Direct to Licensing Consumer Total Licensing Consumer Total Kids $ 193,231 $ — $ 193,231 $ — $ — $ — Accessories 83,712 — 83,712 — — — Men’s & Women’s Apparel 59,641 86,623 146,264 24,728 11,237 35,965 $ 336,584 $ 86,623 $ 423,207 $ 24,728 $ 11,237 $ 35,965 Six months ended June 30, 2019 Six months ended June 30, 2018 Wholesale & Direct to Wholesale & Direct to Licensing Consumer Total Licensing Consumer Total Kids $ 425,976 $ — $ 425,976 $ — $ — $ — Accessories 180,723 — 180,723 — — — Men’s & Women’s Apparel 201,976 143,429 345,405 54,090 20,694 74,784 $ 808,675 $ 143,429 $ 952,104 $ 54,090 $ 20,694 $ 74,784 International sales were $11.1 million for the three months ended June 30, 2019 and immaterial for the three months ended June 30, 2018. International sales were $30.9 million for the six months ended June 30, 2019 and immaterial for the six months ended June 30, 2018. |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Loss Per Share | |
Loss per Share | 13. Loss per Share Loss per share is computed using weighted average common shares and dilutive common equivalent shares outstanding. Potentially dilutive securities consist of outstanding stock options, unvested RSUs, unvested PSUs, warrants, convertible Series A Preferred Stock and shares issuable upon the assumed conversion of the 2024 Convertible Notes and the Modified Convertible Notes, as applicable. A reconciliation of the numerator and denominator of basic and diluted loss per share is as follows (in thousands, except per share data). Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Basic loss per share computation Numerator: Net loss $ (79,252) $ (5,684) $ (161,115) $ (9,769) Less: preferred dividends — (1,847) — (3,609) Net loss attributable to common stockholders $ (79,252) $ (7,531) $ (161,115) $ (13,378) Denominator: Weighted average common shares outstanding 58,649 13,980 58,588 13,766 Loss per common share - basic Net loss $ (1.35) $ (0.54) $ (2.75) $ (0.97) Net loss per common share - basic $ (1.35) $ (0.54) $ (2.75) $ (0.97) Diluted loss per share computation Numerator: Net loss $ (79,252) $ (5,684) $ (161,115) $ (9,769) Less: preferred dividends — (1,847) — (3,609) Net loss attributable to common stockholders $ (79,252) $ (7,531) $ (161,115) $ (13,378) Denominator: Weighted average common shares outstanding 58,649 13,980 58,588 13,766 Effect of dilutive securities: Options, RSUs, PSUs, warrants, Series A, convertible notes — — — — Dilutive common shares 58,649 13,980 58,588 13,766 Loss per common share - diluted Net loss $ (1.35) $ (0.54) $ (2.75) $ (0.97) Net loss per common share - diluted $ (1.35) $ (0.54) $ (2.75) $ (0.97) The following potentially dilutive shares of common stock were excluded from diluted EPS as the Company had a net loss for the periods ended: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Outstanding stock options 321 71 321 71 Unvested RSUs 5,919 877 5,919 877 Unvested PSUs 1,350 403 1,350 403 Outstanding warrants 650 650 650 650 Convertible Series A Preferred Stock — 4,480 — 4,480 Convertible Series A-1 Preferred Stock — 4,588 — 4,588 Modified Convertible Notes 1,299 1,268 1,299 1,268 2024 Convertible Notes 3,125 — 3,125 — Loss per Share under Two−Class Method The Series A Preferred Stock had the non-forfeitable right to participate on an as converted basis at the conversion rate then in effect in any common stock dividends declared and as such, was considered a participating security. The Series A Preferred Stock was included in the computation of basic and diluted loss per share for the three and six months ended June 30, 2019 and 2018 pursuant to the two-class method. Holders of the Series A Preferred Stock did not participate in undistributed net losses because they were not contractually obligated to do so. The computation of diluted loss per share attributable to common stockholders reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock that are dilutive were exercised or converted into shares of common stock (or resulted in the issuance of shares of common stock) and would then share in the Company’s earnings. During the periods in which the Company record a loss from continuing operations attributable to common stockholders, securities would not be dilutive to net loss per share and conversion into shares of common stock is assumed not to occur. The following table provides a reconciliation of net loss to preferred shareholders and common stockholders for purposes of computing net loss per share for the three and six months ended June 30, 2018 (in thousands, except per share data): Three months ended June 30, Six months ended June 30, 2018 2018 Net loss $ (5,684) $ (9,769) Less: preferred dividends (1,847) (3,609) Net loss attributable to common stockholders $ (7,531) $ (13,378) Denominator: Weighted average common shares outstanding 13,980 13,766 Loss per common share - basic and diluted under two-class method $ (0.54) $ (0.97) There were no preferred dividends for the three or six months ended June 30, 2019. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | 14. Income Taxes The provision for income taxes for the six months ended June 30, 2019 was approximately $1.5 million, or an effective tax rate of 0.9%. The Company has reporting entities in the U.S., Canada and Norway that have incurred net operating losses in each of their respective taxing jurisdictions resulting in no current income tax expense except, the U.S., for a small state minimum income tax expense. Further, the Company has full valuation allowances on its U.S. and Canadian net deferred tax assets resulting in no deferred tax benefit on its net operating losses; however, a small deferred tax benefit was recorded in the Company’s Norwegian net operating losses. In the first quarter of 2019, the Company recorded a deferred expense relating to the valuation allowance in the amount of $1.6 million, or 1.0%. In the second quarter of 2019, the Company recorded minimal state income tax expense in the amount of $0.1 million, or 0.1%, and a deferred benefit relating to net operating losses in Norway in the amount of $0.2 million, or a 0.2% benefit. The Company has evaluated the positive and negative evidence supporting the realization of its net deferred tax assets in each taxing jurisdiction, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized in the U.S. and Canada. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against substantially all of its net deferred tax assets. If the Company subsequently determines that it will be able to realize some portion or all of its deferred tax assets, then an adjustment to its valuation allowance on its deferred tax assets will be made which would have the effect of increasing net income in the period such determination is made. The Company has applied ASC 740, Income Taxes, and has determined that it has uncertain income tax positions that resulted in a tax reserve of $0.1 million. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company is subject to U.S. federal tax authority and U.S. state tax authority examinations for all years with the net operating loss and credit carryforwards. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Information | |
Segment Information | 15. Segment Information Segment Reporting Prior to the GBG Acquisition, the Company organized its business into the following three reportable segments: Wholesale, Consumer Direct and Corporate and other. Upon completing the GBG Acquisition, it resegmented its reportable segments to reflect the organizational structure of the Company, including the operations of the GBG Business. Accordingly, it realigned its business into the following three reportable segments: (i) Kids, (ii) Accessories, and (iii) Men’s and Women’s Apparel. This new segment structure is consistent with how the Company establishes our overall business strategy, allocate resources, and assess performance. All prior period segment information has been recast to reflect the realignment of our segment reporting structure on a comparable basis. Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 (in thousands) Net sales: Kids $ 193,231 $ — $ 425,976 $ — Accessories 83,712 — 180,723 — Men’s & Women’s Apparel 146,264 35,965 345,405 74,784 $ 423,207 $ 35,965 $ 952,104 $ 74,784 Gross profit: Kids $ 37,092 $ — $ 74,265 $ — Accessories 13,171 — 28,819 — Men’s & Women’s Apparel 61,389 14,480 127,514 30,681 $ 111,652 $ 14,480 $ 230,598 $ 30,681 Selling, general and administrative: Kids $ 25,084 $ — $ 53,562 $ — Accessories 11,604 — 24,062 — Men’s & Women’s Apparel 66,279 18,670 138,508 33,963 $ 102,967 $ 18,670 $ 216,132 $ 33,963 Depreciation and amortization: Kids $ 10,647 $ — $ 20,472 $ — Accessories 7,225 — 16,484 — Men’s & Women’s Apparel 5,743 1,412 9,615 2,874 $ 23,615 $ 1,412 $ 46,571 $ 2,874 Other (income) expense, net: Kids $ 6,195 $ — $ 12,312 $ — Accessories 4,615 — 10,673 — Men’s & Women’s Apparel 6,934 — 11,857 — $ 17,744 $ — $ 34,842 $ — Operating income (loss): Kids $ (4,834) $ — $ (12,081) $ — Accessories (10,273) — (22,400) — Men’s & Women’s Apparel (17,567) (5,602) (32,466) (6,156) $ (32,674) $ (5,602) $ (66,947) $ (6,156) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | 16. Related Party Transactions Since March 31, 2019, the Company entered into the following related party transaction. On June 8, 2019, the Company entered into an employment offer letter with Andrew Tarshis in connection with the Company’s employment of Mr. Tarshis as its Executive Vice President, General Counsel (the “ Tarshis Agreement ”). The Tarshis Agreement provides that Mr. Tarshis will be employed for a term beginning on June 24, 2019 and ending June 24, 2022, subject to earlier termination as specified in the Tarshis Agreement. If Mr. Tarshis remains an employee of the Company following expiration of the Term and the Tarshis Agreement is not extended, Mr. Tarshis will be an employee “at will.” The Tarshis Agreement provides for Mr. Tarshis to receive an annual base salary of $600,000 per year and for certain other benefits consistent with those provided to other employees of the Company. Also, the Company will reimburse Mr. Tarshis for the cost of obtaining COBRA coverage during the period prior to his eligibility for the Company’s health plan. The Tarshis Agreement provides for a travel allowance of $1,500 per month during the Term. In addition, Mr. Tarshis is eligible to receive an annual cash bonus with a target of 60% of his annual base salary, subject to the achievement of the applicable performance goals (the “ Bonus ”); provided that for calendar year 2019, the Bonus will be prorated. The Tarshis Agreement provides for a grant of 250,000 RSUs with respect to the Company’s common stock under the Company’s 2016 Stock Incentive Compensation Plan, and subject to the terms and conditions as provided in the 2016 Stock Incentive Compensation Plan and an RSU award agreement to be entered into between Centric Brands Inc. and Mr. Tarshis. The RSUs will vest in one-third increments on each of the first three anniversaries of the effective date of the Tarshis Agreement; subject to Mr. Tarshis’s continued employment through the applicable vesting date; provided, if Mr. Tarshis’s employment is terminated by the Company without cause or due to death or permanent disability or by Mr. Tarshis for good reason, then any unvested portion of the RSUs will accelerate and become fully vested on the date of termination. Any vested RSUs will be settled through the issuance of common stock. Upon a termination of Mr. Tarshis’s employment without cause or a resignation by Mr. Tarshis for good reason (as such terms are defined in the Tarshis Agreement), in addition to acceleration of the RSUs as described above, subject to the execution and non-revocation of a general release, the Company will provide Mr. Tarshis with (i) an amount equal to twelve months of Mr. Tarshis’ base salary; (ii) an annual bonus for the calendar year in which the termination occurs; and (iii) the full cost of COBRA continuation coverage for Mr. Tarshis for twelve (12) months following the date of termination of Mr. Tarshis’s employment. The Tarshis Agreement provides for a perpetual non-solicitation provision, pursuant to which Mr. Tarshis agrees, among other things, not to hire or solicit employees, customers, suppliers and potential customers of the Company. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 17. Subsequent Events Third RPA Amendment On July 30, 2019, the Company amended the PNC Receivables Facility by entering into an amendment (the “Third RPA Amendment”) to the RPA. The Third RPA Amendment reflects that the Seller, the Servicer and Centric-Canada Apparel & Accessories ULC, an unlimited liability company organized under the laws of British Columbia, entered into a Canadian Purchase and Sale Agreement to enable the purchase and sale of Canadian receivables pursuant to the PNC Receivables Facility. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition The Company accounts for its revenues in accordance with Accounting Standards Codification, Revenue from Contracts with Customers, (“ ASC 606 ”). Wholesale revenues are recorded when a contract with the customer is agreed to by both parties and product has been transferred, which generally occurs at the point of shipment from the Company’s warehouse, and recorded at the transaction price based on the amount the Company expects to receive. Collection is probable as the majority of shipments occur to reputable credit worthy businesses and through factored relationships which guarantee payment. Estimated reductions to revenue for customer allowances are recorded based upon history as a percentage of sales and current outstanding chargebacks. The Company may allow for returns based upon pre-approval or in the case of damaged goods. Such returns are estimated based on historical experience and also specific claims filed by the customer. A refund liability is included in accounts payable and accrued expenses within the accompanying condensed consolidated balance sheets. Also, the Company records a return asset receivable in prepaid expenses and other current assets within the accompanying condensed consolidated balance sheets. The return asset receivable is evaluated for impairment each period. Retail store revenue is recognized at the time the customer takes possession of the related merchandise. Revenue for ecommerce sales of products ordered through the Company’s retail internet sites are recognized at the point of shipment to the customer. Retail store revenue and ecommerce revenue exclude sales taxes collected from the customer. Revenue from licensing arrangements is recognized based on actual sales when the Company expects royalties to exceed the minimum guarantee. For licensing arrangements in which the Company does not expect royalties to exceed the minimum guarantee, an estimate of the transaction price is recognized on a straight-line basis over the term of the contract. A contract asset is recorded for revenue recognized in advance of the contract payment terms, which is included in other assets within the accompanying condensed consolidated balance sheet. Nonrefundable upfront fees are recorded as a contract liability and revenue is recognized straight-line over the term of the contract. Contract liabilities are included in other liabilities within the accompanying condensed consolidated balance sheet. Amounts related to shipping and handling that are billed to customers are considered to be activities to fulfill a promise to transfer the goods and are reflected in net sales, and the related costs are reflected in cost of goods sold within the accompanying condensed consolidated statements of operations and comprehensive loss. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, accounts receivable and factored accounts receivable. The Company maintains cash and cash equivalents with various financial institutions, which is designed to limit exposure to any one institution. Periodic evaluations are performed of the relative credit rating of those financial institutions that are considered in the Company’s investment strategy. The vast majority of trade receivables from sales to customers are subsequently sold to a financial institution pursuant to a trade receivables securitization facility. The sale of trade receivables are made on a non-recourse basis; however, such sales are guaranteed through credit insurance purchased from an unrelated financial institution. When insured, the Company is not at risk if a customer fails to pay. For trade receivables not sold to a financial institution, the Company generally does not require collateral. As of June 30, 2019, the net deferred purchase price of trade receivables sold pursuant to the RPA (as defined below) totaled $72.3 million. The RPA was not in place as of June 30, 2018. See “Note 4 – Accounts Receivables.” The Company provides an allowance for estimated losses to be incurred in the collection of accounts receivable based upon the aging of outstanding balances, margin support and other dilution-related items. The net carrying value approximates the fair value for these assets. Such losses have historically been within management’s expectations. Uncollectible accounts are written off once collection efforts are deemed by management to have been exhausted. |
Financial Accounting Standards Recently Adopted and Recently Issued Financial Accounting Standards | Financial Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (“ FASB ”) issued ASC Topic 842, Leases (“ ASC 842 ”), a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ ROU ”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASC 842 as of January 1, 2019, using the modified retrospective approach. The Company elected the ‘comparatives under ASC 840 option’ as a transitional practical expedient, which allows the Company to initially apply the new lease requirements at the effective date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. It also allows the Company to report comparative periods in the financial statements under previous GAAP under ASC 840, Leases (“ ASC 840 ”). There was no cumulative-effect adjustment recorded in connection with our adoption of ASC 842. The Company also elected the ‘package of practical expedients’ permitted under the transition guidance, which allowed the Company to (i) carry forward the historical lease classification, (ii) forgo reassessment of whether any expired or existing contracts contain leases, and (iii) forgo reassessment of whether any previously unamortized initial direct costs continue to meet the definition of initial direct costs under ASC 842. However, any initial direct costs after the effective date will be included within the ROU asset under ASC 842. The Company did not elect the ‘hindsight’ practical expedient to reassess the lease term for existing leases. For the accounting policy practical expedients, the Company elected not to recognize ROU assets and lease liabilities for short-term leases which have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Additionally, the Company elected the non-separation of lease and non-lease components, and as a result, the Company does not need to account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs) for all leases. The adoption of ASC 842 resulted in the recognition of ROU assets of $214.0 million with corresponding lease liabilities of $220.7 million. As a result of adopting the standard, $6.7 million of pre-existing liabilities for deferred rent, unfavorable leases and various lease incentives were reclassified as a component of the ROU assets. There was no adjustment to the opening balance of retained earnings upon adoption of ASC 842 given the nature of the impacts and the other transition practical expedients elected by the Company. Adoption of ASC 842 impacted the Company’s results on January 1, 2019, as follows (in thousands): Adjustments due December 31, 2018 to ASC 842 January 1, 2019 Operating lease ROU assets (1) (2) (4) $ — $ 214,000 $ 214,000 Current portion of operating lease liabilities (3) $ — $ 20,883 $ 20,883 Accounts payable and accrued expenses (1) 525,863 (367) 525,496 Operating lease liabilities (3) — 199,857 199,857 Other non-current liabilities (4) 6,581 (6,373) 208 Total $ 532,444 $ 214,000 $ 746,444 (1) Represents the reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. (2) Represents capitalization of operating lease assets. (3) Represents recognition of operating lease liabilities. (4) Represents reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. The standard did not materially impact the Company’s consolidated net earnings and had no material impact on the condensed consolidated statement of cash flows. For further information regarding leases, see “Note 10 – Leases.” Recently Issued Financial Accounting Standards In June 2016, the FASB issued Accounting Standards Update (“ ASU ”) No. 2016-13, Financial Instruments — Credit Losses — Measurement of Credit Losses on Financial Instruments, an accounting standards update that introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This includes accounts receivable, trade receivables, loans, held-to-maturity debt securities, net investments in leases and certain off-balance sheet credit exposures. The guidance also modifies the impairment model for available-for-sale debt securities. The update is effective for fiscal years beginning after December 15, 2019 and interim periods within that reporting period. The Company is currently assessing the potential effects this update may have on its condensed consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. This standard is effective beginning in the first quarter of 2020, with early adoption permitted. The Company is currently assessing the impact of the new guidance. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance is effective for the Company beginning on January 1, 2020, with early adoption permitted. Certain disclosures in the new guidance will need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact of the new guidance. |
Leases | Leases In general, leases are evaluated and classified as either operating or finance leases. The Company has finance leases, however, finance leases are not material to the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss or condensed consolidated statements of cash flows. The assets related to the Company’s operating leases are included in operating lease ROU assets, and the current and long-term portions of liabilities related to the Company’s operating leases are included in current portion of operating lease liabilities and operating lease liabilities, respectively, on the condensed consolidated balance sheet as of June 30, 2019. Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company cannot determine the implicit rate in its leases, the Company uses its estimated incremental borrowing rate based on information available at the date of the commencement of the lease in calculating the present value of its existing lease payments. The incremental borrowing rate is determined using the U.S. Treasury rate adjusted to account for the Company’s credit rating and the collateralized nature of operating leases. The operating lease asset also includes any lease payments made and unamortized lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line method over the term of the lease. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summarize the impact of adopting ASC 606 on the Company’s consolidated financial statements | Adoption of ASC 842 impacted the Company’s results on January 1, 2019, as follows (in thousands): Adjustments due December 31, 2018 to ASC 842 January 1, 2019 Operating lease ROU assets (1) (2) (4) $ — $ 214,000 $ 214,000 Current portion of operating lease liabilities (3) $ — $ 20,883 $ 20,883 Accounts payable and accrued expenses (1) 525,863 (367) 525,496 Operating lease liabilities (3) — 199,857 199,857 Other non-current liabilities (4) 6,581 (6,373) 208 Total $ 532,444 $ 214,000 $ 746,444 (1) Represents the reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. (2) Represents capitalization of operating lease assets. (3) Represents recognition of operating lease liabilities. (4) Represents reclassification of deferred rent, unfavorable leases and lease incentives to operating lease ROU assets. |
GBG Acquisition (Tables)
GBG Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
GBG Acquisition | |
Schedule of unaudited pro forma results | Three months ended June 30, Six months ended June 30, 2018 2018 (in thousands) (in thousands) Net sales $ 381,346 $ 980,467 Cost of goods sold 305,954 754,980 Gross margin 75,392 225,487 Gross margin % of net sales 19.8 % 23.0 % Operating expenses Selling, general and administrative 144,596 279,884 Depreciation and amortization 22,915 46,349 Total operating expenses 167,511 326,233 Operating loss (92,119) (100,746) Interest expense 37,952 76,065 Other (income) expense, net 103 (17,573) Loss before income taxes (130,174) (159,238) Income tax provision (benefit) (2,439) (1,123) Net loss $ (127,735) $ (158,115) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable | |
Schedule of accounts receivable | Accounts receivable consisted of the following (in thousands): As of As of June 30, 2019 December 31, 2018 Insured receivables sold $ 296,623 $ 380,595 Uninsured receivables sold 45,706 43,630 Total receivables sold 342,329 424,225 Purchase price of sold receivables (245,700) (364,900) Allowances (24,297) (25,500) Sold receivables, net $ 72,332 $ 33,825 Accounts receivable, net $ 24,667 $ 27,910 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventories | |
Schedule of inventories | Inventories are valued at the lower of cost or net realizable value with cost determined by the first-in, first-out method. Inventories consisted of the following (in thousands): As of As of June 30, 2019 December 31, 2018 Finished goods $ 400,696 $ 315,484 Raw materials and work in progress 15,514 27,468 Total inventories $ 416,210 $ 342,952 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of five year payment of term debt and line of credit and modified convertible notes | The five-year payment schedule of the Company’s debt as of June 30, 2019 is as follows (in thousands): Payment Due by Period Original Remainder of Issue (Discount) Carrying 2019 2020 2021 2022 2023 Thereafter Total Premium and Costs, Net Value Revolving facility $ 125,411 $ — $ — $ — $ — $ — $ 125,411 $ — $ 125,411 1L Term Loan 8,062 32,250 32,250 32,250 536,963 — 641,775 (16,309) 625,466 2L Term Loan — — — — — 681,077 681,077 (86,506) 594,571 Convertible notes — — 18,275 — — 25,000 43,275 (5,077) 38,198 Total $ 133,473 $ 32,250 $ 50,525 $ 32,250 $ 536,963 $ 706,077 $ 1,491,538 $ (107,892) $ 1,383,646 |
Schedule of interest expense | The following table is a summary of total interest expense recognized (in thousands): Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Contractual coupon interest $ 36,879 $ 2,121 $ 72,926 $ 4,047 Non-cash interest expense (including amortization of discounts and deferred financing costs) 9,996 298 19,962 588 Total interest expense $ 46,875 $ 2,419 $ 92,888 $ 4,635 |
2024 Convertible Notes | |
Schedule of summary of recorded value of convertible debt | June 30, 2019 December 31, 2018 Convertible note - face value $ 25,000 $ 25,000 Less: Original issue discount (4,522) (4,522) Short-term convertible note recorded value on issue date 20,478 20,478 Accumulated accretion of original issue debt discount 2,138 534 Convertible note value $ 22,616 $ 21,012 |
Modified Convertible Notes | |
Schedule of summary of recorded value of convertible debt | June 30, 2019 December 31, 2018 Modified convertible notes - face value $ 16,473 $ 16,473 Less: original issue discount (4,673) (4,673) Modified convertible notes recorded value on issue date 11,800 11,800 PIK interest issued 1,655 1,505 Accumulated accretion of original issue debt discount 2,127 1,918 Modified convertible notes value $ 15,582 $ 15,223 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Summary of components of lease cost | The components of lease cost for the three and six months ended June 30, 2019 are as follows (in thousands): Three months ended Six months ended June 30, 2019 June 30, 2019 Lease cost Operating lease cost $ 9,858 $ 18,420 Short-term lease cost 2,108 4,240 Variable lease cost (1) 2,908 6,343 Total lease cost $ 14,874 $ 29,003 (1) Variable components of the lease payments such as utilities, taxes and insurance, parking and maintenance costs. |
Schedule of balance sheet of leases | Amounts reported in the condensed consolidated balance sheet as of June 30, 2019 are as follows (in thousands): As of June 30, 2019 Operating Leases: Operating lease right-of-use assets $ 212,024 Operating lease liabilities $ 200,565 Current portion of operating lease liabilities 19,767 Total operating lease liabilities $ 220,332 Weighted-average remaining lease term Operating leases 7.58 Years Weighted-average discount rate Operating leases 8.20 % |
Schedule of cash flow information related to operating leases | Cash flow information related to operating leases for the three and six months ended June 30, 2019 are as follows (in thousands): Three months ended Six months ended June 30, 2019 June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10,004 $ 19,960 |
Summary of maturities of lease liabilities | Future minimum lease payments under non-cancellable leases as of the period ended June 30, 2019 are as follows (in thousands): 2019 (excluding the six months ended June 30, 2019) $ 21,837 2020 43,018 2021 39,661 2022 36,349 2023 31,543 Thereafter 127,300 Total undiscounted lease payments 299,708 Less: imputed interest (79,376) Total lease liabilities $ 220,332 Reported as: Current portion of operating lease liabilities $ 19,767 Operating lease liabilities 200,565 Total lease liabilities $ 220,332 |
Schedule of future minimum rental payments under non-cancelable retail operating leases with lease terms in excess of one year prior to adoption of ASC 842 | As of December 31, 2018, for the period prior to adoption of ASC 842, the future minimum rental payments under non-cancelable operating leases with lease terms in excess of one year were as follows (in thousands): 2019 $ 44,295 2020 39,771 2021 37,722 2022 35,554 2023 31,110 Thereafter 125,863 Total $ 314,315 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity | |
Schedule of exercise prices for options outstanding and exercisable | The following table summarizes exercise prices for options exercisable as of June 30, 2019 (in actual amounts): Options Exercisable Weighted-Average Remaining Contractual Exercise Price Number of Shares Life (Years) $ 4.02 70,277 4.9 $ 11.40 444 5.5 70,721 |
Summary of the status of restricted common stock and RSUs and changes | The following table summarizes RSU activity for the six months ended June 30, 2019 (in actual amounts): Restricted Stock Units Number Of Weighted Average Grant Units Date Fair Value Outstanding at January 1, 2019 5,820,560 $ 4.06 Granted 527,680 3.90 Vested (499,320) 3.04 Forfeited (20,000) 2.85 Outstanding at June 30, 2019 5,828,920 $ 4.14 |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disaggregation of Revenue | |
Summary of disaggregation of our operating segment Net Sales by product category and sales channel | Three months ended June 30, 2019 Three months ended June 30, 2018 Wholesale & Direct to Wholesale & Direct to Licensing Consumer Total Licensing Consumer Total Kids $ 193,231 $ — $ 193,231 $ — $ — $ — Accessories 83,712 — 83,712 — — — Men’s & Women’s Apparel 59,641 86,623 146,264 24,728 11,237 35,965 $ 336,584 $ 86,623 $ 423,207 $ 24,728 $ 11,237 $ 35,965 Six months ended June 30, 2019 Six months ended June 30, 2018 Wholesale & Direct to Wholesale & Direct to Licensing Consumer Total Licensing Consumer Total Kids $ 425,976 $ — $ 425,976 $ — $ — $ — Accessories 180,723 — 180,723 — — — Men’s & Women’s Apparel 201,976 143,429 345,405 54,090 20,694 74,784 $ 808,675 $ 143,429 $ 952,104 $ 54,090 $ 20,694 $ 74,784 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Loss Per Share | |
Schedule of reconciliation of the numerator and denominator of basic and diluted loss per share | A reconciliation of the numerator and denominator of basic and diluted loss per share is as follows (in thousands, except per share data). Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Basic loss per share computation Numerator: Net loss $ (79,252) $ (5,684) $ (161,115) $ (9,769) Less: preferred dividends — (1,847) — (3,609) Net loss attributable to common stockholders $ (79,252) $ (7,531) $ (161,115) $ (13,378) Denominator: Weighted average common shares outstanding 58,649 13,980 58,588 13,766 Loss per common share - basic Net loss $ (1.35) $ (0.54) $ (2.75) $ (0.97) Net loss per common share - basic $ (1.35) $ (0.54) $ (2.75) $ (0.97) Diluted loss per share computation Numerator: Net loss $ (79,252) $ (5,684) $ (161,115) $ (9,769) Less: preferred dividends — (1,847) — (3,609) Net loss attributable to common stockholders $ (79,252) $ (7,531) $ (161,115) $ (13,378) Denominator: Weighted average common shares outstanding 58,649 13,980 58,588 13,766 Effect of dilutive securities: Options, RSUs, PSUs, warrants, Series A, convertible notes — — — — Dilutive common shares 58,649 13,980 58,588 13,766 Loss per common share - diluted Net loss $ (1.35) $ (0.54) $ (2.75) $ (0.97) Net loss per common share - diluted $ (1.35) $ (0.54) $ (2.75) $ (0.97) |
Schedule of potential shares of common stock | The following potentially dilutive shares of common stock were excluded from diluted EPS as the Company had a net loss for the periods ended: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Outstanding stock options 321 71 321 71 Unvested RSUs 5,919 877 5,919 877 Unvested PSUs 1,350 403 1,350 403 Outstanding warrants 650 650 650 650 Convertible Series A Preferred Stock — 4,480 — 4,480 Convertible Series A-1 Preferred Stock — 4,588 — 4,588 Modified Convertible Notes 1,299 1,268 1,299 1,268 2024 Convertible Notes 3,125 — 3,125 — |
Schedule of reconciliation of basic and diluted (loss) earnings per share, two class method | The following table provides a reconciliation of net loss to preferred shareholders and common stockholders for purposes of computing net loss per share for the three and six months ended June 30, 2018 (in thousands, except per share data): Three months ended June 30, Six months ended June 30, 2018 2018 Net loss $ (5,684) $ (9,769) Less: preferred dividends (1,847) (3,609) Net loss attributable to common stockholders $ (7,531) $ (13,378) Denominator: Weighted average common shares outstanding 13,980 13,766 Loss per common share - basic and diluted under two-class method $ (0.54) $ (0.97) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Information | |
Summary of financial information concerning reportable segments | All prior period segment information has been recast to reflect the realignment of our segment reporting structure on a comparable basis. Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 (in thousands) Net sales: Kids $ 193,231 $ — $ 425,976 $ — Accessories 83,712 — 180,723 — Men’s & Women’s Apparel 146,264 35,965 345,405 74,784 $ 423,207 $ 35,965 $ 952,104 $ 74,784 Gross profit: Kids $ 37,092 $ — $ 74,265 $ — Accessories 13,171 — 28,819 — Men’s & Women’s Apparel 61,389 14,480 127,514 30,681 $ 111,652 $ 14,480 $ 230,598 $ 30,681 Selling, general and administrative: Kids $ 25,084 $ — $ 53,562 $ — Accessories 11,604 — 24,062 — Men’s & Women’s Apparel 66,279 18,670 138,508 33,963 $ 102,967 $ 18,670 $ 216,132 $ 33,963 Depreciation and amortization: Kids $ 10,647 $ — $ 20,472 $ — Accessories 7,225 — 16,484 — Men’s & Women’s Apparel 5,743 1,412 9,615 2,874 $ 23,615 $ 1,412 $ 46,571 $ 2,874 Other (income) expense, net: Kids $ 6,195 $ — $ 12,312 $ — Accessories 4,615 — 10,673 — Men’s & Women’s Apparel 6,934 — 11,857 — $ 17,744 $ — $ 34,842 $ — Operating income (loss): Kids $ (4,834) $ — $ (12,081) $ — Accessories (10,273) — (22,400) — Men’s & Women’s Apparel (17,567) (5,602) (32,466) (6,156) $ (32,674) $ (5,602) $ (66,947) $ (6,156) |
Business Description and Basi_2
Business Description and Basis of Presentation (Details) | 6 Months Ended | |
Jun. 30, 2019segmentitem | Jun. 30, 2018segment | |
Business Description and Basis of Presentation | ||
Number of brands | item | 100 | |
Number of Reportable Segments | segment | 3 | 3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Concentration of Risk (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Concentration of Credit Risk | ||
Sold Receivables Net | $ 72,332 | $ 33,825 |
Sales | ||
Concentration of Credit Risk | ||
Sold Receivables Net | $ 72,300 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Accounting Standards Recently Adopted (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Package - Practical expedients | true | ||
Hindsight - Practical expedients | false | ||
Operating lease ROU assets | $ 214,000 | $ 212,024 | |
Lease liabilities | 220,332 | ||
Current portion of operating lease liabilities | 20,883 | 19,767 | |
Accounts payable and accrued expenses | 525,496 | 633,402 | $ 525,863 |
Operating lease liabilities | 199,857 | 200,565 | |
Other non-current liabilities | 208 | 127 | 6,581 |
Total liabilities | 746,444 | $ 2,237,507 | 1,775,578 |
Adjustments due to ASC 842 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease ROU assets | 214,000 | ||
Adjustment to retained earnings | 0 | ||
Current portion of operating lease liabilities | 20,883 | ||
Accounts payable and accrued expenses | (367) | 525,863 | |
Operating lease liabilities | 199,857 | ||
Other non-current liabilities | (6,373) | 6,581 | |
Total liabilities | 214,000 | $ 532,444 | |
Adjustments due to ASC 842 | Measurement Period Adjustment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liabilities | 220,700 | ||
Liabilities for deferred rent and various lease incentives | $ 6,700 |
GBG Acquisition - Acquisition (
GBG Acquisition - Acquisition (Details) - USD ($) $ in Millions | Oct. 29, 2018 | Apr. 17, 2019 |
Business Acquisition | ||
Preliminary purchase price | $ 1.2 | |
New Revolving Facility | ||
Business Acquisition | ||
Modified convertible notes - face value | 150 | $ 200 |
Senior Secured Term Loan Credit Facility | ||
Business Acquisition | ||
Modified convertible notes - face value | 645 | |
Second Lien Term Loan Facility | ||
Business Acquisition | ||
Modified convertible notes - face value | $ 668 |
GBG Acquisition - Allocation an
GBG Acquisition - Allocation and Proforma (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Pro forma financial information (unaudited) | ||
Net sales | $ 381,346 | $ 980,467 |
Cost of goods sold | 305,954 | 754,980 |
Gross margin | $ 75,392 | $ 225,487 |
Gross margin % of net sales | 19.80% | 23.00% |
Operating expenses | ||
Selling, general and administrative | $ 144,596 | $ 279,884 |
Depreciation and amortization | 22,915 | 46,349 |
Total operating expenses | 167,511 | 326,233 |
Operating loss | (92,119) | (100,746) |
Interest expense | 37,952 | 76,065 |
Other (income) expense, net | 103 | (17,573) |
Loss before income taxes | (130,174) | (159,238) |
Income tax provision (benefit) | (2,439) | (1,123) |
Net loss | $ (127,735) | $ (158,115) |
Accounts Receivables - New Rece
Accounts Receivables - New Receivable Facility (Details) - USD ($) $ in Millions | Apr. 25, 2019 | Oct. 31, 2018 |
Accounts receivable, inventory advances and due from factor | ||
Trade Receivables Securitization Facility Term | 3 years | |
New Receivables Facility | ||
Accounts receivable, inventory advances and due from factor | ||
Trade Receivables Securitization Facility Term | 3 years | |
Maximum sale of undivided ownership interest | $ 450 | |
Trade Receivables Securitization Facility Under R P A | ||
Accounts receivable, inventory advances and due from factor | ||
Maximum sale of undivided ownership interest | $ 600 | |
Increase in undivided ownership interest | $ 150 |
Accounts Receivables - SWIMS Fa
Accounts Receivables - SWIMS Factoring Agreement (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable | ||
Insured receivables sold | $ 296,623 | $ 380,595 |
Uninsured receivables sold | 45,706 | 43,630 |
Total receivables sold | 342,329 | 424,225 |
Purchase price of sold receivables | (245,700) | (364,900) |
Allowances | (24,297) | (25,500) |
Sold receivables, net | 72,332 | 33,825 |
Accounts receivable, net | $ 24,667 | $ 27,910 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Inventories | ||
Finished goods | $ 400,696 | $ 315,484 |
Raw materials and work in progress | 15,514 | 27,468 |
Total inventories | $ 416,210 | $ 342,952 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill - Intangibles (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Intangible Assets and Goodwill | ||||
Amortization expense related to the intangible assets | $ 19.4 | $ 0.7 | $ 38.9 | $ 1.5 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill | ||||
Impairment charge | $ 0 | $ 0 | $ 0 | $ 0 |
Debt (Details)
Debt (Details) $ / shares in Units, $ in Thousands | Apr. 25, 2019USD ($) | Oct. 29, 2018USD ($)$ / shares | Oct. 01, 2016 | Jan. 18, 2016USD ($)D | Oct. 31, 2018 | Jun. 30, 2019USD ($)$ / shares | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Apr. 17, 2019USD ($) | Apr. 16, 2019USD ($) | Jan. 29, 2018USD ($) | Jan. 28, 2016USD ($) |
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Remainder of 2019 | $ 133,473 | $ 133,473 | |||||||||||||
2020 | 32,250 | 32,250 | |||||||||||||
2021 | 50,525 | 50,525 | |||||||||||||
2022 | 32,250 | 32,250 | |||||||||||||
2023 | 536,963 | 536,963 | |||||||||||||
Thereafter | 706,077 | 706,077 | |||||||||||||
Modified convertible notes recorded value on issue date | 1,491,538 | 1,491,538 | |||||||||||||
Less: Original issue discount | (107,892) | (107,892) | |||||||||||||
Carrying Value | 1,383,646 | 1,383,646 | |||||||||||||
Paid-in-kind interest | 9,861 | $ 828 | |||||||||||||
Net sales | 423,207 | $ 35,965 | 952,104 | $ 74,784 | |||||||||||
Preliminary purchase price | $ 1,200 | ||||||||||||||
Aggregate original issue discount | $ 4,700 | ||||||||||||||
Long-term Debt, Gross | $ 1,491,538 | $ 1,491,538 | |||||||||||||
Receivables facility period (in years) | 3 years | ||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||||
Recorded value of the convertible note | |||||||||||||||
Less: Original issue discount | $ (107,892) | $ (107,892) | |||||||||||||
Modified convertible notes recorded value on issue date | 1,491,538 | 1,491,538 | |||||||||||||
Revolving credit facilities | 125,411 | 125,411 | $ 315 | ||||||||||||
New Revolving Facility | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Remainder of 2019 | 125,411 | 125,411 | |||||||||||||
Modified convertible notes recorded value on issue date | 125,411 | 125,411 | |||||||||||||
Debt issuance cost | $ 1,500 | ||||||||||||||
Carrying Value | 125,411 | 125,411 | |||||||||||||
Aggregate principal amount | 200,000 | $ 150,000 | |||||||||||||
Availability | 60,400 | 60,400 | |||||||||||||
Borrowings | 125,000 | 125,000 | |||||||||||||
Debt Issuance Cost | 6,800 | 6,800 | |||||||||||||
Long-term Debt, Gross | 125,411 | 125,411 | |||||||||||||
Recorded value of the convertible note | |||||||||||||||
Modified convertible notes - face value | $ 150,000 | 200,000 | |||||||||||||
Modified convertible notes recorded value on issue date | 125,411 | $ 125,411 | |||||||||||||
New Revolving Facility | Base Rate | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Floor rate (in percent) | 1.00% | ||||||||||||||
Margin on variable rate basis (as a percent) | 4.50% | ||||||||||||||
New Revolving Facility | LIBOR rate loans | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Floor rate (in percent) | 0.00% | ||||||||||||||
Margin on variable rate basis (as a percent) | 5.50% | ||||||||||||||
New Revolving Facility | First Year After The Closing Date | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Prepayment premium (in percent) | 3.00% | ||||||||||||||
New Revolving Facility | Second Year After The Closing Date | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Prepayment premium (in percent) | 2.00% | ||||||||||||||
New Revolving Facility | Third Year After The Closing Date | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Prepayment premium (in percent) | 1.00% | ||||||||||||||
First Lien Credit Agreement | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Remainder of 2019 | 8,062 | $ 8,062 | |||||||||||||
2020 | 32,250 | 32,250 | |||||||||||||
2021 | 32,250 | 32,250 | |||||||||||||
2022 | 32,250 | 32,250 | |||||||||||||
2023 | 536,963 | 536,963 | |||||||||||||
Modified convertible notes recorded value on issue date | 641,775 | 641,775 | |||||||||||||
Less: Original issue discount | (16,309) | (16,309) | |||||||||||||
Carrying Value | 625,466 | 625,466 | |||||||||||||
Aggregate principal amount | $ 645,000 | 645,000 | 600,000 | 550,000 | |||||||||||
Proceeds from the issuance of term loan | $ 614,700 | ||||||||||||||
Effective interest rate (as a percent) | 9.00% | 9.00% | |||||||||||||
Long-term Debt, Gross | $ 641,775 | $ 641,775 | |||||||||||||
Recorded value of the convertible note | |||||||||||||||
Less: Original issue discount | (16,309) | (16,309) | |||||||||||||
Modified convertible notes recorded value on issue date | $ 641,775 | $ 641,775 | |||||||||||||
First Lien Credit Agreement | Cash And Noncash Interest Related To Deferred Fees And Debt Discounts [Member] | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Effective interest rate (as a percent) | 10.00% | 10.00% | |||||||||||||
Second Lien Credit Agreement | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Thereafter | $ 681,077 | $ 681,077 | |||||||||||||
Modified convertible notes recorded value on issue date | 681,077 | 681,077 | |||||||||||||
Less: Original issue discount | (86,506) | (86,506) | |||||||||||||
Carrying Value | 594,571 | 594,571 | |||||||||||||
Aggregate principal amount | $ 668,000 | 668,000 | $ 845,000 | $ 795,000 | |||||||||||
Proceeds from the issuance of term loan | $ 646,800 | ||||||||||||||
Effective interest rate (as a percent) | 10.00% | 10.00% | |||||||||||||
Long-term Debt, Gross | $ 681,077 | $ 681,077 | |||||||||||||
Recorded value of the convertible note | |||||||||||||||
Less: Original issue discount | (86,506) | (86,506) | |||||||||||||
Modified convertible notes recorded value on issue date | $ 681,077 | $ 681,077 | |||||||||||||
Second Lien Credit Agreement | Cash And Noncash Interest Related To Deferred Fees And Debt Discounts [Member] | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Effective interest rate (as a percent) | 14.00% | 14.00% | |||||||||||||
Revolving Facility | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Aggregate principal amount | $ 150,000 | ||||||||||||||
Availability | 668,000 | ||||||||||||||
Convertible notes | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
2021 | $ 18,275 | $ 18,275 | |||||||||||||
Thereafter | 25,000 | 25,000 | |||||||||||||
Modified convertible notes recorded value on issue date | 43,275 | 43,275 | |||||||||||||
Less: Original issue discount | (5,077) | (5,077) | |||||||||||||
Carrying Value | 38,198 | 38,198 | |||||||||||||
Long-term Debt, Gross | 43,275 | 43,275 | |||||||||||||
Recorded value of the convertible note | |||||||||||||||
Less: Original issue discount | (5,077) | (5,077) | |||||||||||||
Modified convertible notes recorded value on issue date | 43,275 | 43,275 | |||||||||||||
Trade Receivables Securitization Facility Under R P A | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Maximum sale of undivided ownership interest | $ 600,000 | ||||||||||||||
Increase in undivided ownership interest | $ 150,000 | ||||||||||||||
Term Facility | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Aggregate principal amount | $ 645,000 | ||||||||||||||
Credit Facilities | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Paid-in-kind interest | $ 9,900 | 13,100 | |||||||||||||
Debt Issuance Cost | 51,500 | 51,500 | |||||||||||||
Modified Convertible Notes | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Modified convertible notes recorded value on issue date | 11,800 | 11,800 | 11,800 | ||||||||||||
Less: Original issue discount | (4,673) | (4,673) | (4,673) | ||||||||||||
Amount of interest payable in cash (as a percent) | 50.00% | ||||||||||||||
Amount of interest payable in kind (as a percent) | 50.00% | ||||||||||||||
Amount of interest payable in cash, discretionary (as a percent) | 100.00% | ||||||||||||||
Long-term Debt, Gross | 11,800 | 11,800 | 11,800 | ||||||||||||
Recorded value of the convertible note | |||||||||||||||
Modified convertible notes - face value | $ 16,500 | 16,473 | 16,473 | 16,473 | |||||||||||
Less: Original issue discount | (4,673) | (4,673) | (4,673) | ||||||||||||
Modified convertible notes recorded value on issue date | 11,800 | 11,800 | 11,800 | ||||||||||||
PIK interest issued | 1,655 | 1,505 | |||||||||||||
Accumulated accretion of original issue debt discount | 2,127 | 1,918 | |||||||||||||
Modified convertible notes value | 15,582 | 15,582 | 15,223 | ||||||||||||
Modified Convertible Notes | Conversion of Convertible Notes into Common Stock | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Annual rate on outstanding principal amount (as a percent) | 7.00% | 6.50% | |||||||||||||
Trading days immediately preceding the notice of conversion used for calculation of average of the closing prices for the common stock | D | 20 | ||||||||||||||
2024 Convertible Notes | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Modified convertible notes recorded value on issue date | 20,478 | 20,478 | 20,478 | ||||||||||||
Less: Original issue discount | (4,522) | (4,522) | (4,522) | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 8 | ||||||||||||||
Long-term Debt, Gross | 20,478 | 20,478 | 20,478 | ||||||||||||
Recorded value of the convertible note | |||||||||||||||
Modified convertible notes - face value | $ 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||
Less: Original issue discount | (4,522) | (4,522) | (4,522) | ||||||||||||
Modified convertible notes recorded value on issue date | 20,478 | 20,478 | 20,478 | ||||||||||||
Accumulated accretion of original issue debt discount | 2,138 | 534 | |||||||||||||
Modified convertible notes value | $ 22,616 | $ 22,616 | $ 21,012 | ||||||||||||
2024 Convertible Notes | From and after April 29, 2019 To October 29, 2019 | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Prior written notice (in days) | 10 days | ||||||||||||||
Interest rate (in percent) | 12.00% | ||||||||||||||
2024 Convertible Notes | From and after October 29, 2019 | |||||||||||||||
Five year payment schedule of debt for convertible notes, line of credit and ling-term debt | |||||||||||||||
Prior written notice (in days) | 10 days | ||||||||||||||
Interest rate (in percent) | 16.00% |
Debt - Interest Expense (Detail
Debt - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Components of interest expense | ||||
Contractual coupon interest | $ 36,879 | $ 2,121 | $ 72,926 | $ 4,047 |
Non-cash interest expense (including amortization of discounts and deferred financing costs) | 9,996 | 298 | 19,962 | 588 |
Total interest expense | $ 46,875 | $ 2,419 | $ 92,888 | $ 4,635 |
Fair Value Measurement of Fin_2
Fair Value Measurement of Financial Instruments (Details) - Nonrecurring - Level 3 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair value disclosures | ||||
Impairments of long-lived assets | $ 0 | $ 0 | $ 0 | $ 0 |
Convertible notes | $ 38,200 | $ 38,200 |
Leases (Details)
Leases (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Operating lease, option to extend | true |
Minimum | |
Leases | |
Operating lease term | 3 years |
Operating lease, renewal term | 1 year |
Maximum | |
Leases | |
Operating lease term | 10 years |
Operating lease, renewal term | 10 years |
Leases - Components of lease co
Leases - Components of lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Lease cost | ||
Operating lease cost | $ 9,858 | $ 18,420 |
Short-term lease cost | 2,108 | 4,240 |
Variable lease cost (1) | 2,908 | 6,343 |
Total lease cost | $ 14,874 | $ 29,003 |
Leases - Balance Sheet and Cash
Leases - Balance Sheet and Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jan. 01, 2019 | |
Operating leases: | |||
Operating lease right-of-use assets | $ 212,024 | $ 212,024 | $ 214,000 |
Operating lease liabilities | 200,565 | 200,565 | 199,857 |
Current portion of operating lease liabilities | 19,767 | 19,767 | $ 20,883 |
Total operating lease liabilities | $ 220,332 | $ 220,332 | |
Weighted-average remaining lease term, operating leases | 7 years 6 months 29 days | 7 years 6 months 29 days | |
Weighted-average discount rate, operating leases | 8.20% | 8.20% | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 10,004 | $ 19,960 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2019 | Jan. 01, 2019 | |
Future minimum lease payments under non-cancellable leases | |||
2019 (excluding the six months ended June 30, 2019) | $ 21,837 | ||
2020 | 43,018 | ||
2021 | 39,661 | ||
2022 | 36,349 | ||
2023 | 31,543 | ||
Thereafter | 127,300 | ||
Total undiscounted lease payments | 299,708 | ||
Less: imputed interest | (79,376) | ||
Total lease liabilities | 220,332 | ||
Current portion of operating lease liabilities | 19,767 | $ 20,883 | |
Operating lease liabilities | 200,565 | $ 199,857 | |
Total operating lease liabilities | $ 220,332 | ||
Future minimum lease payments under non-cancellable operating leases | |||
2019 | $ 44,295 | ||
2020 | 39,771 | ||
2021 | 37,722 | ||
2022 | 35,554 | ||
2023 | 31,110 | ||
Thereafter | 125,863 | ||
Total minimum lease payments | 314,315 | ||
Rental expense for operating leases | $ 14,200 |
Leases - Operating Leases Not Y
Leases - Operating Leases Not Yet Commenced (Details) $ in Millions | Jun. 30, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
Operating leases not yet commenced, amount | $ 13.5 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating leases not yet commenced, terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating leases not yet commenced, terms | 5 years |
Equity - Incentive Plan (Detail
Equity - Incentive Plan (Details) - shares | Oct. 29, 2018 | Jun. 30, 2019 | Nov. 07, 2016 |
RSUs | Officer | |||
Shares Reserved For Future Issuance | |||
Number of shares of common stock authorized for issuance | 5,200,000 | ||
2016 Plan | |||
Stock Incentive Plans and Plan Amendment | |||
Number of shares reserved for future issuance | 3,529,109 | ||
Shares Reserved For Future Issuance | |||
Shares of common stock issuable | 12,725,963 | ||
Maximum number of shares that can be awarded to any employee in one year | 500,000 | ||
Number of shares of common stock authorized for issuance | 8,676,488 | ||
2016 Plan | RSUs | |||
Shares Reserved For Future Issuance | |||
Shares of common stock issuable | 2,299,197 | ||
Amended And Restated Plan | |||
Shares Reserved For Future Issuance | |||
Shares of common stock issuable | 444 |
Equity - Plan Activity (Details
Equity - Plan Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jan. 01, 2019 | |
Options Outstanding and Exercisable | ||
Options outstanding | 320,721 | |
Exercised (in shares) | 0 | |
Number of shares | 70,721 | |
Unrecognized compensation cost | ||
Total unrecognized compensation cost | $ 0.6 | |
Amended And Restated Plan | ||
Options Outstanding and Exercisable | ||
Options outstanding | 444 | |
2016 Plan | ||
Options Outstanding and Exercisable | ||
Options outstanding | 320,277 | |
4.02 | ||
Options Outstanding and Exercisable | ||
Exercise Price (in dollars per share) | $ 4.02 | |
Number of shares | 70,277 | |
Weighted-Average Remaining Contractual Life (Years) | 4 years 10 months 24 days | |
11.40 | ||
Options Outstanding and Exercisable | ||
Exercise Price (in dollars per share) | $ 11.40 | |
Number of shares | 444 | |
Weighted-Average Remaining Contractual Life (Years) | 5 years 6 months |
Equity - Restricted Stock Units
Equity - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Oct. 29, 2018 | |
RSUs | |||||
Restricted Stock Units | |||||
Outstanding at the beginning of the period (in shares) | 5,820,560 | ||||
Granted (in shares) | 527,680 | ||||
Vested (in shares) | (499,320) | ||||
Forfeited (in shares) | (20,000) | ||||
Outstanding at the end of the period (in shares) | 5,828,920 | 5,828,920 | |||
Weighted-Average Grant-Date Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 4.06 | ||||
Granted (in dollars per share) | 3.90 | ||||
Vested (in dollars per share) | 3.04 | ||||
Forfeited (in dollars per share) | 2.85 | ||||
Outstanding at the end of the period (in dollars per share) | $ 4.14 | $ 4.14 | |||
Unrecognized compensation cost | |||||
Stock based compensation expense recognized | $ 2.7 | $ 0.9 | $ 4.8 | $ 0.9 | |
Total unrecognized compensation | $ 19.9 | $ 19.9 | |||
Weighted-average period for recognition of unrecognized compensation cost | 2 years 4 months 24 days | ||||
PSUs | |||||
Restricted Stock Units | |||||
Granted (in shares) | 0 | ||||
Forfeited (in shares) | 0 | ||||
Outstanding at the end of the period (in shares) | 1,350,000 | 1,350,000 | |||
Unrecognized compensation cost | |||||
Stock based compensation expense recognized | $ 0.8 | $ 0 | |||
Management Incentive Plan | |||||
Management Incentive Plan | |||||
Number of shares of common stock authorized for issuance | 1,776,500 |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($)segment | |
Disaggregation of Revenue [Line Items] | ||||
Number of reportable segments | segment | 3 | 3 | ||
Net sales | $ 423,207 | $ 35,965 | $ 952,104 | $ 74,784 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 11,100 | 30,900 | ||
Kids | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 193,231 | 425,976 | ||
Accessories | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 83,712 | 180,723 | ||
Men's & Women's Apparel | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 146,264 | 35,965 | 345,405 | 74,784 |
Wholesale and licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 336,584 | 24,728 | 808,675 | 54,090 |
Wholesale and licensing | Kids | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 193,231 | 425,976 | ||
Wholesale and licensing | Accessories | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 83,712 | 180,723 | ||
Wholesale and licensing | Men's & Women's Apparel | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 59,641 | 24,728 | 201,976 | 54,090 |
Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 86,623 | 11,237 | 143,429 | 20,694 |
Retail | Men's & Women's Apparel | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 86,623 | $ 11,237 | $ 143,429 | $ 20,694 |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||
Net loss | $ (79,252) | $ (5,684) | $ (161,115) | $ (9,769) |
Less: preferred dividends | (1,847) | (3,609) | ||
Net loss attributable to common stockholders | $ (79,252) | $ (7,531) | $ (161,115) | $ (13,378) |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 58,649 | 13,980 | 58,588 | 13,766 |
Net loss (in dollars per share) | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Loss per common share - basic (in dollars per share) | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Numerator: | ||||
Net loss | $ (79,252) | $ (5,684) | $ (161,115) | $ (9,769) |
Less: preferred dividends | (1,847) | (3,609) | ||
Net loss attributable to common stockholders | $ (79,252) | $ (7,531) | $ (161,115) | $ (13,378) |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 58,649 | 13,980 | 58,588 | 13,766 |
Dilutive common shares | 58,649 | 13,980 | 58,588 | 13,766 |
Net loss (in dollars per share) | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Loss per common share - diluted | $ (1.35) | $ (0.54) | $ (2.75) | $ (0.97) |
Modified Convertible Notes | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 1,299 | 1,268 | 1,299 | 1,268 |
2024 Convertible Notes | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 3,125 | 3,125 | ||
Preferred Series A | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 4,480 | 4,480 | ||
Series A-1 | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 4,588 | 4,588 | ||
Warrants | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 650 | 650 | 650 | 650 |
Stock options | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 321 | 71 | 321 | 71 |
RSUs | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 5,919 | 877 | 5,919 | 877 |
PSUs | ||||
Denominator: | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 1,350 | 403 | 1,350 | 403 |
Loss Per Share - Two Class Meth
Loss Per Share - Two Class Method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Loss Per Share | ||||
Net loss | $ (5,684) | $ (9,769) | ||
Less: preferred dividends | (1,847) | (3,609) | ||
Net loss attributable to common stockholders | $ (79,252) | $ (7,531) | $ (161,115) | $ (13,378) |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 58,649 | 13,980 | 58,588 | 13,766 |
Loss per common share - basic and diluted under two-class method (in dollars per share) | $ (0.54) | $ (0.97) | ||
Preferred dividends | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Expense (Benefit) | $ (95) | $ (2,440) | $ 1,524 | $ (1,124) | |
Effective tax rate from continuing operations (as a percent) | 0.90% | ||||
Deferred expenses relating to valuation allowance | $ 1,600 | ||||
Deferred expenses relating to valuation allowance (as a percent) | 1.00% | ||||
Unrecognized tax benefits | 100 | $ 100 | |||
NORWAY | |||||
Deferred benefit relating to net operating losses | $ 200 | ||||
Deferred benefit relating to net operating losses ( as a percent) | 0.20% | ||||
NORWAY | Minimum | |||||
Income Tax Expense (Benefit) | $ 100 | ||||
Effective tax rate from continuing operations (as a percent) | 0.10% |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($)segment | |
Segment information | ||||
Number of reportable business segments | segment | 3 | 3 | ||
Net sales | $ 423,207 | $ 35,965 | $ 952,104 | $ 74,784 |
Gross profit | 111,652 | 14,480 | 230,598 | 30,681 |
Selling, general and administrative | 102,967 | 18,670 | 216,132 | 33,963 |
Depreciation and amortization | 23,615 | 1,412 | 46,571 | 2,874 |
Other (income) expense, net | 17,744 | 34,842 | ||
Operating income (loss) | (32,674) | (5,602) | (66,947) | (6,156) |
Men’s & Women’s Apparel | ||||
Segment information | ||||
Net sales | 146,264 | 35,965 | 345,405 | 74,784 |
Gross profit | 61,389 | 14,480 | 127,514 | 30,681 |
Selling, general and administrative | 66,279 | 18,670 | 138,508 | 33,963 |
Depreciation and amortization | 5,743 | 1,412 | 9,615 | 2,874 |
Other (income) expense, net | 6,934 | 11,857 | ||
Operating income (loss) | (17,567) | $ (5,602) | (32,466) | $ (6,156) |
Kids | ||||
Segment information | ||||
Net sales | 193,231 | 425,976 | ||
Gross profit | 37,092 | 74,265 | ||
Selling, general and administrative | 25,084 | 53,562 | ||
Depreciation and amortization | 10,647 | 20,472 | ||
Other (income) expense, net | 6,195 | 12,312 | ||
Operating income (loss) | (4,834) | (12,081) | ||
Accessories | ||||
Segment information | ||||
Net sales | 83,712 | 180,723 | ||
Gross profit | 13,171 | 28,819 | ||
Selling, general and administrative | 11,604 | 24,062 | ||
Depreciation and amortization | 7,225 | 16,484 | ||
Other (income) expense, net | 4,615 | 10,673 | ||
Operating income (loss) | $ (10,273) | $ (22,400) |
Related Party Transactions - Ta
Related Party Transactions - Tarshis Agreement (Details) - USD ($) $ in Thousands | Jun. 08, 2019 | Jun. 30, 2019 |
RSUs | ||
Related party transactions | ||
Granted (in shares) | 527,680 | |
Mr. Tarshis | ||
Related party transactions | ||
Annual base salary | $ 600,000 | |
Annual cash bonuses | 60.00% | |
Travel allowance | $ 1,500 | |
Mr. Tarshis | Termination of employment without cause or resignation for good reason | ||
Related party transactions | ||
COBRA continuation coverage eligibility period (in months) | 12 months | |
Period for base salary calculation (in months) | 12 months | |
Mr. Tarshis | RSUs | ||
Related party transactions | ||
Granted (in shares) | 250,000 |