Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 04, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-52170 | |
Entity Registrant Name | INNERWORKINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5997364 | |
Entity Address, Address Line One | 203 North LaSalle Street | |
Entity Address, Address Line Two | Suite 1800 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60601 | |
City Area Code | (312) | |
Local Phone Number | 642-3700 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | INWK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 52,842,618 | |
Entity Central Index Key | 0001350381 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 203,311 | $ 283,861 | $ 464,671 | $ 551,072 |
Cost of goods sold | 154,890 | 215,463 | 352,808 | 420,664 |
Gross profit | 48,421 | 68,398 | 111,863 | 130,408 |
Operating expenses: | ||||
Selling, general and administrative expenses | 45,117 | 57,404 | 96,756 | 113,235 |
Depreciation and amortization | 3,310 | 3,233 | 6,437 | 5,849 |
Goodwill impairment | 0 | 0 | 7,191 | 0 |
Intangible and other asset impairments | 609 | 0 | 883 | 0 |
Restructuring charges | 3,644 | 3,698 | 7,281 | 7,632 |
(Loss) income from operations | (4,259) | 4,063 | (6,685) | 3,692 |
Other income (expense): | ||||
Interest income | 53 | 104 | 109 | 202 |
Interest expense | (3,201) | (2,486) | (7,587) | (5,232) |
(Loss) gain from change in fair value of warrant | (120) | 0 | 5,085 | 0 |
Foreign exchange income (loss) | 862 | 237 | (1,929) | (239) |
Other income | 221 | 42 | 1,117 | 78 |
Total other expense | (2,185) | (2,103) | (3,205) | (5,191) |
(Loss) income before income taxes | (6,444) | 1,960 | (9,890) | (1,499) |
Income tax expense | 1,468 | 2,468 | 862 | 1,053 |
Net loss | $ (7,912) | $ (508) | $ (10,752) | $ (2,552) |
Basic loss per share (in dollars per share) | $ (0.15) | $ (0.01) | $ (0.20) | $ (0.05) |
Diluted loss per share (in dollars per share) | $ (0.15) | $ (0.01) | $ (0.30) | $ (0.05) |
Comprehensive loss | $ (7,715) | $ (246) | $ (15,651) | $ (1,578) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 35,311 | $ 42,711 |
Accounts receivable, net of allowance for doubtful accounts of $3,470 and $3,830, respectively | 158,636 | 202,406 |
Unbilled revenue | 23,900 | 48,396 |
Other receivables | 9,858 | 28,194 |
Inventories | 37,303 | 34,977 |
Prepaid expenses | 13,021 | 10,680 |
Other current assets | 6,981 | 7,301 |
Total current assets | 285,010 | 374,665 |
Property and equipment, net | 36,357 | 37,224 |
Intangibles and other assets: | ||
Goodwill | 144,967 | 152,210 |
Intangible assets, net | 6,693 | 7,714 |
Right of use assets, net | 46,805 | 51,159 |
Deferred income taxes | 2,183 | 2,182 |
Other non-current assets | 3,018 | 4,129 |
Total intangibles and other assets | 203,666 | 217,394 |
Total assets | 525,033 | 629,283 |
Current liabilities: | ||
Accounts payable | 96,866 | 142,136 |
Accrued expenses | 43,350 | 50,975 |
Deferred revenue | 10,572 | 9,568 |
Other current liabilities | 25,969 | 35,665 |
Total current liabilities | 186,833 | 246,437 |
Lease liabilities | 42,487 | 46,075 |
Deferred income taxes | 8,053 | 8,053 |
Other long-term liabilities | 1,762 | 1,138 |
Total liabilities | 359,411 | 451,031 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.0001 per share, 200,000 shares authorized, 65,375 and 64,820 shares issued, and 52,688 and 52,133 shares outstanding, respectively | 6 | 6 |
Additional paid-in capital | 248,215 | 245,311 |
Treasury stock at cost, 12,215 and 12,688 shares, respectively | (78,418) | (81,471) |
Accumulated other comprehensive loss | (27,348) | (22,449) |
Retained earnings | 23,167 | 36,855 |
Total stockholders' equity | 165,622 | 178,252 |
Total liabilities and stockholders' equity | 525,033 | 629,283 |
Term loan facility | ||
Current liabilities: | ||
Line of credit, current | 10,000 | |
Line of credit, non-current | 79,800 | |
ABL Credit Agreement | Revolving credit facility | ||
Current liabilities: | ||
Line of credit, current | 76 | 593 |
Line of credit, non-current | 40,476 | 60,086 |
Term Loan Credit Agreement | Term loan facility | ||
Current liabilities: | ||
Line of credit, current | 10,000 | 7,500 |
Line of credit, non-current | $ 79,800 | $ 89,242 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 3,470 | $ 3,830 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 64,902 | 64,820 |
Common stock, shares outstanding (in shares) | 52,688 | 52,133 |
Treasury stock at cost (in shares) | 12,215 | 12,688 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in-Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings |
Beginning balance (in shares) at Dec. 31, 2018 | 64,495,000 | 12,688,000 | ||||||
Beginning balance at Dec. 31, 2018 | $ 180,955 | $ 6 | $ 239,960 | $ (81,471) | $ (24,311) | $ 46,771 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (2,552) | (2,552) | ||||||
Total other comprehensive income (loss) - foreign currency translation adjustments | 974 | 974 | ||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares (in shares) | 134,000 | |||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares | (91) | (91) | ||||||
Stock-based compensation expense | 2,141 | 2,141 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 64,629,000 | 12,688,000 | ||||||
Ending balance at Jun. 30, 2019 | 181,586 | $ 6 | 242,010 | $ (81,471) | (23,337) | 44,378 | ||
Ending balance (Accounting Standards Update 2016-02) at Jun. 30, 2019 | $ 159 | $ 159 | ||||||
Beginning balance (in shares) at Mar. 31, 2019 | 64,534,000 | 12,688,000 | ||||||
Beginning balance at Mar. 31, 2019 | 180,556 | $ 6 | 240,734 | $ (81,471) | (23,599) | 44,886 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (508) | (508) | ||||||
Total other comprehensive income (loss) - foreign currency translation adjustments | 262 | 262 | ||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares (in shares) | 95,000 | |||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares | (126) | (126) | ||||||
Stock-based compensation expense | 1,402 | 1,402 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 64,629,000 | 12,688,000 | ||||||
Ending balance at Jun. 30, 2019 | 181,586 | $ 6 | 242,010 | $ (81,471) | (23,337) | 44,378 | ||
Ending balance (Accounting Standards Update 2016-02) at Jun. 30, 2019 | 159 | 159 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 64,820,000 | 12,688,000 | ||||||
Beginning balance at Dec. 31, 2019 | 178,252 | $ 6 | 245,311 | $ (81,471) | (22,449) | 36,855 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (10,752) | (10,752) | ||||||
Total other comprehensive income (loss) - foreign currency translation adjustments | (4,899) | (4,899) | ||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares (in shares) | 82,000 | |||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares | (130) | (130) | ||||||
Stock-based compensation expense | 3,034 | 3,034 | ||||||
Reissuance of treasury shares (in shares) | (473,000) | |||||||
Reissuance of treasury shares | 0 | $ 3,053 | (3,053) | |||||
Ending balance (in shares) at Jun. 30, 2020 | 64,902,000 | 12,215,000 | ||||||
Ending balance at Jun. 30, 2020 | 165,622 | $ 6 | 248,215 | $ (78,418) | (27,348) | 23,167 | ||
Ending balance (Accounting Standards Update 2016-13) at Jun. 30, 2020 | 117 | 117 | ||||||
Beginning balance (in shares) at Mar. 31, 2020 | 64,831,000 | 12,688,000 | ||||||
Beginning balance at Mar. 31, 2020 | 171,891 | $ 6 | 246,769 | $ (81,471) | (27,545) | 34,132 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (7,912) | (7,912) | ||||||
Total other comprehensive income (loss) - foreign currency translation adjustments | 197 | 197 | ||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares (in shares) | 71,000 | |||||||
Issuance of common stock upon exercise of stock awards, net of withheld shares | (108) | (108) | ||||||
Stock-based compensation expense | 1,554 | 1,554 | ||||||
Reissuance of treasury shares (in shares) | (473,000) | |||||||
Reissuance of treasury shares | 0 | $ 3,053 | (3,053) | |||||
Ending balance (in shares) at Jun. 30, 2020 | 64,902,000 | 12,215,000 | ||||||
Ending balance at Jun. 30, 2020 | $ 165,622 | $ 6 | $ 248,215 | $ (78,418) | $ (27,348) | $ 23,167 | ||
Ending balance (Accounting Standards Update 2016-13) at Jun. 30, 2020 | $ 117 | $ 117 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (10,752) | $ (2,552) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depreciation and amortization | 6,437 | 5,849 |
Stock-based compensation expense | 2,521 | 2,141 |
Bad debt provision | 426 | 689 |
Contract implementation cost amortization | 135 | 213 |
Goodwill impairment | 7,191 | 0 |
Long-lived asset impairment | 883 | 0 |
Change in fair value of warrant | (5,085) | 0 |
Change in fair value of embedded derivatives | (519) | 0 |
Unrealized foreign exchange loss | 1,184 | 0 |
Other operating activities, net | 1,085 | 224 |
Change in assets and liabilities: | ||
Accounts receivable and unbilled revenue | 61,059 | (10,099) |
Inventories | (3,134) | 4,582 |
Prepaid expenses and other assets | 17,147 | (4,163) |
Accounts payable | (41,351) | (18,146) |
Accrued expenses and other liabilities | (19,190) | 22,551 |
Net cash provided by operating activities | 18,037 | 1,289 |
Cash flows from investing activities | ||
Purchases of property and equipment | (5,127) | (6,881) |
Net cash used in investing activities | (5,127) | (6,881) |
Cash flows from financing activities | ||
Short-term secured borrowings | 0 | (833) |
Proceeds from exercise of stock options | 0 | 63 |
Payment of debt issuance costs | 0 | (935) |
Other financing activities, net | (130) | (156) |
Net cash (used in) provided by financing activities | (22,460) | 13,047 |
Effect of exchange rate changes on cash and cash equivalents | 2,150 | (226) |
Decrease in cash and cash equivalents | (7,400) | 7,229 |
Cash and cash equivalents, beginning of period | 42,711 | 26,770 |
Cash and cash equivalents, end of period | 35,311 | 33,999 |
Revolving credit facility | Credit Agreement | ||
Cash flows from financing activities | ||
Net borrowings from old revolving credit facility | 0 | 14,908 |
Revolving credit facility | ABL Credit Agreement | ||
Adjustments to reconcile net loss to net cash from operating activities: | ||
Change in fair value of embedded derivatives | 278 | |
Cash flows from financing activities | ||
Repayments on credit facility | (19,830) | 0 |
Term loan facility | Term Loan Credit Agreement | ||
Adjustments to reconcile net loss to net cash from operating activities: | ||
Change in fair value of embedded derivatives | 241 | |
Cash flows from financing activities | ||
Repayments on credit facility | $ (2,500) | $ 0 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation of Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of InnerWorkings, Inc. and subsidiaries (the “Company”) included herein have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States (“GAAP”) for interim financial information. Footnote disclosures that would substantially duplicate the disclosures included in the December 31, 2019 audited financial statements have been omitted from these interim unaudited financial statements pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. The operating results for the three and six month period ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 . These condensed consolidated interim financial statements and notes should be read in conjunction with the Company’s condensed consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2020 . Liquidity and Management’s Plans Additionally, under ASC 205, Presentation of Financial Statements , the Company is required to consider and has evaluated whether there is substantial doubt that it has the ability to meet its obligations within one year from the financial statement issuance date. This assessment also includes the Company’s consideration of any management plans to alleviate such doubts. As further described in Note 11 , Revolving Credit Facility , and Note 12 , Long-Term Debt , within the notes to the financial statements included within this Form 10-Q, the agreements governing the Company's debt contain various restrictive covenants. Although we are in compliance with all of our debt covenants as of June 30, 2020 , we have determined that it is probable we will violate certain financial covenants under our credit agreements within the next twelve months if covenant modifications are not obtained. If we were to violate one or more financial covenants, the lenders could declare us in default and could accelerate the amounts due under a portion or all of our outstanding debt. We have discussed the terms for a modification with our lenders, and we believe we will receive such modification before any covenants are violated. Notwithstanding our belief that we will be successful in obtaining a modification of terms under our credit agreements, we also believe that the acquisition of the Company under the Agreement and Plan of Merger with HH Global Group Limited, described in Note 15 , Subsequent Events , is probable of being completed and alleviates doubts about our ability to meet our obligations over the next twelve months. Highly Inflationary Accounting During 2018, the Argentinian economy was classified as highly inflationary under GAAP due to multiple years of increasing inflation, resulting in the remeasurement of our Argentinian operations into U.S. dollars. The application of highly inflationary accounting did not have a material impact on the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2019 . Accounts Receivable and Other Financial Assets Accounts receivable are uncollateralized customer obligations due under normal trade terms. Payment terms with customers are generally 30 to 90 days from the invoice date. Accounts receivable are stated in the condensed consolidated financial statements at the amount billed to the customer, less an estimate for potential credit losses. Interest is not generally accrued on outstanding balances. The Company records an allowance for credit losses at the time that accounts receivable are initially recorded based on consideration of the current economic environment, expectation of future economic conditions, the Company’s historical collection experience and a loss-rate approach whereby the allowance is calculated using an estimated historical loss rate formulated by the age of the financial asset and multiplying it by the asset’s amortized cost at the balance sheet date. The Company reassesses its allowance at each reporting period. Aged receivables are written off when it becomes evident, based on age or unique customer circumstance, that such amounts will not be collected, and all reasonable collection efforts have been exhausted. The accounts receivable allowance expense is recorded within selling, general, and administrative expenses on the Company's Condensed Consolidated Statement of Comprehensive Loss. Additionally, the Company records an allowance for credit losses on other forms of financial assets, including unbilled revenue, other receivables, and other non-current assets. These forms of financial assets require a reserve under ASC 326, Financial Instruments - Credit Losses , as the financial assets are measured at amortized cost and represent receivables that result from revenue transactions under the scope of ASC 606, Revenue from Contracts with Customers , and other off-balance-sheet credit exposures, such as third-party supplier loan commitments. The Company records an allowance at the time the financial assets are initially recorded based on consideration of qualitative factors specific to the financial asset, including, but not limited to, credit-worthiness of the customer or supplier, in addition to the economic and historical collection factors previously noted. The allowances for credit losses for unbilled revenue, other receivables, and other non-current assets are immaterial to the condensed consolidated financial statements as of June 30, 2020 . The other financial asset allowance expenses are recorded within selling, general, and administrative expenses on the Company's Condensed Consolidated Statement of Comprehensive Loss. The Company believes its allowances are appropriately stated considering the quality of its financial asset portfolio as of June 30, 2020 . While credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that its credit loss experience will continue to be consistent with historical experience. Treasury Shares Common shares repurchased by the Company are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, the Company determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires entities to measure the impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. The guidance introduces a new credit reserving methodology known as the Current Expected Credit Loss ("CECL") methodology, which will alter the estimation process, inputs, and assumptions used in estimating credit losses. For the financial assets that are under the scope of this standard, entities will be required to use a new forward-looking “expected loss” model that estimates the loss over the lifetime of the asset based on macroeconomic conditions that correlate with historical loss experience, delinquency trends and aging behavior of receivables, current conditions, and reasonable and supportable forecasts. This will result in earlier recognition of allowance for doubtful accounts and will replace the Company’s “incurred loss” model that delayed the full amount of credit loss until the loss is probable of occurring. In addition, the standard requires entities to evaluate financial instruments by recording allowance for doubtful accounts by pooling of instruments based on similar risk characteristics, rather than a specific identification approach. The effective date is for fiscal years beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company adopted ASU 2016-13 and related ASUs effective January 1, 2020 using a modified-retrospective transition method. The adoption and application of this standard did not have a material impact to the condensed consolidated financial statements. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected losses. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which amends ASC 820, Fair Value Measurement . This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2020, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company adopted this guidance in the first quarter of 2020 with no material impact on its condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of adoption of this ASU on its condensed consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions t o ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The optional amendments are effective as of March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impacts the adoption of this guidance will have on its condensed consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Nature of Goods and Services The Company primarily generates revenue from the procurement of marketing materials for customers. Service revenue including creative, design, installation, warehousing and other services has not been material to the Company’s overall revenue to date. Products and services may be sold separately or in bundled packages. For bundled packages, the Company accounts for individual products and services separately if they are distinct - that is, if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company includes any fixed charges per its contracts as part of the total transaction price. The transaction price is allocated between separate products and services in a bundle based on their standalone selling prices. The standalone selling prices are generally determined based on the prices at which the Company separately sells the products and services. Revenue is measured based on consideration specified in a contract with a customer. Contracts may include variable consideration (for example, customer incentives such as rebates), and to the extent that variable consideration is not constrained, the Company includes the expected amount within the total transaction price and updates its assumptions over the duration of the contract. The constraint will generally not result in a reduction in the estimated transaction price. The Company’s performance obligations related to the procurement of marketing materials are typically satisfied upon shipment or delivery of its products to customers, at which time the Company recognizes revenue. Payment is typically due from the customer at this time or shortly thereafter. Unbilled revenue represents shipments or deliveries that have been made to customers for which the related account receivable has not yet been invoiced. The Company does not have material future performance obligations that extend beyond one year. Some service revenue, including stand-alone creative and other services, may be recognized over time but the difference between recognizing that revenue over time versus at a point in time when the service is completed and accepted by the customer is not material to the Company’s overall revenue to date. Costs to Fulfill Customer Contracts and Contract Liabilities The Company capitalizes certain setup costs related to new customers as fulfillment costs. Capitalized contract costs are amortized over the expected period of benefit using the straight-line method which is generally three years . Contract liabilities are referred to as deferred revenue in the condensed consolidated financial statements. We record deferred revenue when cash payments are received in advance of satisfying our performance obligations, and we recognize revenue as these obligations are satisfied. The amount of amortization during the three months ended June 30, 2020 and 2019 was $0.1 million and $0.1 million , and $0.1 million and $0.2 million during the six months ended June 30, 2020 and 2019 respectively. There was an incremental $0.6 million impairment loss during the six months ended June 30, 2020 in relation to contract implementation costs in the North America reportable segment. The impairment was calculated as the difference between the carrying amount of the asset and the recoverable amount. The following table is a summary of the Company's costs to fulfill and contract liabilities (in thousands): June 30, 2020 December 31, 2019 Costs to fulfill $ 567 $ 1,238 Contract liabilities 10,572 9,568 Cash received 9,845 36,662 Revenue recognized 8,841 44,708 Costs to Obtain a Customer Contract The Company incurs certain incremental costs to obtain a contract that the Company expects to recover. The Company applies a practical expedient and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs would primarily relate to commissions paid to our account executives and are included in selling, general and administrative expenses. No incremental costs to obtain a contract incurred by the Company during the three and six months ended June 30, 2020 and 2019 were required to be capitalized. Transaction Price Allocated to Remaining Performance Obligations ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of June 30, 2020 . The Company does not have material future performance obligations that extend beyond one year. Accordingly, the Company has applied the optional exemption for contracts that have an original expected duration of one year or less. The nature of the remaining performance obligations as well as the nature of the variability and how it will be resolved is described above. |
Allowance for Expected Credit L
Allowance for Expected Credit Losses | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Allowance for Expected Credit Losses | Allowance for Expected Credit Losses The following is a rollforward of the allowance for expected credit losses related to the Company's trade receivables as of June 30, 2020 (in thousands): Balance as of December 31, 2019 $ 3,830 Adjustment for adoption of ASU 2016-13 (431 ) Balance as of January 1, 2020 3,399 Current provision for expected credit losses (1) 71 Recoveries and write-offs — Balance as of June 30, 2020 $ 3,470 (1) The current provision for expected credit losses includes the effect of exchange rate changes on accounts receivable through June 30, 2020 . |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following is a rollforward of goodwill for each reportable segment as of June 30, 2020 (in thousands): North America EMEA LATAM Total Goodwill as of December 31, 2019 Goodwill $ 170,642 $ 96,225 $ 7,109 $ 273,976 Accumulated impairment (18,432 ) (96,225 ) (7,109 ) (121,766 ) 152,210 — — 152,210 Goodwill impairment (7,191 ) — — (7,191 ) Foreign exchange impact (52 ) — — (52 ) Goodwill as of June 30, 2020 Goodwill 170,590 96,225 7,109 273,924 Accumulated impairment (25,623 ) (96,225 ) (7,109 ) (128,957 ) $ 144,967 $ — $ — $ 144,967 The Company most recently recognized a partial impairment of its goodwill in the North America reportable segment as of March 31, 2020 , as outlined below. The Company further considered indicators for impairment at June 30, 2020 given the significant level of goodwill remaining in the reportable segment as well as the recent impairment test at March 31, 2020 . Further, based on the terms of the Agreement and Plan of Merger with HH Global Limited, see Note 15 , Subsequent Events , the Company determined the enterprise value of the North America reporting unit to be consistent with the enterprise value as of the March 31, 2020 impairment test and compared the enterprise value of the reporting unit to its respective carrying value. As a result, as of June 30, 2020 , the enterprise value for the North America reporting unit does not exceed the carrying value by more than 30% and is therefore considered at risk. At June 30, 2020 , the Company performed a qualitative assessment to determine whether it is more likely than not that the fair value of our North America reportable segment is less than the carrying value. We considered the current and expected future economic and market conditions surrounding COVID-19 and the Agreement and Plan of Merger with HH Global Group Limited. See Note 15 , Subsequent Events . After performing this qualitative goodwill impairment assessment, the Company determined that it did not have an interim goodwill triggering event as June 30, 2020 . The fair value estimates used in the goodwill impairment analysis require significant judgment. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenue and operating margins and assumptions about the overall economic climate and the competitive environment for the business. The fair value determination of the North America reporting unit, the only reporting unit with goodwill remaining, primarily relies on management judgments around timing of generating revenue from recent new customer wins as well as timing of benefits expected to be received from the significant restructuring actions currently underway, see Note 6 , Restructuring Activities and Charges to the Consolidated Financial Statements. At June 30, 2020 , the Company had $145.0 million of goodwill on its consolidated balance sheet, all of which relates to the North America reportable segment. If assumptions surrounding any of these factors or assumptions change, then a future impairment charge may occur. 2020 Goodwill Impairment Charges As of March 31, 2020 , the Company performed an interim impairment assessment due to a triggering event caused by a sustained decrease in the Company's stock price and lower outlook due to the deterioration in economic conditions caused by COVID-19. The Company determined a fair value for its North America reporting unit that considered both the discounted cash flow and guideline public company methods. The Company further compared the fair value of the reporting unit to its carrying value. The fair value for the North America reporting unit was less than its carrying value and resulted in a non-cash goodwill impairment charge of $7.2 million . No tax benefit was recognized on such charge, and this charge had no impact on the Company's cash flows or compliance with debt covenants. |
Other Intangibles and Long-Live
Other Intangibles and Long-Lived Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangibles and Long-Lived Assets | Other Intangibles and Long-Lived Assets The following is a summary of the Company’s intangible assets as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Weighted Average Life in Years Customer lists $ 73,442 $ 73,678 14.4 Non-competition agreements 943 959 4.1 Trade names 2,510 2,510 13.3 Patents 57 57 9.0 76,952 77,204 Less accumulated amortization and impairment Customer lists (67,096 ) (66,382 ) Non-competition agreements (943 ) (959 ) Trade names (2,168 ) (2,098 ) Patents (52 ) (51 ) Total accumulated amortization and impairment (70,259 ) (69,490 ) Intangible assets, net $ 6,693 $ 7,714 Amortization expense related to these intangible assets was $0.6 million and $0.6 million for the three months ended June 30, 2020 and 2019 , and $1.1 million and $1.1 million during the six months ended June 30, 2020 and 2019 respectively. As of June 30, 2020 , estimated amortization expense for the remainder of 2020 and each of the next five years and thereafter is as follows (in thousands): Remainder of 2020 $ 1,007 2021 1,783 2022 1,407 2023 961 2024 744 2025 467 Thereafter 324 $ 6,693 |
Restructuring Activities and Ch
Restructuring Activities and Charges | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Activities and Charges | Restructuring Activities and Charges 2018 Restructuring Plan On August 10, 2018 , the Company approved a plan (the "2018 Restructuring Plan") to reduce the Company's cost structure while driving value for its clients and stockholders. The 2018 Restructuring Plan was adopted as a result of the Company's determination that its selling, general and administrative costs were disproportionately high in relation to its revenue and gross profit. At the time of adoption, the plan was expected to be completed by the end of 2019 and the Company expected to incur pre-tax cash restructuring charges of $20.0 million to $25.0 million and pre-tax non-cash restructuring charges of $0.4 million . Where required by law, the Company consults with each of the affected country’s local Works Councils prior to implementing the plan. On February 21, 2019, the Board of Directors approved a two-year extension to the restructuring plan through the end of 2021. On February 24, 2020, the Company approved an increase in the size of the 2018 Restructuring Plan. From adoption through completion of the plan, the Company expects to incur pre-tax cash restructuring charges of $35.0 million to $45.0 million and pre-tax non-cash restructuring charges of $0.5 million . Cash charges are expected to include $9.0 million to $12.0 million for employee severance and related benefits, $8.0 million to $10.0 million for consulting fees and lease and contract terminations, and $18.0 million to $23.0 million for compensation realignment and other retention. The Company's increased 2018 restructuring plan will cover cost-reduction actions associated with the COVID-19 pandemic. The following table summarizes the accrued restructuring activities for this plan for the six months ended June 30, 2020 (in thousands): Employee Severance and Related Benefits Lease and Contract Termination Costs Compensation Realignment and Other Retention Other Total Balance as of December 31, 2019 $ 666 $ 23 $ 3,636 $ 258 $ 4,583 Charges 1,969 369 4,425 518 7,281 Prepayments (1) — — 36 — 36 Cash payments (2,283 ) (402 ) (5,291 ) (494 ) (8,470 ) Non-cash settlements/adjustments (2) 58 (22 ) — — 36 Balance as of June 30, 2020 $ 410 $ (32 ) $ 2,806 $ 282 $ 3,466 (1) For compensation realignment and other retention amounts, expense is recognized over a mandatory future service period, whereby payments occur at certain intervals throughout the mandatory future service period. This line item represents prepayment activity that has occurred through June 30, 2020 . (2) Non-cash settlements and adjustments consist of (1) differences in total lease expense per ASC 842 and cash rental payments for leases that qualify to be recorded to restructuring and (2) foreign currency impacts. The Company recorded the following restructuring costs by segment (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 North America $ 2,247 $ 1,216 $ 4,483 $ 1,408 EMEA 1,009 326 1,889 1,405 LATAM 143 39 307 74 Other 245 2,117 602 4,745 Total $ 3,644 $ 3,698 $ 7,281 $ 7,632 From adoption through June 30, 2020 , the Company recognized $29.2 million in total restructuring charges pursuant to the 2018 Restructuring Plan. 2015 Restructuring Plan On December 14, 2015 , the Company approved a global realignment plan that allowed the Company to more efficiently meet client needs across its international platform. Through improved integration of global resources, the plan created back office and other efficiencies and allowed for the elimination of approximately 100 positions. In connection with these actions, the Company incurred total pre-tax cash restructuring charges of $6.7 million , the majority of which were recognized during 2016. These cash charges included approximately $5.6 million for employee severance and related benefits and $1.1 million for lease and contract terminations and other associated costs. The charges were all incurred by the end of 2016 with the final payouts occurring during the three months ended March 31, 2020 . The following table summarizes the accrued restructuring activities for this plan for the six months ended June 30, 2020 (in thousands), all of which relate to EMEA: Employee Severance and Related Benefits Lease and Contract Termination Costs Other Total Balance as of December 31, 2019 $ 122 $ — $ — $ 122 Charges (36 ) — — (36 ) Cash payments (86 ) — — (86 ) Balance as of June 30, 2020 $ — $ — $ — $ — |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s reported effective income tax rate was (22.8)% and 125.9% for the three months ended June 30, 2020 and 2019 , respectively. The Company’s reported effective income tax rate was (8.7)% and (70.2)% for the six months ended June 30, 2020 and 2019 , respectively. The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, valuation allowances, impacts of the Tax Reform Act, and foreign tax rates that are different than the U.S. federal statutory tax rate. In addition, the effective tax rate can be impacted each period by discrete factors and events such as a write-off of a deferred tax asset for stock‑based compensation due to the expiration of unexercised stock options and prior year provision to return adjustments. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will expire unutilized. At the end of each reporting period, the Company reviews the realizability of its deferred tax assets. There were no material valuation adjustments for the three months ended June 30, 2020 and 2019 . Additionally, the Company continues to incur losses in jurisdictions which have valuation allowances against tax loss carryforwards, so a tax benefit has not been recognized in the financial statements for these losses. |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. The Initial Warrant, as defined in Note 12 , Long-Term Debt , was issued at a nominal exercise price and is considered outstanding at the date of issuance. Diluted loss per share is calculated by dividing net loss by the weighted average shares outstanding assuming dilution. Dilutive common shares outstanding is computed using the treasury stock method and reflects the additional shares that would be outstanding if dilutive stock options were exercised and restricted stock and restricted stock units were settled for common shares during the period. In addition, dilutive shares include any shares issuable related to performance share units ("PSUs") for which the performance conditions have been met as of the end of the period. There were no dilutive effects for securities during the three and six months ended June 30, 2019 as a result of a net loss incurred in the period. In connection with the closing of the term loan in the third quarter of 2019, the Company issued the Initial Warrant which is classified and recorded as a liability at fair value with subsequent changes in fair value recognized in earnings. Refer to Note 12 , Long-Term Debt , for additional information. For diluted earnings per share, changes in fair value related to the Initial Warrant are adjusted out of earnings when the adjustment would not result in an increase to earnings and thus be considered antidilutive. For the three months ended June 30, 2020 , the adjustment to exclude the change in fair value would increase earnings, and thus net loss for the period was not adjusted. For the six months ended June 30, 2020 , the adjustment to exclude the change in fair value would decrease earnings, and thus net loss for the period was adjusted. The computation of basic and diluted loss per share is as follows (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net loss - basic $ (7,912 ) $ (508 ) $ (10,752 ) $ (2,552 ) Adjustments: Change in fair value of Initial Warrant liability — — (5,085 ) — Net loss - diluted $ (7,912 ) $ (508 ) $ (15,837 ) $ (2,552 ) Denominator: Weighted average shares outstanding 52,327 51,773 52,233 51,830 Issuance of Initial Warrant 1,335 — 1,335 — Weighted average shares outstanding - basic and diluted 53,662 51,773 53,568 51,830 Basic loss per share $ (0.15 ) $ (0.01 ) $ (0.20 ) $ (0.05 ) Diluted loss per share $ (0.15 ) $ (0.01 ) $ (0.30 ) $ (0.05 ) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In the fourth quarter of 2017, the Company began providing marketing execution services to Enova International, Inc. ("Enova"). David Fisher, a member of the Company's Board of Directors, is the Chairman and Chief Executive Officer of Enova and has a direct ownership interest in Enova. The total amount billed for such services during the three months ended June 30, 2020 and 2019 was $1.1 million and $3.4 million , respectively, and $4.8 million and $6.1 million during the six months ended June 30, 2020 and 2019 , respectively. The amounts receivable from Enova were nominal and $4.6 million as of June 30, 2020 and December 31, 2019 , respectively. In the second quarter of 2020, the Company began providing product procurement to Byline Bancorp, Inc. ("Byline"). Lindsay Corby, a member of the Company's Board of Directors, is the Chief Financial Officer of Byline and has a direct ownership interest in Byline. The total amount billed for such services during the three months ended June 30, 2020 was $0.1 million . There were no amounts receivable from Byline as of June 30, 2020 . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Self-insurance The Company is self-insured for medical claims which is subject to stop-loss protection. An actuarial calculation of the estimated claims incurred but not reported is provided to the Company each period. The estimated claims incurred is currently updated semi-annually as it is immaterial in relation to the liability due to the limited population of claims since moving to the self-funded model on January 1, 2020. Further, the Company considered COVID-19's effect on insurance claims and recorded an immaterial additional liability based on actuarial estimates of the impact it will have on our claims. As of June 30, 2020 , the medical claims liability was $1.0 million , and the liability is recorded within other current liabilities on the Company's Condensed Consolidated Balance Sheet. Legal Contingencies In October 2013, the Company removed the former owner of Productions Graphics from his role as President of Productions Graphics, the Company’s French subsidiary. He had been in that role since the Company’s 2011 acquisition of Productions Graphics, a European business then principally owned by him. In December 2013, the former owner of Productions Graphics initiated a wrongful termination claim in the Commercial Court of Paris seeking approximately €0.7 million (approximately $1.0 million ) in fees and damages. The Company disputes the allegations of the former owner of Productions Graphics and intends to vigorously defend these matters. In February 2014, based on a review the Company initiated into certain transactions associated with the former owner of Productions Graphics, the Company concluded that he had engaged in fraud by inflating the results of the Productions Graphics business in order to induce the Company to pay him €7.1 million in contingent consideration pursuant to the acquisition agreement. In light of those findings, in February 2014, the Company filed a criminal complaint in France seeking to redress the harm caused by his conduct and this proceeding is currently pending. In addition, in September 2015, the Company initiated a civil claim in the Paris Commercial Court against the former owner of Productions Graphics, seeking civil damages to redress these same harms. In addition to these pending matters, there may be other potential disputes between the Company and the former owner of Productions Graphics relating to the acquisition agreement. The Company had paid €5.8 million (approximately $8.0 million ) in fixed consideration and €7.1 million (approximately $9.4 million ) in contingent consideration to the former owner of Productions Graphics; the remaining maximum contingent consideration under the acquisition agreement was €34.5 million (approximately $37.6 million at the time) and the Company has determined that none of this amount was earned and payable. In January 2014, a former finance employee of Productions Graphics initiated wrongful termination and overtime claims in the Labor Court of Boulogne-Billancourt, and he currently seeks damages of approximately €0.6 million (approximately $0.7 million ). The Company disputes these allegations and intends to vigorously defend these matters. In addition, the Company’s criminal complaint in France, described above, seeks to redress harm caused by this former employee in light of his participation in the fraudulent transactions described above. The labor claim has been stayed in deference to the Company’s related criminal complaint. |
Revolving Credit Facility
Revolving Credit Facility | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility ABL Credit Agreement On July 16, 2019 , the Company and certain of its direct and indirect subsidiaries entered into a loan and security agreement (the “ABL Credit Agreement”) with Bank of America, N.A., as administrative agent, lender, issuing bank and collateral agent, and JPMorgan Chase Bank, N.A. and PNC Bank, National Association, as lenders (the “ABL Credit Facility”). The ABL Credit Facility consists of a $105.0 million asset-based revolving line of credit, of which up to (i) $15.0 million may be used for UK Revolver Loans (as defined in the ABL Credit Agreement), (ii) $10.5 million may be used for Swingline Loans (as defined in the ABL Credit Agreement), and (iii) $10.0 million may be used for letters of credit. The ABL Credit Agreement provides that the revolving line of credit may be increased by up to an additional $20.0 million following satisfaction of certain conditions. The ABL Credit Facility matures on July 16, 2024 . Advances under the ABL Credit Facility bear interest at either: (a) LIBOR (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 2.00% to 2.50% for US LIBOR Loans and UK LIBOR Loans (each as defined in the ABL Credit Agreement); (b) the US Base Rate (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 1.00% to 1.50% for US Base Rate Loans (as defined in the ABL Credit Agreement); or (c) the UK Base Rate (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 2.00% to 2.50% for UK Base Rate Loans (as defined in the ABL Credit Agreement). The Company’s obligations under the ABL Credit Agreement are guaranteed by certain of its subsidiaries pursuant to a guaranty included in the ABL Credit Agreement. As security for the Company’s and its subsidiaries’ obligations under the ABL Credit Agreement, each of the Company and the subsidiaries party thereto have granted: (i) a first priority lien on the Company’s and such subsidiaries’ accounts receivable, chattel paper (to the extent evidencing accounts receivable), inventory, deposit accounts, general intangibles related to the foregoing and proceeds related thereto; and (ii) a second-priority lien on substantially all its other tangible and intangible personal property, including the capital stock of certain of the Company’s direct and indirect subsidiaries. The priority of the liens is described in an intercreditor agreement between Bank of America, N.A. as ABL Agent and TCW Asset Management Company LLC as Term Agent (the “Intercreditor Agreement”). The ABL Credit Agreement contains a minimum fixed charge coverage ratio financial covenant that must be maintained when excess availability falls below a specified amount. In addition, the ABL Credit Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The ABL Credit Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the ABL Credit Agreement to be in full force and effect, and a change of control of the Company’s business. The usage and total commitment of these Loans shall not exceed the respective borrowing base set forth in the ABL Credit Agreement. Within the ABL Credit Agreement, there is a cash dominion requirement for the United States ("US") and United Kingdom ("UK"). In the United States, Bank of America, N.A. (the agent) shall only exercise cash dominion and apply all customer collections of the US borrowers to US obligations when a Trigger Period exists, as defined in the ABL Credit Agreement. In the United Kingdom, all customer collections of the UK borrowers will be applied on a daily basis to any outstanding UK obligations and any credit balance will be transferred back to an account of the UK borrowers. The customer collections of the UK borrowers are only applied against the UK obligations. As a result of the cash dominion, the amount outstanding under the ABL Credit Agreement for UK borrowers has been classified as a current obligation. The amount outstanding under the ABL Credit Agreement for US borrowers has been classified as a long-term obligation, as no Trigger Period has yet occurred nor is considered probable. The amounts outstanding under the ABL Credit Agreement as of June 30, 2020 for the UK borrowers and the US borrowers are $0.1 million and $40.7 million , respectively. The Company's deferred financing fees of approximately $2.0 million are presented as an asset and amortized on a straight-line basis over the term of the ABL Credit Agreement. Amortization of deferred financing fees is recorded in interest expense and was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2020 , respectively. The Company has determined that the interest rate reset features embedded in the ABL Credit Agreement constitute an embedded derivative (collectively, the “ABL Embedded Derivative”) which has been bifurcated from the ABL Credit Facility and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The Company recorded a nominal amount and approximately $0.1 million in interest expense for the amortization of the ABL Embedded Derivative discount for the three and six months ended June 30, 2020 , respectively. The following schedule shows the change in fair value of the ABL Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 497 Change in fair value (278 ) June 30, 2020 $ 219 The change in fair value is recorded within other expense on the Company’s Condensed Consolidated Statement of Comprehensive Loss. Refer to Note 13 , Fair Value Measurement , for further discussion. The Company’s ABL Credit Facility at June 30, 2020 is summarized as follows (in thousands): ABL Credit Facility outstanding $ 40,817 Less: Current portion of ABL Credit Facility for UK Borrowings (76 ) Long-term portion of ABL Credit Facility 40,741 Less: ABL Embedded Derivative Discount (1) (484 ) ABL Embedded Derivative Liability (2) 219 Total Revolving credit facility - non-current $ 40,476 (1) Original value of embedded derivative at July 16, 2019, less amortization. (2) Value of embedded derivative as of June 30, 2020. At June 30, 2020 , the Company had $1.7 million of letters of credit outstanding which have not been drawn upon. On February 22, 2016 , the Company entered into a Revolving Credit Facility (the “Facility”) with Bank of America N.A. to support ongoing working capital needs of the Company's operations in China. The Facility includes a revolving commitment amount of $5.0 million whereby maturity dates vary based on each individual drawdown. On July 16, 2019, the Company modified the Facility to decrease the total revolving commitment amount from $5.0 million to $1.0 million . All other terms of the Facility remained unchanged. Outstanding borrowings under the Facility are guaranteed by the Company’s assets. Borrowings and repayments are made in renminbi, the official Chinese currency. The applicable interest rate is 110% of the People’s Bank of China’s base rate. The terms of the Facility include limitations on use of funds for working capital purposes as well as customary representations and warranties made by the Company. At June 30, 2020 , the Company had $0.5 million of unused availability under the Facility. Long-Term Debt On July 16, 2019 , the Company and certain of its direct and indirect subsidiaries entered into a loan and security agreement (the “Term Loan Credit Agreement”) with TCW Asset Management Company LLC, as administrative agent and collateral agent, and the financial institutions party thereto as lenders (the “Term Loan Credit Facility”). The Term Loan Credit Facility consists of a $100.0 million term loan facility. The Term Loan Credit Facility matures on July 16, 2024 . Principal on the Term Loan Credit Facility is due in quarterly installments, commencing on September 30, 2019, in an amount equal to $1.3 million per quarter during the first year of the Term Loan Credit Facility and $2.5 million each quarter thereafter. The loans under the Term Loan Credit Facility bear interest at either: (a) the LIBOR Rate (as defined in the Term Loan Credit Agreement), plus an applicable margin ranging from 6.25% to 10.75% ; or (b) the Prime Rate (as defined in the Term Loan Credit Agreement), plus an applicable margin ranging from 5.25% to 9.75% . The Company’s obligations under the Term Loan Credit Agreement are guaranteed by certain of its subsidiaries pursuant to a guaranty included in the Term Loan Credit Agreement. As security for the Company’s and its subsidiaries’ obligations under the Term Loan Credit Agreement, each of the Company and the subsidiaries party thereto have granted: (i) a first priority lien on substantially all its tangible and intangible personal property (other than the assets described in the following clause (ii)), including the capital stock of certain of the Company’s direct and indirect subsidiaries, and (ii) a second priority lien on its accounts receivable, chattel paper (to the extent evidencing accounts receivable), inventory, deposit accounts, general intangibles related to the foregoing and proceeds related thereto. The priority of the liens is described in the Intercreditor Agreement. The Term Loan Credit Agreement contains a minimum fixed charge coverage ratio financial covenant, a maximum total leverage ratio financial covenant, a minimum liquidity financial covenant and a maximum capital expenditures covenant, each of which must be maintained for the periods described in the Term Loan Credit Agreement. In addition, the Term Loan Credit Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The Term Loan Credit Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the Term Loan Credit Agreement to be in full force and effect, and a change of control of the Company’s business. The principal outstanding as of June 30, 2020 is $95.0 million . The Company has determined the interest rate reset features embedded in the Term Loan Credit Agreement constitute an embedded derivative (collectively, the “Term Loan Embedded Derivative”) which has been bifurcated from Term Loan Credit Facility and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The Company recorded a nominal amount and $0.1 million in interest expense for the amortization of the Term Loan Embedded Derivative discount for the three and six months ended June 30, 2020 , respectively. The following schedule shows the change in fair value of the Term Loan Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 407 Change in fair value (241 ) June 30, 2020 $ 166 The change in fair value is recorded within other expense on the Company’s Condensed Consolidated Statement of Comprehensive Loss. Refer to Note 13 , Fair Value Measurement , for further discussion. In connection with the closing of the Term Loan Credit Agreement, the Company issued a Warrant (as defined below) to Macquarie US Trading LLC, an affiliate of TCW Asset Management Company LLC, to purchase fully paid and non-assessable shares of common stock of the Company. The Warrant is initially exercisable for an aggregate of 1,335,337 shares of the Company’s common stock with a per share exercise price of $0.01 (the “Initial Warrant”). The Initial Warrant is exercisable on or after (A) the date which is 10 days after the earlier of (x) the date that the Company delivers its financial statements for the fiscal quarter ended March 31, 2020 to the administrative agent and (y) May 15, 2020 (the “First Quarter Reporting Period End Date”) through (B) July 16, 2024 . The initial warrant has not been exercised. In addition, if either (x) the Total Leverage Ratio (as defined in the Term Loan Credit Agreement) as of March 31, 2020 for the four (4) consecutive fiscal quarter period then ended is greater than 4.25 to 1.00 or (y) the Company fails to deliver financial statements to the administrative agent as required by the Term Loan Credit Agreement for the fiscal quarter ended March 31, 2020, then from the First Quarter Reporting Period End Date through July 16, 2024, the Warrant shall also be exercisable for an additional 2.49% of the Company’s common stock calculated on a fully-diluted basis (the “Additional Warrant” or “Contingent Warrant” and together with the Initial Warrant, the “Warrant”). The Company did not trigger any of the provisions defined in the Term Loan Credit Agreement that would cause the Additional Warrant to be exercisable at March 31, 2020 and, accordingly, the additional warrant expired by its terms. The Warrant may be exercised on a cashless basis, and the number of shares for which the Warrant are exercisable, and the associated exercise price are subject to certain proportional adjustments as set forth in the Warrant. In addition, the holder of the Warrant is entitled to certain piggyback registration rights. In the event that the Total Leverage Ratio is less than 4.00 to 1.00 at any time between April 1, 2020 and March 31, 2021 (the “Buyback Period”) based on financial statements delivered to agent pursuant to the terms of the Term Loan Credit Agreement, and calculated on a pro forma basis factoring in the repurchase described in the Warrant, then on any day during the Buyback Period, the Company shall be permitted, upon 5 business days prior written notice given to Holder, to repurchase either (x) any portion of the Warrant not yet exercised and/or (y) any shares of common stock received from the Company pursuant to prior exercise of the Warrant, in each case at the Applicable Buyback Price (as defined in the Warrant) by paying cash to the Holder (“Buyback Option”). The Initial Warrant was recorded as a liability at fair value and will be treated as a discount on the associated debt. The following schedule shows the change in fair value of the Initial Warrant at June 30, 2020 (in thousands): December 31, 2019 $ 6,537 Change in fair value (5,085 ) June 30, 2020 $ 1,452 The Additional Warrant was no longer outstanding as of March 31, 2020 and therefore has no associated fair value at June 30, 2020 . The Term Loan is presented net of the related original issue discount (“OID”), which was $8.5 million on the issuance date of July 16, 2019. Accretion of OID is included in interest expense. The Company incurred $3.7 million of deferred financing fees related to the Term Loan Credit Agreement that has been recorded as a debt discount. The combined debt discount from the Initial Warrant liability, the Term Loan Embedded Derivative liability, and the debt issuance fees is being amortized into interest expense over the term of the Term Loan Credit Facility using the effective interest method. The Company recorded interest expense for the amortization of the Initial Warrant liability and Term Loan Embedded Derivative liability debt discounts of $0.3 million and $0.5 million for the three and six months ended June 30, 2020 , respectively, and recorded an additional $0.2 million and $0.4 million of interest expense for the amortization of the debt issuance fees for the three and six months ended June 30, 2020 , respectively. The Company’s Term Loan Credit Facility at June 30, 2020 is summarized as follows (in thousands): Term Loan Credit Facility outstanding $ 95,000 Less: Current portion of Term Loan Credit Facility (10,000 ) Long-term portion of Term Loan Credit Facility 85,000 Less: Original Issue Discount (1) (6,818 ) Term Loan Embedded Derivative Liability (2) 166 Initial Warrant Liability (2) 1,452 Total Term Loan Credit Facility - Non-current $ 79,800 (1) Original value of OID attributable to debt issuance costs, warrant liability and embedded derivatives at July 16, 2019, less amortization. (2) Value of warrant liability and embedded derivatives as of June 30, 2020. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Revolving Credit Facility ABL Credit Agreement On July 16, 2019 , the Company and certain of its direct and indirect subsidiaries entered into a loan and security agreement (the “ABL Credit Agreement”) with Bank of America, N.A., as administrative agent, lender, issuing bank and collateral agent, and JPMorgan Chase Bank, N.A. and PNC Bank, National Association, as lenders (the “ABL Credit Facility”). The ABL Credit Facility consists of a $105.0 million asset-based revolving line of credit, of which up to (i) $15.0 million may be used for UK Revolver Loans (as defined in the ABL Credit Agreement), (ii) $10.5 million may be used for Swingline Loans (as defined in the ABL Credit Agreement), and (iii) $10.0 million may be used for letters of credit. The ABL Credit Agreement provides that the revolving line of credit may be increased by up to an additional $20.0 million following satisfaction of certain conditions. The ABL Credit Facility matures on July 16, 2024 . Advances under the ABL Credit Facility bear interest at either: (a) LIBOR (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 2.00% to 2.50% for US LIBOR Loans and UK LIBOR Loans (each as defined in the ABL Credit Agreement); (b) the US Base Rate (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 1.00% to 1.50% for US Base Rate Loans (as defined in the ABL Credit Agreement); or (c) the UK Base Rate (as defined in the ABL Credit Agreement), plus an applicable margin ranging from 2.00% to 2.50% for UK Base Rate Loans (as defined in the ABL Credit Agreement). The Company’s obligations under the ABL Credit Agreement are guaranteed by certain of its subsidiaries pursuant to a guaranty included in the ABL Credit Agreement. As security for the Company’s and its subsidiaries’ obligations under the ABL Credit Agreement, each of the Company and the subsidiaries party thereto have granted: (i) a first priority lien on the Company’s and such subsidiaries’ accounts receivable, chattel paper (to the extent evidencing accounts receivable), inventory, deposit accounts, general intangibles related to the foregoing and proceeds related thereto; and (ii) a second-priority lien on substantially all its other tangible and intangible personal property, including the capital stock of certain of the Company’s direct and indirect subsidiaries. The priority of the liens is described in an intercreditor agreement between Bank of America, N.A. as ABL Agent and TCW Asset Management Company LLC as Term Agent (the “Intercreditor Agreement”). The ABL Credit Agreement contains a minimum fixed charge coverage ratio financial covenant that must be maintained when excess availability falls below a specified amount. In addition, the ABL Credit Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The ABL Credit Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the ABL Credit Agreement to be in full force and effect, and a change of control of the Company’s business. The usage and total commitment of these Loans shall not exceed the respective borrowing base set forth in the ABL Credit Agreement. Within the ABL Credit Agreement, there is a cash dominion requirement for the United States ("US") and United Kingdom ("UK"). In the United States, Bank of America, N.A. (the agent) shall only exercise cash dominion and apply all customer collections of the US borrowers to US obligations when a Trigger Period exists, as defined in the ABL Credit Agreement. In the United Kingdom, all customer collections of the UK borrowers will be applied on a daily basis to any outstanding UK obligations and any credit balance will be transferred back to an account of the UK borrowers. The customer collections of the UK borrowers are only applied against the UK obligations. As a result of the cash dominion, the amount outstanding under the ABL Credit Agreement for UK borrowers has been classified as a current obligation. The amount outstanding under the ABL Credit Agreement for US borrowers has been classified as a long-term obligation, as no Trigger Period has yet occurred nor is considered probable. The amounts outstanding under the ABL Credit Agreement as of June 30, 2020 for the UK borrowers and the US borrowers are $0.1 million and $40.7 million , respectively. The Company's deferred financing fees of approximately $2.0 million are presented as an asset and amortized on a straight-line basis over the term of the ABL Credit Agreement. Amortization of deferred financing fees is recorded in interest expense and was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2020 , respectively. The Company has determined that the interest rate reset features embedded in the ABL Credit Agreement constitute an embedded derivative (collectively, the “ABL Embedded Derivative”) which has been bifurcated from the ABL Credit Facility and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The Company recorded a nominal amount and approximately $0.1 million in interest expense for the amortization of the ABL Embedded Derivative discount for the three and six months ended June 30, 2020 , respectively. The following schedule shows the change in fair value of the ABL Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 497 Change in fair value (278 ) June 30, 2020 $ 219 The change in fair value is recorded within other expense on the Company’s Condensed Consolidated Statement of Comprehensive Loss. Refer to Note 13 , Fair Value Measurement , for further discussion. The Company’s ABL Credit Facility at June 30, 2020 is summarized as follows (in thousands): ABL Credit Facility outstanding $ 40,817 Less: Current portion of ABL Credit Facility for UK Borrowings (76 ) Long-term portion of ABL Credit Facility 40,741 Less: ABL Embedded Derivative Discount (1) (484 ) ABL Embedded Derivative Liability (2) 219 Total Revolving credit facility - non-current $ 40,476 (1) Original value of embedded derivative at July 16, 2019, less amortization. (2) Value of embedded derivative as of June 30, 2020. At June 30, 2020 , the Company had $1.7 million of letters of credit outstanding which have not been drawn upon. On February 22, 2016 , the Company entered into a Revolving Credit Facility (the “Facility”) with Bank of America N.A. to support ongoing working capital needs of the Company's operations in China. The Facility includes a revolving commitment amount of $5.0 million whereby maturity dates vary based on each individual drawdown. On July 16, 2019, the Company modified the Facility to decrease the total revolving commitment amount from $5.0 million to $1.0 million . All other terms of the Facility remained unchanged. Outstanding borrowings under the Facility are guaranteed by the Company’s assets. Borrowings and repayments are made in renminbi, the official Chinese currency. The applicable interest rate is 110% of the People’s Bank of China’s base rate. The terms of the Facility include limitations on use of funds for working capital purposes as well as customary representations and warranties made by the Company. At June 30, 2020 , the Company had $0.5 million of unused availability under the Facility. Long-Term Debt On July 16, 2019 , the Company and certain of its direct and indirect subsidiaries entered into a loan and security agreement (the “Term Loan Credit Agreement”) with TCW Asset Management Company LLC, as administrative agent and collateral agent, and the financial institutions party thereto as lenders (the “Term Loan Credit Facility”). The Term Loan Credit Facility consists of a $100.0 million term loan facility. The Term Loan Credit Facility matures on July 16, 2024 . Principal on the Term Loan Credit Facility is due in quarterly installments, commencing on September 30, 2019, in an amount equal to $1.3 million per quarter during the first year of the Term Loan Credit Facility and $2.5 million each quarter thereafter. The loans under the Term Loan Credit Facility bear interest at either: (a) the LIBOR Rate (as defined in the Term Loan Credit Agreement), plus an applicable margin ranging from 6.25% to 10.75% ; or (b) the Prime Rate (as defined in the Term Loan Credit Agreement), plus an applicable margin ranging from 5.25% to 9.75% . The Company’s obligations under the Term Loan Credit Agreement are guaranteed by certain of its subsidiaries pursuant to a guaranty included in the Term Loan Credit Agreement. As security for the Company’s and its subsidiaries’ obligations under the Term Loan Credit Agreement, each of the Company and the subsidiaries party thereto have granted: (i) a first priority lien on substantially all its tangible and intangible personal property (other than the assets described in the following clause (ii)), including the capital stock of certain of the Company’s direct and indirect subsidiaries, and (ii) a second priority lien on its accounts receivable, chattel paper (to the extent evidencing accounts receivable), inventory, deposit accounts, general intangibles related to the foregoing and proceeds related thereto. The priority of the liens is described in the Intercreditor Agreement. The Term Loan Credit Agreement contains a minimum fixed charge coverage ratio financial covenant, a maximum total leverage ratio financial covenant, a minimum liquidity financial covenant and a maximum capital expenditures covenant, each of which must be maintained for the periods described in the Term Loan Credit Agreement. In addition, the Term Loan Credit Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The Term Loan Credit Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the Term Loan Credit Agreement to be in full force and effect, and a change of control of the Company’s business. The principal outstanding as of June 30, 2020 is $95.0 million . The Company has determined the interest rate reset features embedded in the Term Loan Credit Agreement constitute an embedded derivative (collectively, the “Term Loan Embedded Derivative”) which has been bifurcated from Term Loan Credit Facility and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The Company recorded a nominal amount and $0.1 million in interest expense for the amortization of the Term Loan Embedded Derivative discount for the three and six months ended June 30, 2020 , respectively. The following schedule shows the change in fair value of the Term Loan Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 407 Change in fair value (241 ) June 30, 2020 $ 166 The change in fair value is recorded within other expense on the Company’s Condensed Consolidated Statement of Comprehensive Loss. Refer to Note 13 , Fair Value Measurement , for further discussion. In connection with the closing of the Term Loan Credit Agreement, the Company issued a Warrant (as defined below) to Macquarie US Trading LLC, an affiliate of TCW Asset Management Company LLC, to purchase fully paid and non-assessable shares of common stock of the Company. The Warrant is initially exercisable for an aggregate of 1,335,337 shares of the Company’s common stock with a per share exercise price of $0.01 (the “Initial Warrant”). The Initial Warrant is exercisable on or after (A) the date which is 10 days after the earlier of (x) the date that the Company delivers its financial statements for the fiscal quarter ended March 31, 2020 to the administrative agent and (y) May 15, 2020 (the “First Quarter Reporting Period End Date”) through (B) July 16, 2024 . The initial warrant has not been exercised. In addition, if either (x) the Total Leverage Ratio (as defined in the Term Loan Credit Agreement) as of March 31, 2020 for the four (4) consecutive fiscal quarter period then ended is greater than 4.25 to 1.00 or (y) the Company fails to deliver financial statements to the administrative agent as required by the Term Loan Credit Agreement for the fiscal quarter ended March 31, 2020, then from the First Quarter Reporting Period End Date through July 16, 2024, the Warrant shall also be exercisable for an additional 2.49% of the Company’s common stock calculated on a fully-diluted basis (the “Additional Warrant” or “Contingent Warrant” and together with the Initial Warrant, the “Warrant”). The Company did not trigger any of the provisions defined in the Term Loan Credit Agreement that would cause the Additional Warrant to be exercisable at March 31, 2020 and, accordingly, the additional warrant expired by its terms. The Warrant may be exercised on a cashless basis, and the number of shares for which the Warrant are exercisable, and the associated exercise price are subject to certain proportional adjustments as set forth in the Warrant. In addition, the holder of the Warrant is entitled to certain piggyback registration rights. In the event that the Total Leverage Ratio is less than 4.00 to 1.00 at any time between April 1, 2020 and March 31, 2021 (the “Buyback Period”) based on financial statements delivered to agent pursuant to the terms of the Term Loan Credit Agreement, and calculated on a pro forma basis factoring in the repurchase described in the Warrant, then on any day during the Buyback Period, the Company shall be permitted, upon 5 business days prior written notice given to Holder, to repurchase either (x) any portion of the Warrant not yet exercised and/or (y) any shares of common stock received from the Company pursuant to prior exercise of the Warrant, in each case at the Applicable Buyback Price (as defined in the Warrant) by paying cash to the Holder (“Buyback Option”). The Initial Warrant was recorded as a liability at fair value and will be treated as a discount on the associated debt. The following schedule shows the change in fair value of the Initial Warrant at June 30, 2020 (in thousands): December 31, 2019 $ 6,537 Change in fair value (5,085 ) June 30, 2020 $ 1,452 The Additional Warrant was no longer outstanding as of March 31, 2020 and therefore has no associated fair value at June 30, 2020 . The Term Loan is presented net of the related original issue discount (“OID”), which was $8.5 million on the issuance date of July 16, 2019. Accretion of OID is included in interest expense. The Company incurred $3.7 million of deferred financing fees related to the Term Loan Credit Agreement that has been recorded as a debt discount. The combined debt discount from the Initial Warrant liability, the Term Loan Embedded Derivative liability, and the debt issuance fees is being amortized into interest expense over the term of the Term Loan Credit Facility using the effective interest method. The Company recorded interest expense for the amortization of the Initial Warrant liability and Term Loan Embedded Derivative liability debt discounts of $0.3 million and $0.5 million for the three and six months ended June 30, 2020 , respectively, and recorded an additional $0.2 million and $0.4 million of interest expense for the amortization of the debt issuance fees for the three and six months ended June 30, 2020 , respectively. The Company’s Term Loan Credit Facility at June 30, 2020 is summarized as follows (in thousands): Term Loan Credit Facility outstanding $ 95,000 Less: Current portion of Term Loan Credit Facility (10,000 ) Long-term portion of Term Loan Credit Facility 85,000 Less: Original Issue Discount (1) (6,818 ) Term Loan Embedded Derivative Liability (2) 166 Initial Warrant Liability (2) 1,452 Total Term Loan Credit Facility - Non-current $ 79,800 (1) Original value of OID attributable to debt issuance costs, warrant liability and embedded derivatives at July 16, 2019, less amortization. (2) Value of warrant liability and embedded derivatives as of June 30, 2020. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The Company estimates the fair value of the ABL Credit Facility and Term Loan Credit Facility using current market yields. These current market yields are considered Level 2 inputs. The fair value of the Company’s Initial Warrant liability recorded in the Company’s financial statements is determined using the Black-Scholes-Merton option pricing model. The quoted price of the Company’s common stock in an active market, volatility and expected life is a Level 3 measurement. Volatility is based on the actual market activity of the Company’s stock. The expected life is based on the remaining contractual term of the Initial Warrant, and the risk-free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the Initial Warrant’s expected life. The fair value of the Company's Initial Warrant liability may significantly fluctuate based on the unobservable inputs described above including the Company's share price, expected volatility and risk-free interest rate. The table below sets forth the assumptions used within the Black-Scholes-Merton option pricing model to value the Company’s Initial Warrant liability: Stock price $ 1.32 Exercise price $ 0.01 Time until expiration (years) 4.04 Expected volatility 79.0 % Risk-free interest rate 0.24 % Expected dividend yield — % The fair value of the Company’s embedded derivative liabilities recorded in the Company’s financial statements is determined using a probability-weighted discounted cash flow approach utilizing inputs outlined in Note 11 , Revolving Credit Facility and Note 12 , Long-Term Debt . To derive the fair value of the embedded derivatives, the Company estimates the fair value of the ABL Credit Facility and Term Loan Credit Facility with and without the embedded derivatives. The difference between the “with” and “without” fair values determines the fair value of the embedded derivative liabilities. Key inputs for the ABL Credit Facility and Term Loan Credit Facility valuation are the applicable margin, LIBOR and US Prime yield curves, default rates of comparable securities and the assumed cost of debt. The fair value of the Company's embedded derivative liabilities may significantly fluctuate based on unobservable inputs including assumed cost of debt. The table below sets forth the total fair value of the ABL Credit Facility, ABL Embedded Derivative, Term Loan Credit Facility, Term Loan Embedded Derivative, and Initial Warrant as of June 30, 2020 (in thousands): June 30, 2020 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value ABL Credit Facility $ 115,270 $ — $ 115,270 ABL Embedded Derivative — 219 219 Term Loan Credit Facility 85,164 — 85,164 Initial Warrant — 1,452 1,452 Term Loan Embedded Derivative — 166 166 Total $ 200,434 $ 1,837 $ 202,271 |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments Segment information is prepared on the same basis that our Chief Executive Officer, who is our chief operating decision maker ("CODM"), manages the segments, evaluates financial results, and makes key operating decisions. The Company is organized and managed by the CODM as three operating segments: North America, EMEA and LATAM. The North America segment includes operations in the United States and Canada; the EMEA segment includes operations in the United Kingdom, continental Europe, the Middle East, Africa, and Asia; and the LATAM segment includes operations in Mexico, Central America, and South America. Other consists of intersegment eliminations, shared service activities, and corporate expenses which are not allocated to the operating segments as management does not consider them in evaluating segment performance. The table below presents financial information for the Company’s reportable segments and Other for the three and six months ended June 30, 2020 and 2019 (in thousands): North America EMEA LATAM Other Total Three Months Ended June 30, 2020 Revenue from third parties $ 140,995 $ 49,095 $ 13,221 $ — $ 203,311 Revenue from other segments 1,822 1,608 1 (3,431 ) — Total revenue $ 142,817 $ 50,703 $ 13,222 $ (3,431 ) $ 203,311 Adjusted EBITDA $ 13,140 $ 4,218 $ (155 ) $ (11,072 ) $ 6,131 Three Months Ended June 30, 2019 Revenue from third parties $ 200,091 $ 62,483 $ 21,287 $ — $ 283,861 Revenue from other segments 650 2,713 2 (3,365 ) — Total revenue $ 200,741 $ 65,196 $ 21,289 $ (3,365 ) $ 283,861 Adjusted EBITDA $ 20,315 $ 4,480 $ 611 $ (12,414 ) $ 12,992 North America EMEA LATAM Other Total Six Months Ended June 30, 2020 Revenue from third parties $ 338,704 $ 97,305 $ 28,662 $ — $ 464,671 Revenue from other segments 3,047 4,169 2 (7,218 ) — Total revenue $ 341,751 $ 101,474 $ 28,664 $ (7,218 ) $ 464,671 Adjusted EBITDA $ 36,780 $ 5,580 $ 274 $ (23,596 ) $ 19,038 Six Months Ended June 30, 2019 Revenue from third parties $ 388,365 $ 122,662 $ 40,045 $ — $ 551,072 Revenue from other segments 1,213 4,360 4 (5,577 ) — Total revenue $ 389,578 $ 127,022 $ 40,049 $ (5,577 ) $ 551,072 Adjusted EBITDA $ 36,332 $ 7,256 $ 876 $ (24,083 ) $ 20,381 The table below reconciles Adjusted EBITDA to net loss before income taxes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Adjusted EBITDA $ 6,131 $ 12,992 $ 19,038 $ 20,381 Depreciation and amortization (3,310 ) (3,233 ) (6,437 ) (5,849 ) Stock-based compensation - equity classified awards (1,554 ) (1,402 ) (3,034 ) (2,141 ) Stock-based compensation - liability classified awards (SARs) (127 ) (46 ) 513 (46 ) Goodwill impairment — — (7,191 ) — Intangible and other asset impairments (609 ) — (883 ) — Restructuring charges (3,644 ) (3,698 ) (7,281 ) (7,632 ) Merger-related transaction costs (790 ) — (790 ) — Professional fees related to control remediation (356 ) (550 ) (620 ) (916 ) Executive search fees — — — (80 ) Sales and use tax audit — — — (25 ) (Loss) income from operations (4,259 ) 4,063 (6,685 ) 3,692 Interest income 53 104 109 202 Interest expense (3,201 ) (2,486 ) (7,587 ) (5,232 ) (Loss) gain from change in fair value of warrant (120 ) — 5,085 — Foreign exchange gain (loss) 862 237 (1,929 ) (239 ) Other income 221 42 1,117 78 (Loss) income before income taxes (6,444 ) 1,960 (9,890 ) (1,499 ) Income tax expense 1,468 2,468 862 1,053 Net loss $ (7,912 ) $ (508 ) $ (10,752 ) $ (2,552 ) The table below presents total assets for the Company's reportable segments and Other (in thousands): June 30, 2020 December 31, 2019 North America $ 353,974 $ 424,775 EMEA 120,081 140,013 LATAM 32,288 46,822 Other 18,690 17,673 Total assets $ 525,033 $ 629,283 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Pending acquisition On July 15, 2020 , the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with HH Global Group Limited, a Company registered in England and Wales (“Parent”), HH Global Finance Limited, a Company registered in England and Wales, and Project Idaho Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Sub”). The Merger Agreement provides for, among other things, the merger of Sub with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”), with the Company continuing as the surviving corporation in the Merger. As a result of the Merger, the Company would become a wholly owned subsidiary of Parent. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our common stock, par value $0.0001 per share, issued and outstanding immediately prior to the Effective Time will be canceled and automatically converted into the right to receive $3.00 in cash, without interest thereon, other than (i) shares that are held in the treasury of the Company or owned of record by any wholly owned subsidiary of the Company (other than those held on behalf of any third party), (ii) shares owned of record by Parent, Sub or any of their respective wholly owned subsidiaries (other than those held on behalf of any third party), and (iii) shares held by stockholders who have not voted in favor of or consented to the adoption of the Merger Agreement and who have properly demanded appraisal of such shares and complied with all the provisions of the Delaware General Corporation Law concerning the right of holders of shares to require appraisal. Additional information about the Merger Agreement and the related transactions can be found in the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2020 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation of Interim Financial Statements | Basis of Presentation of Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of InnerWorkings, Inc. and subsidiaries (the “Company”) included herein have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States (“GAAP”) for interim financial information. Footnote disclosures that would substantially duplicate the disclosures included in the December 31, 2019 audited financial statements have been omitted from these interim unaudited financial statements pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. The operating results for the three and six month period ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 . These condensed consolidated interim financial statements and notes should be read in conjunction with the Company’s condensed consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2020 . |
Liquidity and Management's Plans | Liquidity and Management’s Plans Additionally, under ASC 205, Presentation of Financial Statements , the Company is required to consider and has evaluated whether there is substantial doubt that it has the ability to meet its obligations within one year from the financial statement issuance date. This assessment also includes the Company’s consideration of any management plans to alleviate such doubts. As further described in Note 11 , Revolving Credit Facility , and Note 12 , Long-Term Debt , within the notes to the financial statements included within this Form 10-Q, the agreements governing the Company's debt contain various restrictive covenants. Although we are in compliance with all of our debt covenants as of June 30, 2020 , we have determined that it is probable we will violate certain financial covenants under our credit agreements within the next twelve months if covenant modifications are not obtained. If we were to violate one or more financial covenants, the lenders could declare us in default and could accelerate the amounts due under a portion or all of our outstanding debt. We have discussed the terms for a modification with our lenders, and we believe we will receive such modification before any covenants are violated. Notwithstanding our belief that we will be successful in obtaining a modification of terms under our credit agreements, we also believe that the acquisition of the Company under the Agreement and Plan of Merger with HH Global Group Limited, described in Note 15 , Subsequent Events , is probable of being completed and alleviates doubts about our ability to meet our obligations over the next twelve months. |
Highly Inflationary Accounting | Highly Inflationary Accounting |
Accounts Receivable and Other Financial Assets | Accounts Receivable and Other Financial Assets Accounts receivable are uncollateralized customer obligations due under normal trade terms. Payment terms with customers are generally 30 to 90 days from the invoice date. Accounts receivable are stated in the condensed consolidated financial statements at the amount billed to the customer, less an estimate for potential credit losses. Interest is not generally accrued on outstanding balances. The Company records an allowance for credit losses at the time that accounts receivable are initially recorded based on consideration of the current economic environment, expectation of future economic conditions, the Company’s historical collection experience and a loss-rate approach whereby the allowance is calculated using an estimated historical loss rate formulated by the age of the financial asset and multiplying it by the asset’s amortized cost at the balance sheet date. The Company reassesses its allowance at each reporting period. Aged receivables are written off when it becomes evident, based on age or unique customer circumstance, that such amounts will not be collected, and all reasonable collection efforts have been exhausted. The accounts receivable allowance expense is recorded within selling, general, and administrative expenses on the Company's Condensed Consolidated Statement of Comprehensive Loss. Additionally, the Company records an allowance for credit losses on other forms of financial assets, including unbilled revenue, other receivables, and other non-current assets. These forms of financial assets require a reserve under ASC 326, Financial Instruments - Credit Losses , as the financial assets are measured at amortized cost and represent receivables that result from revenue transactions under the scope of ASC 606, Revenue from Contracts with Customers , and other off-balance-sheet credit exposures, such as third-party supplier loan commitments. The Company records an allowance at the time the financial assets are initially recorded based on consideration of qualitative factors specific to the financial asset, including, but not limited to, credit-worthiness of the customer or supplier, in addition to the economic and historical collection factors previously noted. The allowances for credit losses for unbilled revenue, other receivables, and other non-current assets are immaterial to the condensed consolidated financial statements as of June 30, 2020 . The other financial asset allowance expenses are recorded within selling, general, and administrative expenses on the Company's Condensed Consolidated Statement of Comprehensive Loss. The Company believes its allowances are appropriately stated considering the quality of its financial asset portfolio as of June 30, 2020 . While credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that its credit loss experience will continue to be consistent with historical experience. |
Treasury Shares | Treasury Shares Common shares repurchased by the Company are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, the Company determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires entities to measure the impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. The guidance introduces a new credit reserving methodology known as the Current Expected Credit Loss ("CECL") methodology, which will alter the estimation process, inputs, and assumptions used in estimating credit losses. For the financial assets that are under the scope of this standard, entities will be required to use a new forward-looking “expected loss” model that estimates the loss over the lifetime of the asset based on macroeconomic conditions that correlate with historical loss experience, delinquency trends and aging behavior of receivables, current conditions, and reasonable and supportable forecasts. This will result in earlier recognition of allowance for doubtful accounts and will replace the Company’s “incurred loss” model that delayed the full amount of credit loss until the loss is probable of occurring. In addition, the standard requires entities to evaluate financial instruments by recording allowance for doubtful accounts by pooling of instruments based on similar risk characteristics, rather than a specific identification approach. The effective date is for fiscal years beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company adopted ASU 2016-13 and related ASUs effective January 1, 2020 using a modified-retrospective transition method. The adoption and application of this standard did not have a material impact to the condensed consolidated financial statements. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected losses. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which amends ASC 820, Fair Value Measurement . This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2020, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company adopted this guidance in the first quarter of 2020 with no material impact on its condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of adoption of this ASU on its condensed consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions t o ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The optional amendments are effective as of March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impacts the adoption of this guidance will have on its condensed consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability | The following table is a summary of the Company's costs to fulfill and contract liabilities (in thousands): June 30, 2020 December 31, 2019 Costs to fulfill $ 567 $ 1,238 Contract liabilities 10,572 9,568 Cash received 9,845 36,662 Revenue recognized 8,841 44,708 |
Allowance for Expected Credit_2
Allowance for Expected Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Accounts Receivable, Allowance for Credit Loss | The following is a rollforward of the allowance for expected credit losses related to the Company's trade receivables as of June 30, 2020 (in thousands): Balance as of December 31, 2019 $ 3,830 Adjustment for adoption of ASU 2016-13 (431 ) Balance as of January 1, 2020 3,399 Current provision for expected credit losses (1) 71 Recoveries and write-offs — Balance as of June 30, 2020 $ 3,470 (1) The current provision for expected credit losses includes the effect of exchange rate changes on accounts receivable through June 30, 2020 . |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following is a rollforward of goodwill for each reportable segment as of June 30, 2020 (in thousands): North America EMEA LATAM Total Goodwill as of December 31, 2019 Goodwill $ 170,642 $ 96,225 $ 7,109 $ 273,976 Accumulated impairment (18,432 ) (96,225 ) (7,109 ) (121,766 ) 152,210 — — 152,210 Goodwill impairment (7,191 ) — — (7,191 ) Foreign exchange impact (52 ) — — (52 ) Goodwill as of June 30, 2020 Goodwill 170,590 96,225 7,109 273,924 Accumulated impairment (25,623 ) (96,225 ) (7,109 ) (128,957 ) $ 144,967 $ — $ — $ 144,967 |
Other Intangibles and Long-Li_2
Other Intangibles and Long-Lived Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following is a summary of the Company’s intangible assets as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Weighted Average Life in Years Customer lists $ 73,442 $ 73,678 14.4 Non-competition agreements 943 959 4.1 Trade names 2,510 2,510 13.3 Patents 57 57 9.0 76,952 77,204 Less accumulated amortization and impairment Customer lists (67,096 ) (66,382 ) Non-competition agreements (943 ) (959 ) Trade names (2,168 ) (2,098 ) Patents (52 ) (51 ) Total accumulated amortization and impairment (70,259 ) (69,490 ) Intangible assets, net $ 6,693 $ 7,714 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of June 30, 2020 , estimated amortization expense for the remainder of 2020 and each of the next five years and thereafter is as follows (in thousands): Remainder of 2020 $ 1,007 2021 1,783 2022 1,407 2023 961 2024 744 2025 467 Thereafter 324 $ 6,693 |
Restructuring Activities and _2
Restructuring Activities and Charges (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Accrued Restructuring Activities | The following table summarizes the accrued restructuring activities for this plan for the six months ended June 30, 2020 (in thousands), all of which relate to EMEA: Employee Severance and Related Benefits Lease and Contract Termination Costs Other Total Balance as of December 31, 2019 $ 122 $ — $ — $ 122 Charges (36 ) — — (36 ) Cash payments (86 ) — — (86 ) Balance as of June 30, 2020 $ — $ — $ — $ — The following table summarizes the accrued restructuring activities for this plan for the six months ended June 30, 2020 (in thousands): Employee Severance and Related Benefits Lease and Contract Termination Costs Compensation Realignment and Other Retention Other Total Balance as of December 31, 2019 $ 666 $ 23 $ 3,636 $ 258 $ 4,583 Charges 1,969 369 4,425 518 7,281 Prepayments (1) — — 36 — 36 Cash payments (2,283 ) (402 ) (5,291 ) (494 ) (8,470 ) Non-cash settlements/adjustments (2) 58 (22 ) — — 36 Balance as of June 30, 2020 $ 410 $ (32 ) $ 2,806 $ 282 $ 3,466 (1) For compensation realignment and other retention amounts, expense is recognized over a mandatory future service period, whereby payments occur at certain intervals throughout the mandatory future service period. This line item represents prepayment activity that has occurred through June 30, 2020 . (2) Non-cash settlements and adjustments consist of (1) differences in total lease expense per ASC 842 and cash rental payments for leases that qualify to be recorded to restructuring and (2) foreign currency impacts. The Company recorded the following restructuring costs by segment (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 North America $ 2,247 $ 1,216 $ 4,483 $ 1,408 EMEA 1,009 326 1,889 1,405 LATAM 143 39 307 74 Other 245 2,117 602 4,745 Total $ 3,644 $ 3,698 $ 7,281 $ 7,632 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computation of basic and diluted loss per share is as follows (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net loss - basic $ (7,912 ) $ (508 ) $ (10,752 ) $ (2,552 ) Adjustments: Change in fair value of Initial Warrant liability — — (5,085 ) — Net loss - diluted $ (7,912 ) $ (508 ) $ (15,837 ) $ (2,552 ) Denominator: Weighted average shares outstanding 52,327 51,773 52,233 51,830 Issuance of Initial Warrant 1,335 — 1,335 — Weighted average shares outstanding - basic and diluted 53,662 51,773 53,568 51,830 Basic loss per share $ (0.15 ) $ (0.01 ) $ (0.20 ) $ (0.05 ) Diluted loss per share $ (0.15 ) $ (0.01 ) $ (0.30 ) $ (0.05 ) |
Revolving Credit Facility (Tabl
Revolving Credit Facility (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following schedule shows the change in fair value of the ABL Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 497 Change in fair value (278 ) June 30, 2020 $ 219 The following schedule shows the change in fair value of the Term Loan Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 407 Change in fair value (241 ) June 30, 2020 $ 166 |
Schedule of Debt | The Company’s ABL Credit Facility at June 30, 2020 is summarized as follows (in thousands): ABL Credit Facility outstanding $ 40,817 Less: Current portion of ABL Credit Facility for UK Borrowings (76 ) Long-term portion of ABL Credit Facility 40,741 Less: ABL Embedded Derivative Discount (1) (484 ) ABL Embedded Derivative Liability (2) 219 Total Revolving credit facility - non-current $ 40,476 (1) Original value of embedded derivative at July 16, 2019, less amortization. (2) Value of embedded derivative as of June 30, 2020. The Company’s Term Loan Credit Facility at June 30, 2020 is summarized as follows (in thousands): Term Loan Credit Facility outstanding $ 95,000 Less: Current portion of Term Loan Credit Facility (10,000 ) Long-term portion of Term Loan Credit Facility 85,000 Less: Original Issue Discount (1) (6,818 ) Term Loan Embedded Derivative Liability (2) 166 Initial Warrant Liability (2) 1,452 Total Term Loan Credit Facility - Non-current $ 79,800 (1) Original value of OID attributable to debt issuance costs, warrant liability and embedded derivatives at July 16, 2019, less amortization. (2) Value of warrant liability and embedded derivatives as of June 30, 2020. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following schedule shows the change in fair value of the ABL Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 497 Change in fair value (278 ) June 30, 2020 $ 219 The following schedule shows the change in fair value of the Term Loan Embedded Derivative at June 30, 2020 (in thousands): December 31, 2019 $ 407 Change in fair value (241 ) June 30, 2020 $ 166 |
Schedule of Warrant Liabilities at Fair Value | The following schedule shows the change in fair value of the Initial Warrant at June 30, 2020 (in thousands): December 31, 2019 $ 6,537 Change in fair value (5,085 ) June 30, 2020 $ 1,452 |
Schedule of Debt | The Company’s ABL Credit Facility at June 30, 2020 is summarized as follows (in thousands): ABL Credit Facility outstanding $ 40,817 Less: Current portion of ABL Credit Facility for UK Borrowings (76 ) Long-term portion of ABL Credit Facility 40,741 Less: ABL Embedded Derivative Discount (1) (484 ) ABL Embedded Derivative Liability (2) 219 Total Revolving credit facility - non-current $ 40,476 (1) Original value of embedded derivative at July 16, 2019, less amortization. (2) Value of embedded derivative as of June 30, 2020. The Company’s Term Loan Credit Facility at June 30, 2020 is summarized as follows (in thousands): Term Loan Credit Facility outstanding $ 95,000 Less: Current portion of Term Loan Credit Facility (10,000 ) Long-term portion of Term Loan Credit Facility 85,000 Less: Original Issue Discount (1) (6,818 ) Term Loan Embedded Derivative Liability (2) 166 Initial Warrant Liability (2) 1,452 Total Term Loan Credit Facility - Non-current $ 79,800 (1) Original value of OID attributable to debt issuance costs, warrant liability and embedded derivatives at July 16, 2019, less amortization. (2) Value of warrant liability and embedded derivatives as of June 30, 2020. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Valuation Techniques | The table below sets forth the assumptions used within the Black-Scholes-Merton option pricing model to value the Company’s Initial Warrant liability: Stock price $ 1.32 Exercise price $ 0.01 Time until expiration (years) 4.04 Expected volatility 79.0 % Risk-free interest rate 0.24 % Expected dividend yield — % |
Schedule of Fair Value, Liabilities Measured on Recurring Basis | The table below sets forth the total fair value of the ABL Credit Facility, ABL Embedded Derivative, Term Loan Credit Facility, Term Loan Embedded Derivative, and Initial Warrant as of June 30, 2020 (in thousands): June 30, 2020 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value ABL Credit Facility $ 115,270 $ — $ 115,270 ABL Embedded Derivative — 219 219 Term Loan Credit Facility 85,164 — 85,164 Initial Warrant — 1,452 1,452 Term Loan Embedded Derivative — 166 166 Total $ 200,434 $ 1,837 $ 202,271 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The table below presents total assets for the Company's reportable segments and Other (in thousands): June 30, 2020 December 31, 2019 North America $ 353,974 $ 424,775 EMEA 120,081 140,013 LATAM 32,288 46,822 Other 18,690 17,673 Total assets $ 525,033 $ 629,283 The table below presents financial information for the Company’s reportable segments and Other for the three and six months ended June 30, 2020 and 2019 (in thousands): North America EMEA LATAM Other Total Three Months Ended June 30, 2020 Revenue from third parties $ 140,995 $ 49,095 $ 13,221 $ — $ 203,311 Revenue from other segments 1,822 1,608 1 (3,431 ) — Total revenue $ 142,817 $ 50,703 $ 13,222 $ (3,431 ) $ 203,311 Adjusted EBITDA $ 13,140 $ 4,218 $ (155 ) $ (11,072 ) $ 6,131 Three Months Ended June 30, 2019 Revenue from third parties $ 200,091 $ 62,483 $ 21,287 $ — $ 283,861 Revenue from other segments 650 2,713 2 (3,365 ) — Total revenue $ 200,741 $ 65,196 $ 21,289 $ (3,365 ) $ 283,861 Adjusted EBITDA $ 20,315 $ 4,480 $ 611 $ (12,414 ) $ 12,992 North America EMEA LATAM Other Total Six Months Ended June 30, 2020 Revenue from third parties $ 338,704 $ 97,305 $ 28,662 $ — $ 464,671 Revenue from other segments 3,047 4,169 2 (7,218 ) — Total revenue $ 341,751 $ 101,474 $ 28,664 $ (7,218 ) $ 464,671 Adjusted EBITDA $ 36,780 $ 5,580 $ 274 $ (23,596 ) $ 19,038 Six Months Ended June 30, 2019 Revenue from third parties $ 388,365 $ 122,662 $ 40,045 $ — $ 551,072 Revenue from other segments 1,213 4,360 4 (5,577 ) — Total revenue $ 389,578 $ 127,022 $ 40,049 $ (5,577 ) $ 551,072 Adjusted EBITDA $ 36,332 $ 7,256 $ 876 $ (24,083 ) $ 20,381 |
Schedule of EBITDA Reconciliation | The table below reconciles Adjusted EBITDA to net loss before income taxes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Adjusted EBITDA $ 6,131 $ 12,992 $ 19,038 $ 20,381 Depreciation and amortization (3,310 ) (3,233 ) (6,437 ) (5,849 ) Stock-based compensation - equity classified awards (1,554 ) (1,402 ) (3,034 ) (2,141 ) Stock-based compensation - liability classified awards (SARs) (127 ) (46 ) 513 (46 ) Goodwill impairment — — (7,191 ) — Intangible and other asset impairments (609 ) — (883 ) — Restructuring charges (3,644 ) (3,698 ) (7,281 ) (7,632 ) Merger-related transaction costs (790 ) — (790 ) — Professional fees related to control remediation (356 ) (550 ) (620 ) (916 ) Executive search fees — — — (80 ) Sales and use tax audit — — — (25 ) (Loss) income from operations (4,259 ) 4,063 (6,685 ) 3,692 Interest income 53 104 109 202 Interest expense (3,201 ) (2,486 ) (7,587 ) (5,232 ) (Loss) gain from change in fair value of warrant (120 ) — 5,085 — Foreign exchange gain (loss) 862 237 (1,929 ) (239 ) Other income 221 42 1,117 78 (Loss) income before income taxes (6,444 ) 1,960 (9,890 ) (1,499 ) Income tax expense 1,468 2,468 862 1,053 Net loss $ (7,912 ) $ (508 ) $ (10,752 ) $ (2,552 ) |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||||
Capitalized contract costs amortization | $ 100 | $ 100 | $ 100 | $ 200 | |
Capitalized contract costs, impairment loss | 600 | ||||
Costs to fulfill | 567 | 567 | $ 1,238 | ||
Contract liabilities | 10,572 | 10,572 | 9,568 | ||
Cash received | $ 9,845 | 9,845 | 36,662 | ||
Revenue recognized | $ 8,841 | $ 44,708 |
Allowance for Expected Credit_3
Allowance for Expected Credit Losses (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Jun. 30, 2020 |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 3,830 | $ 3,830 |
Current provision for expected credit losses | 71 | |
Recoveries and write-offs | 0 | |
Ending balance | 3,399 | $ 3,470 |
Accounting Standards Update 2016-13 | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Adjustment for adoption of ASU 2016-13 | $ (431) |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Goodwill [Line Items] | ||||||
Goodwill, gross | $ 273,924 | $ 273,924 | $ 273,976 | |||
Accumulated impairment | (128,957) | (128,957) | (121,766) | |||
Goodwill, net | 144,967 | 144,967 | 152,210 | |||
Goodwill impairment | $ 0 | $ 0 | (7,191) | $ 0 | ||
Foreign exchange impact | $ (52) | |||||
Reporting unit, threshold maximum percentage of fair value in excess of carrying amount | 30.00% | 30.00% | ||||
North America | ||||||
Goodwill [Line Items] | ||||||
Goodwill, gross | $ 170,590 | $ 170,590 | 170,642 | |||
Accumulated impairment | (25,623) | (25,623) | (18,432) | |||
Goodwill, net | 144,967 | 144,967 | 152,210 | |||
Goodwill impairment | $ (7,200) | (7,191) | ||||
Foreign exchange impact | (52) | |||||
EMEA | ||||||
Goodwill [Line Items] | ||||||
Goodwill, gross | 96,225 | 96,225 | 96,225 | |||
Accumulated impairment | (96,225) | (96,225) | (96,225) | |||
Goodwill, net | 0 | 0 | 0 | |||
Goodwill impairment | 0 | |||||
Foreign exchange impact | 0 | |||||
LATAM | ||||||
Goodwill [Line Items] | ||||||
Goodwill, gross | 7,109 | 7,109 | 7,109 | |||
Accumulated impairment | (7,109) | (7,109) | (7,109) | |||
Goodwill, net | $ 0 | 0 | $ 0 | |||
Goodwill impairment | 0 | |||||
Foreign exchange impact | $ 0 |
Other Intangibles and Long-Li_3
Other Intangibles and Long-Lived Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 76,952 | $ 76,952 | $ 77,204 | ||
Less accumulated amortization and impairment | (70,259) | (70,259) | (69,490) | ||
Intangible assets, net | 6,693 | 6,693 | 7,714 | ||
Amortization expense of intangible assets | 600 | $ 600 | 1,100 | $ 1,100 | |
Customer lists | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 73,442 | 73,442 | 73,678 | ||
Less accumulated amortization and impairment | (67,096) | $ (67,096) | (66,382) | ||
Weighted Average Life in Years | 14 years 4 months 24 days | ||||
Non-competition agreements | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 943 | $ 943 | 959 | ||
Less accumulated amortization and impairment | (943) | $ (943) | (959) | ||
Weighted Average Life in Years | 4 years 1 month 6 days | ||||
Trade names | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 2,510 | $ 2,510 | 2,510 | ||
Less accumulated amortization and impairment | (2,168) | $ (2,168) | (2,098) | ||
Weighted Average Life in Years | 13 years 3 months 18 days | ||||
Patents | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 57 | $ 57 | 57 | ||
Less accumulated amortization and impairment | $ (52) | $ (52) | $ (51) | ||
Weighted Average Life in Years | 9 years |
Other Intangibles and Long-Li_4
Other Intangibles and Long-Lived Assets - Schedule of Other Intangible Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2020 | $ 1,007 | |
2021 | 1,783 | |
2022 | 1,407 | |
2023 | 961 | |
2024 | 744 | |
2025 | 467 | |
Thereafter | 324 | |
Intangible assets, net | $ 6,693 | $ 7,714 |
Restructuring Activities and _3
Restructuring Activities and Charges - Narrative (Details) $ in Thousands | Feb. 21, 2019 | Dec. 14, 2015USD ($)employee | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Feb. 24, 2020USD ($) | Aug. 10, 2018USD ($) |
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | $ 3,644 | $ 3,698 | $ 7,281 | $ 7,632 | |||||
Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Non-cash settlements / adjustments | $ 500 | $ 400 | |||||||
Restructuring and related cost, extension period | 2 years | ||||||||
Restructuring charges | 7,281 | $ 29,200 | |||||||
Restructuring Plan, 2015 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | $ 6,700 | (36) | |||||||
Expected number of positions eliminated | employee | 100 | ||||||||
Employee Severance and Related Benefits | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | 1,969 | ||||||||
Employee Severance and Related Benefits | Restructuring Plan, 2015 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | $ 5,600 | (36) | |||||||
Lease and Contract Termination Costs | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | 369 | ||||||||
Lease and Contract Termination Costs | Restructuring Plan, 2015 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | $ 1,100 | 0 | |||||||
Compensation Realignment and Other Retention | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges | $ 4,425 | ||||||||
Minimum | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 35,000 | 20,000 | |||||||
Minimum | Employee Severance and Related Benefits | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 9,000 | ||||||||
Minimum | Lease and Contract Termination Costs | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 8,000 | ||||||||
Minimum | Compensation Realignment and Other Retention | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 18,000 | ||||||||
Maximum | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 45,000 | $ 25,000 | |||||||
Maximum | Employee Severance and Related Benefits | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 12,000 | ||||||||
Maximum | Lease and Contract Termination Costs | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | 10,000 | ||||||||
Maximum | Compensation Realignment and Other Retention | Restructuring Plan, 2018 | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring charges, expected cost | $ 23,000 |
Restructuring Activities and _4
Restructuring Activities and Charges - Schedule of Restructuring Related Costs (Details) - USD ($) $ in Thousands | Dec. 14, 2015 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 |
Restructuring Reserve [Roll Forward] | ||||||
Charges | $ 3,644 | $ 3,698 | $ 7,281 | $ 7,632 | ||
Restructuring Plan, 2018 | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 4,583 | |||||
Charges | 7,281 | $ 29,200 | ||||
Prepayments | 36 | |||||
Cash payments | (8,470) | |||||
Non-cash settlements/adjustments | 36 | |||||
Ending balance | 3,466 | 3,466 | 3,466 | |||
Restructuring Plan, 2018 | Employee Severance and Related Benefits | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 666 | |||||
Charges | 1,969 | |||||
Prepayments | 0 | |||||
Cash payments | (2,283) | |||||
Non-cash settlements/adjustments | 58 | |||||
Ending balance | 410 | 410 | 410 | |||
Restructuring Plan, 2018 | Lease and Contract Termination Costs | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 23 | |||||
Charges | 369 | |||||
Prepayments | 0 | |||||
Cash payments | (402) | |||||
Non-cash settlements/adjustments | (22) | |||||
Ending balance | (32) | (32) | (32) | |||
Restructuring Plan, 2018 | Compensation Realignment and Other Retention | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 3,636 | |||||
Charges | 4,425 | |||||
Prepayments | 36 | |||||
Cash payments | (5,291) | |||||
Non-cash settlements/adjustments | 0 | |||||
Ending balance | 2,806 | 2,806 | 2,806 | |||
Restructuring Plan, 2018 | Other | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 258 | |||||
Charges | 518 | |||||
Prepayments | 0 | |||||
Cash payments | (494) | |||||
Non-cash settlements/adjustments | 0 | |||||
Ending balance | 282 | 282 | 282 | |||
Restructuring Plan, 2015 | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 122 | |||||
Charges | $ 6,700 | (36) | ||||
Cash payments | (86) | |||||
Ending balance | 0 | 0 | 0 | |||
Restructuring Plan, 2015 | Employee Severance and Related Benefits | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 122 | |||||
Charges | 5,600 | (36) | ||||
Cash payments | (86) | |||||
Ending balance | 0 | 0 | 0 | |||
Restructuring Plan, 2015 | Lease and Contract Termination Costs | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 0 | |||||
Charges | $ 1,100 | 0 | ||||
Cash payments | 0 | |||||
Ending balance | 0 | 0 | 0 | |||
Restructuring Plan, 2015 | Other | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Beginning balance | 0 | |||||
Charges | 0 | |||||
Cash payments | 0 | |||||
Ending balance | $ 0 | $ 0 | $ 0 |
Restructuring Activities and _5
Restructuring Activities and Charges - Schedule of Restructuring Costs by Segment (Details) - Restructuring Plan, 2018 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 3,644 | $ 3,698 | $ 7,281 | $ 7,632 |
Operating Segments | North America | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 2,247 | 1,216 | 4,483 | 1,408 |
Operating Segments | EMEA | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1,009 | 326 | 1,889 | 1,405 |
Operating Segments | LATAM | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 143 | 39 | 307 | 74 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 245 | $ 2,117 | $ 602 | $ 4,745 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate percentage | (22.80%) | 125.90% | (8.70%) | (70.20%) |
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, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net loss - basic | $ (7,912) | $ (508) | $ (10,752) | $ (2,552) |
Change in fair value of Initial Warrant liability | 0 | 0 | (5,085) | 0 |
Net loss - diluted | $ (7,912) | $ (508) | $ (15,837) | $ (2,552) |
Denominator: | ||||
Weighted average shares outstanding (in shares) | 52,327 | 51,773 | 52,233 | 51,830 |
Issuance of warrants (in shares) | 1,335 | 0 | 1,335 | 0 |
Weighted average shares outstanding - basic and diluted (in shares) | 53,662 | 51,773 | 53,568 | 51,830 |
Basic loss per share (in dollars per share) | $ (0.15) | $ (0.01) | $ (0.20) | $ (0.05) |
Diluted loss per share (in dollars per share) | $ (0.15) | $ (0.01) | $ (0.30) | $ (0.05) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Enova | |||||
Related Party Transaction [Line Items] | |||||
Print procurement services | $ 1.1 | $ 3.4 | $ 4.8 | $ 6.1 | |
Net amount receivable from related parties | $ 4.6 | ||||
Byline | |||||
Related Party Transaction [Line Items] | |||||
Print procurement services | $ 0.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) € in Millions, $ in Millions | 1 Months Ended | |||||||
Jan. 31, 2014USD ($) | Jan. 31, 2014EUR (€) | Dec. 31, 2013USD ($) | Dec. 31, 2013EUR (€) | Jun. 30, 2020USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2015EUR (€) | Feb. 28, 2014EUR (€) | |
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Medical claims liability | $ 1 | |||||||
Wrongful Termination Lawsuit - Productions Graphics | ||||||||
Other Commitments [Line Items] | ||||||||
Loss contingency, damages sought | $ 1 | € 0.7 | ||||||
Loss contingency, damages value, contingent consideration | $ 9.4 | € 7.1 | € 7.1 | |||||
Loss contingency, damages value, fixed consideration | 8 | 5.8 | ||||||
Loss contingency, damages maximum, contingent consideration | $ 37.6 | € 34.5 | ||||||
Employment Arbitration Claim | ||||||||
Other Commitments [Line Items] | ||||||||
Loss contingency, damages sought | $ 0.7 | € 0.6 |
Revolving Credit Facility - Nar
Revolving Credit Facility - Narrative (Details) - USD ($) | Jul. 16, 2019 | Feb. 22, 2016 | Jun. 30, 2020 | Jun. 30, 2020 |
Revolving Credit Facility | China | ||||
Line of Credit Facility [Line Items] | ||||
Revolving commitment amount | $ 1,000,000 | $ 5,000,000 | ||
Unused capacity | $ 500,000 | $ 500,000 | ||
Revolving Credit Facility | Base Rate | China | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 110.00% | |||
Revolving Credit Facility | ABL Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Revolving commitment amount | 105,000,000 | |||
Additional increase to borrowing capacity | 20,000,000 | |||
ABL Credit Facility outstanding | 40,817,000 | 40,817,000 | ||
Deferred financing costs | 2,000,000 | |||
Amortization of deferred financing costs | 100,000 | 200,000 | ||
Amortization of debt discount | 100,000 | |||
Letters of credit outstanding | 1,700,000 | 1,700,000 | ||
Revolving Credit Facility | ABL Credit Agreement | US | ||||
Line of Credit Facility [Line Items] | ||||
ABL Credit Facility outstanding | 40,700,000 | 40,700,000 | ||
Revolving Credit Facility | ABL Credit Agreement | UK | ||||
Line of Credit Facility [Line Items] | ||||
Revolving commitment amount | 15,000,000 | |||
ABL Credit Facility outstanding | $ 100,000 | $ 100,000 | ||
Bridge Loan | ABL Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Revolving commitment amount | 10,500,000 | |||
Letter of Credit | ABL Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Revolving commitment amount | $ 10,000,000 | |||
Minimum | Revolving Credit Facility | ABL Credit Agreement | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Minimum | Revolving Credit Facility | ABL Credit Agreement | Base Rate | US | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Minimum | Revolving Credit Facility | ABL Credit Agreement | Base Rate | UK | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Maximum | Revolving Credit Facility | ABL Credit Agreement | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.50% | |||
Maximum | Revolving Credit Facility | ABL Credit Agreement | Base Rate | US | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Maximum | Revolving Credit Facility | ABL Credit Agreement | Base Rate | UK | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.50% |
Revolving Credit Facility - Cha
Revolving Credit Facility - Change in Fair Value of ABL Embedded Derivative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Change in fair value | $ 519 | $ 0 |
ABL Credit Agreement | Revolving Credit Facility | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Beginning balance | 497 | |
Change in fair value | (278) | |
Ending balance | $ 219 |
Revolving Credit Facility - Sum
Revolving Credit Facility - Summary of ABL Credit Facility (Details) - ABL Credit Agreement - Revolving Credit Facility - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
ABL Credit Facility outstanding | $ 40,817 | |
Less: Current portion of ABL Credit Facility for UK Borrowings | (76) | $ (593) |
Long-term portion of Credit Facility | 40,741 | |
Less: ABL Embedded Derivative Discount | (484) | |
ABL Embedded Derivative Liability | 219 | |
Total Revolving credit facility - non-current | $ 40,476 | $ 60,086 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | Oct. 01, 2020USD ($) | Jul. 16, 2019USD ($)day$ / sharesshares | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) |
Debt Instrument [Line Items] | |||||
Debt instrument, converted debt, interest rate | 2.49% | ||||
Initial Warrant | |||||
Debt Instrument [Line Items] | |||||
Number of warrants or rights exercisable (in shares) | shares | 1,335,337 | ||||
Class of warrant or right, exercise price (in usd per share) | $ / shares | $ 0.01 | ||||
Warrants and rights outstanding, exercise period after triggering event | 10 days | ||||
Term Loan Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Warrant, exercise price of common stock | 4.25 | ||||
Debt instrument, covenant, leverage ratio, maximum | 4 | ||||
Debt instrument, convertible, threshold trading days | day | 5 | ||||
Amortization of debt discount | $ 300,000 | $ 500,000 | |||
Interest expense | 200,000 | 400,000 | |||
Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
ABL Credit Facility outstanding | 95,000,000 | 95,000,000 | |||
Original issue discount | 6,818,000 | 6,818,000 | |||
Term Loan Facility | Term Loan Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Revolving commitment amount | $ 100,000,000 | ||||
Debt instrument, periodic payment, principal | $ 1,300,000 | ||||
ABL Credit Facility outstanding | $ 95,000,000 | 95,000,000 | |||
Original issue discount | 8,500,000 | ||||
Debt issuance costs | $ 3,700,000 | ||||
Interest expense | $ 100,000 | ||||
Term Loan Facility | Term Loan Credit Agreement | Minimum | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 6.25% | ||||
Term Loan Facility | Term Loan Credit Agreement | Minimum | Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 5.25% | ||||
Term Loan Facility | Term Loan Credit Agreement | Maximum | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 10.75% | ||||
Term Loan Facility | Term Loan Credit Agreement | Maximum | Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 9.75% | ||||
Forecast | Term Loan Facility | Term Loan Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, periodic payment, principal | $ 2,500,000 |
Long-Term Debt - Change in Fair
Long-Term Debt - Change in Fair Value of Term Loan Embedded Derivative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Change in fair value | $ 519 | $ 0 |
Term Loan Credit Agreement | Term Loan Facility | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Beginning balance | 407 | |
Change in fair value | (241) | |
Ending balance | $ 166 |
Long-Term Debt - Change in Fa_2
Long-Term Debt - Change in Fair Value of Initial Warrant (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
(Loss) gain from change in fair value of warrant | $ (120) | $ 0 | $ 5,085 | $ 0 |
Initial Warrant | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 6,537 | |||
(Loss) gain from change in fair value of warrant | (5,085) | |||
Ending balance | $ 1,452 | $ 1,452 |
Long-Term Debt - Summary of Ter
Long-Term Debt - Summary of Term Loan Credit Facility (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Term Loan Credit Facility outstanding | $ 95,000 | |
Less: Current portion of Term Loan Credit Facility | (10,000) | |
Long-term portion of Credit Facility | 85,000 | |
Less: Original Issue Discount | (6,818) | |
Term Loan Embedded Derivative Liability | 166 | |
Total Term Loan Credit Facility - Non-current | 79,800 | |
Initial Warrant | ||
Debt Instrument [Line Items] | ||
Initial Warrant Liability | 1,452 | $ 6,537 |
Initial Warrant | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Initial Warrant Liability | $ 1,452 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Fair Value Assumptions (Details) | 6 Months Ended |
Jun. 30, 2020$ / shares | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Stock price (in dollars per share) | $ 1.32 |
Exercise price (in dollars per share) | $ 0.01 |
Time until expiration (years) | 4 years 14 days |
Expected volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.790 |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.0024 |
Expected dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0 |
Fair Value Measurement - Sche_2
Fair Value Measurement - Schedule of Fair Value Measurements (Details) - Fair Value, Recurring $ in Thousands | Jun. 30, 2020USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Initial Warrant | $ 1,452 |
Total | 202,271 |
Significant Other Observable Inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Initial Warrant | 0 |
Total | 200,434 |
Significant Unobservable Inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Initial Warrant | 1,452 |
Total | 1,837 |
Term loan facility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 85,164 |
Derivative | 166 |
Term loan facility | Significant Other Observable Inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 85,164 |
Derivative | 0 |
Term loan facility | Significant Unobservable Inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 0 |
Derivative | 166 |
ABL Credit Agreement | Revolving credit facility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 115,270 |
Derivative | 219 |
ABL Credit Agreement | Revolving credit facility | Significant Other Observable Inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 115,270 |
Derivative | 0 |
ABL Credit Agreement | Revolving credit facility | Significant Unobservable Inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Line of credit, fair value | 0 |
Derivative | $ 219 |
Business Segments - Schedule of
Business Segments - Schedule of Business Segment Financial Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of business segments | segment | 3 | |||
Segment Reporting Information [Line Items] | ||||
Revenue from third parties | $ 203,311 | $ 283,861 | $ 464,671 | $ 551,072 |
Revenue from other segments | 0 | 0 | 0 | 0 |
Total revenue | 203,311 | 283,861 | 464,671 | 551,072 |
Adjusted EBITDA | 6,131 | 12,992 | 19,038 | 20,381 |
Operating Segments | North America | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from third parties | 140,995 | 200,091 | 338,704 | 388,365 |
Revenue from other segments | 1,822 | 650 | 3,047 | 1,213 |
Total revenue | 142,817 | 200,741 | 341,751 | 389,578 |
Adjusted EBITDA | 13,140 | 20,315 | 36,780 | 36,332 |
Operating Segments | EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from third parties | 49,095 | 62,483 | 97,305 | 122,662 |
Revenue from other segments | 1,608 | 2,713 | 4,169 | 4,360 |
Total revenue | 50,703 | 65,196 | 101,474 | 127,022 |
Adjusted EBITDA | 4,218 | 4,480 | 5,580 | 7,256 |
Operating Segments | LATAM | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from third parties | 13,221 | 21,287 | 28,662 | 40,045 |
Revenue from other segments | 1 | 2 | 2 | 4 |
Total revenue | 13,222 | 21,289 | 28,664 | 40,049 |
Adjusted EBITDA | (155) | 611 | 274 | 876 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from third parties | 0 | 0 | 0 | 0 |
Revenue from other segments | (3,431) | (3,365) | (7,218) | (5,577) |
Total revenue | (3,431) | (3,365) | (7,218) | (5,577) |
Adjusted EBITDA | $ (11,072) | $ (12,414) | $ (23,596) | $ (24,083) |
Business Segments - Schedule _2
Business Segments - Schedule of Business Segments Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting [Abstract] | ||||
Adjusted EBITDA | $ 6,131 | $ 12,992 | $ 19,038 | $ 20,381 |
Depreciation and amortization | (3,310) | (3,233) | (6,437) | (5,849) |
Stock-based compensation - equity classified awards | (1,554) | (1,402) | (3,034) | (2,141) |
Stock-based compensation - liability classified awards (SARs) | (127) | (46) | 513 | (46) |
Goodwill impairment | 0 | 0 | (7,191) | 0 |
Intangible and other asset impairments | (609) | 0 | (883) | 0 |
Restructuring charges | (3,644) | (3,698) | (7,281) | (7,632) |
Merger-related transaction costs | (790) | 0 | (790) | 0 |
Professional fees related to control remediation | (356) | (550) | (620) | (916) |
Executive search fees | 0 | 0 | 0 | (80) |
Sales and use tax audit | 0 | 0 | 0 | (25) |
(Loss) income from operations | (4,259) | 4,063 | (6,685) | 3,692 |
Interest income | 53 | 104 | 109 | 202 |
Interest expense | (3,201) | (2,486) | (7,587) | (5,232) |
(Loss) gain from change in fair value of warrant | (120) | 0 | 5,085 | 0 |
Foreign exchange income (loss) | 862 | 237 | (1,929) | (239) |
Other income | 221 | 42 | 1,117 | 78 |
Loss before income taxes | (6,444) | 1,960 | (9,890) | (1,499) |
Income tax benefit | 1,468 | 2,468 | 862 | 1,053 |
Net loss | $ (7,912) | $ (508) | $ (10,752) | $ (2,552) |
Business Segments - Schedule _3
Business Segments - Schedule of Assets by Segment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Assets | $ 525,033 | $ 629,283 |
Operating Segments | North America | ||
Segment Reporting Information [Line Items] | ||
Assets | 353,974 | 424,775 |
Operating Segments | EMEA | ||
Segment Reporting Information [Line Items] | ||
Assets | 120,081 | 140,013 |
Operating Segments | LATAM | ||
Segment Reporting Information [Line Items] | ||
Assets | 32,288 | 46,822 |
Other | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 18,690 | $ 17,673 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Jul. 15, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Business acquisition, share price | $ 3 |