Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 30, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39773 | |
Entity Registrant Name | Hydrofarm Holdings Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-4895761 | |
Entity Address, Address Line One | 1510 Main Street | |
Entity Address, City or Town | Shoemakersville | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19555 | |
City Area Code | 707 | |
Local Phone Number | 765-9990 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | HYFM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,367,678 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001695295 | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 18,703 | $ 21,291 |
Accounts receivable, net | 22,601 | 17,227 |
Inventories | 103,430 | 111,398 |
Prepaid expenses and other current assets | 6,104 | 5,032 |
Total current assets | 150,838 | 154,948 |
Property, plant and equipment, net | 50,989 | 51,135 |
Operating lease right-of-use assets | 61,155 | 65,265 |
Intangible assets, net | 294,348 | 300,366 |
Other assets | 1,927 | 1,845 |
Total assets | 559,257 | 573,559 |
Current liabilities: | ||
Accounts payable | 13,232 | 13,633 |
Accrued expenses and other current liabilities | 10,116 | 13,208 |
Deferred revenue | 2,539 | 3,654 |
Current portion of operating lease liabilities | 8,967 | 9,099 |
Current portion of finance lease liabilities | 1,012 | 704 |
Current portion of long-term debt | 1,367 | 1,307 |
Total current liabilities | 37,233 | 41,605 |
Long-term operating lease liabilities | 53,879 | 56,299 |
Finance leases | 9,426 | 1,200 |
Long-term debt | 117,363 | 117,461 |
Deferred tax liabilities | 2,685 | 2,685 |
Other long-term liabilities | 4,468 | 4,428 |
Total liabilities | 225,054 | 223,678 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity | ||
Common stock ($0.0001 par value; 300,000,000 shares authorized; 45,362,276 and 45,197,249 shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively) | 5 | 5 |
Additional paid-in capital | 784,101 | 783,042 |
Accumulated other comprehensive loss | (7,123) | (7,235) |
Accumulated deficit | (442,780) | (425,931) |
Total stockholders’ equity | 334,203 | 349,881 |
Total liabilities and stockholders’ equity | $ 559,257 | $ 573,559 |
Common stock, shares issued (in shares) | 45,362,276 | 45,197,249 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 45,362,276 | 45,197,249 |
Common stock, shares outstanding (in shares) | 45,362,276 | 45,197,249 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 62,178 | $ 111,377 |
Cost of goods sold | 50,797 | 94,771 |
Gross profit | 11,381 | 16,606 |
Operating expenses: | ||
Selling, general and administrative | 24,431 | 40,247 |
Impairment charges | 0 | 2,756 |
Loss from operations | (13,050) | (26,397) |
Interest expense | (3,692) | (2,366) |
Other income (expense), net | 40 | (102) |
Loss before tax | (16,702) | (28,865) |
Income tax (expense) benefit | (147) | 5,569 |
Net loss | $ (16,849) | $ (23,296) |
Net loss per share: | ||
Basic (in dollars per share) | $ (0.37) | $ (0.52) |
Diluted (in dollars per share) | $ (0.37) | $ (0.52) |
Weighted-average shares of common stock outstanding: | ||
Basic (in shares) | 45,263,822 | 44,718,510 |
Diluted (in shares) | 45,263,822 | 44,718,510 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (16,849) | $ (23,296) |
Other comprehensive loss: | ||
Foreign currency translation gain | 112 | 2,184 |
Total comprehensive loss | $ (16,737) | $ (21,112) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2021 | 44,618,357 | ||||
Beginning balance at Dec. 31, 2021 | $ 635,180 | $ 4 | $ 777,074 | $ (1,382) | $ (140,516) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued upon exercise of options (in shares) | 7,765 | ||||
Common stock issued upon exercise of options | 70 | 70 | |||
Issuance of common stock for vesting of restricted stock units (in shares) | 278,002 | ||||
Shares repurchased for withholding tax on restricted stock units (in shares) | (81,357) | ||||
Shares repurchased for withholding tax on stock awards | (1,589) | (1,589) | |||
Issuance of common stock under cashless warrant exercise (in shares) | 99 | ||||
Stock-based compensation expense | 2,908 | 2,908 | |||
Net loss | (23,296) | (23,296) | |||
Foreign currency translation gain | 2,184 | 2,184 | |||
Ending balance (in shares) at Mar. 31, 2022 | 44,822,866 | ||||
Ending balance at Mar. 31, 2022 | $ 615,457 | $ 4 | 778,463 | 802 | (163,812) |
Beginning balance (in shares) at Dec. 31, 2022 | 45,197,249 | 45,197,249 | |||
Beginning balance at Dec. 31, 2022 | $ 349,881 | $ 5 | 783,042 | (7,235) | (425,931) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock for vesting of restricted stock units (in shares) | 237,333 | ||||
Issuance of common stock for vesting of stock awards | 0 | ||||
Shares repurchased for withholding tax on restricted stock units (in shares) | (72,306) | ||||
Shares repurchased for withholding tax on stock awards | (123) | (123) | |||
Stock-based compensation expense | 1,182 | 1,182 | |||
Net loss | (16,849) | (16,849) | |||
Foreign currency translation gain | $ 112 | 112 | |||
Ending balance (in shares) at Mar. 31, 2023 | 45,362,276 | 45,362,276 | |||
Ending balance at Mar. 31, 2023 | $ 334,203 | $ 5 | $ 784,101 | $ (7,123) | $ (442,780) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities | ||
Net loss | $ (16,849) | $ (23,296) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, depletion and amortization | 8,007 | 16,941 |
(Benefit from) provision for doubtful accounts | (247) | 166 |
Provision for inventory obsolescence | 704 | 3,229 |
Restructuring expenses | 327 | 0 |
Stock-based compensation expense | 1,182 | 2,908 |
Non-cash operating lease expense | 2,948 | 2,261 |
Impairment charges | 0 | 2,756 |
Change in fair value of contingent consideration | 0 | (1,560) |
Deferred income tax benefit | 0 | (4,586) |
Other | 456 | 92 |
Changes in assets and liabilities: | ||
Accounts receivable | (5,141) | (6,834) |
Inventories | 7,321 | (143) |
Prepaid expenses and other current assets | (699) | (2,315) |
Other assets | (188) | (90) |
Accounts payable | (346) | 10,454 |
Accrued expenses and other current liabilities | (3,139) | (1,208) |
Deferred revenue | (1,116) | (7,159) |
Lease liabilities | (2,166) | (1,750) |
Other long-term liabilities | (4) | (21) |
Net cash used in operating activities | (8,950) | (10,155) |
Investing activities | ||
Business combinations, net of cash and cash equivalents | 0 | 190 |
Capital expenditures of property, plant and equipment | (1,653) | (2,470) |
Other | 51 | (105) |
Net cash used in investing activities | (1,602) | (2,385) |
Financing activities | ||
Proceeds from Sale-Leaseback Transaction | 8,598 | 0 |
Borrowings under revolving credit facilities | 169 | 420 |
Repayments of revolving credit facilities | (116) | (397) |
Repayments of Term Loan | (312) | (313) |
Payment of withholding tax related to stock awards | (123) | (1,559) |
Other | (257) | (104) |
Net cash from (used in) financing activities | 7,959 | (1,953) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 5 | 43 |
Net decrease in cash, cash equivalents and restricted cash | (2,588) | (14,450) |
Cash, cash equivalents and restricted cash at beginning of period | 21,291 | 28,384 |
Cash, cash equivalents and restricted cash at end of period | 18,703 | 13,934 |
Non-cash investing and financing activities | ||
Right-of-use assets (relinquished) acquired under operating lease obligations | (1,103) | 10,991 |
Assets acquired under finance lease obligations | 185 | 0 |
Supplemental information | ||
Cash paid for interest | 3,401 | 2,081 |
Cash paid for income taxes | $ 180 | $ 2,710 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS Description of the business Hydrofarm Holdings Group, Inc. (collectively with its subsidiaries, the “Company”) was formed in May 2017 under the laws of the state of Delaware to acquire and continue the business originally founded in 1977. The Company is a leading independent manufacturer and distributor of controlled environment agriculture ("CEA", principally hydroponics) equipment and supplies, including a broad portfolio of proprietary branded products. Products offered include agricultural lighting devices, indoor climate control equipment, nutrients, and plant additives used to grow, farm and cultivate cannabis, flowers, fruits, plants, vegetables, grains and herbs in controlled environment settings that allow end users to control key farming variables including temperature, humidity, CO 2 , light intensity and color, nutrient concentration and pH. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the Company's annual consolidated financial statements and, in the opinion of management, reflect all normal and recurring adjustments which are necessary for the fair statement of the Company’s financial information. The Company reclassified balances of $704 and $1,200 as of December 31, 2022, previously reported in "Current portion of long-term debt" and "Long-term debt", respectively, into "Current portion of finance lease liabilities" and "Long-term finance lease liabilities", respectively, on consolidated balance sheet as of December 31, 2022, to conform to the current period presentation. The Company made reclassifications to the condensed consolidated statement of cash flows for the prior period to conform with the current period presentation. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023, or for any other interim period or for any other future year. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2022, has been derived from the audited consolidated financial statements of the Company, which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report"). These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the 2022 Annual Report. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include provisions for sales returns, rebates and claims from customers, realization of accounts receivable and inventories, fair value of assets acquired and liabilities assumed for business combinations, valuation of intangible assets, estimated useful lives of long-lived assets, incremental borrowing rate applied in lease accounting, valuation of stock-based compensation, recognition of deferred income taxes, recognition of liabilities related to commitments and contingencies and valuation allowances. Actual results may differ from these estimates. On an ongoing basis, the Company reviews its estimates to ensure that these estimates appropriately reflect changes in its business or new information available. Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree, and the equity interests issued in exchange for control of the acquiree. Acquisition related costs are recognized in net loss as incurred. When the consideration transferred in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Contingent consideration is established for business acquisitions where the Company has the obligation to transfer additional assets or equity interests to the former owners if specified future events occur or conditions are met. Contingent consideration is classified as a liability when the obligation requires settlement in cash or other assets and is classified as equity when the obligation requires settlement in the Company's own equity instruments. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with a corresponding adjustment to goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. All other subsequent changes in the fair value of contingent consideration classified as a liability are included in net loss in the period. Changes in the fair value of contingent consideration classified as equity are not recognized. During 2022, the Company settled contingent consideration for certain acquisitions that were completed in 2021. Refer to Note 14 – Fair Value Measurements , for further discussion of the contingent consideration. For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period to obtain sufficient information to assess these contingencies as part of acquisition accounting, as applicable. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition‑date fair value amounts of the identifiable assets acquired, and the liabilities assumed. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that time. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to net loss. During 2021, the Company completed five acquisitions of branded manufacturers of CEA products, resulting in a significant expansion of its portfolio of proprietary branded products and manufacturing capabilities. The 2021 acquisitions included (i) Heavy 16, a manufacturer of plant nutrients and additives, in May 2021; (ii) House & Garden, a manufacturer of plant nutrients and additives, in June 2021; (iii) Aurora Innovations, a manufacturer of soil, grow media, plant nutrients and additives, in July 2021; (iv) Greenstar Plant Products, a manufacturer of plant nutrients and additives, in August 2021; and (v) Innovative Growers Equipment, a manufacturer of horticultural benches, racks and grow lights, in November 2021. The Company finalized the determination of its allocation of the purchase price relating to the acquisitions during 2022. During the three months ended March 31, 2022, the Company evaluated and adjusted the useful lives of certain intangible assets associated with entities that were acquired during 2021. In addition, the Company determined that the preliminary allocation of assets acquired related to indefinite lived trade names have a finite useful life because the expected usefulness of the trade names is limited. As a result of these adjustments to the provisional amounts, the Company recorded $5,894 of additional amortization expense during the three months ended March 31, 2022, which related to amortization expense that would have been recorded in the previous reporting period from the acquisition date through December 31, 2021. The intangible assets were assigned estimated useful lives as follows: (i) customer relationships: 7 to 12 years, (ii) technology, formulations and recipes: 8 to 12 years, (iii) computer software: 3 years, and (iv) trade names and trademarks: 15 to 20 years. Restructuring The Company began a restructuring plan during the three months ended December 31, 2022, and undertook significant actions to streamline operations, reduce costs and improve efficiencies. The major initiatives of the restructuring plan include (i) narrowing the Company's product and brand portfolio and (ii) the relocation and consolidation of certain manufacturing and distribution centers, including headcount reductions and reorganization to drive a solution based approach. The Company's strategic product consolidation entails removing approximately one-third of all products and one-fifth of all brands relating to the Company's primary product portfolio, which excludes the garden center business in Canada. During the three months ended March 31, 2023, the Company recorded pre-tax expense of $1,411 relating primarily to the relocation and termination of certain facilities in Canada, which are primarily cash charges. The Company incurred $327 of non-cash charges during the three months ended March 31, 2023, relating to asset dispositions and write-downs. The Company recorded $1,237 of restructuring related charges within Cost of goods sold and $174 within Selling, general and administrative expenses on the consolidated statements of operations for the three months ended March 31, 2023. The following table presents the activity in accrued expenses and other current liabilities for restructuring costs for the three months ended March 31, 2023: December 31, Expense Cash Payments March 31, Restructuring accruals $ 696 1,084 (1,156) $ 624 The Company estimates it will incur additional restructuring charges of approximately $900 primarily during the second quarter of 2023. The amounts the Company will ultimately realize or disburse could differ from these estimates. Total costs incurred since the restructuring plan commenced in the fourth quarter of 2022 are (i) $6,790 relating to inventory markdowns and (ii) $2,308 relating primarily to the relocation and termination of certain facilities in Canada. Segment and entity-wide information Segment information The Company's chief operating decision maker is the chief executive officer ("CEO") who reviews financial information for the purposes of making operating decisions, assessing financial performance, and allocating resources. The business is organized as two operating segments, the United States and Canada, which meet the criteria for aggregation, and the Company has elected to present them as one reportable segment, which is the distribution and manufacture of CEA equipment and supplies. Aggregation is based on similarities which include the nature of its products, production or acquisition of inventory, customer base, fulfillment and distribution and economic characteristics. Since the Company operates as one reportable segment, all required segment financial information is found in the condensed consolidated financial statements and footnotes with entity-wide disclosures presented below. Entity-wide information Sales to external customers and property, plant and equipment, and operating lease right-of-use assets, net in the United States and Canada, determined by the location of the subsidiaries, are shown below. Other foreign locations, which are immaterial, individually and in the aggregate, are included in the United States below. Three months ended March 31, 2023 2022 United States $ 47,749 $ 92,858 Canada 15,019 21,502 Intersegment eliminations (590) (2,983) Total consolidated net sales $ 62,178 $ 111,377 March 31, December 31, United States $ 78,082 $ 80,380 Canada 34,062 36,020 Total property, plant and equipment, net and operating lease right-of-use assets $ 112,144 $ 116,400 All of the products sold by the Company are similar and classified as CEA equipment and supplies. Fair value measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. All financial instruments recognized at fair value are classified into one of three levels in the fair value hierarchy as follows: Level 1 — Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 — Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or, corroborated by, observable market data by correlation or other means. Level 3 — Valuation techniques with significant unobservable market inputs. The Company measures certain non-financial assets and liabilities, including long-lived assets, intangible assets and goodwill, at fair value on a nonrecurring basis. The fair value of contingent consideration was classified within level 3 of the fair value hierarchy. Inventories Inventories consist of finished goods, work-in-process, and raw materials used in manufacturing products. Inventories are stated at the lower of cost or net realizable value, principally determined by the first in, first out method of accounting. The Company maintains an allowance for excess and obsolete inventory. The estimate for excess and obsolete inventory is based upon assumptions about current and anticipated demand, customer preferences, business strategies, and market conditions. Management reviews these assumptions periodically to determine if any adjustments are needed to the allowance for excess and obsolete inventory. The establishment of an allowance for excess and obsolete inventory establishes a new cost basis in the inventory. Such allowance is not reduced until the product is sold or otherwise disposed. If inventory is sold, any related reserves would be reversed in the period of sale. During the year ended December 31, 2022, the Company estimated inventory markdowns relating to restructuring charges based upon current and anticipated demand, customer preferences, business strategies, and market conditions including management's actions with respect to inventory products and brands being removed from our portfolio. Hydrofarm's strategic product consolidation entails removing approximately one-third of all products and one-fifth of all brands relating to our primary product portfolio. Note receivable and Investment In 2019, the Company executed a note receivable secured by equipment to a third-party, the terms of which were amended and restated during the first quarter of 2021. The note receivable provided for interest and installment payments to the Company, and full maturity of the note in 2024. During the first quarter of 2022, the third-party defaulted on interest payments, and the Company measured an impairment on the note receivable based on the estimated fair value of the collateral. The Company recorded an impairment loss of $2,636 during the three months ended March 31, 2022, in Impairments on the condensed consolidated statements of operations. As of December 31, 2022, the note receivable carrying value was $475 and it was classified in Other assets on the condensed consolidated balance sheet. During the three months ended March 31, 2023, the Company agreed to forgive the note receivable in exchange for interest in a third-party equity investment with a cost basis of $475, which is reported within Other assets on the condensed consolidated balance sheet. Revenue recognition The Company follows Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers (“ASC 606”) which requires that revenue recognized from contracts with customers be disaggregated into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company has determined that revenue is generated from one category, which is the distribution and manufacture of CEA equipment and supplies. Revenue is recognized as control of promised goods is transferred to customers, which generally occurs upon receipt at customers’ locations determined by the specific terms of the contract. Arrangements generally have a single performance obligation and revenue is reported net of variable consideration which includes applicable volume rebates, cash discounts and sales returns and allowances. Variable consideration is estimated and recorded at the time of sale. The amount billed to customers for shipping and handling costs included in net sales was $2,568 and $3,879 during the three months ended March 31, 2023, and 2022, respectively. Shipping and handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs included in cost of goods sold. The Company does not receive noncash consideration for the sale of goods. Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company's contract liabilities, which consist primarily of customer deposits reported within deferred revenue in the condensed consolidated balance sheets, totaled $2,539 and $3,654 as of March 31, 2023, and December 31, 2022, respectively. There are no significant financing components. Excluded from revenue are any taxes assessed by governmental authorities, including value-added and other sales-related taxes that are imposed on and concurrent with revenue-generating activities. Income taxes The income tax provision is calculated for an interim period by distinguishing between elements recognized in the income tax provision through applying an estimated annual effective tax rate to a measure of year-to-date operating results referred to as “ordinary income (or loss),” and discretely recognizing specific events referred to as “discrete items” as they occur. The income tax provision or benefit for each interim period is the difference between the year-to-date amount for the current period and the year-to-date amount for the prior period. Recent accounting pronouncements The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the FASB. There were no ASUs that were assessed and determined to be applicable or expected to have a material impact on the Company's condensed consolidated financial statements. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill Primarily due to a sustained decline in the Company's market value of common stock and market conditions, the Company identified a triggering event requiring a test for impairment as of June 30, 2022. The Company completed its goodwill impairment testing and recorded an impairment charge of $189,572 as the test determined that the carrying value of the U.S. and Canada reporting units was in excess of the fair value. The recognized impairment reduced the goodwill balance to zero as of June 30, 2022. The impairment was primarily due to a deterioration in customer demand in the U.S. and Canada caused by macroeconomic and industry conditions. The Company determined the fair value of the U.S. and Canada reporting units based on an income approach, using the present value of future discounted cash flows, and based on a market approach. The fair values were reconciled to the market value of common stock of Hydrofarm to corroborate the estimates used in the interim test for impairment. Significant estimates used to determine fair value include the weighted average cost of capital, financial forecasts, and pricing multiples derived from publicly-traded companies that are comparable to the reporting units. Refer to Note 14 – Fair Value Measurements , for further discussion of valuation inputs. The changes in goodwill are as follows: Goodwill Balance at December 31, 2021 $ 204,868 Acquisition - IGE Entities - measurement period adjustments (22,542) Acquisition - all others - remeasurement adjustments and foreign currency translation adjustments, net 1,012 Balance at March 31, 2022 $ 183,338 Intangible assets, net Intangible assets, net comprised the following: March 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Computer software $ 9,425 $ (8,041) $ 1,384 $ 9,408 $ (7,976) $ 1,432 Customer relationship 99,947 (26,374) 73,573 99,933 (24,533) 75,400 Technology, formulations and recipes 114,191 (17,790) 96,401 114,187 (15,344) 98,843 Trade names and trademarks 131,421 (11,725) 119,696 131,410 (10,052) 121,358 Other 4,780 (4,287) 493 4,778 (4,246) 532 Total finite-lived intangible assets, net 359,764 (68,217) 291,547 359,716 (62,151) 297,565 Indefinite-lived intangible asset: Trade name 2,801 — 2,801 2,801 — 2,801 Total Intangible assets, net $ 362,565 $ (68,217) $ 294,348 $ 362,517 $ (62,151) $ 300,366 Amortization expense related to intangible assets was $6,045 and $14,746 for the three months ended March 31, 2023 and 2022, respectively. The following are the estimated useful lives and the weighted-average amortization period as of March 31, 2023, for the major classes of finite-lived intangible assets: Useful lives Weighted-average amortization period Computer software 5 years 3 years Customer relationships 7 to 18 years 11 years Technology, formulations and recipes 8 to 12 years 10 years Trade names and trademarks 15 to 20 years 18 years The estimated aggregate future amortization expense for intangible assets subject to amortization as of March 31, 2023, is summarized below: Estimated Future Amortization Expense For the period of April 1, 2023 to December 31, 2023 $ 18,397 Year ending December 31, 2024 24,413 2025 24,342 2026 24,044 2027 23,859 Thereafter 176,492 Total $ 291,547 |
EARNINGS (LOSS) PER COMMON SHAR
EARNINGS (LOSS) PER COMMON SHARE (“EPS”) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER COMMON SHARE (“EPS”) | EARNINGS (LOSS) PER COMMON SHARE (“EPS”) Basic EPS is computed using net income (loss) divided by the weighted-average number of common shares outstanding during each period, excluding unvested restricted stock units (“RSUs”) and performance stock units ("PSUs"). Diluted EPS represents net income (loss) divided by the weighted-average number of common shares outstanding during the period, including common stock equivalents. Common stock equivalents consist of shares subject to warrants and share-based awards with exercise prices less than the average market price of the Company’s common stock for the period, to the extent their inclusion would be dilutive. Regarding RSUs subject to a market condition, before the end of the contingency period, the number of contingently issuable shares (i.e., RSUs) to be included in diluted EPS would be based on the number of shares of common stock issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, assuming the result would be dilutive. Those contingently issuable shares would be included in the denominator of diluted EPS as of the beginning of the period, or as of the grant date of the share-based payment, if later. The following table presents information necessary to calculate basic and diluted EPS for the three months ended March 31, 2023 and 2022: Three Months Ended 2023 2022 Net loss $ (16,849) $ (23,296) Weighted-average shares of common stock outstanding 45,263,822 44,718,510 Dilutive effect of warrants and share based compensation awards using the treasury stock method — — Diluted weighted-average shares of common stock outstanding 45,263,822 44,718,510 Basic EPS $ (0.37) $ (0.52) Diluted EPS $ (0.37) $ (0.52) The computation of the weighted-average shares of common stock outstanding for diluted EPS excludes the following potential shares of common stock as their inclusion would have an anti-dilutive effect on diluted EPS: Three Months Ended 2023 2022 Shares subject to warrants outstanding 17,669 17,669 Shares subject to unvested performance based and restricted stock units 2,048,606 1,234,857 Shares subject to stock options outstanding 658,296 696,071 |
ACCOUNTS RECEIVABLE, NET AND IN
ACCOUNTS RECEIVABLE, NET AND INVENTORIES | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET AND INVENTORIES | ACCOUNTS RECEIVABLE, NET, AND INVENTORIES Accounts receivable, net comprised the following: March 31, December 31, Trade accounts receivable $ 22,907 $ 18,204 Allowance for doubtful accounts (1,164) (1,556) Other receivables 858 579 Total accounts receivable, net $ 22,601 $ 17,227 Inventories comprised the following: March 31, December 31, Finished goods $ 75,795 $ 83,134 Work-in-process 5,163 5,403 Raw materials 35,594 38,558 Allowance for inventory obsolescence (13,122) (15,697) Total inventories $ 103,430 $ 111,398 Inventories are stated at the lower of cost or net realizable value, and the Company maintains an allowance for excess and obsolete inventory that is based upon assumptions about future demand and market conditions. The allowance for excess and obsolete inventory is subject to change from period to period based on a number of factors including sales of products, changes in estimates, and disposals. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases its distribution centers and manufacturing facilities from third parties under various non-cancelable lease agreements expiring at various dates through 2038. Also, the Company leases some equipment under finance leases. Certain leases contain escalation provisions and/or renewal options, giving the Company the right to extend the leases by up to 20 years. However, these options are generally not reflected in the calculation of the right-of-use assets and lease liabilities due to uncertainty surrounding the likelihood of renewal. The Company recognizes operating lease costs over the respective lease periods, including short-term and month-to-month leases. The Company incurred operating lease costs of $3,647 and $2,597, during the three months ended March 31, 2023, and March 31, 2022, respectively. These costs are included primarily within SG&A in the condensed consolidated statements of operations. The Company has operating subleases which have been accounted for by reference to the underlying asset subject to the lease, primarily as an offset to rent expense within SG&A. For the three months ended March 31, 2023, and March 31, 2022, the Company recorded sublease income of $642 and $314, respectively. In January 2023, Gotham Properties LLC, an Oregon limited liability company and a subsidiary of the Company (“Seller”), consummated a Purchase and Sale Agreement with J & D Property, LLC, a Nevada limited liability company (“Purchaser”) pursuant to which certain real property located in the City of Eugene, County of Lane, State of Oregon (the “Eugene Property”) was sold to Purchaser for $8,598 and then leased back by Seller (the “Sale-Leaseback Transaction”). The new lease has a term of 15 years with annual rent starting at $731 and fixed increases to the final year when annual rent is $964. The Company is accounting for the transaction as a failed sale-leaseback which requires retaining the asset associated with the property and recognizing a corresponding financial liability for the cash received. The Eugene Property serves as the manufacturing and processing site for certain of the Company’s grow media and nutrient brands. The Company intends to reinvest the net cash proceeds into certain permitted investments in 2023, such as capital expenditures. Total right-of-use ("ROU") assets and lease liabilities were as follows: Balance Sheet Classification March 31, December 31, Lease assets Operating lease assets Operating lease right-of-use assets $ 61,155 $ 65,265 Finance lease assets Property, plant and equipment, net 10,405 2,005 Total lease assets $ 71,560 $ 67,270 Lease liabilities Current: Operating leases Current portion of operating lease liabilities $ 8,967 $ 9,099 Finance leases Current portion of finance lease liabilities 1,012 704 Noncurrent: Operating leases Long-term operating lease liabilities 53,879 56,299 Finance leases Long-term finance lease liabilities 9,426 1,200 Total lease liabilities $ 73,284 $ 67,302 The aggregate future minimum lease payments under long-term non-cancelable operating and finance leases with remaining terms greater than one year as of March 31, 2023, are as follows: Operating Finance For the period of April 1, 2023 to December 31, 2023 $ 8,665 $ 1,145 Year ending December 31, 2024 10,642 1,441 2025 10,364 1,303 2026 9,179 851 2027 8,940 853 2028 8,385 805 Thereafter 16,809 8,037 Total lease payments 72,984 14,435 Less portion representing interest (10,138) (3,997) Total principal 62,846 10,438 Less current portion (8,967) (1,012) Long-term portion $ 53,879 $ 9,426 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net comprised the following: March 31, December 31, Machinery and equipment 27,681 27,832 Peat bogs and related development 11,475 10,761 Building and improvements 9,927 9,920 Land 6,204 6,107 Furniture and fixtures 3,922 3,921 Computer equipment 3,405 3,337 Leasehold improvements 4,535 4,177 Gross property, plant and equipment 67,149 66,055 Less: accumulated depreciation (16,160) (14,920) Total property, plant and equipment, net $ 50,989 $ 51,135 Depreciation, depletion and amortization expense related to property, plant and equipment, net was $1,962 and $2,195 for the three months ended March 31, 2023, and 2022, respectively. As of March 31, 2023, Land, Building and improvements, Computer equipment and Machinery and equipment contain finance leases assets, recorded at cost of $12,920, less accumulated depreciation of $2,515. As of December 31, 2022, Computer equipment and Machinery and equipment contains finance leases assets, recorded at cost of $3,128, less accumulated depreciation of $1,123. The increase is in finance lease assets primarily relates to the Sale-Leaseback Transaction. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities comprised the following: March 31, December 31, Accrued compensation and benefits $ 2,747 $ 2,522 Freight, custom and duty accrual 735 1,022 Goods in transit accrual 787 1,172 Income tax accrual — 451 Other accrued liabilities 5,847 8,041 Total accrued expenses and other current liabilities $ 10,116 $ 13,208 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Debt is comprised of the following: March 31, December 31, Term loan - net of unamortized discount and deferred financing costs of $4,924 and $5,142 as of March 31, 2023, and December 31, 2022, respectively $ 118,514 $ 118,608 Other 216 160 Total debt $ 118,730 $ 118,768 Current portion of long-term debt $ 1,367 $ 1,307 Long-term debt - net of unamortized discount and deferred financing costs of $4,924 and $5,142 as of March 31, 2023, and December 31, 2022, respectively 117,363 117,461 Total debt $ 118,730 $ 118,768 Term Loan On October 25, 2021, the Company and certain of its direct and indirect subsidiaries (the "Obligors") entered into a Credit and Guaranty Agreement with JPMorgan Chase Bank, N.A., as administrative agent for the lenders, pursuant to which the Company borrowed a $125,000 senior secured term loan (“Term Loan”). The Term Loan bears interest at LIBOR (with a 1.0% floor) plus 5.50%, or an alternative base rate (with a 2.0% floor), plus 4.50%, and is subject to a call premium of 2% in year one, 1% in year two, and 0% thereafter, and matures on October 25, 2028 ("Maturity Date"). Deferred financing costs totaled $6,190 at the inception of the Term Loan, and are being amortized to interest expense over the term of the loan. For the three months ended March 31, 2023, the effective interest rate was 10.97% and interest expense was $3,347, which includes amortization of deferred financing costs and discount of $218. The principal amounts of the Term Loan are required to be repaid in consecutive quarterly installments in amounts equal to 0.25% of the original principal amount of the Term Loan, on the last day of each fiscal quarter commencing March 31, 2022, with the balance of the Term Loan payable on the Maturity Date. The Company is also required to make mandatory prepayments in the event of (i) achieving certain excess cash flow criteria, including the achievement and maintenance of a specific leverage ratio, (ii) selling assets that are collateral, or (iii) upon the issuance, offering, or placement of new debt obligations. There were no such mandatory prepayments made since inception of the Term Loan. As of March 31, 2023, and December 31, 2022, the outstanding principal balance on the Term Loan was $123,438 and $123,750, respectively. The Term Loan requires the Company to maintain certain reporting requirements, affirmative covenants, and negative covenants, and the Company was in compliance with all requirements as of March 31, 2023. The Term Loan is secured by a first lien on the non-working capital assets of the Company and a second lien on the working capital assets of the Company. Revolving Credit Facility On March 29, 2021, the Obligors entered into a Senior Secured Revolving Credit Facility (the "Revolving Credit Facility") with JPMorgan Chase Bank, N.A., as administrative agent, issuing bank and swingline lender, and the lenders from time to time party thereto. The Revolving Credit Facility is due on June 30, 2026, or any earlier date on which the revolving commitments are reduced to zero. The Revolving Credit Facility originally had a borrowing limit of $50,000. On August 31, 2021, the Obligors entered into an amendment (the "First Amendment") to increase their original borrowing limit to $100,000. In connection with the First Amendment, the Company's previously acquired subsidiaries became party to the Revolving Credit Facility as either borrowers or as guarantors. On October 25, 2021, the Company and its subsidiaries entered into a second amendment (the “Second Amendment”), with JPMorgan Chase Bank, N.A., pursuant to which the parties consented to the Term Loan described above, and made certain conforming changes to comport with the Term Loan provisions. The Revolving Credit Facility was further amended by a third amendment and joinder dated August 23, 2022, (the “Third Amendment”) pursuant to which several previously acquired subsidiaries became parties to the Revolving Credit Facility and granted liens on their assets. On December 22, 2022, the Company entered into a fourth amendment (the “Fourth Amendment”) pursuant to which a sale-leaseback transaction was permitted, and certain other changes were made, including a reduction of the maximum commitment amount under the Revolving Credit Facility from $100,000 to $75,000 and transitioning the LIBOR based rates to SOFR based rates. On March 31, 2023, the Company and certain of its subsidiaries entered into an amendment (the “Fifth Amendment”) pursuant to which the maturity date was extended to June 30, 2026, the maximum commitment amount under the Revolving Credit Facility was reduced to $55,000, and the interest rate on borrowings was revised to various spreads, based on the Company's fixed charge coverage ratio. The unamortized debt issuance costs were $686 as of March 31, 2023, and are included in other assets in the condensed consolidated balance sheets. Debt issuance costs are being amortized to interest expense over the term of the Revolving Credit Facility. The Revolving Credit Facility is an asset-based facility that is secured by a first lien on the working capital assets of the Company and a second lien on the non-working capital assets of the Company (including most of the Company’s subsidiaries). The borrowing base is based on a detailed monthly calculation of the sum of (a) a percentage of the Eligible Accounts at such time, plus (b) the lesser of (i) a percentage of the Eligible Inventory, at such time, valued at the lower of cost or market value, determined on a first-in-first-out basis, and (ii) the product of a percentage multiplied by the Net Orderly Liquidation Value percentage identified in the most recent inventory appraisal ordered by the Administrative Agent multiplied by the Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, minus (c) Reserves (each of the defined terms above, as defined in the Revolving Credit Facility documents). The Company is required to maintain certain reporting requirements, affirmative covenants and negative covenants, pursuant to terms outlined in the agreement. Additionally, if the Company’s Excess Availability (as defined in the Revolving Credit Facility documents) is less than an amount equal to 10% of the Aggregate Revolving Commitment (currently $55,000), the Company will be required to maintain a minimum fixed charge coverage ratio of 1.1x on a rolling twelve-month basis until the Excess Availability is more than 10% of the Aggregate Revolving Commitment for thirty The Revolving Credit Facility provides for various interest rate options including the Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the CB Floating Rate, the Adjusted Daily Simple SOFR, the CBFR, the Canadian Prime Rate, or the CDOR Rate. The rates that use SOFR as the reference rate (Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the Adjusted Daily Simple SOFR and the CBFR rate) use the Term SOFR Rate plus 1.95%. Each rate has a 0.0% floor. A fee of 0.25% per annum is charged for available but unused borrowings. As of March 31, 2023, and December 31, 2022, the Company had zero borrowed under the facility. As of March 31, 2023, the Company would be able to borrow approximately $39 million under the Revolving Credit Facility, before the Company would be required to comply with the minimum fixed charge coverage ratio of 1.1x. Other Debt Other debt of $216 and $160 as of March 31, 2023, and December 31, 2022, respectively, was primarily comprised of a foreign subsidiary's other debt which constitutes an immaterial revolving line of credit and mortgage. Aggregate future principal payments As of March 31, 2023, the aggregate future principal payments under long-term debt are as follows: Debt For the period of April 1, 2023 to December 31, 2023 $ 1,055 Year ending December 31, 2024 1,269 2025 1,269 2026 1,269 2027 1,270 2028 117,522 Total $ 123,654 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Common stock Each holder of common stock is entitled to one vote for each share of common stock. Common stockholders have no pre-emptive rights to acquire additional shares of common stock or other securities. The common stock is not subject to redemption rights and carries no subscription or conversion rights. In the event of liquidation, the stockholders are entitled to share in corporate assets on a pro rata basis after the Company satisfies all liabilities and after provision is made for any class of capital stock having preference over the common stock. Subject to corporate regulations and preferences to preferred stock, if any, dividends are at the discretion of the Board. As of March 31, 2023, there were 45,362,276 shares outstanding and 300,000,000 shares authorized. Warrants On July 19, 2021, the Company completed the redemption ("Redemption") of certain of its outstanding warrants (the "Investor Warrants") that were issued in connection with a private placement of units (the "private placement"), each consisting of a share of common stock and a warrant to purchase an additional one-half (1/2) shares of common stock. In connection with the private placement, the Company agreed to engage the placement agent (the "Placement Agent") as the Company's warrant solicitation agent in the event the Investor Warrants were called for Redemption. The Company agreed to pay a warrant solicitation fee to the Placement Agent equal to five percent of the amount of net cash proceeds solicited by the Placement Agent upon the exercise of certain Investor Warrants following such call for Redemption. As of March 31, 2023, and December 31, 2022, respectively, there were no Investor Warrants outstanding. In connection with the private placement, the Placement Agent was issued warrants (the “placement agent warrants”) which will expire on December 14, 2023. As of March 31, 2023, the following table summarizes the outstanding placement agent warrants: Number of Warrants Exercise Price Placement agent warrants 11,662 $ 8.43 Placement agent warrants 6,007 $ 16.86 Total 17,669 $ 11.30 As of December 31, 2022, the following table summarizes the outstanding placement agent warrants: Number of Warrants Exercise Price Placement agent warrants 11,662 $ 8.43 Placement agent warrants 6,007 $ 16.86 Total 17,669 $ 11.30 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation plan overview The Company maintains three equity incentive plans: the 2018 Equity Incentive Plan (“2018 Plan”), the 2019 Employee, Director and Consultant Equity Incentive Plan (“2019 Plan”) and the 2020 Employee, Director, and Consultant Equity Incentive Plan (“2020 Plan” and collectively, “Incentive Plans”). The 2020 Plan serves as the successor to the 2019 Plan and 2018 Plan and provides for the issuance of incentive stock options ("ISOs"), stock grants and stock-based awards to employees, directors, and consultants of the Company. No further awards will be issued under the 2018 Plan and 2019 Plan. As of March 31, 2023, a total of 1,989,274 shares are available for grant under the 2020 Plan. The Incentive Plans are administered by the Company's Board of Directors. Notwithstanding the foregoing, the Board of Directors may delegate concurrent responsibility for administering each plan, including with respect to designated classes of persons eligible to receive an award under each plan, to a committee or committees (which term shall include subcommittees) consisting of one or more members of the Board of Directors (collectively, the “Plan Administrator”), subject to such limitations as the Board of Directors deems appropriate. In November 2020, the Board of Directors and stockholders approved the 2020 Plan and reserved an aggregate of 2,284,053 shares of common stock for issuance under the 2020 Plan. Pursuant to the 2020 Plan, the number of shares available for issuance under the 2020 Plan may be increased on January 1 of each year, beginning on January 1, 2021, and ending on January 2, 2030, in an amount equal to the lesser of (i) 4% of the outstanding shares of the Company’s common stock on such date or (ii) such number of shares determined by the Plan Administrator. The 2020 Plan provides for the grant of ISOs, nonqualified stock options, stock grants, and stock-based awards that are based in whole or in part by reference to the Company’s common stock. • The Plan Administrator may grant options designated as incentive stock options or nonqualified stock options. Options shall be granted with an exercise price per share not less than 100% of the fair market value of the common stock on the grant date, subject to certain limitations and exceptions as described in the plan agreements. Generally, the maximum term of an option shall be 10 years from the grant date. The Plan Administrator shall establish and set forth in each instrument that evidences an option the time at which, or the installments in which, the option shall vest and become exercisable. • The Plan Administrator may grant stock grants and stock-based awards, including securities convertible into shares, stock appreciation rights, phantom stock awards or stock units on such terms and conditions which may be based on continuous service with the Company or related company or the achievement of any performance goals, as the Plan Administrator shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the award. Restricted Stock Unit ("RSU") Activity RSUs granted to certain executives, employees and members of the Board of Directors expire 10 years after the grant date. The awards generally have a time-based vesting requirement (based on continuous employment). Upon vesting, the RSUs convert into shares of the Company's common stock. The stock-based compensation expense related to service-based awards is recorded over the requisite service period. During the three months ended March 31, 2023, the Company granted RSU awards that are expected to vest with two equal vesting tranches, which are scheduled to occur on October 31, 2023, and October 31, 2024. The award granted to a former member of the Board (the "former Board member") in July 2020, and modified in November 2020, contained a market-based vesting condition based on the traded value of shares of the Company’s common stock following the IPO over a specific time frame. For this award, the market condition was factored into its fair value. The fair value of the award, at the modification date, was $3,180, all of which was recorded as stock-based compensation expense upon the IPO. In July 2021, the market-based vesting condition for this award was satisfied and 148,315 RSUs of the former Board member vested. The remaining 111,236 unvested RSUs met the time-based vesting conditions during the year ended December 31, 2022, and vested at that time. No additional awards with market-based conditions have been granted. The following table summarizes the activity related to the Company's RSUs for the three months ended March 31, 2023. For purposes of this table, vested RSUs represent the shares for which the service condition had been fulfilled during the three months ended March 31, 2023: Number of Weighted Balance, December 31, 2022 992,633 $ 8.57 Granted 173,411 $ 1.73 Vested (211,439) $ 10.14 Forfeited (42,376) $ 11.03 Balance, March 31, 2023 912,229 $ 6.80 As of March 31, 2023, total unamortized stock-based compensation cost related to unvested RSUs was $4,752 and the weighted-average period over which the compensation is expected to be recognized is 1.21 years. For the three months ended March 31, 2023, the Company recognized $1,001, of total stock-based compensation expense for RSUs. As of March 31, 2023, there were 6,357 RSUs which had previously vested, but were not yet issued due to the recipients' elections to defer the awards. Performance Stock Unit ("PSU") Activity During the three months ended March 31, 2023, the Company granted PSU awards that are subject to a one-year vesting requirement (based on continuous employment) and contain performance conditions based on certain performance metrics. The following table summarizes the activity related to the Company's PSUs for the three months ended March 31, 2023: Number of Weighted Balance, December 31, 2022 96,246 $ 15.74 Granted 1,141,543 $ 1.77 Vested (25,894) $ 15.74 Forfeited (75,518) $ 14.78 Balance, March 31, 2023 1,136,377 $ 1.77 During the three months ended March 31, 2023, the PSU forfeitures were primarily due to performance conditions that were not satisfied. As of March 31, 2023, total unamortized stock-based compensation cost related to unvested PSUs was $1,967 and the weighted-average period over which the compensation is expected to be recognized is less than one-year. For the three months ended March 31, 2023, the Company recognized $97 of total stock-based compensation expense for PSUs. Stock Options The vesting of stock options is subject to certain change in control provisions as provided in the incentive plan agreements and options may be exercised up to 10 years from the date of issuance. There were no stock options granted or exercised during the three months ended March 31, 2023. The following table summarizes the stock option activity for the three months ended March 31, 2023: Number Weighted Weighted Weighted average Outstanding as of December 31, 2022 670,026 $ 9.50 $ 2.05 5.25 Cancelled (11,162) $ 10.19 $ 4.10 Forfeited (568) $ 10.05 $ 4.03 Outstanding as of March 31, 2023 658,296 $ 9.50 $ 2.07 4.62 Options exercisable as of March 31, 2023 601,494 $ 8.87 $ 1.40 4.41 Vested and expected to vest as of March 31, 2023 658,296 $ 9.50 $ 2.07 4.62 The following table summarizes the unvested stock option activity for the three months ended March 31, 2023: Number Weighted Unvested as of December 31, 2022 70,587 $ 7.02 Vested (13,217) $ 1.13 Forfeited (568) $ 4.03 Unvested as of March 31, 2023 56,802 $ 9.08 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recorded an income tax expense of $147 for the three months ended March 31, 2023, representing an effective income tax rate of (0.9)%. The Company’s effective tax rate for the three months ended March 31, 2023, differs from the federal statutory rate of 21% primarily due to the Company maintaining a full valuation allowance against its net deferred tax assets in the U.S. and most foreign jurisdictions. The tax expense for the three months ended March 31, 2023, was primarily due to foreign tax expense. The Company recorded an income tax benefit of $5,569 for the three months ended March 31, 2022, representing an effective income tax rate of 19.3%. The Company’s effective tax rate for the three months ended March 31, 2022 differs from the federal statutory rate primarily as a result of a reduction in the valuation allowance recorded against the Company's net deferred tax assets due to the acquisition of certain entities which had an income tax rate benefit of 23.4%. As described in Note 2 – Basis of Presentation and Significant Accounting Policies , the Company determined that the preliminary allocation of assets acquired related to indefinite lived trade names have a finite useful life, and, as a result of adjusting this provisional amount, the Company recorded a reduction to the valuation allowance which resulted in an income tax benefit. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Purchase commitments From time to time in the normal course of business, the Company will enter into agreements with suppliers which provide favorable pricing in return for a commitment to purchase minimum amounts of inventory over a defined time period. Contingencies In the normal course of business, certain claims have been brought against the Company and, where applicable, its suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested the validity of these claims. Based on available information, management believes the claims are without merit and does not expect that the outcome, individually or in the aggregate, would have a material adverse effect on the consolidated financial positions, results of operations, cash flows or future earnings. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Recurring Contingent consideration, as described under the heading Business combinations in Note 2 – Basis of Presentation and Significant Accounting Policies , was measured at estimated fair value on a recurring basis and based on Level 3 fair value measurements. The fair value of the contingent consideration for the Heavy 16 and Aurora acquisitions was $200 and $16,834, respectively, as of December 31, 2021. There was no change in the fair value of the contingent consideration for the Heavy 16 acquisition during the three months ended March 31, 2022, and it was subsequently paid in April 2022. The change in the fair value of contingent consideration for the Aurora acquisition was a benefit of $1,560, during the three months ended March 31, 2022, and was recognized in SG&A on the condensed consolidated statements of operations during that period. The value of the contingent consideration was $15,274 as of March 31, 2022, and was subsequently paid in July 2022. As of March 31, 2023, and December 31, 2022, the Company had no remaining unsettled contingent consideration relating to the Company's five acquisitions from 2021. Nonrecurring Nonrecurring fair value measurements include the Company’s goodwill impairment recognized during the three months ended June 30, 2022, as determined based on unobservable Level 3 inputs. Refer to Note 3 – Goodwill and Intangible Assets, Net , for further discussion. The note receivable, as described in Note 2 – Basis of Presentation and Significant Accounting Policies , was measured at fair value on a nonrecurring basis. During the three months ended March 31, 2022, the Company measured an impairment on the note receivable based on the estimated fair value of the collateral, which was considered a Level 3 fair value measurement. The carrying value of the note receivable was $3,111 as of December 31, 2021. The Company recorded an impairment loss of $2,636 during the three months ended March 31, 2022, recognized in Impairments on the condensed consolidated statements of operations. The carrying value of the note receivable was $475 as of December 31, 2022. As of December 31, 2022, the note receivable was included in other assets on the consolidated balance sheet. Other Fair Value Measurements The following table summarizes the fair value of the Company’s assets and liabilities which are provided for disclosure purposes: March 31, 2023 December 31, 2022 Fair Value Hierarchy Level Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets Cash and cash equivalents Level 1 18,703 18,703 21,291 21,291 Liabilities Finance leases Level 3 10,438 10,438 1,904 1,904 Term Loan Level 2 123,438 107,391 123,750 105,188 Cash and cash equivalents included funds deposited in banks, and the carrying values approximated fair values due to their short-term maturities. The carrying values of other current assets and liabilities including accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their fair value due to their short-term maturities. The carrying amount of finance leases was $10,438 and $1,904 as of March 31, 2023, and December 31, 2022, respectively. The estimated fair value of finance leases approximated its carrying value given the applicable interest rates and the nature of the security interest in the Company’s assets, which were considered Level 3 fair value measurements. The fair value of the Term Loan was estimated based on Level 2 fair value measurements and was based on bank quotes. The carrying amount of the Term Loan reported above excludes unamortized deferred financing costs and discount. Refer to Note 6 – Leases and Note 9 – Debt , for further discussion of the Company's finance leases and Term Loan, respectively. The Company did not have any transfers between Levels within the fair value hierarchy during the periods presented. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the Company's annual consolidated financial statements and, in the opinion of management, reflect all normal and recurring adjustments which are necessary for the fair statement of the Company’s financial information. The Company reclassified balances of $704 and $1,200 as of December 31, 2022, previously reported in "Current portion of long-term debt" and "Long-term debt", respectively, into "Current portion of finance lease liabilities" and "Long-term finance lease liabilities", respectively, on consolidated balance sheet as of December 31, 2022, to conform to the current period presentation. The Company made reclassifications to the condensed consolidated statement of cash flows for the prior period to conform with the current period presentation. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023, or for any other interim period or for any other future year. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2022, has been derived from the audited consolidated financial statements of the Company, which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report"). These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the 2022 Annual Report. |
Use of estimates | The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include provisions for sales returns, rebates and claims from customers, realization of accounts receivable and inventories, fair value of assets acquired and liabilities assumed for business combinations, valuation of intangible assets, estimated useful lives of long-lived assets, incremental borrowing rate applied in lease accounting, valuation of stock-based compensation, recognition of deferred income taxes, recognition of liabilities related to commitments and contingencies and valuation allowances. Actual results may differ from these estimates. On an ongoing basis, the Company reviews its estimates to ensure that these estimates appropriately reflect changes in its business or new information available. |
Business combinations | Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree, and the equity interests issued in exchange for control of the acquiree. Acquisition related costs are recognized in net loss as incurred. When the consideration transferred in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Contingent consideration is established for business acquisitions where the Company has the obligation to transfer additional assets or equity interests to the former owners if specified future events occur or conditions are met. Contingent consideration is classified as a liability when the obligation requires settlement in cash or other assets and is classified as equity when the obligation requires settlement in the Company's own equity instruments. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with a corresponding adjustment to goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. All other subsequent changes in the fair value of contingent consideration classified as a liability are included in net loss in the period. Changes in the fair value of contingent consideration classified as equity are not recognized. During 2022, the Company settled contingent consideration for certain acquisitions that were completed in 2021. Refer to Note 14 – Fair Value Measurements , for further discussion of the contingent consideration. For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period to obtain sufficient information to assess these contingencies as part of acquisition accounting, as applicable. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition‑date fair value amounts of the identifiable assets acquired, and the liabilities assumed. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that time. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to net loss. During 2021, the Company completed five acquisitions of branded manufacturers of CEA products, resulting in a significant expansion of its portfolio of proprietary branded products and manufacturing capabilities. The 2021 acquisitions included (i) Heavy 16, a manufacturer of plant nutrients and additives, in May 2021; (ii) House & Garden, a manufacturer of plant nutrients and additives, in June 2021; (iii) Aurora Innovations, a manufacturer of soil, grow media, plant nutrients and additives, in July 2021; (iv) Greenstar Plant Products, a manufacturer of plant nutrients and additives, in August 2021; and (v) Innovative Growers Equipment, a manufacturer of horticultural benches, racks and grow lights, in November 2021. The Company finalized the determination of its allocation of the purchase price relating to the acquisitions during 2022. |
Restructuring | The Company began a restructuring plan during the three months ended December 31, 2022, and undertook significant actions to streamline operations, reduce costs and improve efficiencies. The major initiatives of the restructuring plan include (i) narrowing the Company's product and brand portfolio and (ii) the relocation and consolidation of certain manufacturing and distribution centers, including headcount reductions and reorganization to drive a solution based approach. The Company's strategic product consolidation entails removing approximately one-third of all products and one-fifth of all brands relating to the Company's primary product portfolio, which excludes the garden center business in Canada. |
Fair value measurements | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. All financial instruments recognized at fair value are classified into one of three levels in the fair value hierarchy as follows: Level 1 — Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 — Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or, corroborated by, observable market data by correlation or other means. Level 3 — Valuation techniques with significant unobservable market inputs. The Company measures certain non-financial assets and liabilities, including long-lived assets, intangible assets and goodwill, at fair value on a nonrecurring basis. The fair value of contingent consideration was classified within level 3 of the fair value hierarchy. |
Inventories | Inventories consist of finished goods, work-in-process, and raw materials used in manufacturing products. Inventories are stated at the lower of cost or net realizable value, principally determined by the first in, first out method of accounting. The Company maintains an allowance for excess and obsolete inventory. The estimate for excess and obsolete inventory is based upon assumptions about current and anticipated demand, customer preferences, business strategies, and market conditions. Management reviews these assumptions periodically to determine if any adjustments are needed to the allowance for excess and obsolete inventory. The establishment of an allowance for excess and obsolete inventory establishes a new cost basis in the inventory. Such allowance is not reduced until the product is sold or otherwise disposed. If inventory is sold, any related reserves would be reversed in the period of sale. During the year ended December 31, 2022, the Company estimated inventory markdowns relating to restructuring charges based upon current and anticipated demand, customer preferences, business strategies, and market conditions including management's actions with respect to inventory products and brands being removed from our portfolio. Hydrofarm's strategic product consolidation entails removing approximately one-third of all products and one-fifth of all brands relating to our primary product portfolio. |
Note receivable and Investment | In 2019, the Company executed a note receivable secured by equipment to a third-party, the terms of which were amended and restated during the first quarter of 2021. The note receivable provided for interest and installment payments to the Company, and full maturity of the note in 2024. During the first quarter of 2022, the third-party defaulted on interest payments, and the Company measured an impairment on the note receivable based on the estimated fair value of the collateral. The Company recorded an impairment loss of $2,636 during the three months ended March 31, 2022, in Impairments on the condensed consolidated statements of operations. As of December 31, 2022, the note receivable carrying value was $475 and it was classified in Other assets on the condensed consolidated balance sheet. During the three months ended March 31, 2023, the Company agreed to forgive the note receivable in exchange for interest in a third-party equity investment with a cost basis of $475, which is reported within Other assets on the condensed consolidated balance sheet. |
Revenue recognition | The Company follows Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers (“ASC 606”) which requires that revenue recognized from contracts with customers be disaggregated into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company has determined that revenue is generated from one category, which is the distribution and manufacture of CEA equipment and supplies. Revenue is recognized as control of promised goods is transferred to customers, which generally occurs upon receipt at customers’ locations determined by the specific terms of the contract. Arrangements generally have a single performance obligation and revenue is reported net of variable consideration which includes applicable volume rebates, cash discounts and sales returns and allowances. Variable consideration is estimated and recorded at the time of sale. The amount billed to customers for shipping and handling costs included in net sales was $2,568 and $3,879 during the three months ended March 31, 2023, and 2022, respectively. Shipping and handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs included in cost of goods sold. The Company does not receive noncash consideration for the sale of goods. Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company's contract liabilities, which consist primarily of customer deposits reported within deferred revenue in the condensed consolidated balance sheets, totaled $2,539 and $3,654 as of March 31, 2023, and December 31, 2022, respectively. There are no significant financing components. Excluded from revenue are any taxes assessed by governmental authorities, including value-added and other sales-related taxes that are imposed on and concurrent with revenue-generating activities. |
Income taxes | The income tax provision is calculated for an interim period by distinguishing between elements recognized in the income tax provision through applying an estimated annual effective tax rate to a measure of year-to-date operating results referred to as “ordinary income (or loss),” and discretely recognizing specific events referred to as “discrete items” as they occur. The income tax provision or benefit for each interim period is the difference between the year-to-date amount for the current period and the year-to-date amount for the prior period. |
Recent accounting pronouncements | The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the FASB. There were no ASUs that were assessed and determined to be applicable or expected to have a material impact on the Company's condensed consolidated financial statements. |
Purchase commitments | From time to time in the normal course of business, the Company will enter into agreements with suppliers which provide favorable pricing in return for a commitment to purchase minimum amounts of inventory over a defined time period. |
Contingencies | In the normal course of business, certain claims have been brought against the Company and, where applicable, its suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested the validity of these claims. Based on available information, management believes the claims are without merit and does not expect that the outcome, individually or in the aggregate, would have a material adverse effect on the consolidated financial positions, results of operations, cash flows or future earnings. |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Restructuring Costs | The following table presents the activity in accrued expenses and other current liabilities for restructuring costs for the three months ended March 31, 2023: December 31, Expense Cash Payments March 31, Restructuring accruals $ 696 1,084 (1,156) $ 624 |
Revenue from External Customers by Geographic Areas | Sales to external customers and property, plant and equipment, and operating lease right-of-use assets, net in the United States and Canada, determined by the location of the subsidiaries, are shown below. Other foreign locations, which are immaterial, individually and in the aggregate, are included in the United States below. Three months ended March 31, 2023 2022 United States $ 47,749 $ 92,858 Canada 15,019 21,502 Intersegment eliminations (590) (2,983) Total consolidated net sales $ 62,178 $ 111,377 March 31, December 31, United States $ 78,082 $ 80,380 Canada 34,062 36,020 Total property, plant and equipment, net and operating lease right-of-use assets $ 112,144 $ 116,400 |
Long-lived Assets by Geographic Areas | Sales to external customers and property, plant and equipment, and operating lease right-of-use assets, net in the United States and Canada, determined by the location of the subsidiaries, are shown below. Other foreign locations, which are immaterial, individually and in the aggregate, are included in the United States below. Three months ended March 31, 2023 2022 United States $ 47,749 $ 92,858 Canada 15,019 21,502 Intersegment eliminations (590) (2,983) Total consolidated net sales $ 62,178 $ 111,377 March 31, December 31, United States $ 78,082 $ 80,380 Canada 34,062 36,020 Total property, plant and equipment, net and operating lease right-of-use assets $ 112,144 $ 116,400 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in goodwill are as follows: Goodwill Balance at December 31, 2021 $ 204,868 Acquisition - IGE Entities - measurement period adjustments (22,542) Acquisition - all others - remeasurement adjustments and foreign currency translation adjustments, net 1,012 Balance at March 31, 2022 $ 183,338 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net comprised the following: March 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Computer software $ 9,425 $ (8,041) $ 1,384 $ 9,408 $ (7,976) $ 1,432 Customer relationship 99,947 (26,374) 73,573 99,933 (24,533) 75,400 Technology, formulations and recipes 114,191 (17,790) 96,401 114,187 (15,344) 98,843 Trade names and trademarks 131,421 (11,725) 119,696 131,410 (10,052) 121,358 Other 4,780 (4,287) 493 4,778 (4,246) 532 Total finite-lived intangible assets, net 359,764 (68,217) 291,547 359,716 (62,151) 297,565 Indefinite-lived intangible asset: Trade name 2,801 — 2,801 2,801 — 2,801 Total Intangible assets, net $ 362,565 $ (68,217) $ 294,348 $ 362,517 $ (62,151) $ 300,366 |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net comprised the following: March 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Computer software $ 9,425 $ (8,041) $ 1,384 $ 9,408 $ (7,976) $ 1,432 Customer relationship 99,947 (26,374) 73,573 99,933 (24,533) 75,400 Technology, formulations and recipes 114,191 (17,790) 96,401 114,187 (15,344) 98,843 Trade names and trademarks 131,421 (11,725) 119,696 131,410 (10,052) 121,358 Other 4,780 (4,287) 493 4,778 (4,246) 532 Total finite-lived intangible assets, net 359,764 (68,217) 291,547 359,716 (62,151) 297,565 Indefinite-lived intangible asset: Trade name 2,801 — 2,801 2,801 — 2,801 Total Intangible assets, net $ 362,565 $ (68,217) $ 294,348 $ 362,517 $ (62,151) $ 300,366 Useful lives Weighted-average amortization period Computer software 5 years 3 years Customer relationships 7 to 18 years 11 years Technology, formulations and recipes 8 to 12 years 10 years Trade names and trademarks 15 to 20 years 18 years |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated aggregate future amortization expense for intangible assets subject to amortization as of March 31, 2023, is summarized below: Estimated Future Amortization Expense For the period of April 1, 2023 to December 31, 2023 $ 18,397 Year ending December 31, 2024 24,413 2025 24,342 2026 24,044 2027 23,859 Thereafter 176,492 Total $ 291,547 |
EARNINGS (LOSS) PER COMMON SH_2
EARNINGS (LOSS) PER COMMON SHARE (“EPS”) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents information necessary to calculate basic and diluted EPS for the three months ended March 31, 2023 and 2022: Three Months Ended 2023 2022 Net loss $ (16,849) $ (23,296) Weighted-average shares of common stock outstanding 45,263,822 44,718,510 Dilutive effect of warrants and share based compensation awards using the treasury stock method — — Diluted weighted-average shares of common stock outstanding 45,263,822 44,718,510 Basic EPS $ (0.37) $ (0.52) Diluted EPS $ (0.37) $ (0.52) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The computation of the weighted-average shares of common stock outstanding for diluted EPS excludes the following potential shares of common stock as their inclusion would have an anti-dilutive effect on diluted EPS: Three Months Ended 2023 2022 Shares subject to warrants outstanding 17,669 17,669 Shares subject to unvested performance based and restricted stock units 2,048,606 1,234,857 Shares subject to stock options outstanding 658,296 696,071 |
ACCOUNTS RECEIVABLE, NET AND _2
ACCOUNTS RECEIVABLE, NET AND INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net comprised the following: March 31, December 31, Trade accounts receivable $ 22,907 $ 18,204 Allowance for doubtful accounts (1,164) (1,556) Other receivables 858 579 Total accounts receivable, net $ 22,601 $ 17,227 |
Schedule of Inventories | Inventories comprised the following: March 31, December 31, Finished goods $ 75,795 $ 83,134 Work-in-process 5,163 5,403 Raw materials 35,594 38,558 Allowance for inventory obsolescence (13,122) (15,697) Total inventories $ 103,430 $ 111,398 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Assets And Liabilities, Lessee | Total right-of-use ("ROU") assets and lease liabilities were as follows: Balance Sheet Classification March 31, December 31, Lease assets Operating lease assets Operating lease right-of-use assets $ 61,155 $ 65,265 Finance lease assets Property, plant and equipment, net 10,405 2,005 Total lease assets $ 71,560 $ 67,270 Lease liabilities Current: Operating leases Current portion of operating lease liabilities $ 8,967 $ 9,099 Finance leases Current portion of finance lease liabilities 1,012 704 Noncurrent: Operating leases Long-term operating lease liabilities 53,879 56,299 Finance leases Long-term finance lease liabilities 9,426 1,200 Total lease liabilities $ 73,284 $ 67,302 |
Lessee, Operating Lease, Liability, Maturity | The aggregate future minimum lease payments under long-term non-cancelable operating and finance leases with remaining terms greater than one year as of March 31, 2023, are as follows: Operating Finance For the period of April 1, 2023 to December 31, 2023 $ 8,665 $ 1,145 Year ending December 31, 2024 10,642 1,441 2025 10,364 1,303 2026 9,179 851 2027 8,940 853 2028 8,385 805 Thereafter 16,809 8,037 Total lease payments 72,984 14,435 Less portion representing interest (10,138) (3,997) Total principal 62,846 10,438 Less current portion (8,967) (1,012) Long-term portion $ 53,879 $ 9,426 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment, net comprised the following: March 31, December 31, Machinery and equipment 27,681 27,832 Peat bogs and related development 11,475 10,761 Building and improvements 9,927 9,920 Land 6,204 6,107 Furniture and fixtures 3,922 3,921 Computer equipment 3,405 3,337 Leasehold improvements 4,535 4,177 Gross property, plant and equipment 67,149 66,055 Less: accumulated depreciation (16,160) (14,920) Total property, plant and equipment, net $ 50,989 $ 51,135 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities and Other Current Liabilities | Accrued expenses and other current liabilities comprised the following: March 31, December 31, Accrued compensation and benefits $ 2,747 $ 2,522 Freight, custom and duty accrual 735 1,022 Goods in transit accrual 787 1,172 Income tax accrual — 451 Other accrued liabilities 5,847 8,041 Total accrued expenses and other current liabilities $ 10,116 $ 13,208 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt is comprised of the following: March 31, December 31, Term loan - net of unamortized discount and deferred financing costs of $4,924 and $5,142 as of March 31, 2023, and December 31, 2022, respectively $ 118,514 $ 118,608 Other 216 160 Total debt $ 118,730 $ 118,768 Current portion of long-term debt $ 1,367 $ 1,307 Long-term debt - net of unamortized discount and deferred financing costs of $4,924 and $5,142 as of March 31, 2023, and December 31, 2022, respectively 117,363 117,461 Total debt $ 118,730 $ 118,768 |
Schedule of Maturities of Long-term Debt | As of March 31, 2023, the aggregate future principal payments under long-term debt are as follows: Debt For the period of April 1, 2023 to December 31, 2023 $ 1,055 Year ending December 31, 2024 1,269 2025 1,269 2026 1,269 2027 1,270 2028 117,522 Total $ 123,654 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of Warrants | As of March 31, 2023, the following table summarizes the outstanding placement agent warrants: Number of Warrants Exercise Price Placement agent warrants 11,662 $ 8.43 Placement agent warrants 6,007 $ 16.86 Total 17,669 $ 11.30 As of December 31, 2022, the following table summarizes the outstanding placement agent warrants: Number of Warrants Exercise Price Placement agent warrants 11,662 $ 8.43 Placement agent warrants 6,007 $ 16.86 Total 17,669 $ 11.30 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement, Outstanding Award, Activity, Excluding Option | For purposes of this table, vested RSUs represent the shares for which the service condition had been fulfilled during the three months ended March 31, 2023: Number of Weighted Balance, December 31, 2022 992,633 $ 8.57 Granted 173,411 $ 1.73 Vested (211,439) $ 10.14 Forfeited (42,376) $ 11.03 Balance, March 31, 2023 912,229 $ 6.80 Number of Weighted Balance, December 31, 2022 96,246 $ 15.74 Granted 1,141,543 $ 1.77 Vested (25,894) $ 15.74 Forfeited (75,518) $ 14.78 Balance, March 31, 2023 1,136,377 $ 1.77 |
Share-based Payment Arrangement, Option, Activity | The following table summarizes the stock option activity for the three months ended March 31, 2023: Number Weighted Weighted Weighted average Outstanding as of December 31, 2022 670,026 $ 9.50 $ 2.05 5.25 Cancelled (11,162) $ 10.19 $ 4.10 Forfeited (568) $ 10.05 $ 4.03 Outstanding as of March 31, 2023 658,296 $ 9.50 $ 2.07 4.62 Options exercisable as of March 31, 2023 601,494 $ 8.87 $ 1.40 4.41 Vested and expected to vest as of March 31, 2023 658,296 $ 9.50 $ 2.07 4.62 The following table summarizes the unvested stock option activity for the three months ended March 31, 2023: Number Weighted Unvested as of December 31, 2022 70,587 $ 7.02 Vested (13,217) $ 1.13 Forfeited (568) $ 4.03 Unvested as of March 31, 2023 56,802 $ 9.08 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of the Company’s assets and liabilities which are provided for disclosure purposes: March 31, 2023 December 31, 2022 Fair Value Hierarchy Level Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets Cash and cash equivalents Level 1 18,703 18,703 21,291 21,291 Liabilities Finance leases Level 3 10,438 10,438 1,904 1,904 Term Loan Level 2 123,438 107,391 123,750 105,188 |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2021 USD ($) acquisition | Dec. 31, 2022 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 1 | ||||
Impairment loss | $ 2,636,000 | ||||
Note receivable | $ 3,111,000 | $ 475,000 | |||
Revenue from External Customer [Line Items] | |||||
Current portion of finance lease liabilities | $ 1,012,000 | $ 1,012,000 | 704,000 | ||
Finance leases | 9,426,000 | 9,426,000 | 1,200,000 | ||
Number of businesses acquired | acquisition | 5 | ||||
Amortization of intangible assets, additional | 5,894,000 | ||||
Restructuring expenses | 1,084,000 | ||||
Non-cash restructuring charges | 327,000 | ||||
Accrued liability for restructuring costs | 624,000 | 624,000 | 696,000 | ||
Estimated additional restructuring charges | $ 900,000 | 900,000 | |||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 1 | ||||
Note receivable | $ 3,111,000 | 475,000 | |||
Cost of third party equity investment | $ 475,000 | 475,000 | |||
Net sales | 62,178,000 | 111,377,000 | |||
Deferred revenue | $ 2,539,000 | 2,539,000 | $ 3,654,000 | ||
Computer software | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 3 years | ||||
Minimum | Customer relationship | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 7 years | ||||
Minimum | Technology, formulations and recipes | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 8 years | ||||
Minimum | Trade name | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 15 years | ||||
Maximum | Customer relationship | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||||
Maximum | Technology, formulations and recipes | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||||
Maximum | Trade name | |||||
Revenue from External Customer [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 20 years | ||||
Cost of Sales | |||||
Revenue from External Customer [Line Items] | |||||
Restructuring expenses | $ 1,237,000 | ||||
Selling, General and Administrative Expenses | |||||
Revenue from External Customer [Line Items] | |||||
Restructuring expenses | 174,000 | ||||
Facility Closing | |||||
Revenue from External Customer [Line Items] | |||||
Restructuring expenses | 1,411,000 | 2,308,000 | |||
Inventory Writedown | |||||
Revenue from External Customer [Line Items] | |||||
Restructuring expenses | $ 6,790,000 | ||||
Shipping and Handling | |||||
Revenue from External Customer [Line Items] | |||||
Net sales | $ 2,568,000 | $ 3,879,000 |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Restructuring Costs (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring Reserve [Roll Forward] | |
Restructuring accruals, beginning balance | $ 696 |
Restructuring expenses | 1,084 |
Cash Payments | (1,156) |
Restructuring accruals, ending balance | $ 624 |
BASIS OF PRESENTATION AND SIG_6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Entity-wide Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 62,178 | $ 111,377 | |
Property, plant and equipment, and operating lease right-of-use assets, net | 112,144 | $ 116,400 | |
United States | |||
Segment Reporting Information [Line Items] | |||
Property, plant and equipment, and operating lease right-of-use assets, net | 78,082 | 80,380 | |
Canada | |||
Segment Reporting Information [Line Items] | |||
Property, plant and equipment, and operating lease right-of-use assets, net | 34,062 | $ 36,020 | |
Operating segments | United States | |||
Segment Reporting Information [Line Items] | |||
Net sales | 47,749 | 92,858 | |
Operating segments | Canada | |||
Segment Reporting Information [Line Items] | |||
Net sales | 15,019 | 21,502 | |
Intersegment eliminations | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ (590) | $ (2,983) |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment | $ 189,572 | |||
Goodwill | $ 183,338,000 | $ 0 | $ 204,868,000 | |
Amortization expense | $ 6,045,000 | $ 14,746,000 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2021 | $ 204,868 |
Balance at March 31, 2022 | 183,338 |
Innovative Growers Equipment, Inc. | |
Goodwill [Roll Forward] | |
Remeasurement adjustments and foreign currency translation adjustments, net | (22,542) |
All others | |
Goodwill [Roll Forward] | |
Remeasurement adjustments and foreign currency translation adjustments, net | $ 1,012 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets, net (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 359,764 | $ 359,716 |
Accumulated Amortization | (68,217) | (62,151) |
Total | 291,547 | 297,565 |
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 362,565 | 362,517 |
Total | 294,348 | 300,366 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,801 | 2,801 |
Computer software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9,425 | 9,408 |
Accumulated Amortization | (8,041) | (7,976) |
Total | 1,384 | 1,432 |
Customer relationship | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 99,947 | 99,933 |
Accumulated Amortization | (26,374) | (24,533) |
Total | 73,573 | 75,400 |
Technology, formulations and recipes | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 114,191 | 114,187 |
Accumulated Amortization | (17,790) | (15,344) |
Total | 96,401 | 98,843 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 131,421 | 131,410 |
Accumulated Amortization | (11,725) | (10,052) |
Total | 119,696 | 121,358 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,780 | 4,778 |
Accumulated Amortization | (4,287) | (4,246) |
Total | $ 493 | $ 532 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Useful Life Finite-lived Intangible Assets (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Computer software | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 5 years |
Computer software | Weighted Average | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, amortization period | 3 years |
Customer relationship | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 7 years |
Customer relationship | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 18 years |
Customer relationship | Weighted Average | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, amortization period | 11 years |
Technology, formulations and recipes | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 8 years |
Technology, formulations and recipes | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 12 years |
Technology, formulations and recipes | Weighted Average | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, amortization period | 10 years |
Trade names and trademarks | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 15 years |
Trade names and trademarks | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 20 years |
Trade names and trademarks | Weighted Average | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, amortization period | 18 years |
GOODWILL AND INTANGIBLE ASSET_7
GOODWILL AND INTANGIBLE ASSETS, NET - Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
For the period of April 1, 2023 to December 31, 2023 | $ 18,397 | |
2024 | 24,413 | |
2025 | 24,342 | |
2026 | 24,044 | |
2027 | 23,859 | |
Thereafter | 176,492 | |
Total | $ 291,547 | $ 297,565 |
EARNINGS (LOSS) PER COMMON SH_3
EARNINGS (LOSS) PER COMMON SHARE (“EPS”) - Calculation for Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Net loss | $ (16,849) | $ (23,296) |
Weighted-average shares of common stock outstanding (in shares) | 45,263,822 | 44,718,510 |
Diluted weighted-average shares of common stock outstanding (in shares) | 45,263,822 | 44,718,510 |
Basic EPS (in dollars per share) | $ (0.37) | $ (0.52) |
Diluted EPS (in dollars per share) | $ (0.37) | $ (0.52) |
Share Based Compensation Awards and Warrants | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Dilutive effect of share-based payments using the treasury stock method (in shares) | 0 | 0 |
EARNINGS (LOSS) PER COMMON SH_4
EARNINGS (LOSS) PER COMMON SHARE (“EPS”) - Antidilutive (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares subject to (in shares) | 17,669 | 17,669 |
Performance based and restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares subject to (in shares) | 2,048,606 | 1,234,857 |
Stock options outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares subject to (in shares) | 658,296 | 696,071 |
ACCOUNTS RECEIVABLE, NET AND _3
ACCOUNTS RECEIVABLE, NET AND INVENTORIES - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 22,907 | $ 18,204 |
Allowance for doubtful accounts | (1,164) | (1,556) |
Other receivables | 858 | 579 |
Total accounts receivable, net | $ 22,601 | $ 17,227 |
ACCOUNTS RECEIVABLE, NET AND _4
ACCOUNTS RECEIVABLE, NET AND INVENTORIES - Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Finished goods | $ 75,795 | $ 83,134 |
Work-in-process | 5,163 | 5,403 |
Raw materials | 35,594 | 38,558 |
Allowance for inventory obsolescence | (13,122) | (15,697) |
Total inventories | $ 103,430 | $ 111,398 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2037 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2023 | Jan. 31, 2023 | |
Lessee, Lease, Description [Line Items] | |||||
Lease term | 20 years | ||||
Operating lease, cost | $ 3,647 | $ 2,597 | |||
Sublease income | $ 642 | $ 314 | |||
City of Eugene, County of Lane, State of Oregon | |||||
Lessee, Lease, Description [Line Items] | |||||
Initial purchase price | $ 8,598 | ||||
Term of contract | 15 years | ||||
City of Eugene, County of Lane, State of Oregon | Forecast | |||||
Lessee, Lease, Description [Line Items] | |||||
Rent expense | $ 964 | $ 731 |
LEASES - Balance Sheet (Details
LEASES - Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Lease assets | ||
Operating lease right-of-use assets | $ 61,155 | $ 65,265 |
Finance lease assets | 10,405 | 2,005 |
Total lease assets | 71,560 | 67,270 |
Lease liabilities | ||
Current portion of operating lease liabilities | 8,967 | 9,099 |
Current portion of finance lease liabilities | 1,012 | 704 |
Operating leases | 53,879 | 56,299 |
Finance leases | 9,426 | 1,200 |
Total lease liabilities | $ 73,284 | $ 67,302 |
LEASES - Future Minimum Lease P
LEASES - Future Minimum Lease Payment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
For the period of April 1, 2023 to December 31, 2023 | $ 8,665 | |
2024 | 10,642 | |
2025 | 10,364 | |
2026 | 9,179 | |
2027 | 8,940 | |
2028 | 8,385 | |
Thereafter | 16,809 | |
Total lease payments | 72,984 | |
Less portion representing interest | (10,138) | |
Total lease liabilities | 62,846 | |
Less current portion | (8,967) | $ (9,099) |
Long-term portion | 53,879 | 56,299 |
For the period of April 1, 2023 to December 31, 2023 | 1,145 | |
2024 | 1,441 | |
2025 | 1,303 | |
2026 | 851 | |
2027 | 853 | |
2028 | 805 | |
Thereafter | 8,037 | |
Total lease payments | 14,435 | |
Less portion representing interest | (3,997) | |
Total principal | 10,438 | |
Less current portion | (1,012) | (704) |
Finance leases | $ 9,426 | $ 1,200 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | $ 67,149 | $ 66,055 | |
Less: accumulated depreciation | (16,160) | (14,920) | |
Total property, plant and equipment, net | 50,989 | 51,135 | |
Depreciation and amortization expense | 1,962 | $ 2,195 | |
Finance lease assets cost | 12,920 | 3,128 | |
Finance lease assets, accumulated depreciation | 2,515 | 1,123 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 27,681 | 27,832 | |
Peat bogs and related development | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 11,475 | 10,761 | |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 9,927 | 9,920 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 6,204 | 6,107 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 3,922 | 3,921 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | 3,405 | 3,337 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property, plant and equipment | $ 4,535 | $ 4,177 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 2,747 | $ 2,522 |
Freight, custom and duty accrual | 735 | 1,022 |
Goods in transit accrual | 787 | 1,172 |
Income tax accrual | 0 | 451 |
Other accrued liabilities | 5,847 | 8,041 |
Total accrued expenses and other current liabilities | $ 10,116 | $ 13,208 |
DEBT - Components (Details)
DEBT - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Oct. 25, 2021 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 118,730 | $ 118,768 | |
Current portion of long-term debt | 1,367 | 1,307 | |
Long-term debt - net of unamortized discount and deferred financing costs of $4,924 and $5,142 as of March 31, 2023, and December 31, 2022, respectively | 117,363 | 117,461 | |
Total debt | 118,730 | 118,768 | |
Unamortized discount and deferred financing costs | 4,924 | 5,142 | |
Term loan | |||
Debt Instrument [Line Items] | |||
Long-term debt | 118,514 | 118,608 | |
Unamortized discount and deferred financing costs | 4,924 | 5,142 | $ 6,190 |
Other | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 216 | $ 160 |
DEBT - Term Loans (Details)
DEBT - Term Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Oct. 25, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 123,654 | ||
Deferred financing costs and discount | $ 4,924 | $ 5,142 | |
Senior Secured Term Loan | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 125,000 | ||
Debt instrument, call premium rate, year one | 2% | ||
Debt instrument, call premium rate, year two | 1% | ||
Debt instrument, call premium rate, after year two | 0% | ||
Debt instrument, interest rate during period | 10.97% | ||
Deferred financing costs and discount | $ 6,190 | $ 4,924 | 5,142 |
Interest expense, debt | 3,347 | ||
Amortization of deferred financing costs | 218 | ||
Debt instrument, quarterly payment, principal outstanding, percentage | 0.25% | ||
Senior Secured Term Loan | Fair Value, Inputs, Level 2 [Member] | Carrying Amount | |||
Debt Instrument [Line Items] | |||
Debt | $ 123,438 | $ 123,750 | |
Senior Secured Term Loan | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Debt instrument, floor on variable rate | 1% | ||
Debt instrument, basis spread on variable rate | 5.50% | ||
Senior Secured Term Loan | Alternative Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, floor on variable rate | 2% | ||
Debt instrument, basis spread on variable rate | 4.50% |
DEBT - Revolving Asset-backed C
DEBT - Revolving Asset-backed Credit Facilities (Details) | Dec. 22, 2022 USD ($) | Aug. 31, 2021 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 29, 2021 USD ($) |
Debt Instrument [Line Items] | |||||
Other debt | $ 216,000 | $ 160,000 | |||
JPMorgan Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 75,000,000 | $ 100,000,000 | 55,000,000 | $ 50,000,000 | |
Unamortized debt issuance expense | 686,000 | ||||
Line of credit facility, remaining borrowing capacity | 39,000,000 | 39,000,000 | |||
Covenant , minimum fixed charge coverage ratio, term | 12 months | ||||
Excess availability threshold | 10% | ||||
Covenant, excess availability term | 30 days | ||||
Fixed charge coverage ratio | 1.15 | ||||
Borrowings outstanding | $ 0 | $ 0 | |||
JPMorgan Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | ||||
JPMorgan Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.95% | ||||
Debt instrument, floor on variable rate | 0% | ||||
Revolving Asset-baked Credit Facility | JPMorgan Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Covenant , minimum fixed charge coverage ratio multiplier | 1.1 |
DEBT - Future Principal Payment
DEBT - Future Principal Payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
For the period of April 1, 2023 to December 31, 2023 | $ 1,055 |
2024 | 1,269 |
2025 | 1,269 |
2026 | 1,269 |
2027 | 1,270 |
2028 | 117,522 |
Long-term debt, gross | $ 123,654 |
STOCKHOLDERS_ EQUITY - Narrativ
STOCKHOLDERS’ EQUITY - Narrative (Details) | Mar. 31, 2023 vote shares | Dec. 31, 2022 shares | Jul. 19, 2021 shares |
Class of Warrant or Right [Line Items] | |||
Common stock, shares outstanding (in shares) | 45,362,276 | 45,197,249 | |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | |
Common Stock | |||
Class of Warrant or Right [Line Items] | |||
Votes per share of stock | vote | 1 | ||
Investor Warrants | |||
Class of Warrant or Right [Line Items] | |||
Warrant solicitation fee expense, percentage of net cash proceeds solicited by placement agents on certain warrants following call for redemption | 5% | ||
Investor Warrants | Common Stock | |||
Class of Warrant or Right [Line Items] | |||
Number of securities called by each warrant or right (in shares) | 0.5 |
STOCKHOLDERS_ EQUITY - Outstand
STOCKHOLDERS’ EQUITY - Outstanding Warrants (Details) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 17,669 | 17,669 |
Exercise price (in dollars per share) | $ 11.30 | $ 11.30 |
Investor Warrants, Placement Agents, $8.43 | ||
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 11,662 | 11,662 |
Exercise price (in dollars per share) | $ 8.43 | $ 8.43 |
Investor Warrants, Placement Agents, $16.86 | ||
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 6,007 | 6,007 |
Exercise price (in dollars per share) | $ 16.86 | $ 16.86 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2021 shares | Nov. 30, 2020 USD ($) shares | Mar. 31, 2023 USD ($) tranche plan shares | Dec. 31, 2022 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of equity plans maintained | plan | 3 | |||
Stock-based compensation expense | $ | $ 3,180 | |||
Vesting period | 10 years | |||
RSU | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting tranches | tranche | 2 | |||
Stock-based compensation expense | $ | $ 1,001 | |||
Vested (in shares) | 148,315 | 211,439 | ||
Number of RSUs (in shares) | 912,229 | 992,633 | ||
Cost not yet recognized, amount | $ | $ 4,752 | |||
Cost not yet recognized, period for recognition | 1 year 2 months 15 days | |||
Awards vested but not yet issued (in shares) | 6,357 | |||
PSU | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ | $ 97 | |||
Vested (in shares) | 25,894 | |||
Number of RSUs (in shares) | 1,136,377 | 96,246 | ||
Cost not yet recognized, amount | $ | $ 1,967 | |||
Cost not yet recognized, period for recognition | 1 year | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ | $ 84 | |||
Cost not yet recognized, amount | $ | $ 357 | |||
Cost not yet recognized, period for recognition | 1 year 3 months 3 days | |||
Restricted Stock Units (RSUs) with Performance Based Vesting Conditions On A Qualifying Liquidity Event | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of RSUs (in shares) | 111,236 | |||
2020 Employee, Director, and Consultant Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for grant (in shares) | 1,989,274 | |||
Capital shares reserved for future issuance (in shares) | 2,284,053 | |||
Percentage of outstanding stock maximum | 4% | |||
Purchase price of common stock, percent | 100% | |||
Expiration period | 10 years |
STOCK-BASED COMPENSATION - RSU
STOCK-BASED COMPENSATION - RSU Activity (Details) - RSU - $ / shares | 1 Months Ended | 3 Months Ended |
Jul. 31, 2021 | Mar. 31, 2023 | |
Number of RSUs | ||
Beginning (in shares) | 992,633 | |
Granted (in shares) | 173,411 | |
Vested (in shares) | (148,315) | (211,439) |
Forfeited (in shares) | (42,376) | |
Ending (in shares) | 912,229 | |
Weighted average grant date fair value | ||
Beginning (in dollars per shares) | $ 8.57 | |
Granted (in dollars per share) | 1.73 | |
Vested (in dollars per share) | 10.14 | |
Forfeited (in dollars per share) | 11.03 | |
Ending (in dollars shares) | $ 6.80 |
STOCK-BASED COMPENSATION - PSU
STOCK-BASED COMPENSATION - PSU Activity (Details) - PSU | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of PSUs | |
Beginning (in shares) | shares | 96,246 |
Granted (in shares) | shares | 1,141,543 |
Vested (in shares) | shares | (25,894) |
Forfeited (in shares) | shares | (75,518) |
Ending (in shares) | shares | 1,136,377 |
Weighted average grant date fair value | |
Beginning (in dollars per shares) | $ / shares | $ 15.74 |
Granted (in dollars per share) | $ / shares | 1.77 |
Vested (in dollars per share) | $ / shares | 15.74 |
Forfeited (in dollars per share) | $ / shares | 14.78 |
Ending (in dollars shares) | $ / shares | $ 1.77 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number | ||
Outstanding, beginning (in shares) | 670,026 | |
Cancelled (in shares) | (11,162) | |
Forfeited (in shares) | (568) | |
Outstanding, ending (in shares) | 658,296 | 670,026 |
Options exercisable (in shares) | 601,494 | |
Vested and expected to vest (in shares) | 658,296 | |
Weighted average exercise price | ||
Outstanding, beginning (in dollars per share) | $ 9.50 | |
Cancelled (in dollars per share) | 10.19 | |
Forfeited (in dollars per share) | 10.05 | |
Outstanding, ending (in dollars per share) | 9.50 | $ 9.50 |
Options exercisable (in dollars per share) | 8.87 | |
Vested and expected to vest (in dollars per share) | 9.50 | |
Weighted average grant date fair value | ||
Outstanding, beginning (in dollars per share) | 2.05 | |
Cancelled (in dollars per share) | 4.10 | |
Forfeited (in dollars per share) | 4.03 | |
Outstanding, ending (in dollars per share) | 2.07 | $ 2.05 |
Options exercisable (in dollars per share) | 1.40 | |
Vested and expected to vest (in dollars per share) | $ 2.07 | |
Weighted average remaining contractual term (years) | ||
Outstanding, term | 4 years 7 months 13 days | 5 years 3 months |
Options exercisable, term | 4 years 4 months 28 days | |
Vested and expected to vest, term | 4 years 7 months 13 days |
STOCK-BASED COMPENSATION - Unve
STOCK-BASED COMPENSATION - Unvested Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number | |
Balance, outstanding, beginning (in shares) | shares | 70,587 |
Vested (in shares) | shares | (13,217) |
Forfeited (in shares) | shares | (568) |
Balance, outstanding, ending (in shares) | shares | 56,802 |
Weighted average grant date fair value | |
Balance, outstanding, beginning (in dollars per share) | $ / shares | $ 7.02 |
Vested (in dollars per share) | $ / shares | 1.13 |
Forfeited (in dollars per share) | $ / shares | 4.03 |
Balance, outstanding, ending (in dollars per share) | $ / shares | $ 9.08 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax (expense) benefit | $ (147) | $ 5,569 |
Effective income tax rate | (0.90%) | 19.30% |
Income tax rate benefit, change in deferred tax assets valuation allowance, percent | 23.40% |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) acquisition | Dec. 31, 2022 USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Change in fair value of contingent consideration | $ 0 | $ 1,560,000 | ||
Number of businesses acquired | acquisition | 5 | |||
Impairment loss | 2,636,000 | |||
Note receivable | $ 3,111,000 | $ 475,000 | ||
Field 16, LLC (Heavy 16) | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Contingent consideration | 200,000 | |||
Aurora Innovations LLC | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Change in fair value of contingent consideration | 1,560,000 | |||
Fair value of contingent consideration | $ 15,274,000 | |||
Aurora Innovations LLC | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Contingent consideration | $ 16,834,000 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 18,703 | $ 21,291 |
Fair Value, Inputs, Level 2 [Member] | Carrying Amount | Term Loan | ||
Liabilities | ||
Debt | 123,438 | 123,750 |
Fair Value, Inputs, Level 2 [Member] | Estimated Fair Value | Term Loan | ||
Liabilities | ||
Debt | 107,391 | 105,188 |
Level 3 | Carrying Amount | Finance leases | ||
Liabilities | ||
Debt | 10,438 | 1,904 |
Level 3 | Estimated Fair Value | Finance leases | ||
Liabilities | ||
Debt | 10,438 | 1,904 |
Level 1 | Estimated Fair Value | ||
Assets | ||
Cash and cash equivalents | $ 18,703 | $ 21,291 |