DELAWARE
|
75-1256622
|
(State or other jurisdiction of
|
(I.R.S. employer incorporation or
|
organization)
|
identification no.)
|
1650 Hwy 6 South, Suite 190
|
77478
|
Sugar Land, Texas
|
(Zip code)
|
(Address of principal executive offices)
|
PART I – FINANCIAL INFORMATION
|
||
|
||
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
18
|
||
25
|
||
25
|
||
|
||
26
|
||
26
|
||
26
|
MARCH 31,
2017
(unaudited)
|
DECEMBER 31,
2016
|
|||||||
ASSETS
|
(thousands of dollars)
|
|||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
4,045
|
$
|
8,389
|
||||
Trade receivables, net
|
24,248
|
22,193
|
||||||
Inventories
|
14,957
|
17,871
|
||||||
Prepaid expenses and other assets
|
3,481
|
3,511
|
||||||
Taxes receivable
|
4,143
|
3,983
|
||||||
Total current assets
|
50,874
|
55,947
|
||||||
Plant, pipeline and equipment
, net
|
151,606
|
140,009
|
||||||
Goodwill
|
21,798
|
21,798
|
||||||
Other intangible assets, net
|
22,204
|
22,669
|
||||||
Investment in AMAK
|
48,420
|
49,386
|
||||||
Mineral properties in the United States
|
588
|
588
|
||||||
Other assets
|
63
|
87
|
||||||
TOTAL ASSETS
|
$
|
295,553
|
$
|
290,484
|
||||
LIABILITIES
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$
|
13,062
|
$
|
13,306
|
||||
Current portion of derivative instruments
|
34
|
58
|
||||||
Accrued liabilities
|
3,247
|
2,017
|
||||||
Current portion of post-retirement benefit
|
314
|
316
|
||||||
Current portion of long-term debt
|
8,061
|
10,145
|
||||||
Current portion of other liabilities
|
1,112
|
870
|
||||||
Total current liabilities
|
25,830
|
26,712
|
||||||
Long-term debt
, net of current portion
|
76,092
|
73,107
|
||||||
Post-retirement benefit,
net of current portion
|
897
|
897
|
||||||
Other liabilities,
net of current portion
|
1,977
|
2,309
|
||||||
Deferred income taxes
|
24,261
|
23,083
|
||||||
Total liabilities
|
129,057
|
126,108
|
||||||
EQUITY
|
||||||||
Common stock
‑authorized 40 million shares of $.10 par value; issued 24.5 million in 2017 and 2016 and outstanding 24.3 million and 24.2 million shares in 2017 and 2016, respectively
|
2,451
|
2,451
|
||||||
Additional paid-in capital
|
54,077
|
53,474
|
||||||
Common stock in treasury, at cost
|
(254
|
)
|
(284
|
)
|
||||
Retained earnings
|
109,933
|
108,446
|
||||||
Total Trecora Resources Stockholders' Equity
|
166,207
|
164,087
|
||||||
Noncontrolling Interest
|
289
|
289
|
||||||
Total equity
|
166,496
|
164,376
|
||||||
TOTAL LIABILITIES AND EQUITY
|
$
|
295,553
|
$
|
290,484
|
THREE MONTHS ENDED
|
||||||||
MARCH 31,
|
||||||||
2017
|
2016
|
|||||||
REVENUES
|
(thousands of dollars)
|
|||||||
Petrochemical and Product Sales
|
$
|
50,899
|
$
|
47,181
|
||||
Processing Fees
|
4,643
|
5,019
|
||||||
55,542
|
52,200
|
|||||||
OPERATING COSTS AND EXPENSES
|
||||||||
Cost of Sales and Processing
|
||||||||
(including depreciation and amortization of $2,383 and $2,219, respectively)
|
44,924
|
40,429
|
||||||
GROSS PROFIT
|
10,618
|
11,771
|
||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
||||||||
General and Administrative
|
6,221
|
5,449
|
||||||
Depreciation
|
205
|
177
|
||||||
6,426
|
5,626
|
|||||||
OPERATING INCOME
|
4,192
|
6,145
|
||||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest Income
|
2
|
4
|
||||||
Interest Expense
|
(636
|
)
|
(628
|
)
|
||||
Equity in Earnings (Losses) of AMAK
|
(966
|
)
|
5,367
|
|||||
Miscellaneous Expense
|
(44
|
)
|
(17
|
)
|
||||
(1,644
|
)
|
4,726
|
||||||
INCOME BEFORE INCOME TAXES
|
2,548
|
10,871
|
||||||
INCOME TAXES
|
1,061
|
3,647
|
||||||
NET INCOME
|
1,487
|
7,224
|
||||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
--
|
--
|
||||||
NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES
|
$
|
1,487
|
$
|
7,224
|
||||
Basic Earnings per Common Share
|
||||||||
Net Income Attributable to Trecora Resources (dollars)
|
$
|
0.06
|
$
|
0.30
|
||||
Basic Weighted Average Number of Common Shares Outstanding
|
24,240
|
24,484
|
||||||
Diluted Earnings per Common Share
|
||||||||
Net Income Attributable to Trecora Resources (dollars)
|
$
|
0.06
|
$
|
0.29
|
||||
Diluted Weighted Average Number of Common Shares Outstanding
|
25,054
|
25,085
|
TRECORA RESOURCES STOCKHOLDERS
|
||||||||||||||||||||||||||||||||
COMMON STOCK
|
ADDITIONAL
PAID-IN
|
TREASURY
|
RETAINED
|
NON-
CONTROLLING
|
TOTAL
|
|||||||||||||||||||||||||||
SHARES
|
AMOUNT
|
CAPITAL
|
STOCK
|
EARNINGS
|
TOTAL
|
INTEREST
|
EQUITY
|
|||||||||||||||||||||||||
(thousands)
|
(thousands of dollars)
|
|||||||||||||||||||||||||||||||
JANUARY 1, 2017
|
24,222
|
$
|
2,451
|
$
|
53,474
|
$
|
(284
|
)
|
$
|
108,446
|
$
|
164,087
|
$
|
289
|
$
|
164,376
|
||||||||||||||||
Stock options
|
||||||||||||||||||||||||||||||||
Issued to Directors
|
-
|
-
|
30
|
-
|
-
|
30
|
-
|
30
|
||||||||||||||||||||||||
Issued to Employees
|
-
|
-
|
308
|
-
|
-
|
308
|
-
|
308
|
||||||||||||||||||||||||
Restricted Common Stock
|
||||||||||||||||||||||||||||||||
Issued to Directors
|
-
|
-
|
82
|
-
|
-
|
82
|
-
|
82
|
||||||||||||||||||||||||
Issued to Employees
|
-
|
-
|
213
|
-
|
-
|
213
|
-
|
213
|
||||||||||||||||||||||||
Common stock
|
||||||||||||||||||||||||||||||||
Issued to Directors
|
3
|
-
|
(3
|
)
|
3
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Issued to Employees
|
27
|
-
|
(27
|
)
|
27
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Net Income
|
-
|
-
|
-
|
-
|
1,487
|
1,487
|
-
|
1,487
|
||||||||||||||||||||||||
MARCH 31, 2017
|
24,252
|
$
|
2,451
|
$
|
54,077
|
$
|
(254
|
)
|
$
|
109,933
|
$
|
166,207
|
$
|
289
|
$
|
166,496
|
THREE MONTHS ENDED
|
||||||||
MARCH 31,
|
||||||||
2017
|
2016
|
|||||||
(thousands of dollars)
|
||||||||
OPERATING ACTIVITIES
|
||||||||
Net Income
|
$
|
1,487
|
$
|
7,224
|
||||
Adjustments to Reconcile Net Income of Trecora Resources
|
||||||||
To Net Cash Provided by Operating Activities:
|
||||||||
Depreciation
|
2,123
|
1,926
|
||||||
Amortization of Intangible Assets
|
465
|
469
|
||||||
Unrealized Gain on Derivative Instruments
|
(24
|
)
|
(30
|
)
|
||||
Share-based Compensation
|
633
|
647
|
||||||
Deferred Income Taxes
|
1,178
|
1,407
|
||||||
Postretirement Obligation
|
(2
|
)
|
2
|
|||||
Equity in (earnings) losses of AMAK
|
966
|
(5,367
|
)
|
|||||
Amortization of loan fees
|
68
|
68
|
||||||
Changes in Operating Assets and Liabilities:
|
||||||||
(Increase) Decrease in Trade Receivables
|
(2,056
|
)
|
695
|
|||||
(Increase) Decrease in Taxes Receivable
|
(160
|
)
|
2,177
|
|||||
(Increase) Decrease in Inventories
|
2,914
|
(1,521
|
)
|
|||||
Decrease in Prepaid Expenses and Other Assets
|
79
|
180
|
||||||
Increase (Decrease) in Accounts Payable and Accrued Liabilities
|
989
|
(1,430
|
)
|
|||||
Increase (Decrease) in Other Liabilities
|
70
|
(1,244
|
)
|
|||||
Net Cash Provided by Operating Activities
|
8,730
|
5,203
|
||||||
INVESTING ACTIVITIES
|
||||||||
Additions to Plant, Pipeline and Equipment
|
(13,881
|
)
|
(7,602
|
)
|
||||
Advances to AMAK, net
|
(26
|
)
|
-
|
|||||
Cash Used in Investing Activities
|
(13,907
|
)
|
(7,602
|
)
|
||||
FINANCING ACTIVITIES
|
||||||||
Issuance of Common Stock
|
-
|
11
|
||||||
Addition to Long-Term Debt
|
5,000
|
-
|
||||||
Repayment of Long-Term Debt
|
(4,167
|
)
|
(2,083
|
)
|
||||
Net Cash Provided by (Used in) Financing Activities
|
833
|
(2,072
|
)
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(4,344
|
)
|
(4,471
|
)
|
||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
8,389
|
18,623
|
||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
4,045
|
$
|
14,152
|
||||
(1)
|
TREC – Trecora Resources
|
(2)
|
TOCCO – Texas Oil & Chemical Co. II, Inc. – Wholly owned subsidiary of TREC and parent of SHR and TC
|
(3)
|
SHR – South Hampton Resources, Inc. – Petrochemical segment and parent of GSPL
|
(4)
|
GSPL – Gulf State Pipe Line Co, Inc. – Pipeline support for the petrochemical segment
|
(5)
|
TC – Trecora Chemical, Inc. – Specialty wax segment
|
(6)
|
AMAK – Al Masane Al Kobra Mining Company – Mining equity investment – 33% ownership
|
(7)
|
PEVM – Pioche Ely Valley Mines, Inc. – Inactive mine - 55% ownership
|
As Originally
Reported
|
As Retrospectively
Adjusted
|
|||||||
(in thousands)
|
||||||||
Deferred income tax asset, current
|
$
|
1,615
|
$
|
-
|
||||
Total current assets
|
57,562
|
55,947
|
||||||
Total assets
|
292,099
|
290,484
|
||||||
Deferred income tax liability, noncurrent
|
24,698
|
23,083
|
||||||
Total liabilities
|
127,723
|
126,108
|
||||||
Total liabilities and equity
|
292,099
|
290,484
|
March 31, 2017
|
December 31, 2016
|
|||||||
(thousands of dollars)
|
||||||||
Trade receivables
|
$
|
24,548
|
$
|
22,493
|
||||
Less allowance for doubtful accounts
|
(300
|
)
|
(300
|
)
|
||||
Trade receivables, net
|
$
|
24,248
|
$
|
22,193
|
March 31, 2017
|
December 31, 2016
|
|||||||
(thousands of dollars)
|
||||||||
Prepaid license
|
$
|
1,919
|
$
|
1,919
|
||||
Prepaid catalyst
|
124
|
187
|
||||||
Prepaid insurance
|
566
|
797
|
||||||
Other prepaid expenses and assets
|
872
|
608
|
||||||
Total
|
$
|
3,481
|
$
|
3,511
|
March 31, 2017
|
December 31, 2016
|
|||||||
(thousands of dollars)
|
||||||||
Raw material
|
$
|
3,225
|
$
|
3,627
|
||||
Work in process
|
27
|
12
|
||||||
Finished products
|
11,458
|
14,232
|
||||||
Spare parts
|
247
|
-
|
||||||
Total inventory
|
$
|
14,957
|
$
|
17,871
|
March 31, 2017
|
December 31, 2016
|
|||||||
(thousands of dollars)
|
||||||||
Platinum catalyst metal
|
$
|
1,612
|
$
|
1,612
|
||||
Land
|
5,376
|
5,376
|
||||||
Plant, pipeline and equipment
|
156,142
|
154,107
|
||||||
Construction in progress
|
45,093
|
33,391
|
||||||
Total plant, pipeline and equipment
|
208,223
|
194,486
|
||||||
Less accumulated depreciation
|
(56,617
|
)
|
(54,477
|
)
|
||||
Net plant, pipeline and equipment
|
$
|
151,606
|
$
|
140,009
|
March 31, 2017
|
||||||||||||
Intangible assets subject to amortization
(Definite-lived)
|
Gross
|
Accumulated
Amortization
|
Net
|
|||||||||
Customer relationships
|
$
|
16,852
|
$
|
(2,808
|
)
|
$
|
14,044
|
|||||
Non-compete agreements
|
94
|
(48
|
)
|
46
|
||||||||
Licenses and permits
|
1,471
|
(311
|
)
|
1,160
|
||||||||
Developed technology
|
6,131
|
(1,532
|
)
|
4,599
|
||||||||
24,548
|
(4,699
|
)
|
19,849
|
|||||||||
Intangible assets not subject to amortization
(Indefinite-lived)
|
||||||||||||
Emissions Allowance
|
197
|
-
|
197
|
|||||||||
Trade name
|
2,158
|
-
|
2,158
|
|||||||||
Total
|
$
|
26,903
|
$
|
(4,699
|
)
|
$
|
22,204
|
December 31, 2016
|
||||||||||||
Intangible assets subject to amortization
(Definite-lived)
|
Gross
|
Accumulated
Amortization
|
Net
|
|||||||||
Customer relationships
|
$
|
16,852
|
$
|
(2,527
|
)
|
$
|
14,325
|
|||||
Non-compete agreements
|
94
|
(43
|
)
|
51
|
||||||||
Licenses and permits
|
1,471
|
(285
|
)
|
1,186
|
||||||||
Developed technology
|
6,131
|
(1,379
|
)
|
4,752
|
||||||||
24,548
|
(4,234
|
)
|
20,314
|
|||||||||
Intangible assets not subject to amortization
(Indefinite-lived)
|
||||||||||||
Emissions Allowance
|
197
|
-
|
197
|
|||||||||
Trade name
|
2,158
|
-
|
2,158
|
|||||||||
Total
|
$
|
26,903
|
$
|
(4,234
|
)
|
$
|
22,669
|
Remainder of
2017
|
2018
|
2019
|
2020
|
2021
|
Thereafter
|
|||||||||||||||||||
Customer relationships
|
$
|
843
|
$
|
1,123
|
$
|
1,123
|
$
|
1,123
|
1,123
|
$
|
8,710
|
|||||||||||||
Non-compete agreements
|
14
|
19
|
12
|
-
|
-
|
-
|
||||||||||||||||||
Licenses and permits
|
80
|
106
|
106
|
106
|
106
|
656
|
||||||||||||||||||
Developed technology
|
460
|
613
|
613
|
613
|
613
|
1,687
|
||||||||||||||||||
Total future amortization expense
|
$
|
1,397
|
$
|
1,861
|
$
|
1,854
|
$
|
1,842
|
$
|
1,842
|
$
|
11,053
|
Three Months Ended
March 31, 2017
|
Three Months Ended
March 31, 2016
|
|||||||||||||||||||||||
Per Share
|
Per Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$
|
1,487
|
24,240
|
$
|
0.06
|
$
|
7,224
|
24,484
|
$
|
0.30
|
||||||||||||||
Unvested restricted stock grant
|
321
|
282
|
||||||||||||||||||||||
Dilutive stock options outstanding
|
493
|
319
|
||||||||||||||||||||||
Diluted Net Income per Share:
|
||||||||||||||||||||||||
Net Income Attributable to Trecora Resources
|
$
|
1,487
|
25,054
|
$
|
0.06
|
$
|
7,224
|
25,085
|
$
|
0.29
|
Four Fiscal Quarter Ending
|
Maximum Consolidated Leverage Ratio
|
March 31, 2017
|
4.00 to 1.00
|
June 30, 2017
|
4.25 to 1.00
|
September 30, 2017
|
3.75 to 1.00
|
December 31, 2017
|
3.50 to 1.00
|
March 31, 2018 and each fiscal quarter thereafter
|
3.25 to 1.00
|
Four Fiscal Quarter Ending
|
Minimum Consolidated Fixed Charge Coverage Ratio
|
March 31, 2017
|
1.10 to 1.00
|
June 30, 2017
|
1.05 to 1.00
|
September 30, 2017
|
1.05 to 1.00
|
December 31, 2017
|
1.10 to 1.00
|
March 31, 2018 and each fiscal quarter thereafter
|
1.25 to 1.00
|
Level
|
Consolidated Leverage Ratio
|
LIBOR Margin
|
Base Rate Margin
|
Commitment Fee
|
1
|
Less than 1.50 to 1.00
|
2.00%
|
1.00%
|
0.25%
|
2
|
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
|
2.25%
|
1.25%
|
0.25%
|
3
|
Greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00
|
2.50%
|
1.50%
|
0.375%
|
4
|
Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
|
2.75%
|
1.75%
|
0.375%
|
5
|
Greater than or equal to 3.50 to 1.00
|
3.00%
|
2.00%
|
0.375%
|
Fair Value Measurements Using
|
||||||||||||||||
March 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$
|
34
|
-
|
$
|
34
|
-
|
Fair Value Measurements Using
|
||||||||||||||||
December 31, 2016
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Interest rate swap
|
$
|
58
|
-
|
$
|
58
|
-
|
March 31, 2017
|
December 31, 2016
|
|||||||
Fair value of interest rate swap - liability
|
$
|
34
|
$
|
58
|
Shares of Restricted
Stock
|
Weighted Average Grant Date Price per
Share
|
|||||||
Outstanding at January 1, 2017
|
350,891
|
$
|
11.44
|
|||||
Granted
|
-
|
-
|
||||||
Forfeited
|
(21,201
|
)
|
$
|
10.52
|
||||
Vested
|
(59,064
|
)
|
$
|
12.12
|
||||
Outstanding at March 31, 2017
|
270,626
|
$
|
11.37
|
Number of
Stock
Options & Warrants
|
Weighted Average Exercise Price per
Share
|
Weighted
Average
Remaining
Contractual
Life
|
||||||||||
Outstanding at January 1, 2017
|
1,348,437
|
$
|
7.79
|
|||||||||
Granted
|
--
|
--
|
||||||||||
Exercised
|
(4,350
|
)
|
3.90
|
|||||||||
Expired
|
--
|
--
|
||||||||||
Cancelled
|
--
|
--
|
||||||||||
Forfeited
|
--
|
--
|
||||||||||
Outstanding at March 31, 2017
|
1,344,087
|
$
|
7.80
|
4.9
|
||||||||
Exercisable at March 31, 2017
|
976,587
|
$
|
8.15
|
5.2
|
Three Months Ended March 31, 2017
|
||||||||||||||||
Petrochemical
|
Specialty Wax
|
Corporate
|
Consolidated
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Product sales
|
$
|
44,391
|
$
|
6,508
|
$
|
-
|
$
|
50,899
|
||||||||
Processing fees
|
1,488
|
3,155
|
-
|
4,643
|
||||||||||||
Net revenues
|
45,879
|
9,663
|
-
|
55,542
|
||||||||||||
Operating profit (loss) before depreciation and amortization
|
8,214
|
745
|
(2,179
|
)
|
6,780
|
|||||||||||
Operating profit (loss)
|
6,658
|
(271
|
)
|
(2,195
|
)
|
4,192
|
||||||||||
Profit (loss) before taxes
|
6,005
|
(290
|
)
|
(3,167
|
)
|
2,548
|
||||||||||
Depreciation and amortization
|
1,556
|
1,016
|
16
|
2,588
|
||||||||||||
Capital expenditures
|
8,756
|
5,125
|
-
|
13,881
|
Three Months Ended March 31, 2016
|
||||||||||||||||
Petrochemical
|
Specialty Wax
|
Corporate
|
Consolidated
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Product sales
|
$
|
42,624
|
$
|
4,557
|
$
|
-
|
$
|
47,181
|
||||||||
Processing fees
|
1,441
|
3,578
|
-
|
5,019
|
||||||||||||
Net revenues
|
44,065
|
8,135
|
-
|
52,200
|
||||||||||||
Operating profit (loss) before depreciation and amortization
|
8,412
|
2,062
|
(1,933
|
)
|
8,541
|
|||||||||||
Operating profit (loss)
|
7,075
|
1,011
|
(1,941
|
)
|
6,145
|
|||||||||||
Profit (loss) before taxes
|
6,449
|
1,006
|
3,416
|
10,871
|
||||||||||||
Depreciation and amortization
|
1,337
|
1,051
|
8
|
2,396
|
||||||||||||
Capital expenditures
|
5,662
|
1,940
|
-
|
7,602
|
March 31, 2017
|
||||||||||||||||||||
Petrochemical
|
Specialty Wax
|
Corporate
|
Eliminations
|
Consolidated
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Goodwill and intangible assets, net
|
$
|
-
|
$
|
44,002
|
$
|
-
|
$
|
-
|
$
|
44,002
|
||||||||||
Total assets
|
228,280
|
116,765
|
99,018
|
(148,510
|
)
|
295,553
|
Year Ended December 31, 2016
|
||||||||||||||||||||
Petrochemical
|
Specialty Wax
|
Corporate
|
Eliminations
|
Consolidated
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Goodwill and intangible assets, net
|
$
|
-
|
$
|
44,467
|
$
|
-
|
$
|
-
|
$
|
44,467
|
||||||||||
Total assets
|
219,376
|
113,676
|
106,428
|
(148,996
|
)
|
290,484
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
( thousands of dollars)
|
||||||||
Sales
|
$
|
2,256
|
$
|
8,992
|
||||
Gross profit (loss)
|
(1,307
|
)
|
191
|
|||||
General, administrative and other expenses
|
2,589
|
2,147
|
||||||
Loss from operations
|
$
|
(3,896
|
)
|
$
|
(1,956
|
)
|
||
Gain on settlement with former operator
|
-
|
16,225
|
||||||
Net income (loss)
|
$
|
(3,896
|
)
|
$
|
14,269
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
( thousands of dollars)
|
||||||||
Net income (loss) before depreciation and amortization
|
$
|
(3,369
|
)
|
$
|
16,978
|
March 31,
|
December 31,
|
|||||||
2017
|
2016
|
|||||||
(Thousands of Dollars)
|
||||||||
Current assets
|
$
|
17,333
|
$
|
22,860
|
||||
Noncurrent assets
|
257,715
|
251,741
|
||||||
Total assets
|
$
|
275,048
|
$
|
274,601
|
||||
Current liabilities
|
$
|
10,326
|
$
|
8,005
|
||||
Long term liabilities
|
84,567
|
82,546
|
||||||
Shareholders' equity
|
180,155
|
184,050
|
||||||
$
|
275,048
|
$
|
274,601
|
Three months ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
AMAK Net income (loss)
|
$
|
(3,896
|
)
|
$
|
14,269
|
|||
Company's share of income (loss) reported by AMAK
|
$
|
(1,303
|
)
|
$
|
5,030
|
|||
Amortization of difference between Company's investment in AMAK and Company's share of net assets of AMAK
|
337
|
337
|
||||||
Equity in earnings (loss) of AMAK
|
$
|
(966
|
)
|
$
|
5,367
|
Three months ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Net Income
|
$
|
1,487
|
$
|
7,224
|
||||
Interest expense
|
636
|
628
|
||||||
Depreciation and amortization
|
2,588
|
2,396
|
||||||
Income tax expense
|
1,061
|
3,647
|
||||||
EBITDA
|
$
|
5,772
|
$
|
13,895
|
||||
Share-based compensation
|
633
|
647
|
||||||
Equity in (earnings) losses of AMAK
|
966
|
(5,367
|
)
|
|||||
Adjusted EBITDA
|
$
|
7,371
|
$
|
9,175
|
||||
Net Income
|
$
|
1,487
|
$
|
7,224
|
||||
Equity in (earnings) losses of AMAK
|
$
|
966
|
$
|
(5,367
|
)
|
|||
Taxes at statutory rate of 35%
|
338
|
(1,878
|
)
|
|||||
Tax effected equity in (earnings) losses
|
628
|
(3,489
|
)
|
|||||
Adjusted Net Income
|
$
|
2,115
|
$
|
3,735
|
March 31, 2017
|
December 31, 2016
|
March 31, 2016
|
||||||||||
Days sales outstanding in accounts receivable
|
39.3
|
38.2
|
32.7
|
|||||||||
Days sales outstanding in inventory
|
24.2
|
30.2
|
30.2
|
|||||||||
Days sales outstanding in accounts payable
|
21.2
|
22.9
|
12.3
|
|||||||||
Days of working capital
|
42.4
|
45.5
|
50.6
|
2017
|
2016
|
|||||||
Net cash provided by (used in)
|
(thousands of dollars)
|
|||||||
Operating activities
|
$
|
8,730
|
$
|
5,203
|
||||
Investing activities
|
(13,907
|
)
|
(7,602
|
)
|
||||
Financing activities
|
833
|
(2,072
|
)
|
|||||
Decrease in cash and equivalents
|
$
|
(4,344
|
)
|
$
|
(4,471
|
)
|
||
Cash and cash equivalents
|
$
|
4,045
|
$
|
14,152
|
·
|
Inventory decreased approximately $2.9 million
(due to an effort to decrease inventory on hand at both facilities)
as compared to an increase of approximately $1.5 million
in 2016 (due to a decision to increase inventory because of planned outages);
|
·
|
Other liabilities increased approximately $0.1 million (due to an increase in deferred wax sales revenue) as compared to a decrease of approximately $1.2 million in 2016 (due to the recognition of revenue associated with a custom processing customer); and
|
·
|
Accounts payable and accrued liabilities increased $1.0 million (due to increased construction expenditures) as compared to a decrease of approximately $1.4 million in 2016 (due to a reduction in the accrual for feedstock).
|
·
|
Trade receivables increased approximately $2.1 million (due to sales to foreign customers with longer payment terms) as compared to a decrease of approximately $0.7 million (due to a decrease in the average selling price); and
|
·
|
Income tax receivable increased $0.2 million (due to an adjustment to deferred taxes related to the change to the LIFO method for inventory valuation) as compared to a decrease of approximately $2.2 million in 2016 (due to the overpayment being applied to 2016 estimated taxes).
|
2017
|
2016
|
Change
|
%Change
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Petrochemical Product Sales
|
$
|
44,391
|
$
|
42,624
|
$
|
1,767
|
4.1
|
%
|
||||||||
Processing
|
1,488
|
1,441
|
47
|
3.3
|
%
|
|||||||||||
Gross Revenue
|
$
|
45,879
|
$
|
44,065
|
$
|
1,814
|
4.1
|
%
|
||||||||
Volume of Sales (gallons)
|
||||||||||||||||
Petrochemical Products
|
17,324
|
20,353
|
(3,029
|
)
|
(14.9
|
%)
|
||||||||||
Prime Product Sales
|
13,892
|
14,616
|
(724
|
)
|
(5.0
|
%)
|
||||||||||
Cost of Sales
|
$
|
36,358
|
$
|
34,495
|
$
|
1,863
|
5.4
|
%
|
||||||||
Gross Margin
|
20.8
|
%
|
21.7
|
%
|
(1.0
|
%)
|
||||||||||
Total Operating Expense**
|
12,969
|
13,202
|
(233
|
)
|
(1.8
|
%)
|
||||||||||
Natural Gas Expense**
|
1,084
|
772
|
312
|
40.4
|
%
|
|||||||||||
Operating Labor Costs**
|
3,243
|
3,821
|
(578
|
)
|
(15.1
|
%)
|
||||||||||
Transportation Costs**
|
5,696
|
5,473
|
223
|
4.1
|
%
|
|||||||||||
General & Administrative Expense
|
2,696
|
2,346
|
350
|
14.9
|
%
|
|||||||||||
Depreciation and Amortization*
|
1,556
|
1,337
|
219
|
16.4
|
%
|
|||||||||||
Capital Expenditures
|
$
|
8,756
|
$
|
5,662
|
$
|
3,094
|
54.6
|
%
|
2017
|
2016
|
Change
|
%Change
|
|||||||||||||
(thousands of dollars)
|
||||||||||||||||
Product Sales
|
$
|
6,508
|
$
|
4,557
|
$
|
1,951
|
42.8
|
%
|
||||||||
Processing
|
3,155
|
3,578
|
(423
|
)
|
(11.8
|
%)
|
||||||||||
Gross Revenue
|
$
|
9,663
|
$
|
8,135
|
$
|
1,528
|
18.8
|
%
|
||||||||
Volume of wax sales (thousand pounds)
|
10,664
|
7,076
|
3,588
|
50.7
|
%
|
|||||||||||
Cost of Sales
|
$
|
8,566
|
$
|
5,934
|
$
|
2,633
|
44.4
|
%
|
||||||||
Gross Margin
|
11.4
|
%
|
27.1
|
%
|
(15.7
|
%)
|
||||||||||
General & Administrative Expense
|
1,347
|
1,169
|
178
|
15.2
|
%
|
|||||||||||
Depreciation and Amortization*
|
1,016
|
1,051
|
(35
|
)
|
(3.3
|
%)
|
||||||||||
Capital Expenditures
|
$
|
5,125
|
$
|
1,940
|
$
|
3,185
|
164.2
|
%
|
2017
|
2016
|
Change
|
%Change
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General & Administrative Expense
|
$
|
2,178
|
$
|
1,934
|
$
|
244
|
12.6
|
%
|
||||||||
Equity in earnings (losses) of AMAK
|
(966
|
)
|
5,367
|
(6,333
|
)
|
(118.0
|
%)
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
(Thousands of Dollars)
|
||||||||
Sales
|
$
|
2,256
|
$
|
8,992
|
||||
Gross profit (loss)
|
(1,307
|
)
|
191
|
|||||
General, administrative and other
|
2,589
|
2,147
|
||||||
Loss from operations
|
(3,896
|
)
|
(1,956
|
)
|
||||
Gain on settlement with former operator
|
-
|
16,225
|
||||||
Net income (loss)
|
$
|
(3,896
|
)
|
$
|
14,269
|
Payments due by period
|
||||||||||||||||||||
Total
|
Less than
1 year |
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||||||||
Operating Lease Obligations
|
$
|
20,641
|
$
|
3,553
|
$
|
6,702
|
$
|
5,988
|
$
|
4,398
|
||||||||||
Purchase Obligations
|
2,309
|
2,309
|
-
|
-
|
-
|
|||||||||||||||
Long-Term Debt Obligations
|
84,833
|
8,333
|
76,500
|
-
|
-
|
|||||||||||||||
Total
|
$
|
107,783
|
$
|
14,195
|
$
|
83,202
|
$
|
5,988
|
$
|
4,398
|
(a)
|
Evaluation of disclosure controls and procedures
. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) and determined that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to the material weakness in internal control over financial reporting as described below.
|
(b)
|
Changes in internal control
. Other than the efforts discussed immediately above in "Remediation of Material Weakness in Internal Control over Financial Reporting", there was no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
|
Exhibit
Number
|
Description
|
3(a)
|
-
Certificate of Incorporation of the Company as amended through the Certificate of Amendment filed with the Delaware Secretary of State on May 22, 2014 (incorporated by reference to Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (file No. 001-33926))
|
3(b)
|
-
Restated Bylaws of the Company dated August 1, 2014 (incorporated by reference to Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (file No. 001-33926))
|
10(a)*
|
-
Retirement Awards Program dated January 15, 2008 between Arabian American Development Company and Hatem El Khalidi (incorporated by reference to Exhibit 10(h) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (file No. 001-33926))
|
10(b)*
|
-
Arabian American Development Company Stock and Incentive Plan adopted April 3, 2012 (incorporated by reference to Exhibit A to the Company's Form DEF 14A filed April 25, 2012 (file No. 001-33926))
|
10(c)*
|
-
Employment Contract dated October 1, 2014, between Trecora Resources and Peter M. Loggenberg, Ph.D.
|
Exhibit
Number
|
Description
|
10(d)*
|
-
Severance Agreement and Covenant not to Compete, Solicit and Disclose dated October 1, 2014, between Trecora Resources and Subsidiaries and Peter M. Loggenberg, Ph.D.
|
10(e)
|
-
Articles of Association of Al Masane Al Kobra Mining Company, dated July 10, 2006 (incorporated by reference to Exhibit 10(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
|
10(f)
|
-
Bylaws of Al Masane Al Kobra Mining Company (incorporated by reference to Exhibit 10(n) to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
|
10(g)
|
-
Letter Agreement dated August 5, 2009, between Arabian American Development Company and the other Al Masane Al Kobra Company shareholders named therein (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on August 27, 2009 (file No. 001-33926))
|
10(h)
|
-
Limited Guarantee dated October 24, 2010, between Arabian American Development Company and the Saudi Industrial Development Fund (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on October 27, 2010 (file No. 001-33926))
|
10(i)
|
-
Amended and Restated Credit Agreement dated October 1, 2014, between Texas Oil & Chemical Co. II, Inc. and certain subsidiaries and Bank of America, N.A. as administrative agent (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on October 3, 2014 (file No. 001-33926))
|
10(j)
|
-
Stock Purchase Agreement dated September 19, 2014, between Trecora Resources, Texas Oil & Chemical Co. II, Inc., SSI Chusei, Inc. and Schumann/Steier Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on September 25, 2014 (file No. 001-33926))
|
10(k)
|
-
Second Amendment to Amended and Restated Credit Agreement dated as of March 28, 2017, among Texas Oil & Chemical Co. II, Inc. and certain subsidiaries and Bank of America, N.A. as administrative agent (incorporated by reference to Exhibit 99.2 to the Company's Form 8-K filed on March 30, 2017 (file No. 001-33926))
|
18.1
|
-
Preferability Letter
|
31.1
|
-
Certification of Chief Executive Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
|
31.2
|
-
Certification of Chief Financial Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
|
32.1
|
-
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
-
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
-
XBRL Instance Document
|
101.SCH
|
-
XBRL Taxonomy Schema Document
|
101.CAL
|
-
XBRL Taxonomy Calculation Linkbase Document
|
Exhibit
Number
|
Description
|
101.LAB
|
-
XBRL Taxonomy Label Linkbase Document
|
101.PRE
|
-
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
-
XBRL Taxonomy Extension Definition Linkbase Document
|
a.
|
Salary
. Loggenberg will be paid a base salary of THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($350,000.00) per year, payable in installments according to the Company's regular payroll schedule. The base salary shall be adjusted in January following each year of employment at the discretion of the board of directors, with minimum salary increase on an annual basis determined by the same formula and factors the Company and Trecora Resources use for other upper management positions.
|
b.
|
Signing Bonus
. Loggenberg shall receive a bonus of THIRTY FIVE THOUSAND AND NO/100 DOLLARS ($35,000.00) payable upon signing this Agreement.
|
c.
|
Stock Grant
. Loggenberg shall receive a grant of SEVEN THOUSAND (7,000) restricted common shares of Trecora Resources upon the signing of this Agreement.
|
a.
|
Medical and Dental Insurance
. Company will either reimburse, if Loggenberg obtains his own coverage, or provide health insurance, dental insurance, medical and hospital treatment benefits for Loggenberg with such medical and hospital treatment program as made available to other similarly situated employees, and other type of benefits as the Company may from time to time have in effect for its other employees and their families. The Company currently covers 80% of the cost of such coverage with the employee responsible for the remainder. Alternatively, Loggenberg may purchase his own insurance, and the Company will contribute the amount it would have contributed under the Company's regular health insurance program.
|
b.
|
Pension and Profit Sharing Plans
. Loggenberg shall be entitled to participate in the 401K plan and quarterly profit sharing plan adopted by the Company for the benefit of its officers and/or regular employees.
|
c.
|
Long-Term Incentive Compensation Plans
. Loggenberg shall be entitled to participate in any long-term incentive compensation plan adopted by the Company for the benefit of officers and/or regular employees.
|
d.
|
Annual Cash Incentive Plan
. Loggenberg shall be entitled to participate in the annual cash incentive plan adopted by the Company for the benefit of officers and/or regular employees. The target Bonus for Loggenberg will be initially set at 60% for purposes of the calculation with the Maximum Bonus as % of Base Salary being set at 120% of Base Salary.
|
e.
|
Automobile
. Company will provide to Loggenberg the use of an automobile of Loggenberg's choice at a gross purchase price not to exceed $50,000. Company agrees to replace the automobile with a new one at Loggenberg's request no more often than once every five years or 85.000 miles, whichever comes first. Company will pay all automobile operating expenses incurred by Loggenberg in the performance of Loggenberg's Company duties. Company will procure and maintain in force an automobile liability policy for the automobile with coverage, including Loggenberg, in the minimum amount of $1,000,000 combined single limit on bodily injury and property damage.
|
f.
|
Expense Reimbursement
. Loggenberg shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment in accordance with normal Company policy, incurred by Loggenberg in the performance of Loggenberg's duties. Loggenberg will maintain records and written receipts as required by Company policy and reasonably requested by the board of directors to substantiate such expenses.
|
g.
|
Vacation
. Loggenberg shall be entitled to 20 days of paid vacation each calendar year in accordance with normal Company policy.
|
h.
|
Holidays
. Loggenberg will be entitled paid holidays each calendar year in accordance with normal Company policy.
|
i.
|
Sick Leave
. Loggenberg shall be entitled to sick leave and emergency leave according to the regular policies and procedures of Company.
|
a.
|
Loggenberg's embezzling any funds or property of the Company or committing any other dishonest act towards the Company;
|
b.
|
Company's determination that Loggenberg was under the influence of alcohol or illegal drugs, as defined by the Company's employee handbook, during working hours;
|
1.1 |
Loggenberg recognizes and acknowledges the following:
|
a.
|
That TREC's decision to make cash severance payments to Loggenberg on dismissal or termination of employment other than for good cause ("Severance Payments") is induced primarily because of the covenants and assurances made by Loggenberg in this Agreement, and, but for this Agreement, TREC would not have agreed to make the Severance Payments;
|
b.
|
That Loggenberg is receiving substantial compensation on account of, and as consideration for, Loggenberg covenants and assurances in this Agreement; such consideration includes, but is not limited to, the Severance Payments, providing Loggenberg access to confidential and proprietary information as defined in this Article I, and providing Loggenberg industry specific training;
|
c.
|
That the Companies have devoted a considerable amount of time, effort, and expense to establishing a customer base and to hiring and training the Companies' employees and agents, that such customer base and employees and agents comprise valuable assets of the Companies, and that, as a result of the employment relationship with the Companies, Loggenberg will have access to this customer and employee and agent base;
|
d.
|
That Loggenberg's covenants and assurances are necessary to ensure the protection of the Companies' confidential and proprietary business information and the continuation of the Business;
|
e.
|
That Loggenberg and the Companies carefully considered the necessity to protect the Companies against Loggenberg's or Companies violation of the covenants and assurances in this Agreement, and the nature and scope of such protection;
|
f.
|
That irreparable harm and damage will be done to the Companies or Loggenberg in the event that Loggenberg or Company violates this Agreement;
|
g.
|
That the duration and scope applicable to the covenants and assurances described in this Agreement are fair, reasonable, and necessary, that adequate compensation has been received by Loggenberg under this Agreement for such obligations, and that these obligations will not prevent Loggenberg from earning a livelihood;
|
h.
|
That, in the event that any part of the covenants set forth in this Agreement shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or enforceable parts had not been included therein. If any court of competent jurisdiction determines, for any reason, that the restrictions in this Agreement are not reasonable or enforceable or that the consideration is inadequate, such restrictions shall be interpreted, modified, or rewritten to include as much of the duration and scope identified in this Agreement as will render such restrictions valid and enforceable; Provided that these covenants do not violate any Texas State or Federal law.
|
i.
|
That, for purposes of this Agreement, "
Proprietary or Confidential Information
" includes the following, without limitation: this Agreement, any and all secrets or confidential technology, proprietary information, customer lists, employee and agent information, trade secrets, business records, marketing programs and strategies, computer software, personnel information, business plans and related plans, training and instruction in the Companies' methodology or business systems, specialized requirements of the Companies' customers, memorandums, or other writings, in the possession or control of the Companies, not generally known or available to members of the general public, including any copies, worksheets, or extracts from any of the above, provided, however that "
Proprietary or Confidential Information
" does not include (a) information received by Loggenberg from a source other than the Companies or their advisors, provided that such source is legally in possession of the same and not under an obligation of confidentiality with respect thereto, (b) any information which Loggenberg can document was in his possession prior to his becoming an employee of TCI or SSI Chusei, Inc., a Texas corporation, and (c) information which is now or hereafter becomes generally available to the public other than as a result of a disclosure by the Companies.
|
j.
|
That, for purposes of this Agreement, "
Products
" means low to medium viscosity polyethylene wax, as well as any other goods, materials or services that the Companies may subsequently research, develop, manufacture or market during one or more of the Companies' employment of Loggenberg.
|
a.
|
Own, manage, operate, control, participate in the management or control of, be employed by, lend Loggenberg's name to, or maintain or continue any interest whatsoever in any enterprise which conducts or will conduct business in the development, manufacture, sale or marketing of Products or compete with the Companies in any respect with business conducted by the company during the employment of Loggenberg;
|
b.
|
Request or advise any supplier, customer, or other person or entity that has or will have dealings with the Companies, to withdraw, curtail, or cancel such dealings with the Companies;
|
c.
|
Disclose to any person or entity the name of any client, customer, account, supplier, person, firm, partnership, association, corporation, or business organization, entity or enterprise that has, or has the potential to have, dealings with the Companies, except where such information is public knowledge or as required by law.
|
a.
|
Solicit clients, customers, or accounts of the Companies, or request or advise any previous or present client, customer, or account of the Companies to withdraw, curtail, or cancel such client's, customer's or account's business with the Companies;
|
b.
|
Solicit any employee, agent, or affiliate of the Companies to terminate his or her employment, agency, or affiliation with the Companies;
|
c.
|
Solicit to hire any employee, agent, or affiliate of the Companies.
|
a.
|
Use any Proprietary or Confidential Information in competition with the Companies;
|
b.
|
Disclose any Proprietary or Confidential Information, or permit such information to be disclosed, to any person or entity, except where such information is public knowledge or as required by law;
|
c.
|
Take, reproduce, or retain, without prior authorization from the Companies, originals, copies, worksheets, or extractions of any Proprietary or Confidential Information as such information is, and will remain, the property of the Companies.
|
a.
|
The commission of any crime by Loggenberg involving moral turpitude;
|
b.
|
Loggenberg's embezzling any funds or property of the Companies or committing any other dishonest act towards the Companies;
|
c.
|
TREC's determination that Loggenberg was under the influence of alcohol or illegal drugs, as defined by any of the Companies' employee handbooks, during working hours.
|
1. |
I have reviewed this quarterly report on Form 10-Q of Trecora Resources;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting.
|
5. |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered public accounting firm and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1. |
I have reviewed this quarterly report on Form 10-Q of Trecora Resources;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting.
|
5. |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered public accounting firm and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|