DELAWARE
|
75-1256622
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
1650 Hwy 6 South, Suite 190
|
77478
|
Sugar Land, Texas
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(Zip code)
|
(Address of principal executive offices)
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.10 per share
|
TREC
|
New York Stock Exchange
|
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March 31,
2019 (Unaudited) |
|
December 31,
2018 |
||||
ASSETS
|
|
(thousands of dollars, except par value)
|
||||||
Current Assets
|
|
|
|
|
||||
Cash
|
|
$
|
6,833
|
|
|
$
|
6,735
|
|
Trade receivables, net
|
|
25,737
|
|
|
27,112
|
|
||
Inventories
|
|
16,922
|
|
|
16,539
|
|
||
Prepaid expenses and other assets
|
|
4,535
|
|
|
4,664
|
|
||
Taxes receivable
|
|
182
|
|
|
182
|
|
||
Total current assets
|
|
54,209
|
|
|
55,232
|
|
||
|
|
|
|
|
||||
Plant, pipeline and equipment
, net
|
|
192,855
|
|
|
194,657
|
|
||
|
|
|
|
|
||||
Goodwill
|
|
21,798
|
|
|
21,798
|
|
||
Intangible assets,
net
|
|
18,482
|
|
|
18,947
|
|
||
Investment in AMAK
|
|
37,357
|
|
|
38,746
|
|
||
Lease right of use assets,
net
|
|
16,137
|
|
|
—
|
|
||
Mineral properties in the United States
|
|
558
|
|
|
588
|
|
||
|
|
|
|
|
||||
TOTAL ASSETS
|
|
$
|
341,396
|
|
|
$
|
329,968
|
|
LIABILITIES
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
11,551
|
|
|
$
|
19,106
|
|
Accrued liabilities
|
|
5,053
|
|
|
5,439
|
|
||
Current portion of long-term debt
|
|
4,194
|
|
|
4,194
|
|
||
Current portion of lease liabilities
|
|
3,568
|
|
|
—
|
|
||
Current portion of other liabilities
|
|
890
|
|
|
752
|
|
||
Total current liabilities
|
|
25,256
|
|
|
29,491
|
|
||
|
|
|
|
|
||||
Long-term debt
, net of current portion
|
|
99,240
|
|
|
98,288
|
|
||
Lease liabilities,
net of current portion
|
|
12,566
|
|
|
—
|
|
||
Other liabilities,
net of current portion
|
|
1,108
|
|
|
1,352
|
|
||
Deferred income taxes
|
|
16,037
|
|
|
15,676
|
|
||
Total liabilities
|
|
154,207
|
|
|
144,807
|
|
||
|
|
|
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|
||||
EQUITY
|
|
|
|
|
||||
Common stock
‑authorized 40 million shares of $0.10 par value; issued 24.7 million and 24.6 million in 2019 and 2018 and outstanding 24.7 million and 24.6 million shares in 2019 and 2018, respectively
|
|
2,469
|
|
|
2,463
|
|
||
Additional paid-in capital
|
|
58,565
|
|
|
58,294
|
|
||
Common stock in treasury, at cost
|
|
(8
|
)
|
|
(8
|
)
|
||
Retained earnings
|
|
125,874
|
|
|
124,123
|
|
||
Total Trecora Resources Stockholders' Equity
|
|
186,900
|
|
|
184,872
|
|
||
Noncontrolling Interest
|
|
289
|
|
|
289
|
|
||
Total equity
|
|
187,189
|
|
|
185,161
|
|
||
|
|
|
|
|
||||
TOTAL LIABILITIES AND EQUITY
|
|
$
|
341,396
|
|
|
$
|
329,968
|
|
|
|
THREE MONTHS ENDED
MARCH 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(thousands of dollars, except per share amounts)
|
||||||
REVENUES
|
|
|
|
|
||||
Specialty Petrochemical and Product Sales
|
|
$
|
61,493
|
|
|
$
|
66,699
|
|
Processing Fees
|
|
3,662
|
|
|
5,042
|
|
||
|
|
65,155
|
|
|
71,741
|
|
||
|
|
|
|
|
||||
OPERATING COSTS AND EXPENSES
|
|
|
|
|
||||
Cost of Sales and Processing
|
|
|
|
|
||||
(including depreciation and amortization of $4,229 and $2,830, respectively)
|
|
55,082
|
|
|
61,601
|
|
||
|
|
|
|
|
||||
GROSS PROFIT
|
|
10,073
|
|
|
10,140
|
|
||
|
|
|
|
|
||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
|
|
||||
General and Administrative
|
|
6,050
|
|
|
6,335
|
|
||
Depreciation
|
|
213
|
|
|
196
|
|
||
|
|
6,263
|
|
|
6,531
|
|
||
|
|
|
|
|
||||
OPERATING INCOME
|
|
3,810
|
|
|
3,609
|
|
||
|
|
|
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
||||
Interest Income
|
|
5
|
|
|
7
|
|
||
Interest Expense
|
|
(1,499
|
)
|
|
(878
|
)
|
||
Equity in Earnings (Losses) of AMAK
|
|
(59
|
)
|
|
230
|
|
||
Miscellaneous Expense
|
|
(28
|
)
|
|
(26
|
)
|
||
|
|
(1,581
|
)
|
|
(667
|
)
|
||
|
|
|
|
|
||||
INCOME BEFORE INCOME TAXES
|
|
2,229
|
|
|
2,942
|
|
||
|
|
|
|
|
||||
INCOME TAX EXPENSE
|
|
478
|
|
|
590
|
|
||
|
|
|
|
|
||||
NET INCOME
|
|
1,751
|
|
|
2,352
|
|
||
|
|
|
|
|
||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
||||
NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES
|
|
$
|
1,751
|
|
|
$
|
2,352
|
|
|
|
|
|
|
||||
Basic Earnings per Common Share
|
|
|
|
|
||||
Net Income Attributable to Trecora Resources (dollars)
|
|
$
|
0.07
|
|
|
$
|
0.10
|
|
|
|
|
|
|
||||
Basic Weighted Average Number of Common Shares Outstanding
|
|
24,653
|
|
|
24,343
|
|
||
|
|
|
|
|
||||
Diluted Earnings per Common Share
|
|
|
|
|
||||
Net Income Attributable to Trecora Resources (dollars)
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
|
|
|
|
||||
Diluted Weighted Average Number of Common Shares Outstanding
|
|
25,027
|
|
|
25,231
|
|
|
|
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, 2019
|
|
24,626
|
|
|
$
|
2,463
|
|
|
$
|
58,294
|
|
|
$
|
(8
|
)
|
|
$
|
124,123
|
|
|
$
|
184,872
|
|
|
$
|
289
|
|
|
$
|
185,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Restricted Stock Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Issued to Directors
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|||||||
Issued to Employees
|
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
|||||||
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Issued to Directors
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issued to Employees
|
|
61
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||||
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,751
|
|
|
1,751
|
|
|
—
|
|
|
1,751
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
March 31, 2019
|
|
24,687
|
|
|
$
|
2,469
|
|
|
$
|
58,565
|
|
|
$
|
(8
|
)
|
|
$
|
125,874
|
|
|
$
|
186,900
|
|
|
$
|
289
|
|
|
$
|
187,189
|
|
|
|
THREE MONTHS ENDED
MARCH 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(thousands of dollars)
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
||||
Net Income
|
|
$
|
1,751
|
|
|
$
|
2,352
|
|
Adjustments to Reconcile Net Income
|
|
|
|
|
||||
To Net Cash Provided by Operating Activities:
|
|
|
|
|
||||
Depreciation and Amortization
|
|
3,977
|
|
|
2,561
|
|
||
Amortization of Intangible Assets
|
|
465
|
|
|
465
|
|
||
Stock-based Compensation
|
|
213
|
|
|
592
|
|
||
Deferred Income Taxes
|
|
361
|
|
|
428
|
|
||
Postretirement Obligation
|
|
(5
|
)
|
|
(3
|
)
|
||
Equity in Losses (Earnings) of AMAK
|
|
59
|
|
|
(230
|
)
|
||
Bad Debt Expense
|
|
—
|
|
|
128
|
|
||
Amortization of Loan Fees
|
|
45
|
|
|
93
|
|
||
Changes in Operating Assets and Liabilities:
|
|
|
|
|
||||
Decrease (Increase) in Trade Receivables
|
|
1,375
|
|
|
(1,770
|
)
|
||
Decrease (Increase) in Insurance Receivables
|
|
—
|
|
|
(742
|
)
|
||
Decrease in Taxes Receivable
|
|
—
|
|
|
102
|
|
||
(Increase) Decrease in Inventories
|
|
(383
|
)
|
|
2,759
|
|
||
Increase in Prepaid Expenses and Other Assets
|
|
(227
|
)
|
|
(803
|
)
|
||
Decrease in Accounts Payable and Accrued Liabilities
|
|
(6,773
|
)
|
|
(3,190
|
)
|
||
Decrease in Other Liabilities
|
|
(34
|
)
|
|
(7
|
)
|
||
Net Cash Provided by Operating Activities
|
|
824
|
|
|
2,735
|
|
||
|
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
||||
Additions to Plant, Pipeline and Equipment
|
|
(1,887
|
)
|
|
(11,028
|
)
|
||
Proceeds from PEVM
|
|
30
|
|
|
—
|
|
||
Advances to AMAK, net
|
|
—
|
|
|
(44
|
)
|
||
Proceeds from AMAK Share Repurchase
|
|
440
|
|
|
—
|
|
||
Net Cash Used in Investing Activities
|
|
(1,417
|
)
|
|
(11,072
|
)
|
||
|
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
||||
Net Cash Paid Related to Stock-Based Compensation
|
|
(215
|
)
|
|
(40
|
)
|
||
Addition to Long-Term Debt
|
|
2,000
|
|
|
10,000
|
|
||
Repayment of Long-Term Debt
|
|
(1,094
|
)
|
|
(2,083
|
)
|
||
Net Cash Provided by Financing Activities
|
|
691
|
|
|
7,877
|
|
||
|
|
|
|
|
||||
NET INCREASE (DECREASE) IN CASH
|
|
98
|
|
|
(460
|
)
|
||
|
|
|
|
|
||||
CASH AT BEGINNING OF PERIOD
|
|
6,735
|
|
|
3,028
|
|
||
|
|
|
|
|
||||
CASH AT END OF PERIOD
|
|
$
|
6,833
|
|
|
$
|
2,568
|
|
(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. – Specialty petrochemical segment and parent of GSPL
|
(4)
|
GSPL – Gulf State Pipe Line Co, Inc. – Pipeline support for the specialty 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
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Trade receivables
|
|
$
|
26,189
|
|
|
$
|
27,564
|
|
Less allowance for doubtful accounts
|
|
(452
|
)
|
|
(452
|
)
|
||
Trade receivables, net
|
|
$
|
25,737
|
|
|
$
|
27,112
|
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Prepaid license
|
|
$
|
1,814
|
|
|
$
|
2,419
|
|
Spare parts
|
|
1,621
|
|
|
1,597
|
|
||
Other prepaid expenses and assets
|
|
1,100
|
|
|
648
|
|
||
Total
|
|
$
|
4,535
|
|
|
$
|
4,664
|
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Raw material
|
|
$
|
4,384
|
|
|
$
|
4,742
|
|
Work in process
|
|
137
|
|
|
173
|
|
||
Finished products
|
|
12,401
|
|
|
11,624
|
|
||
Total inventory
|
|
$
|
16,922
|
|
|
$
|
16,539
|
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Platinum catalyst metal
|
|
$
|
1,580
|
|
|
$
|
1,612
|
|
Catalyst
|
|
3,396
|
|
|
3,131
|
|
||
Land
|
|
5,428
|
|
|
5,428
|
|
||
Plant, pipeline and equipment
|
|
255,567
|
|
|
253,905
|
|
||
Construction in progress
|
|
4,473
|
|
|
4,343
|
|
||
Total plant, pipeline and equipment
|
|
$
|
270,444
|
|
|
$
|
268,419
|
|
Less accumulated depreciation
|
|
(77,589
|
)
|
|
(73,762
|
)
|
||
Net plant, pipeline and equipment
|
|
$
|
192,855
|
|
|
$
|
194,657
|
|
|
|
March 31, 2019
|
||||||||||
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Intangible assets subject to amortization (Definite-lived)
|
|
(thousands of dollars)
|
||||||||||
Customer relationships
|
|
$
|
16,852
|
|
|
$
|
(5,055
|
)
|
|
$
|
11,797
|
|
Non-compete agreements
|
|
94
|
|
|
(85
|
)
|
|
9
|
|
|||
Licenses and permits
|
|
1,471
|
|
|
(522
|
)
|
|
949
|
|
|||
Developed technology
|
|
6,131
|
|
|
(2,759
|
)
|
|
3,372
|
|
|||
|
|
24,548
|
|
|
(8,421
|
)
|
|
16,127
|
|
|||
Intangible assets not subject to amortization (Indefinite-lived)
|
|
|
|
|
|
|
||||||
Emissions Allowance
|
|
197
|
|
|
—
|
|
|
197
|
|
|||
Trade name
|
|
2,158
|
|
|
—
|
|
|
2,158
|
|
|||
Total
|
|
$
|
26,903
|
|
|
$
|
(8,421
|
)
|
|
$
|
18,482
|
|
|
|
December 31, 2018
|
||||||||||
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Intangible assets subject to amortization (Definite-lived)
|
|
(thousands of dollars)
|
||||||||||
Customer relationships
|
|
$
|
16,852
|
|
|
$
|
(4,775
|
)
|
|
$
|
12,077
|
|
Non-compete agreements
|
|
94
|
|
|
(80
|
)
|
|
14
|
|
|||
Licenses and permits
|
|
1,471
|
|
|
(495
|
)
|
|
976
|
|
|||
Developed technology
|
|
6,131
|
|
|
(2,606
|
)
|
|
3,525
|
|
|||
|
|
24,548
|
|
|
(7,956
|
)
|
|
16,592
|
|
|||
Intangible assets not subject to amortization (Indefinite-lived)
|
|
|
|
|
|
|
||||||
Emissions Allowance
|
|
197
|
|
|
—
|
|
|
197
|
|
|||
Trade name
|
|
2,158
|
|
|
—
|
|
|
2,158
|
|
|||
Total
|
|
$
|
26,903
|
|
|
$
|
(7,956
|
)
|
|
$
|
18,947
|
|
|
|
Total
|
|
|
Remainder of 2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
Thereafter
|
|
||||||||
|
|
(thousands of dollars)
|
||||||||||||||||||||||||||||||
Customer relationships
|
|
$
|
11,797
|
|
|
$
|
843
|
|
|
$
|
1,123
|
|
|
$
|
1,123
|
|
|
1,123
|
|
|
1,123
|
|
|
1,123
|
|
|
$
|
5,339
|
|
|||
Non-compete agreements
|
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Licenses and permits
|
|
949
|
|
|
79
|
|
|
106
|
|
|
101
|
|
|
86
|
|
|
86
|
|
|
86
|
|
|
405
|
|
||||||||
Developed technology
|
|
3,372
|
|
|
460
|
|
|
613
|
|
|
613
|
|
|
613
|
|
|
613
|
|
|
460
|
|
|
—
|
|
||||||||
Total future amortization expense
|
|
$
|
16,127
|
|
|
$
|
1,391
|
|
|
$
|
1,842
|
|
|
$
|
1,837
|
|
|
$
|
1,822
|
|
|
$
|
1,822
|
|
|
$
|
1,669
|
|
|
$
|
5,744
|
|
($ in thousands)
|
Classification on the Condensed Consolidated Balance Sheets
|
March 31, 2019
|
||
Assets:
|
|
|
||
Operating
|
Operating lease assets
|
$
|
16,137
|
|
Finance
|
Property, plant, and equipment
|
—
|
|
|
Total leased assets
|
|
$
|
16,137
|
|
|
|
|
||
Liabilities:
|
|
|
||
Current
|
|
|
||
Operating
|
Current portion of operating lease liabilities
|
$
|
3,568
|
|
Finance
|
Short-term debt and current portion of long-term debt
|
—
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease liabilities
|
12,566
|
|
|
Finance
|
Long-term debt
|
—
|
|
|
Total lease liabilities
|
|
$
|
16,134
|
|
($ in thousands)
|
Three Months Ended March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows used for operating leases
|
$
|
1,133
|
|
Operating cash flows used for finance leases
|
—
|
|
|
Financing cash flows used for finance leases
|
—
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
113
|
|
Finance leases
|
—
|
|
($ in thousands)
|
Operating Leases
|
Finance Leases
|
||||
2020
|
$
|
4,202
|
|
$
|
—
|
|
2021
|
3,624
|
|
—
|
|
||
2022
|
3,486
|
|
—
|
|
||
2023
|
3,006
|
|
—
|
|
||
2024
|
1,885
|
|
—
|
|
||
Thereafter
|
1,787
|
|
—
|
|
||
Total lease payments
|
$
|
17,990
|
|
$
|
—
|
|
Less: Interest
|
1,856
|
|
—
|
|
||
Total lease obligations
|
$
|
16,134
|
|
$
|
—
|
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Accrued state taxes
|
|
$
|
189
|
|
|
$
|
210
|
|
Accrued property taxes
|
|
837
|
|
|
—
|
|
||
Accrued payroll
|
|
1,006
|
|
|
936
|
|
||
Accrued interest
|
|
32
|
|
|
31
|
|
||
Accrued officer compensation
|
|
300
|
|
|
—
|
|
||
Other
|
|
2,689
|
|
|
2,239
|
|
||
Total
|
|
$
|
5,053
|
|
|
$
|
5,439
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||
|
(thousands of dollars)
|
||||
Revolving facility
|
20,000
|
|
|
18,000
|
|
Term loan facility
|
84,219
|
|
|
85,312
|
|
Loan fees
|
(785
|
)
|
|
(830
|
)
|
|
|
|
|
||
Total long-term debt
|
103,434
|
|
|
102,482
|
|
|
|
|
|
||
Less current portion including loan fees
|
4,194
|
|
|
4,194
|
|
|
|
|
|
||
Total long-term debt, less current portion including loan fees
|
99,240
|
|
|
98,288
|
|
|
Stock Options and Warrants
|
|
|
Weighted
Average
Exercise
Price
Per Share
|
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Intrinsic
Value
(in thousands)
|
|
|
Outstanding at January 1, 2019
|
745,830
|
|
|
10.33
|
|
|
|
|
|||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
||
Exercised
|
(85,000
|
)
|
|
7.71
|
|
|
|
|
|||
Forfeited
|
(108,830
|
)
|
|
8.80
|
|
|
|
|
|
||
Outstanding at March 31, 2019
|
552,000
|
|
|
11.04
|
|
3.8
|
|
$
|
—
|
|
|
Expected to vest
|
—
|
|
|
|
|
|
|
$
|
—
|
|
|
Exercisable at March 31, 2019
|
552,000
|
|
|
11.04
|
|
3.8
|
|
$
|
—
|
|
|
Shares of Restricted
Stock Units
|
|
|
Weighted Average Grant Date Price per Share
|
Outstanding at January 1, 2019
|
405,675
|
|
|
11.27
|
Granted
|
190,615
|
|
|
9.22
|
Forfeited
|
(58,268
|
)
|
|
12.15
|
Vested
|
(105,456
|
)
|
|
12.53
|
Outstanding at March 31, 2019
|
432,566
|
|
|
9.94
|
Expected to vest
|
432,566
|
|
|
|
|
|
Three Months Ended
March 31, 2019 |
|
Three Months Ended
March 31, 2018 |
||||||||||||||||||
|
|
Income
|
|
|
Shares
|
|
|
Per Share
Amount
|
|
|
Income
|
|
|
Shares
|
|
|
Per Share
Amount
|
|
||||
Basic Net Income per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income Attributable to Trecora Resources
|
|
$
|
1,751
|
|
|
24,653
|
|
|
$
|
0.07
|
|
|
$
|
2,352
|
|
|
24,343
|
|
|
$
|
0.10
|
|
Unvested restricted stock units
|
|
|
|
374
|
|
|
|
|
|
|
403
|
|
|
|
||||||||
Dilutive stock options outstanding
|
|
|
|
—
|
|
|
|
|
|
|
485
|
|
|
|
||||||||
Diluted Net Income per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income Attributable to Trecora Resources
|
|
$
|
1,751
|
|
|
25,027
|
|
|
$
|
0.07
|
|
|
$
|
2,352
|
|
|
25,231
|
|
|
$
|
0.09
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Specialty Petrochemical
|
|
|
Specialty Wax
|
|
|
Corporate
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|||||
|
(in thousands)
|
||||||||||||||||||
Product sales
|
$
|
55,490
|
|
|
$
|
6,003
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,493
|
|
Processing fees
|
1,383
|
|
|
2,279
|
|
|
—
|
|
|
—
|
|
|
3,662
|
|
|||||
Total revenues
|
56,873
|
|
|
8,282
|
|
|
—
|
|
|
—
|
|
|
65,155
|
|
|||||
Operating profit (loss) before depreciation and amortization
|
11,407
|
|
|
(849
|
)
|
|
(2,305
|
)
|
|
—
|
|
|
8,253
|
|
|||||
Operating profit (loss)
|
8,333
|
|
|
(2,197
|
)
|
|
(2,326
|
)
|
|
—
|
|
|
3,810
|
|
|||||
Profit (loss) before taxes
|
7,135
|
|
|
(2,539
|
)
|
|
(2,367
|
)
|
|
—
|
|
|
2,229
|
|
|||||
Depreciation and amortization
|
3,074
|
|
|
1,348
|
|
|
20
|
|
|
—
|
|
|
4,442
|
|
|||||
Capital expenditures
|
1,378
|
|
|
509
|
|
|
—
|
|
|
—
|
|
|
1,887
|
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||
|
Specialty Petrochemical
|
|
|
Specialty Wax
|
|
|
Corporate
|
|
|
Eliminations
|
|
|
Consolidated
|
|
||||
|
(in thousands)
|
|||||||||||||||||
Product sales
|
$
|
60,285
|
|
|
$
|
6,383
|
|
|
$
|
—
|
|
|
31
|
|
|
$
|
66,699
|
|
Processing fees
|
2,028
|
|
|
3,212
|
|
|
—
|
|
|
(198
|
)
|
|
5,042
|
|
||||
Total revenues
|
62,313
|
|
|
9,595
|
|
|
—
|
|
|
(167
|
)
|
|
71,741
|
|
||||
Operating profit (loss) before depreciation and amortization
|
8,393
|
|
|
390
|
|
|
(2,148
|
)
|
|
—
|
|
|
6,635
|
|
||||
Operating profit (loss)
|
6,679
|
|
|
(914
|
)
|
|
(2,156
|
)
|
|
—
|
|
|
3,609
|
|
||||
Profit (loss) before taxes
|
6,054
|
|
|
(1,181
|
)
|
|
(1,931
|
)
|
|
—
|
|
|
2,942
|
|
||||
Depreciation and amortization
|
1,714
|
|
|
1,304
|
|
|
8
|
|
|
—
|
|
|
3,026
|
|
||||
Capital expenditures
|
10,283
|
|
|
745
|
|
|
—
|
|
|
—
|
|
|
11,028
|
|
|
March 31, 2019
|
||||||||||||||||||
|
Specialty Petrochemical
|
|
|
Specialty Wax
|
|
|
Corporate
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|||||
|
(in thousands)
|
||||||||||||||||||
Trade receivables, product sales
|
$
|
19,938
|
|
|
$
|
3,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,217
|
|
Trade receivables, processing fees
|
684
|
|
|
1,836
|
|
|
—
|
|
|
—
|
|
|
2,520
|
|
|||||
Goodwill and intangible assets, net
|
—
|
|
|
40,280
|
|
|
—
|
|
|
—
|
|
|
40,280
|
|
|||||
Total assets
|
301,633
|
|
|
113,827
|
|
|
90,141
|
|
|
(164,205
|
)
|
|
341,396
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Specialty Petrochemical
|
|
|
Specialty Wax
|
|
|
Corporate
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|||||
|
(in thousands)
|
||||||||||||||||||
Trade receivables, product sales
|
$
|
21,915
|
|
|
$
|
3,173
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25.088
|
|
Trade receivables, processing fees
|
633
|
|
|
1,391
|
|
|
—
|
|
|
—
|
|
|
2,024
|
|
|||||
Goodwill and intangible assets, net
|
—
|
|
|
40,745
|
|
|
—
|
|
|
—
|
|
|
40,745
|
|
|||||
Total assets
|
284,367
|
|
|
115,366
|
|
|
91,474
|
|
|
(161,239
|
)
|
|
329,968
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
|
2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Sales
|
|
$
|
20,664
|
|
|
$
|
14,087
|
|
Cost of sales
|
|
18,570
|
|
|
12,506
|
|
||
Gross profit
|
|
2,094
|
|
|
1,581
|
|
||
Selling, general, and administrative
|
|
2,738
|
|
|
1,523
|
|
||
Operating income (loss)
|
|
(644
|
)
|
|
58
|
|
||
Other income
|
|
428
|
|
|
20
|
|
||
Finance and interest expense
|
|
(445
|
)
|
|
(397
|
)
|
||
Loss before Zakat and income taxes
|
|
(661
|
)
|
|
(319
|
)
|
||
Zakat and income taxes
|
|
522
|
|
|
—
|
|
||
Net Loss
|
|
$
|
(1,183
|
)
|
|
$
|
(319
|
)
|
|
|
March 31,
|
|
|
December 31,
|
|
||
|
|
2019
|
|
|
2018
|
|
||
|
|
(thousands of dollars)
|
||||||
Current assets
|
|
$
|
56,073
|
|
|
$
|
44,093
|
|
Noncurrent assets
|
|
202,640
|
|
|
212,291
|
|
||
Total assets
|
|
$
|
258,713
|
|
|
$
|
256,384
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
18,030
|
|
|
$
|
17,160
|
|
Long term liabilities
|
|
80,008
|
|
|
77,366
|
|
||
Stockholders' equity
|
|
160,675
|
|
|
161,858
|
|
||
|
|
$
|
258,713
|
|
|
$
|
256,384
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
|
2018
|
|
||
|
|
(thousands of dollars)
|
||||||
AMAK Net Loss
|
|
$
|
(1,183
|
)
|
|
$
|
(319
|
)
|
Percentage of Ownership
|
|
33.41
|
%
|
|
33.41
|
%
|
||
|
|
|
|
|
||||
Company's share of loss reported by AMAK
|
|
$
|
(395
|
)
|
|
$
|
(107
|
)
|
Amortization of difference between Company's investment in AMAK and Company's share of net assets of AMAK
|
|
337
|
|
|
337
|
|
||
Equity in earnings (losses) of AMAK
|
|
$
|
(59
|
)
|
|
$
|
230
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
|
2018
|
|
||
|
|
(Thousands of Dollars)
|
||||||
Net Income
|
|
$
|
1,751
|
|
|
$
|
2,352
|
|
Interest expense
|
|
1,499
|
|
|
878
|
|
||
Depreciation and amortization
|
|
4,442
|
|
|
3,026
|
|
||
Income tax expense
|
|
478
|
|
|
590
|
|
||
EBITDA
|
|
$
|
8,170
|
|
|
$
|
6,846
|
|
Share-based compensation
|
|
213
|
|
|
592
|
|
||
Equity in earnings (losses) of AMAK
|
|
59
|
|
|
(230
|
)
|
||
Adjusted EBITDA
|
|
$
|
8,442
|
|
|
$
|
7,208
|
|
|
|
|
|
|
||||
Net Income
|
|
$
|
1,751
|
|
|
$
|
2,352
|
|
Equity in earnings (losses) of AMAK
|
|
$
|
59
|
|
|
$
|
(230
|
)
|
Taxes at statutory rate
|
|
(12
|
)
|
|
48
|
|
||
Tax effected equity in earnings (losses)
|
|
47
|
|
|
(182
|
)
|
||
Adjusted Net Income
|
|
$
|
1,798
|
|
|
$
|
2,170
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
|
March 31, 2018
|
|
Days sales outstanding in accounts receivable
|
35.6
|
|
|
34.4
|
|
|
34.4
|
|
Days sales outstanding in inventory
|
23.4
|
|
|
21.0
|
|
|
19.7
|
|
Days sales outstanding in accounts payable
|
16.0
|
|
|
24.2
|
|
|
18.7
|
|
Days of working capital
|
43.0
|
|
|
31.1
|
|
|
35.4
|
|
|
|
THREE MONTHS ENDED MARCH 31,
|
||||||
|
|
2019
|
|
|
2018
|
|
||
Net cash provided by (used in)
|
|
(thousands of dollars)
|
||||||
Operating activities
|
|
$
|
824
|
|
|
$
|
2,735
|
|
Investing activities
|
|
(1,417
|
)
|
|
(11,072
|
)
|
||
Financing activities
|
|
691
|
|
|
7,877
|
|
||
Decrease in cash
|
|
$
|
98
|
|
|
$
|
(460
|
)
|
Cash
|
|
$
|
6,833
|
|
|
$
|
2,568
|
|
•
|
Accounts receivable decreased approximately
$1.4 million
due to a nearly 13% decline in revenues in first quarter 2019 compared with fourth quarter 2018;
|
•
|
Accounts payable and accrued liabilities decreased
$6.8 million
mainly due to payment for the Advanced Reformer unit catalyst replacement which was completed in December 2018, severance payments and payment for supplemental wax feed.
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
|
% Change
|
|
|||
|
|
(thousands of dollars)
|
|||||||||||||
Specialty Petrochemical Product Sales
|
|
$
|
55,490
|
|
|
$
|
60,285
|
|
|
$
|
(4,795
|
)
|
|
(8.0
|
)%
|
Processing
|
|
1,383
|
|
|
2,028
|
|
|
(645
|
)
|
|
(31.8
|
)%
|
|||
Gross Revenue
|
|
$
|
56,873
|
|
|
$
|
62,313
|
|
|
$
|
(5,440
|
)
|
|
(8.7
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Volume of Sales (gallons)
|
|
|
|
|
|
|
|
|
|||||||
Specialty Petrochemical Products
|
|
22,468
|
|
|
23,289
|
|
|
(821
|
)
|
|
(3.5
|
)%
|
|||
Prime Product Sales
|
|
17,638
|
|
|
17,651
|
|
|
(13
|
)
|
|
(0.1
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Cost of Sales
|
|
$
|
45,866
|
|
|
$
|
52,649
|
|
|
$
|
(6,783
|
)
|
|
(12.9
|
)%
|
Gross Margin
|
|
19.4
|
%
|
|
15.5
|
%
|
|
|
|
|
3.8
|
%
|
|||
Total Operating Expense*
|
|
18,280
|
|
|
15,843
|
|
|
2,437
|
|
|
15.4
|
%
|
|||
Natural Gas Expense*
|
|
1,383
|
|
|
1,248
|
|
|
135
|
|
|
10.8
|
%
|
|||
Operating Labor Costs*
|
|
3,703
|
|
|
3,759
|
|
|
(56
|
)
|
|
(1.5
|
)%
|
|||
Transportation Costs*
|
|
7,048
|
|
|
7,320
|
|
|
(272
|
)
|
|
(3.7
|
)%
|
|||
General & Administrative Expense
|
|
2,475
|
|
|
2,820
|
|
|
(345
|
)
|
|
(12.2
|
)%
|
|||
Depreciation and Amortization**
|
|
3,074
|
|
|
1,714
|
|
|
1,360
|
|
|
79.3
|
%
|
|||
Capital Expenditures
|
|
1,378
|
|
|
10,283
|
|
|
(8,905
|
)
|
|
(86.6
|
)%
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
|
% Change
|
|
|||
|
|
(thousands of dollars)
|
|||||||||||||
Product Sales
|
|
$
|
6,003
|
|
|
$
|
6,383
|
|
|
$
|
(380
|
)
|
|
(6.0
|
)%
|
Processing
|
|
2,279
|
|
|
3,212
|
|
|
(933
|
)
|
|
(29.0
|
)%
|
|||
Gross Revenue
|
|
$
|
8,282
|
|
|
$
|
9,595
|
|
|
$
|
(1,313
|
)
|
|
(13.7
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Volume of specialty wax sales (thousand pounds)
|
|
7,882
|
|
|
9,541
|
|
|
(1,659
|
)
|
|
(17.4
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Cost of Sales
|
|
$
|
9,216
|
|
|
$
|
9,119
|
|
|
$
|
97
|
|
|
1.1
|
%
|
Gross Margin
|
|
(11.3
|
)%
|
|
5.0
|
%
|
|
|
|
|
(16.2
|
)%
|
|||
General & Administrative Expense
|
|
1,269
|
|
|
1,368
|
|
|
(99
|
)
|
|
(7.2
|
)%
|
|||
Depreciation and Amortization*
|
|
1,348
|
|
|
1,304
|
|
|
44
|
|
|
3.4
|
%
|
|||
Capital Expenditures
|
|
$
|
509
|
|
|
$
|
745
|
|
|
$
|
(236
|
)
|
|
(31.7
|
)%
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
|
% Change
|
|
|||
|
|
(in thousands)
|
|
|
|||||||||||
General & Administrative Expense
|
|
$
|
2,305
|
|
|
$
|
2,147
|
|
|
$
|
158
|
|
|
7.4
|
%
|
Equity in earnings (losses) of AMAK
|
|
(59
|
)
|
|
230
|
|
|
(289
|
)
|
|
125.7
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(thousands of dollars)
|
||||||
Sales
|
|
$
|
20,664
|
|
|
$
|
14,087
|
|
Cost of sales
|
|
18,570
|
|
|
12,506
|
|
||
Gross profit (loss)
|
|
2,094
|
|
|
1,581
|
|
||
Selling, general, and administrative
|
|
2,738
|
|
|
1,523
|
|
||
Operating income (loss)
|
|
(644
|
)
|
|
58
|
|
||
Other income
|
|
428
|
|
|
20
|
|
||
Finance and interest expense
|
|
(445
|
)
|
|
(397
|
)
|
||
Loss before Zakat and income taxes
|
|
(661
|
)
|
|
(319
|
)
|
||
Zakat and income taxes
|
|
522
|
|
|
—
|
|
||
Net Loss
|
|
$
|
(1,183
|
)
|
|
$
|
(319
|
)
|
|
|
|
|
|
||||
Finance and interest expense
|
|
445
|
|
|
397
|
|
||
Depreciation and amortization
|
|
7,325
|
|
|
7,701
|
|
||
Zakat and income taxes
|
|
522
|
|
|
—
|
|
||
EBITDA
|
|
$
|
7,109
|
|
|
$
|
7,779
|
|
(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 effective as of the end of the period covered by this report.
|
(b)
|
Changes in internal control
. There were no significant changes in our internal control over financial reporting that occurred during the
three months ended
March 31, 2019
, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
Exhibit
Number
|
Description
|
10.1
|
|
10.2*+
|
|
10.3*+
|
|
10.4*
|
|
31.1*
|
|
31.2*
|
|
32.1**
|
|
32.2**
|
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Taxonomy Schema Document
|
101.CAL*
|
XBRL Taxonomy Calculation Linkbase Document
|
101.LAB*
|
XBRL Taxonomy Label Linkbase Document
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
TRECORA RESOURCES
|
|
|
|
|
Dated: May 09, 2019
|
By:
|
/s/ Sami Ahmad
|
|
|
Sami Ahmad
|
|
|
Principal Financial Officer and Duly Authorized Officer
|
Percentage of Restricted Stock Units to Vest
|
Vesting Date
|
|
|
TRECORA RESOURCES
By:
Name: Christopher Groves
Title: Corporate Secretary
Date:
|
HOLDER
By:
Name:
Date:
|
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 officer 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 reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officer 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 the 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.
|
Date: May 9, 2019
|
/s/ Patrick Quarles
|
|
Patrick Quarles
|
|
President and Chief Executive Officer
|
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 officer 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 reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officer 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 the 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.
|
Date: May 9, 2019
|
/s/ Sami Ahmad
|
|
Sami Ahmad
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|