free-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38880


Whole Earth Brands, Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)						38-4101973 (I.R.S. Employer Identification No.)
125 S. Wacker Drive, Suite 1250 Chicago, Illinois						60606
(Address of Principal Executive Offices)						(Zip Code)


(312) 840-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which
registered

Common stock, par value $0.0001 per share

FREE

The NASDAQ Stock Market LLC

Warrants to purchase one-half of one share of common stock

FREEW

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of July 31, 2024, there were 43,444,240 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.


		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	29
Item 6.	Exhibits	29
Signatures		30


Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets			4

Condensed Consolidated Statements of Operations			5

Condensed Consolidated Statements of Comprehensive Income (Loss)			6

Condensed Consolidated Statements of Equity			7

Condensed Consolidated Statements of Cash Flows			8

Notes to Condensed Consolidated Financial Statements			9
Note 1: Basis of Presentation and Significant Accounting Policies			9
Note 2: Merger			10
Note 3: Inventories			12
Note 4: Goodwill and Other Intangible Assets			12
Note 5: Debt			13
Note 6: Warrants			14
Note 7: Fair Value Measurements			14
Note 8: Commitments and Contingencies			15
Note 9: Income Taxes			15
Note 10: Stock-Based Compensation			16
Note 11: Earnings Per Share			17
Note 12: Accumulated Other Comprehensive Income (Loss)			19
Note 13: Related Party Transactions			19
Note 14: Business Segments			19
Note 1 5: Subs equent Events			20


Whole Earth Brands, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)

	June 30, 2024		December 31, 2023
Assets
Current Assets
Cash and cash equivalents	$	24,788	$	30,513
Accounts receivable (net of allowances of $1,007 and $1,460, respectively)	73,113		74,012
Inventories	201,325		209,271
Prepaid expenses and other current assets	8,370		6,429
Total current assets	307,596		320,225

Property, Plant and Equipment, net	53,214		54,937

Other Assets
Operating lease right-of-use assets	36,255		19,223
Goodwill	186,520		193,610
Other intangible assets, net	217,962		229,936
Deferred tax assets, net	517		500
Other assets	7,067		7,266
Total Assets	$	809,131	$	825,697

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	41,420	$	55,662
Accrued expenses and other current liabilities	26,915		32,173
Current portion of operating lease liabilities	5,770		7,370
Current portion of long-term debt	3,750		3,750
Total current liabilities	77,855		98,955
Non-Current Liabilities
Long-term debt	423,833		417,929
Deferred tax liabilities, net	31,784		31,579
Operating lease liabilities, less current portion	32,505		14,336
Other liabilities	11,064		11,208
Total Liabilities	577,041		574,007
Commitments and Contingencies (Note 8)	—		—
Stockholders’ Equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2024 and December 31, 2023	—		—
Common stock, $0.0001 par value; 220,000,000 shares authorized; 43,444,240 and 42,853,468 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	4		4
Additional paid-in capital	367,643		365,721
Accumulated deficit	(134,893)		(123,284)
Accumulated other comprehensive (loss) income	(664)		9,249
Total stockholders’ equity	232,090		251,690
Total Liabilities and Stockholders’ Equity	$	809,131	$	825,697


Whole Earth Brands, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands of dollars)
(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net loss	$	(2,213)	$	(5,517)	$	(11,609)	$	(25,314)
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized, net of taxes of $(3), $(4), $(6) and $(8), respectively	(10)		(11)		(20)		(23)
Unrealized gains and losses on cash flow hedges, net of taxes of $197, $219, $812 and $219, respectively	572		655		2,349		655
Gains and losses on cash flow hedges reclassified to net income, net of taxes of $(123), $0, $(250), and $0, respectively	(355)		—		(726)		—
Foreign currency translation adjustments	(508)		(2,371)		(11,516)		2,045
Total other comprehensive income (loss), net of tax	(301)		(1,727)		(9,913)		2,677
Comprehensive loss	$	(2,514)	$	(7,244)	$	(21,522)	$	(22,637)







	Common Stock			Additional Paid-in		Accumulated		Accumulated Other Comprehensive		Total Stockholders’
	Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance at December 31, 2023	42,853,468	$	4	$	365,721	$	(123,284)	$	9,249	$	251,690

Net loss	—	—		—		(9,396)		—		(9,396)
Other comprehensive loss, net of tax	—	—		—		—		(9,612)		(9,612)

Stock-based compensation	—	—		1,763		—		—		1,763
Net share settlements of stock-based awards	205,073	—		(458)		—		—		(458)
Balance at March 31, 2024	43,058,541	4		367,026		(132,680)		(363)		233,987

Net loss	—	—		—		(2,213)		—		(2,213)
Other comprehensive loss, net of tax	—	—		—		—		(301)		(301)

Stock-based compensation	—	—		832		—		—		832
Net share settlements of stock-based awards	297,508	—		(640)		—		—		(640)
Net share settlements of liability-based awards	88,191	—		425		—		—		425
Balance at June 30, 2024	43,444,240	$	4	$	367,643	$	(134,893)	$	(664)	$	232,090



	June 30, 2024		December 31, 2023
Raw materials and supplies	$	113,912	$	125,421
Work in process	983		1,505
Finished goods	86,430		82,345
Total inventories	$	201,325	$	209,271



	June 30, 2024						December 31, 2023
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Other intangible assets subject to amortization
Customer relationships (useful life of 5 to 10 years)	$	105,259	$	(43,810)	$	61,449	$	105,616	$	(38,074)	$	67,542
Tradenames (useful life of 25 years)	171,642		(25,829)		145,813		174,495		(22,801)		151,694
Total	$	276,901	$	(69,639)	207,262		$	280,111	$	(60,875)	219,236
Other intangible assets not subject to amortization
Product formulations					10,700						10,700
Total other intangible assets, net					217,962						229,936
Goodwill					186,520						193,610
Total goodwill and other intangible assets					$	404,482					$	423,546


Remainder of 2024	$	9,350
2025	18,455
2026	18,223
2027	17,013
2028	15,027
2029	14,231


	June 30, 2024		December 31, 2023
Term loan, due 2028	$	362,812	$	364,688
Revolving credit facility, due 2026	71,000		64,000
Less: current portion	(3,750)		(3,750)
Less: unamortized discount and debt issuance costs	(6,229)		(7,009)
Total long-term debt	$	423,833	$	417,929


	Six Months Ended June 30, 2024
	Shares	Weighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2023	2,116,671	$	3.19
Granted	26,954	3.71
Vested	(694,796)	3.58
Forfeited	(18,496)	2.87
Outstanding and nonvested at June 30, 2024	1,430,333	$	3.02

SEC Form 10-Q filed by Whole Earth Brands Inc.