Hudson Labs Red Flags - Dirty Laundry
Welcome to our weekly reports featuring impactful and unusual disclosures as extracted by Hudson Labs' algorithms.
Filings from the week of October 11-15, 2021
Insurance not covering it.
Red Flags from our Screening Tool
MSA SAFETY INC (MSA) Payments for MSA LLC’s product liability claims exceeded insurance collections by $16.5M in the 6-months ended June 30, 2021.
DYCOM INDUSTRIES INC (DY) Insurance recoveries decrease by $4.2M for the 6-months ended July 31, 2021 due to settlement of claim exceeding loss retention.
RYDER SYSTEM INC (R) Costs exceeded self-insured loss reserves in both 2019 and 2020, resulting in the recognition of $18M of charges in both years.
AMARIN CORP PLCUK (AMRN)
8-K,10-Q | Market cap: $2B
Amarin was previous featured in our newsletter. The company branded slashing their sales team as a new go-to-market strategy for their headline product, VASCEPA. This “GTM” includes estimated severance costs of $15M (2% of revenues). [1]
Per their 10-Q, an anti-trust complaint has been filed against Amarin related to the active ingredient in VASCEPA. They have also received a civil investigative demand from the US FTC and a subpoena from the New York Attorney General relating to VASCEPA. [2]
“On September 22, 2021, Amarin Corporation plc (“Amarin”) announced that it was implementing a new go-to-market strategy for VASCEPA® (icosapent ethyl), resulting in a reduction of Amarin’s field force to approximately 300 sales representatives. Amarin estimates that it will incur approximately $15 million in charges related to the reduction in force, substantially all of which are cash expenditures for one-time termination benefits and associated costs.“
As has been a practice in the generic pharmaceutical industry, on April 27, 2021, Dr. Reddy’s filed a complaint against us in the United States District Court District of New Jersey (case no. 2:21-cv-10309) alleging various antitrust violations stemming from alleged anticompetitive practices related to the supply of active pharmaceutical ingredient of VASCEPA.”... “We have also received a civil investigative demand from the U.S. FTC and a subpoena from the New York Attorney General with respect to practices relating to our supply of the active pharmaceutical ingredient in VASCEPA.”
E2OPEN PARENT HOLDINGS INC (ETWO)
10-Q | Market cap: $5B
We previously reported (Filings of Interest - week of July 16th, 2021) a growing difference between EBITDA and Adjusted EBITDA. As net loss continues to grow, Adjusted EBITDA continues to improve: [1]
Triggering events were met for Series B-1 common and Series 1 RCUs, resulting in conversion of the stock and elimination of the contingent consideration liability. [2]
“EBITDA was a loss of $132.8 million for the six months ended August 31, 2021, a $175.8 million decrease compared to $43.0 million for the six months ended August 31, 2020. EBITDA margins decreased to a negative 92% for the first six months of fiscal 2022 compared to 26% in the prior year. ”
“As of June 8, 2021, the Series B-1 common stock and Series 1 RCUs were no longer reflected as a contingent consideration liability as the 5-day VWAP of our Class A Common Stock exceeded $13.50 per share. This triggering event resulted in the 8,120,273 Series B-1 common stock converting into Class A Common Stock and 4,379,557 Series 1 RCUs becoming 4,379,557 Common Units of E2open Holdings along with entitling the holders of the newly vested common units to 4,379,557 shares of Class V Common Stock.“
LOOP INDUSTRIES INC (LOOP)
10-Q | Market cap: $500M
In May, the company purchased a parcel of land exceeding project needs and planned to sell a portion of the land to offset the project commitment. The excess land has not yet been sold. [1]
In September, the company announced a partnership with Evian to produce 100% recycled bottles. There are no sales from this partnership to date, these products are scheduled to be sold in Korea starting next year. [2]
In October 2020, the company received subpoenas from the SEC requisitioning certain information on testing results and certain partnership arrangements. [3]
During Q3’2021, the company ceased capitalization of research and development machinery costs that were previously capitalized. [4]
“On May 27, 2021, we acquired a 19 million square foot parcel of land in Bécancour, Québec for $4.8 million (CDN $5.9 million). The site offers attractive logistics being located on the St-Lawrence river and access to rail. The site size exceeds our project needs and we plan to sell a portion of the land to offset part of our project commitment.”
“Unveiling of New evian Loop Bottle On September 20, 2021, Loop, in partnership with iconic global beverage brand evian, unveiled a new “evian Loop” prototype virgin-quality water bottle made from 100 percent recycled content. The monomers used to produce the evian Loop bottles were made at Loop’s small-scale production facility in Terrebonne, Quebec. Evian plans to begin selling water bottles made from Loop™ PET initially in South Korea next year, and subsequently in other global markets.“
“As previously disclosed in our Current Report on Form 8-K filed with the SEC on October 16, 2020, on October 15, 2020, we received a subpoena from the SEC requesting certain information from us, including information regarding testing, testing results and details of results from our GEN I and GEN II technologies and certain of our partnerships and agreements.“
“Starting in Q3 of fiscal 2021, the Company expensed research and development machinery and equipment in accordance with ASC 730, Research and Development Costs, and no longer capitalized these costs.”
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