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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