Company Quick10K Filing
Trecora Resources
Price9.13 EPS-0
Shares25 P/E-413
MCap229 P/FCF11
Net Debt80 EBIT5
TEV309 TEV/EBIT63
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-13
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-15
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-03-12
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-16
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-03-11
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-03-13
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-06
10-Q 2014-03-31 Filed 2014-05-09
10-K 2013-12-31 Filed 2014-03-14
10-Q 2013-09-30 Filed 2013-11-05
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-03-18
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-03-09
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-03-18
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-15
8-K 2020-05-05 Earnings, Regulation FD, Exhibits
8-K 2020-04-09 Enter Agreement, Exhibits
8-K 2020-03-23 Enter Agreement, Regulation FD, Exhibits
8-K 2020-03-09 Earnings, Regulation FD, Exhibits
8-K 2020-01-16 Enter Agreement, Other Events, Exhibits
8-K 2019-12-11 Regulation FD, Exhibits
8-K 2019-11-06 Earnings, Regulation FD, Exhibits
8-K 2019-10-02 Enter Agreement, Regulation FD, Exhibits
8-K 2019-08-05 Earnings, Regulation FD, Exhibits
8-K 2019-05-15 Officers, Shareholder Vote
8-K 2019-05-06 Earnings, Regulation FD, Exhibits
8-K 2019-04-08 Officers, Exhibits
8-K 2019-03-29 Enter Agreement, Exhibits
8-K 2019-03-13 Regulation FD, Exhibits
8-K 2019-03-06 Earnings, Regulation FD, Exhibits
8-K 2019-02-26 Other Events, Exhibits
8-K 2019-02-14 Other Events, Exhibits
8-K 2019-01-02 Other Events, Exhibits
8-K 2018-12-14 Enter Agreement, Officers, Regulation FD, Exhibits
8-K 2018-12-13 Regulation FD, Other Events, Exhibits
8-K 2018-11-26 Officers, Exhibits
8-K 2018-11-19 Other Events
8-K 2018-10-31 Earnings, Regulation FD, Exhibits
8-K 2018-09-01 Officers, Exhibits
8-K 2018-08-10 Officers
8-K 2018-08-03 Earnings, Regulation FD, Exhibits
8-K 2018-08-01 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-07-12 Officers
8-K 2018-06-15 Officers, Other Events
8-K 2018-05-23 Officers, Exhibits
8-K 2018-05-15 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2018-05-01 Earnings, Regulation FD, Exhibits
8-K 2018-03-13 Officers
8-K 2018-03-07 Officers
8-K 2018-03-06 Earnings, Officers, Regulation FD, Other Events, Exhibits

TREC 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 5. Other Information.
Item 6. Exhibits.
EX-2.2 spathirdamendment.htm
EX-10.2 trecoraformofrsu2020.htm
EX-31.1 exhibit311q12020.htm
EX-31.2 exhibit312q12020.htm
EX-32.1 exhibit321q12020.htm
EX-32.2 exhibit322q12020.htm

Trecora Resources Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
96577257938619302012201420172020
Assets, Equity
806244268-102012201420172020
Rev, G Profit, Net Income
1593-3-9-152012201420172020
Ops, Inv, Fin

10-Q 1 trecoraq1202010q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q
(Mark One)

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

For the quarterly period ended March 31, 2020
or

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

For the transition period from _________ to __________

COMMISSION FILE NUMBER 1-33926
trecoralogoa02.jpg
TRECORA RESOURCES
(Exact name of registrant as specified in its charter)

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
(Zip code)
(Address of principal executive offices)
 

Registrant's telephone number, including area code: (281) 980-5522

N/A
(Former name, former address and former fiscal year, if changed since last report)

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 $0.10 per share
TREC
New York Stock Exchange

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   X    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   X    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   X   

Non-accelerated filer         Smaller reporting company   X   

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 X  

Number of shares of the Registrant's Common Stock (par value $0.10 per share) outstanding at April 30, 2020: 24,714,980.





TABLE OF CONTENTS

Item Number and Description






PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.
TRECORA RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
March 31,
2020
(Unaudited)
 
December 31,
2019
ASSETS
 
(thousands of dollars, except par value)
 Current Assets
 
 
 
 
Cash
 
$
37,450

 
$
6,145

Trade receivables, net
 
28,396

 
26,320

Inventories
 
8,362

 
13,624

Investment in AMAK (held-for-sale)
 
28,869

 
32,872

Prepaid expenses and other assets
 
4,458

 
4,947

Taxes receivable
 
16,107

 
182

Total current assets
 
123,642

 
84,090

 
 
 
 
 
Plant, pipeline and equipment, net
 
187,211

 
188,919

 
 
 
 
 
Intangible assets, net
 
14,275

 
14,736

Lease right-of-use assets, net
 
12,711

 
13,512

Mineral properties in the United States
 
562

 
562

 
 
 
 
 
TOTAL ASSETS
 
$
338,401

 
$
301,819

LIABILITIES
 
 
 
 
Current Liabilities
 
 
 
 
Accounts payable
 
$
10,171

 
$
14,603

Accrued liabilities
 
6,720

 
5,740

Current portion of long-term debt
 
4,194

 
4,194

Current portion of lease liabilities
 
3,153

 
3,174

Current portion of other liabilities
 
1,021

 
924

Total current liabilities
 
25,259

 
28,635

 
 
 
 
 
  Long-term debt, net of current portion
 
98,046

 
79,095

  Post-retirement benefit, net of current portion
 
332

 
338

Lease liabilities, net of current portion
 
9,558

 
10,338

  Other liabilities, net of current portion
 
178

 
595

Deferred income taxes
 
22,512

 
11,375

Total liabilities
 
155,885

 
130,376

 
 
 
 
 
EQUITY
 
 
 
 
Common stock‑authorized 40 million shares of $0.10 par value; issued and outstanding 24.8 million and 24.8 million in 2020 and 2019, respectively
 
2,478

 
2,475

Additional paid-in capital
 
59,880

 
59,530

Retained earnings
 
119,869

 
109,149

Total Trecora Resources Stockholders' Equity
 
182,227

 
171,154

Noncontrolling Interest
 
289

 
289

Total equity
 
182,516

 
171,443

 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
 
$
338,401

 
$
301,819


See notes to consolidated financial statements.





TRECORA RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
 
THREE MONTHS ENDED
MARCH 31,
 
 
2020
 
2019
 
 
(thousands of dollars, except per share amounts)
REVENUES
 
 
 
 
Product sales
 
$
57,183

 
$
61,493

Processing fees
 
4,884

 
3,662

 
 
62,067

 
65,155

 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
Cost of sales and processing
 
 
 
 
(including depreciation and amortization of $3,952 and $4,229, respectively)
 
53,989

 
55,082

 
 
 
 
 
    GROSS PROFIT
 
8,078

 
10,073

 
 
 
 
 
GENERAL AND ADMINISTRATIVE EXPENSES
 
 
 
 
General and administrative
 
6,674

 
6,034

Depreciation
 
216

 
213

 
 
6,890

 
6,247

 
 
 
 
 
OPERATING INCOME
 
1,188

 
3,826

 
 
 
 
 
OTHER INCOME (EXPENSE)
 
 
 
 
Interest income
 

 
5

Interest expense
 
(916
)
 
(1,499
)
Miscellaneous income (expense), net
 
(62
)
 
(28
)
 
 
(978
)
 
(1,522
)
 
 
 
 
 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
210

 
2,304

 
 
 
 
 
INCOME TAX EXPENSE (BENEFIT)
 
(5,653
)
 
494

 
 
 
 
 
INCOME FROM CONTINUING OPERATIONS
 
5,863

 
1,810

 
 
 
 
 
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
 
4,857

 
(59
)
 
 
 
 
 
NET INCOME
 
$
10,720

 
$
1,751

 
 
 
 
 
Basic Earnings per Common Share
 
 
 
 
Net income from continuing operations (dollars)
 
$
0.24

 
$
0.07

Net income from discontinued operations, net of tax (dollars)
 
0.20

 

Net income (dollars)
 
$
0.44

 
$
0.07

 
 
 
 
 
Basic weighted average number of common shares outstanding
 
24,765

 
24,653

 
 
 
 
 
Diluted Earnings per Common Share
 
 
 
 
Net income from continuing operations (dollars)
 
$
0.23

 
$
0.07

Net income from discontinued operations, net of tax (dollars)
 
0.19

 

Net income (dollars)
 
$
0.42

 
$
0.07

 
 
 
 
 
Diluted weighted average number of common shares outstanding
 
25,276

 
25,027


See notes to consolidated financial statements.





TRECORA RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31
 
 
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)
December 31, 2019
 
24,750

 
$
2,475

 
$
59,530

 
$

 
$
109,149

 
$
171,154

 
$
289

 
$
171,443

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Stock Units
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issued to Directors
 

 

 
94

 

 

 
94

 

 
94

Issued to Employees
 

 

 
259

 

 

 
259

 

 
259

Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issued to Employees
 
30

 
3

 
(3
)
 

 

 

 

 

Net Income
 

 

 

 

 
10,720

 
10,720

 

 
10,720

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2020
 
24,780

 
$
2,478

 
$
59,880

 
$

 
$
119,869

 
$
182,227

 
$
289

 
$
182,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
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 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


See notes to consolidated financial statements.





TRECORA RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
THREE MONTHS ENDED
MARCH 31,
 
 
2020
 
2019
 
 
(thousands of dollars)
OPERATING ACTIVITIES
 
 
 
 
Net Income
 
$
10,720

 
$
1,751

Income (Loss) from Discontinued Operations
 
4,857

 
(59
)
Income from Continuing Operations
 
$
5,863

 
$
1,810

Adjustments to Reconcile Income from Continuing Operations To Net Cash Provided by Operating Activities:
 
 
 
 
Depreciation and Amortization
 
3,492

 
3,977

Amortization of Intangible Assets
 
461

 
465

Stock-based Compensation
 
390

 
213

Deferred Income Taxes
 
10,385

 
374

Postretirement Obligation
 
10

 
(5
)
Amortization of Loan Fees
 
45

 
45

Loss on Disposal of Assets
 
18

 

Changes in Operating Assets and Liabilities:
 
 
 
 
Decrease (Increase) in Trade Receivables
 
(2,077
)
 
1,375

Decrease in Insurance Receivables
 
274

 

Increase in Taxes Receivable
 
(16,144
)
 

Decrease (Increase) in Inventories
 
5,263

 
(383
)
Decrease (Increase) in Prepaid Expenses and Other Assets
 
185

 
(227
)
Decrease in Accounts Payable and Accrued Liabilities
 
(3,739
)
 
(6,773
)
Decrease in Other Liabilities
 
(72
)
 
(34
)
Net Cash Provided by Operating Activities - Continuing Operations
 
4,354

 
837

Net Cash Used in Operating Activities - Discontinued Operations
 
(53
)
 
(13
)
Net Cash Provided by Operating Activities
 
4,301

 
824

INVESTING ACTIVITIES
 
 
 
 
Additions to Plant, Pipeline and Equipment
 
(2,065
)
 
(1,887
)
Proceeds from PEVM
 

 
30

Net Cash Used in Investing Activities - Continuing Operations
 
(2,065
)
 
(1,857
)
Net Cash Provided by Investing Activities - Discontinued Operations
 
10,163

 
440

Net Cash Provided by (Used in) Investing Activities
 
8,098

 
(1,417
)
FINANCING ACTIVITIES
 
 
 
 
Net Cash Paid Related to Stock-Based Compensation
 

 
(215
)
Additions to Long-Term Debt
 
20,000

 
2,000

Repayments of Long-Term Debt
 
(1,094
)
 
(1,094
)
Net Cash Provided by Financing Activities - Continuing Operations
 
18,906

 
691

NET INCREASE IN CASH
 
31,305

 
98

CASH AT BEGINNING OF PERIOD
 
6,145

 
6,735

CASH AT END OF PERIOD
 
$
37,450

 
$
6,833

Supplemental disclosure of cash flow information:
 
 
Cash payments for interest
 
$
870

 
$
1,210

Cash payments for taxes, net of refunds
 
$

 
$

Supplemental disclosure of non-cash items:
 
 
 
 
Capital expansion amortized to depreciation expense
 
$
262

 
$
68

Foreign taxes paid by AMAK
 
$

 
$
891


See notes to consolidated financial statements.





TRECORA RESOURCES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

Organization

Trecora Resources (the "Company" or "TREC") was incorporated in the State of Delaware in 1967. Our principal business activities are the manufacturing of various specialty hydrocarbons and specialty waxes and the provision of custom processing services.   Unless the context requires otherwise, references to "we," "us," "our," "TREC," and the "Company" are intended to mean Trecora Resources and its subsidiaries.

This document includes the following abbreviations:
(1)
TOCCO – Texas Oil & Chemical Co. II, Inc. – Wholly owned subsidiary of TREC and parent of SHR and TC
(2)
SHR – South Hampton Resources, Inc. – Specialty Petrochemicals segment and parent of GSPL
(3)
GSPL – Gulf State Pipe Line Co, Inc. – Pipeline support for the Specialty Petrochemicals segment
(4)
TC – Trecora Chemical, Inc. – Specialty Waxes segment
(5)
AMAK – Al Masane Al Kobra Mining Company – Held-for-sale mining equity investment – 28.3% ownership
(6)
PEVM – Pioche Ely Valley Mines, Inc. – Inactive mine – 55% ownership

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with the financial statements and related notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The unaudited condensed financial statements included in this document have been prepared on the same basis as the annual financial statements and in management's opinion reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the interim periods presented. We have made estimates and judgments affecting the amounts reported in this document. The actual results that we experience may differ materially from our estimates. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading.

Operating results for the three months ended March 31, 2020 are not necessarily indicative of results for the year ending December 31, 2020.

We currently operate in two segments, Specialty Petrochemicals and Specialty Waxes. All revenue originates from sources in the United States, and all long-lived assets owned are located in the United States.

In addition, we own a 28.3% interest in AMAK, a Saudi Arabian closed joint stock company, which owns, operates and is developing mining assets in Saudi Arabia. Our investment is classified as held-for-sale and and the equity in earnings (losses) are recorded in discontinued operations. See Note 5.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, we adopted Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments, which changed the way entities recognize impairment of most financial assets. Short-term and long-term financial assets, as defined by the standard, are impacted by immediate recognition of estimated credit losses in the financial statements, reflecting the net amount expected to be collected. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.






Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for us in the first quarter of 2021 on a prospective basis, and early adoption is permitted. We are currently evaluating the impact of the new guidance on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020–04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU 2020-04 apply only to those transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2022. We are currently evaluating the impact of ASU 2020-04 on our condensed consolidated financial statements.

3. TRADE RECEIVABLES

Trade receivables, net, consisted of the following:
 
 
March 31, 2020

 
December 31, 2019

 
 
(thousands of dollars)
Trade receivables
 
$
28,825

 
$
26,749

Less allowance for doubtful accounts
 
(429
)
 
(429
)
Trade receivables, net
 
$
28,396

 
$
26,320


Trade receivables serve as collateral for our amended and restated credit agreement. See Note 11.

4. INVENTORIES

Inventories included the following:
 
 
March 31, 2020

 
December 31, 2019

 
 
(thousands of dollars)
Raw material
 
$
1,298

 
$
2,100

Work in process
 
139

 
142

Finished products
 
6,925

 
11,382

Total inventory
 
$
8,362

 
$
13,624


Inventory serves as collateral for our amended and restated credit agreement. See Note 11.

Inventory included Specialty Petrochemicals products in transit valued at approximately $1.6 million and $2.9 million at March 31, 2020 and December 31, 2019, respectively.

5. INVESTMENT IN AMAK (Held-for-Sale)

As of March 31, 2020 and December 31, 2019, the Company had a non-controlling equity interest of 28.3% and 33.3% in AMAK of approximately $28.9 million and $32.9 million, respectively. This investment is accounted for under the equity method. There were no events or changes in circumstances that had an adverse effect on the fair value of our investment in AMAK at March 31, 2020.

The Company committed to a plan to sell our investment in AMAK during the third quarter of 2019. Management engaged in a comprehensive process to market the investment to numerous potential buyers. The process resulted in an agreement with certain AMAK stockholders in September 2019 to purchase our investment. Pursuant to a Share Sale and Purchase Agreement (as amended, the "Purchase Agreement") that was effective as of October 2, 2019, the Company agreed to sell its entire equity interest in AMAK, to AMAK and certain other existing stockholders of AMAK (collectively, the "Purchasers")





for an aggregate gross purchase price (before taxes and transaction expenses) of Saudi Riyals ("SAR") 264.7 million (or approximately US$70 million), which will be payable in US Dollars (collectively, the "Share Sale"). The Purchasers advanced 5% of the purchase price (or approximately $3.5 million) in the form of a non-refundable deposit, which was a condition to the effectiveness of the Purchase Agreement. The Purchase Agreement contained various representations, warranties and indemnity obligations of the Company and the Purchasers, including the release of the Company's guarantee as described in Note 12.

On January 16, 2020, the Company and the Purchasers entered into a letter agreement (the “January 2020 Amendment”) providing certain amendments to the Purchase Agreement. Pursuant to the January 2020 Amendment, the Long Stop Date (as defined in the Purchase Agreement) for completion of the Share Sale was extended to March 31, 2020 to allow additional time for the parties to obtain certain required governmental approvals. Under the Purchase Agreement, the Company had certain termination rights if closing of the Share Sale did not occur on or before the Long Stop Date. The January 2020 Amendment also provided that, if closing of the Share Sale does not occur on or before the extended Long Stop Date, and the Company determined in its sole discretion to further extend such date, then an amount equal to 50% of the approximately $3.5 million non-refundable deposit made by the Purchasers under the Purchase Agreement would be forfeited to the Company as liquidated damages and would not be applied to the purchase price at closing of the Share Sale.

Effective as of March 26, 2020, the Company and the Purchasers entered into a letter agreement, dated March 23, 2020 (the “March 2020 Amendment”), providing for certain additional amendments to the Purchase Agreement.

Pursuant to the March 2020 Amendment, the Company and the Purchasers agreed that the Share Sale may be completed with the respective Purchasers in multiple closings, in each case, subject to the completion of any remaining conditions precedent. To the extent that a Purchaser completed the purchase of all or a portion of the ordinary shares allotted to it under the Purchase Agreement on or before March 31, 2020, the non-refundable deposit paid by such Purchaser (or a portion of such deposit for a partial closing) was credited toward the purchase price of the ordinary shares being purchased. Purchasers that complete the purchase of all or a portion of their allotted ordinary shares after March 31, 2020 but on or before September 28, 2020 (the “New Long Stop Date”), will forfeit an amount equal to 50% of the non-refundable deposit paid by such Purchasers to the Company as liquidated damages and such amount shall not be applied to the purchase price paid by the applicable Purchaser. With respect to any Purchaser that has not completed the purchase of 100% of its allocated ordinary shares on or prior to the New Long Stop Date, (i) any remaining amount of non-refundable deposit paid by such Purchaser will be forfeited to the Company as liquidated damages as of September 29, 2020 and (ii) the Company may terminate the Purchase Agreement in accordance with its terms unless the Company elects, in its sole discretion, to further extend the New Long Stop Date.

On March 26, 2020, the Company and one Purchaser, Arab Mining Company, completed the first closing of the Share Sale (the “First Closing”). In connection with the First Closing, the Company sold 4,000,000 ordinary shares for an aggregate gross purchase price (before taxes and transaction expenses) of SAR 40 million (or approximately US$10.7 million) (inclusive of the credited amount of the Purchaser’s non-refundable deposit previously paid of US$0.5 million). The First Closing also included indemnification provisions which effectively reduced our portion of the loan guarantee (as discussed in Note 12). We recorded a foreign tax payable of approximately $0.3 million related to this transaction, which is offset by a foreign tax credit for U.S. tax purposes.

Pursuant to the March 2020 Amendment, the remaining Purchasers have agreed to use their best efforts to close the purchase of 100% of their respective allotments of ordinary shares as soon as possible. The March 2020 Amendment also provides that the Company will continue to have the right to appoint three directors of the board of directors of AMAK, and will enjoy all other governance rights it currently has, until the Share Sale has been completed in full. As of March 31, 2020, approximately $1.5 million of the initial deposits were forfeited to the Company as liquidated damages and will not be applied to the purchase price at closing. This amount was recorded as an increase to our investment in AMAK and a gain in discontinued operations.

As all the required criteria for held-for-sale classification was met in third quarter of 2019, the investment in AMAK is classified as held-for-sale in the Consolidated Balance Sheets and reflected as discontinued operations in the Consolidated Statements of Operations for all periods presented. The assets held-for-sale are disclosed by the Company in the Corporate segment. The Company expects to have no continuing involvement with the discontinued operations after the closing date.  The gain (loss) from discontinued operations, net of tax, include our portion of the equity in earnings (losses) in AMAK as well as other administrative expenses incurred in Saudi Arabia and transaction costs.






Included in discontinued operations are the following :
 
 
Three Months Ended March 31,
 
 
2020

 
2019

 
 
(thousands of dollars)
Saudi administration (income) expenses
 
$
(17
)
 
$
16

Equity in losses of AMAK
 
532

 
59

Gain on sale of equity interest
 
(6,663
)
 

(Income) loss from discontinued operations before taxes
 
(6,148
)
 
75

Tax expense (benefit)
 
1,291

 
(16
)
(Income) loss from discontinued operations (net of tax)
 
$
(4,857
)
 
$
59


AMAK's financial statements were prepared in the functional currency of AMAK which is the SAR. In June 1986 the SAR was officially pegged to the U. S. Dollar at a fixed exchange rate of 1 USD to 3.75 SAR.

The summarized results of operation and financial position for AMAK are as follows:

Results of Operations
 
 
Three Months Ended March 31,
 
 
2020

 
2019

 
 
(thousands of dollars)
Sales
 
$
17,937

 
$
20,664

Cost of sales
 
16,821

 
18,570

Gross profit
 
1,116

 
2,094

Selling, general, and administrative
 
2,680

 
2,738

Operating loss
 
(1,564
)
 
(644
)
Other income
 
17

 
428

Finance and interest expense
 
(531
)
 
(445
)
Loss before Zakat and income taxes
 
(2,078
)
 
(661
)
Zakat and income taxes
 
533

 
522

Net Loss
 
$
(2,611
)
 
$
(1,183
)

Financial Position
 
 
March 31,

 
December 31,

 
 
2020

 
2019

 
 
(thousands of dollars)
Current assets
 
$
44,189

 
$
45,354

Noncurrent assets
 
199,109

 
196,564

Total assets
 
$
243,298

 
$
241,918

 
 
 
 
 
Current liabilities
 
$
28,955

 
$
27,645

Long term liabilities
 
82,029

 
79,348

Stockholders' equity
 
132,314

 
134,925

 
 
$
243,298

 
$
241,918


Changes in Ownership

In the first quarter of 2020, we completed a portion of the Share Sale to an existing shareholder of AMAK. We sold 4 million shares of AMAK, thereby reducing our ownership percentage from 33.3% to 28.3%. As this transaction





occurred at the end of the first quarter, our portion of the equity in earnings/losses of AMAK reflected for the first quarter of 2020 is calculated at 33.3%, whereas our ownership of balance sheet accounts is reflected at 28.3% as of March 31, 2020.

In the second quarter of 2019, certain shareholders of AMAK transferred a portion of their shares to the CEO of AMAK as a one-time retention and performance bonus. The Company transferred 100,000 shares and the transaction reduced our ownership percentage from 33.4% to 33.3%.

The equity in the (losses) earnings of AMAK included in income (loss) from discontinued operations, net of tax, on the consolidated statements of operations for the three months ended March 31, 2020 and 2019, is comprised of the following:
 
 
Three Months Ended
March 31,
 
 
2020

 
2019

 
 
(thousands of dollars)
AMAK Net Loss
 
$
(2,611
)
 
$
(1,183
)
Percentage of Ownership
 
33.3
%
 
33.4
%
 
 
 
 
 
Company's share of loss reported by AMAK
 
$
(869
)
 
$
(395
)
Amortization of difference between Company's investment in AMAK and Company's share of net assets of AMAK
 
337

 
337

Equity in losses of AMAK
 
$
(532
)
 
$
(59
)

For additional information, see NOTE 6, "INVESTMENT IN AMAK AND DISCONTINUED OPERATIONS" to the consolidated financial statements set forth in our Annual Report on Form 10–K for the year ended December 31, 2019.

6. PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following:
 
 
March 31, 2020

 
December 31, 2019

 
 
(thousands of dollars)
Prepaid license
 
$
1,008

 
$
1,209

Spare parts
 
1,965

 
1,857

Insurance receivable
 
874

 
1,148

Other prepaid expenses and assets
 
611

 
733

Total prepaid expenses and other assets
 
$
4,458

 
$
4,947


7. PLANT, PIPELINE AND EQUIPMENT

Plant, pipeline and equipment consisted of the following:
 
 
March 31, 2020

 
December 31, 2019

 
 
(thousands of dollars)
Platinum catalyst metal
 
$
1,580

 
$
1,580

Catalyst
 
4,225

 
4,095

Land
 
5,428

 
5,428

Plant, pipeline and equipment
 
260,892

 
258,651

Construction in progress
 
4,673

 
5,052

Total plant, pipeline and equipment
 
$
276,798

 
$
274,806

Less accumulated depreciation
 
(89,587
)
 
(85,887
)
Net plant, pipeline and equipment
 
$
187,211

 
$
188,919


Plant, pipeline, and equipment serve as collateral for our amended and restated credit agreement. See Note 11.

Labor capitalized for construction was approximately nil and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

Construction in progress during the first three months of 2020 included Advanced Reformer unit improvements and pipeline maintenance at SHR and equipment modifications at TC. Construction in progress during the first three months of 2019





included equipment purchased for various equipment updates at the TC facility, the Advanced Reformer unit, tankage upgrades, and an addition to the rail spur at SHR.

Amortization relating to the catalyst, which is included in cost of sales, was approximately $0.2 million and nil for the three months ended March 31, 2020 and 2019, respectively.

8. LEASES
The Company leases certain rail cars, rail equipment, office space and office equipment. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:
($ in thousands)
Classification in the Condensed Consolidated Statements of Income
Three Months Ended
March 31, 2020
 
Three Months Ended
March 31, 2019
Operating lease cost (a)
Cost of sales, exclusive of depreciation and amortization
$
920

 
$
1,139

Operating lease cost (a)
Selling, general and administrative
48

 
34

Total operating lease cost
 
$
968

 
$
1,173

 
 
 
 
 
Finance lease cost:
 
 
 
 
Amortization of right-of-use assets
Depreciation
$

 

Interest on lease liabilities
Interest Expense

 

Total finance lease cost
 
$

 
$

 
 
 
 
 
Total lease cost
 
$
968

 
$
1,173

 
 
 
 
 
(a) Short-term lease costs were approximately $0.1 million and $0.1 million during the periods, respectively.
The Company had no variable lease expense, as defined by ASC 842, during the periods.
($ in thousands)
Classification on the Condensed Consolidated Balance Sheets
March 31, 2020
 
December 31, 2019
Assets:
 
 
 
 
Operating
Operating lease assets
$
12,711

 
$
13,512

Finance
Property, plant, and equipment

 

Total leased assets
 
$
12,711

 
$
13,512

 
 
 
 
 
Liabilities:
 
 
 
 
Current
 
 
 
 
Operating
Current portion of operating lease liabilities
$
3,153

 
$
3,174

Finance
Short-term debt and current portion of long-term debt

 

Noncurrent
 
 
 
 
Operating
Operating lease liabilities
9,558

 
10,338

Finance
Long-term debt

 

Total lease liabilities
 
$
12,711

 
$
13,512


 
 
 
10
 




($ in thousands)
Three Months Ended
March 31, 2020
 
Three Months Ended
March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows used for operating leases
$
947

 
$
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

 

 
March 31, 2020
Weighted-average remaining lease term (in years):
 
Operating leases
4.3

Finance leases
0.0

Weighted-average discount rate:
 
Operating leases
4.5
%
Finance leases
%
Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company’s estimated incremental borrowing rate is based on information available at the inception of the lease.
As of March 31, 2020, maturities of lease liabilities were as follows:
($ in thousands)
Operating Leases
 
Finance Leases
2020
$
2,756

 
$

2021
3,540

 

2022
3,218

 

2023
2,329

 

2024
1,026

 

Thereafter
1,082

 

Total lease payments
$
13,951

 
$

Less: Interest
1,240

 

Total lease obligations
$
12,711

 
$


9. INTANGIBLE ASSETS, NET

Intangible assets were recorded in relation to the acquisition of TC on October 1, 2014.

The following tables summarize the gross carrying amounts and accumulated amortization of intangible assets by major class:
 
 
March 31, 2020
 
 
Gross
 
Accumulated Amortization
 
Net
 
 
(thousands of dollars)
Customer relationships
 
$
16,852

 
$
(6,179
)
 
$
10,673

Non-compete agreements
 
94

 
(94
)
 

Licenses and permits
 
1,471

 
(628
)
 
843

Developed technology
 
6,131

 
(3,372
)
 
2,759

Total
 
$
24,548

 
$
(10,273
)
 
$
14,275


 
 
 
11
 




 
 
December 31, 2019
 
 
Gross
 
Accumulated Amortization
 
Net
 
 
(thousands of dollars)
Customer relationships
 
$
16,852

 
$
(5,898
)
 
$
10,954

Non-compete agreements
 
94

 
(94
)
 

Licenses and permits
 
1,471

 
(601
)
 
870

Developed technology
 
6,131

 
(3,219
)
 
2,912

Total
 
$
24,548

 
$
(9,812
)
 
$
14,736


Amortization expense for intangible assets included in cost of sales for the three months ended March 31, 2020 and 2019 was approximately $0.5 million and $0.5 million, respectively.

Based on identified intangible assets that are subject to amortization as of March 31, 2020, we expect future amortization expenses for each period to be as follows:
 
 
Total

 
Remainder of 2020

 
2021

 
2022

 
2023

 
2024

 
2025

 
Thereafter

 
 
(thousands of dollars)
Customer relationships
 
$
10,673

 
$
843

 
$
1,123

 
$
1,123

 
1,123

 
1,123

 
1,123

 
$
4,215

Licenses and permits
 
843

 
79

 
101

 
86

 
86

 
86

 
86

 
319

Developed technology
 
2,759

 
460

 
613

 
613

 
613

 
460

 

 

Total future amortization expense
 
$
14,275

 
$
1,382

 
$
1,837

 
$
1,822

 
$
1,822

 
$
1,669

 
$
1,209

 
$
4,534


10. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:
 
 
March 31, 2020

 
December 31, 2019

 
 
(thousands of dollars)
State taxes
 
$
247

 
$
215

Property taxes
 
940

 

Payroll
 
1,718

 
1,250

Royalties
 
409

 
273

Officer compensation
 
344

 
1,687

Legal
 
213

 

Foreign taxes
 
320

 

AMAK transaction costs
 
1,000

 
1,000

Other
 
1,529

 
1,315

Total
 
$
6,720

 
$
5,740


11. LIABILITIES AND LONG-TERM DEBT

Senior Secured Credit Facilities

As of March 31, 2020, we had $23.0 million in borrowings outstanding under the revolving credit facility (the "Revolving Facility") of our amended and restated credit agreement (as amended to the date hereof, the "ARC Agreement") and approximately $79.8 million in borrowings outstanding under the term loan facility of the ARC Agreement (the "Term Loan Facility" and, together with the Revolving Facility, the "Credit Facilities"). In addition, we had approximately $21 million of availability under our Revolving Facility at March 31, 2020. TOCCO’s ability to make additional borrowings under the

 
 
 
12
 




Revolving Facility at March 31, 2020 was limited by, and in the future may be limited by, our obligation to maintain compliance with the covenants contained in the ARC Agreement (including maintenance of a maximum Consolidated Leverage Ratio and minimum Consolidated Fixed Charge Coverage Ratio (each as defined in the ARC Agreement)).

For each fiscal quarter after December 31, 2019, TOCCO must maintain a Consolidated Leverage Ratio of 3.50 to 1.00 (subject to temporary increase following certain acquisitions). TOCCO's Consolidated Leverage Ratio was 2.91 and 2.20 as of March 31, 2020 and December 31, 2019, respectively. Additionally, TOCCO must maintain a minimum Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter of 1.15 to 1.00. TOCCO's Consolidated Fixed Charge Coverage Ratio was 2.21 and 2.56 as of March 31, 2020 and December 31, 2019, respectively.

The maturity date for the ARC Agreement is July 31, 2023. As of March 31, 2020, the effective interest rate for the Credit Facilities was 3.83%. The ARC Agreement contains a number of customary affirmative and negative covenants and we were in compliance with those covenants as of March 31, 2020.

For a summary of additional terms of the Credit Facilities, see NOTE 13, “LONG-TERM DEBT AND LONG-TERM OBLIGATIONS" to the consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2019.

Debt Issuance Costs

Debt issuance costs of approximately $0.9 million were incurred in connection with the fourth amendment to the ARC Agreement. Unamortized debt issuance costs of approximately $0.6 million and $0.6 million for the periods ended March 31, 2020 and December 31, 2019, have been netted against outstanding loan balances.

Long-term debt and long-term obligations are summarized as follows:
 
March 31, 2020
 
December 31, 2019
 
(thousands of dollars)
Revolving Facility
23,000

 
3,000

Term Loan Facility
79,844

 
80,938

Loan fees
(604
)
 
(649
)
Total long-term debt
102,240

 
83,289

 
 
 
 
Less current portion including loan fees
4,194

 
4,194

 
 
 
 
Total long-term debt, less current portion including loan fees
98,046

 
79,095


12. COMMITMENTS AND CONTINGENCIES

COVID-19

The global outbreak of COVID-19 presents various global risks. The full impact of the outbreak continues to evolve as of the date of this report. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, investments, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects, if any, on its results of operations, financial condition, or liquidity for fiscal year 2020.

Guarantees

On October 24, 2010, we executed a limited guarantee in favor of the Saudi Industrial Development Fund ("SIDF") whereby we agreed to guaranty up to 41% of the SIDF loan (the "Loan") to AMAK. As a condition of the Loan, SIDF required all stockholders of AMAK to execute personal or corporate guarantees. The Loan was necessary to continue construction of the AMAK facilities and provide working capital needs. We received no consideration in connection with extending the guarantee and did so to maintain and enhance the value of our investment. On July 8, 2018, the Loan was amended to adjust the repayment schedule and extend the repayment terms through April 2024. Under the new payment terms the current

 
 
 
13
 




amount due in 2020 is SAR 50.0 million (US$13.3 million). In connection with the First Closing discussed in Note 5, our portion of the loan guarantee was effectively reduced to 33.1% or approximately SAR 95.7 million (US$24.3 million). The total amount outstanding on the Loan at March 31, 2020 was SAR 275.0 million (US$77.3 million). See additional discussion including release of the entire guarantee in connection with the Share Sale in Note 5.

Operating Lease Commitments

See Note 8 for discussion on lease commitments.

Litigation

The Company is periodically named in legal actions arising from normal business activities. We evaluate the merits of these actions and, if we determine that an unfavorable outcome is probable and can be reasonably estimated, we will establish the necessary reserves. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

Supplier Agreements

In accordance with our supplier agreements, on a recurring monthly basis, the Company commits to purchasing a determined volume of feedstock in anticipation of upcoming requirements. Feedstock purchases are invoiced and recorded when they are delivered. As of March 31, 2020 and December 31, 2019, the value of the remaining undelivered feedstock approximated $2.7 million and $3.5 million, respectively.

From time to time, we may incur shortfall fees due to feedstock purchases being below the minimum amounts prescribed by our agreements with our suppliers. Shortfall fee expenses for the three months ended March 31, 2020 and 2019, were $0.3 million and $0.2 million, respectively.

Environmental Remediation

Amounts charged to expense for various activities related to environmental monitoring, compliance, and improvements were approximately $0.3 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

13. STOCK-BASED COMPENSATION

The Stock Option Plan for Key Employees, as well as, the Non-Employee Director Stock Option Plan (hereinafter collectively referred to as the “Stock Option Plans”), were approved by the Company’s stockholders in July 2008. The Stock Option Plans allot for the issuance of up to 1,000,000 shares.

The Trecora Resources Stock and Incentive Plan (the “Plan”) was approved by the Company’s stockholders in June 2012. As amended, the Plan allots for the issuance of up to 2.5 million shares in the form of stock options or restricted stock unit awards.

Stock-based compensation expense of approximately $0.4 million and $0.2 million was recognized during the three months ended March 31, 2020 and 2019, respectively.

Stock Options and Warrant Awards

Stock options and warrants granted under the provisions of the Stock Option Plans permit the purchase of our common stock at exercise prices equal to the closing price of Company common stock on the date the options were granted. The options have terms of 10 years and generally vest ratably over terms of 4 to 5 years. There were no stock options or warrant awards issued during the three months ended March 31, 2020 or 2019.


 
 
 
14
 




A summary of the status of the Company’s stock option and warrant awards is as follows:
 
Stock Options and Warrants

 
Weighted Average Exercise Price Per Share

 
Weighted Average Remaining Contractual Life
 
Intrinsic
Value
(in thousands)

Outstanding at January 1, 2020
487,000

 
10.87
 
 
 
 
Granted

 

 
 
 
 
Exercised

 

 
 
 
 
Forfeited

 

 
 
 
 
Outstanding at March 31, 2020
487,000

 
10.87
 
3.5
 
$

Expected to vest

 
 
 
 
 
$

Exercisable at March 31, 2020
487,000

 
10.87
 
3.5
 
$


The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At March 31, 2020, options to purchase approximately 0.1 million shares of common stock were in-the-money.

Since no options were granted, the weighted average grant-date fair value per share of options granted during the three months ended March 31, 2020 and 2019, respectively, was $0.

The Company has no non-vested options as of March 31, 2020.

Restricted Stock Unit Awards
Generally, restricted stock unit awards are granted annually to officers and directors of the Company under the provisions of the Plan. Restricted stock units are also granted ad hoc to attract or retain key personnel, and the terms and conditions under which these restricted stock units vest vary by award. The fair market value of restricted stock units granted is equal to the Company’s closing stock price on the date of grant. Restricted stock units granted generally vest ratably over periods ranging from 2.5 to 5 years. Certain awards also include vesting provisions based on performance metrics. Upon vesting, the restricted stock units are settled by issuing one share of Company common stock per unit.

A summary of the status of the Company's restricted stock units activity is as follows:
 
Shares of Restricted Stock Units

 
Weighted Average Grant Date Price per Share

Outstanding at January 1, 2020
298,864

 
9.78
Granted
248,265

 
6.50

Forfeited

 

Vested
(36,268
)
 
6.32
Outstanding at March 31, 2020
510,861

 
9.80

Expected to vest
510,861

 
 

14. INCOME TAXES

We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. We received notification from the Internal Revenue Service ("IRS") in February 2020 on the selection of our December 31, 2017 tax return for audit. In prior years, we received notification that Texas selected our R&D credit calculations for 2014 and 2015 for audit. The state of Texas had suspended their examination while they comprehensively reviewed their audit procedures for consistency. During the fourth quarter of 2019, we received notice that Texas had completed their review of their procedures and initiated additional requests for information. We do not expect any material changes related to the federal or Texas audits. Our federal and Texas tax returns remain open for examination for the years 2016 through 2019. As of March 31, 2020 and December 31, 2019, respectively, we recognized no adjustments for uncertain tax positions or related interest and penalties.

The effective tax rate varies from the federal statutory rate of 21%, primarily as a result of state tax expense, stock based compensation, foreign taxes and a research and development credit for the three months ended March 31, 2020 and 2019. We

 
 
 
15
 




continue to maintain a valuation allowance against certain deferred tax assets, specifically for mining claims for PEVM, where realization is not certain.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted into law. The CARES Act allows for the deferral of income and social security tax payments, a five–year carryback for net operating losses ("NOLs"), changes to interest expense and business loss limitation rules, certain new tax credits, and certain new loans and grants to businesses. We have recognized the provisional amounts of $17.8 million for the NOLs carryback and they are included in the income tax receivable of $16.1 million. The Company will continue to evaluate the CARES Act for opportunities as additional information is released. See Subsequent Events disclosure at Note 19.

15. SEGMENT INFORMATION

We operate through business segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by our key decision maker, who is our Chief Executive Officer. Segment data may include rounding differences.

Our Specialty Petrochemicals segment includes SHR and GSPL. Our Specialty Waxes segment is TC. We also separately identify our corporate overhead which includes administrative activities such as legal, accounting, consulting, investor relations, officer and director compensation, corporate insurance, and other administrative costs.

 
Three Months Ended March 31, 2020
 
Specialty Petrochemicals

 
Specialty Waxes

 
Corporate

 
Eliminations

 
Consolidated

 
(in thousands)
Product sales
$
50,386

 
$
6,797

 
$

 
$

 
$
57,183

Processing fees
1,244

 
3,640

 

 

 
4,884

Total revenues
51,630

 
10,437

 

 

 
62,067

Operating income (loss) before depreciation and amortization
6,490

 
1,066

 
(2,415
)
 

 
5,141

Operating income (loss)
3,872

 
(262
)
 
(2,422
)
 

 
1,188

Income (loss) from continuing operations before taxes
2,942

 
(242
)
 
(2,490
)
 

 
210

Depreciation and amortization
2,617

 
1,328

 
7

 

 
3,952

Capital expenditures
1,601

 
316

 

 

 
1,917

 
Three Months Ended March 31, 2019
 
Specialty Petrochemicals

 
Specialty Waxes

 
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 income (loss) before depreciation and amortization
11,407

 
(849
)
 
(2,305
)
 

 
8,253

Operating income (loss)
8,333

 
(2,197
)
 
(2,310
)
 

 
3,826

Income (loss) from continuing operations before taxes
7,135

 
(2,539
)
 
(2,292
)
 

 
2,304

Depreciation and amortization
3,074

 
1,348

 
20

 

 
4,442

Capital expenditures
1,378

 
509

 

 

 
1,887


 
 
 
16
 




 
March 31, 2020
 
Specialty Petrochemicals

 
Specialty Waxes

 
Corporate

 
Eliminations

 
Consolidated

 
(in thousands)
Trade receivables, product sales
$
20,556

 
$
4,079

 
$

 
$

 
$
24,635

Trade receivables, processing fees
811

 
2,950

 

 

 
3,761

Intangible assets, net

 
14,275

 

 

 
14,275

Total assets
293,382

 
91,674