Business Context and Reporting Period
Waldencast plc filed a shell company report on Form 20-F dated August 3, 2022, covering the July 27, 2022 closing of its Business Combination. The filing is not a conventional 2022 first-quarter earnings report. Waldencast, formerly Waldencast Acquisition Corp., domesticated from the Cayman Islands to Jersey on July 26, 2022 and acquired Obagi Global Holdings Limited and Milk Makeup LLC as indirect subsidiaries on July 27, 2022.
The filing incorporates historical and unaudited condensed financial statements for Waldencast, Obagi and Milk from the Form F-4. The provided text does not present a standalone Q1 2022 income statement, cash flow statement or operating results for the combined company.
Key Financial Metrics
| Metric | Amount or disclosure | Basis |
|---|---|---|
| Cash and cash equivalents | $58.5 million | Unaudited pro forma as of March 31, 2022 |
| Total equity | $862.4 million | Unaudited pro forma as of March 31, 2022 |
| Non-current borrowings | $174.5 million | Unaudited pro forma as of March 31, 2022 |
| Current borrowings | $7.8 million | Unaudited pro forma as of March 31, 2022 |
| Total indebtedness | $182.2 million | Unaudited pro forma as of March 31, 2022 |
| Total capitalization | $1,044.6 million | Unaudited pro forma as of March 31, 2022 |
| PIPE financing | $118.0 million | $105.0 million initial investment, $8.0 million June investment and $5.0 million July investment |
| Ordinary shares outstanding | 107,564,779 | As of August 3, 2022; 86,460,554 Class A and 21,104,225 Class B |
| Warrants outstanding | 29,533,332 | Generally exercisable at $11.50 per share |
The provided filing text does not clearly state consolidated revenue, net income or loss, operating cash flow, free cash flow, gross margin, operating margin or EBITDA for the requested period.
Material Changes Versus the Prior Comparable Period
- The company transitioned from a blank-check company with no material operating business to a consumer beauty company holding Obagi and Milk.
- The July 2022 Business Combination included the Obagi merger, the acquisition of Milk, the Jersey domestication and the related PIPE and forward-purchase transactions.
- Waldencast Class A ordinary shares and warrants began trading on Nasdaq on July 28, 2022 under the symbols WALD and WALDW.
- The company entered into a credit agreement dated June 24, 2022. Pro forma March 31, 2022 indebtedness was $182.2 million.
- A $1.5 million sponsor working-capital note was converted into 1.0 million warrants at $1.50 per warrant. Separate non-convertible working-capital notes totaling $1.05 million were repaid at closing.
- Former Chief Financial and Technology Officer and principal financial officer Tassilo Festetics resigned effective June 10, 2022.
Guidance, Outlook, Risks and Unusual Items
The filing does not provide quantitative revenue, earnings or cash-flow guidance. Management’s operating and financial review is incorporated by reference from the Form F-4 rather than reproduced in the provided text.
- Forward-looking statements are subject to substantial risks and uncertainties, including the risks incorporated from the Form F-4.
- The company identifies exposure to interest-rate, foreign-exchange and inflation risks, although it states these risks were not material to its financial condition or results of operations at the filing date.
- Liquidity and leverage should be evaluated in light of $58.5 million of pro forma cash and $182.2 million of pro forma indebtedness as of March 31, 2022.
- Potential dilution is significant: 29.5 million warrants were outstanding, in addition to employee RSUs and stock rights. The filing reports 112.8 million total diluted shares before including warrant dilution.
- The company has never declared or paid cash dividends and does not expect to pay dividends in the foreseeable future.
- Related-party arrangements include sponsor financing, forward-purchase agreements, registration rights, lock-up arrangements and Obagi China transition, licensing and supply agreements.
Important Facts for Investors to Verify
- Review the Form F-4 financial statements for historical and Q1 2022 revenue, profitability, margins and cash flows for Obagi and Milk, which are not clearly stated in this filing text.
- Reconcile the pro forma capitalization, credit agreement terms, interest rates, maturities, covenants and available liquidity.
- Assess the effect of the 29.5 million warrants, employee awards and exchangeable Class B shares on diluted ownership.
- Review the incorporated Form F-4 risk factors, including integration, consumer demand, supply chain, international operations and execution risks.
- Evaluate related-party arrangements and the concentration of ownership and voting power among Cedarwalk, the sponsor, Dynamo Master Fund and Burwell Mountain Trust.
- Confirm post-closing operating results and cash balances in subsequent periodic reports, because the figures in this filing are primarily pro forma or transaction-related.