Willscot Holdings Corp quarterly report, Q1 FY2017

Business Context and Reporting Period

The supplied filing is Double Eagle Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2017. This does not match the request metadata naming WillScot Holdings Corp. Double Eagle describes itself as a blank-check company formed to pursue a business combination, not an operating business; it reports no revenue and says it had not selected a target.

Financial Results and Position

  • Revenue: $0 for the quarter, unchanged from Q1 2016.
  • Profit and expenses: General and administrative expense was $331,416, versus $277,474 in Q1 2016. Operating loss was $331,416, compared with $277,474. Interest earned on trust investments was $526,144, versus $230,730, resulting in net income of $194,728; Q1 2016 had a net loss of $46,744. Basic earnings per share were $0.01; diluted earnings per share were reported as $0.00.
  • Cash flow: Operating activities provided $345,370, compared with $48,622 used in Q1 2016. Trust income reinvested in the trust account was $526,144; cash outside the trust fell by $180,774 to $7,289.
  • Assets and liquidity: Total assets were $501.9 million, including $501.9 million in the trust account. Current liabilities were $200,513, and the company reported a working-capital deficit of approximately $146,000. Management said it might seek sponsor or other financing for working capital; such funding was not committed.
  • Debt and obligations: The filing reports no long-term debt. Deferred underwriting compensation of $19.5 million is payable only if a business combination is completed. There were no reported off-balance-sheet arrangements.
  • Margins: Not meaningful for this pre-combination company, which had no revenue.

Material Changes Versus the Prior Comparable Period

Compared with Q1 2016, the operating loss widened by $53,942, while trust interest increased by $295,414. The result shifted from a $46,744 net loss to $194,728 net income, primarily reflecting the higher trust interest. Cash outside the trust declined from $728,509 at March 31, 2016 to $7,289 at March 31, 2017.

Outlook, Risks, and Unusual Items

  • The company had until September 16, 2017—24 months after its IPO—to complete a business combination. If it failed, it was required to stop operations, redeem public shares from the trust account subject to the stated terms, and liquidate.
  • The filing states that the required liquidation raises substantial doubt about the company’s ability to continue as a going concern. It had approximately $7,300 of outside cash and a working-capital deficit at quarter-end, and sponsor or other financing was uncertain.
  • Management said it would continue identifying and evaluating targets and expected further expenses. It cautioned that additional financing might be needed to fund operations or complete a transaction.
  • Trust assets were primarily short-term U.S. Treasury securities. Management considered interest-rate exposure not material given their short maturities. No legal proceedings or material changes to previously disclosed risk factors were reported.
  • Net income is an unusual indicator of operating performance here: the company had an operating loss and no revenue, while trust interest drove the quarter’s positive net result.

Important Facts for Investors to Verify

  • Confirm the intended issuer: the provided filing is for Double Eagle Acquisition Corp., not WillScot Holdings Corp.
  • Verify whether a business combination was announced or completed by the September 16, 2017 deadline, and the resulting treatment of public shares and warrants.
  • Review the trust balance, redemption terms, and the $19.5 million deferred underwriting fee payable upon a completed combination.
  • Assess whether the company obtained working-capital financing, given its limited outside cash, deficit, and going-concern disclosure.
  • Check subsequent filings for changes to the target search, deadline, liquidity, or liquidation status.