Willscot Holdings Corp quarterly report, Q3 FY2016

Filing identity and reporting period

Important mismatch: The supplied filing is Double Eagle Acquisition Corp.’s Form 10-Q for the quarter ended September 30, 2016—not a WillScot Holdings Corp. filing. Double Eagle was a blank-check company seeking a business combination, not an operating modular-space business.

Financial results and liquidity

  • Revenue: None reported for the three or nine months ended September 30, 2016.
  • Net income: $190,937 for the quarter and $285,396 for the nine months, primarily reflecting $328,313 and $827,797, respectively, of trust-account interest. General and administrative expense was $137,376 and $542,401.
  • Cash flow: Nine-month operating cash provided was $165,365; trust investments used $827,797, leaving cash outside the trust of $345,429, down from $1,007,861 at year-end 2015.
  • Balance sheet: Assets totaled $501.4 million, including $500.9 million held in trust. Current liabilities were $112,671; total liabilities were $19.6 million, including $19.5 million of deferred underwriting compensation payable only if a business combination closes. The filing reports no long-term debt.
  • Equity and redemptions: 47,674,947 Class A shares were classified as subject to possible redemption at $476.7 million. Permanent shareholders’ equity was $5.0 million.
  • Margins: Not meaningful because the company had no revenue.

Changes versus prior period

Against the prior-year comparison—which covers only the period from inception on June 26, 2015, through September 30, 2015—the company moved from a $9,793 quarterly loss to $190,937 quarterly income; trust interest rose from $1,096 to $328,313. Nine-month 2016 results are not directly comparable to the prior-year inception-period figures. Versus December 31, 2015, cash outside the trust fell by $662,432, while trust assets increased by about $827,797.

Outlook, risks, and unusual items

  • The company had until September 16, 2017, 24 months after its IPO closing, to complete a business combination; otherwise it was required to wind up and redeem public shares under the stated terms. Management said mandatory liquidation raised substantial doubt about the company’s ability to continue as a going concern.
  • Management expected further acquisition-search costs and said additional financing might be needed if costs exceeded estimates or to complete a transaction. Sponsor and insider loans were not committed.
  • The trust held short-term U.S. Treasury securities and cash. Management considered interest-rate exposure immaterial given the short maturities.
  • A business combination required a target meeting the stated 80% trust-asset fair-value test, subject to other conditions. Public-share redemptions could reduce funds available, and any transaction could involve dilution or new debt.
  • The $19.5 million deferred underwriting fee was contingent on completing a business combination. No legal proceedings or material changes to previously disclosed risk factors were reported. Management concluded disclosure controls were effective.

Investor verification points

  1. Verify the filing belongs to Double Eagle Acquisition Corp.; it does not report WillScot results.
  2. Check the trust balance, redemption terms, and the September 16, 2017 combination deadline stated in this 2016 filing.
  3. Confirm whether a business combination occurred, and how public-share redemptions and the deferred underwriting fee were ultimately handled.
  4. Review subsequent filings for financing needs, expenses, and developments affecting the going-concern uncertainty.