Utz Brands, Inc. quarterly report, Q3 FY2019

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Filing identity and business context

Important issuer mismatch: The supplied filing is Collier Creek Holdings’ Form 10-Q, not a filing by Utz Brands, Inc. It covers the quarter ended September 30, 2019. Collier Creek was a blank-check company seeking a business combination, with an intended focus on consumer goods; it had not yet identified or completed a target transaction in this filing.

Financial results and liquidity

  • Revenue and operating activity: No operating revenue; the company reported that it would not generate operating revenues until completing a business combination.
  • Third-quarter results: Net income was $1.78 million, comprising $2.23 million of trust-account investment income offset by $444,442 of general and administrative expense. Basic and diluted Class A earnings per share were $0.05.
  • Nine-month results: Net income was $6.44 million, including $7.17 million of trust-account investment income and $729,938 of general and administrative expense. Basic and diluted Class A earnings per share were $0.16.
  • Margins: Not meaningful for this pre-combination blank-check company; the filing reports no operating revenue.
  • Cash flow: Cash used in operating activities was $272,875 for the nine months ended September 30, 2019. Cash at period-end was $672,015, down from $944,890 at December 31, 2018.
  • Trust and liquidity: Trust-account cash and marketable securities totaled $449.22 million, versus $442.05 million at year-end 2018. Management reported working capital of approximately $387,000.
  • Debt and liabilities: No Working Capital Loans were outstanding. Total liabilities were $15.93 million, including $15.45 million of deferred underwriting commissions and legal fees. Shareholders’ equity was $5.00 million; 42.03 million Class A shares were classified as subject to possible redemption.

Changes versus prior comparable periods

Third-quarter net income of $1.78 million contrasted with a $10 loss in the third quarter of 2018, when the company had not yet completed its October 2018 IPO and had no reported trust investment income. The filing does not provide a comparable nine-month 2018 operating period; its comparative 2018 results cover inception through September 30, 2018. The increase in 2019 earnings primarily reflects investment income earned on the trust assets, rather than operating business growth.

Outlook, risks, and unusual items

  • The company had until October 10, 2020—24 months after its IPO—to complete a business combination. If it failed to do so, it was required to cease operations, redeem public shares, and liquidate, subject to applicable requirements.
  • Management said the mandatory liquidation and dissolution if no transaction is completed raised substantial doubt about the company’s ability to continue as a going concern. No liquidation-related adjustments were recorded.
  • Public shareholders could redeem shares in connection with a business combination; redemptions could affect transaction funding. The company also had a forward purchase agreement for $35 million of shares and warrants, conditional on closing a business combination.
  • A $15.45 million deferred underwriting commission and $50,000 of deferred legal fees were payable only upon completion of a business combination. The sponsor’s potential working-capital lending was discretionary, not committed.
  • No formal financial guidance was provided. The company reported no legal proceedings, no applicable risk-factor update, no off-balance-sheet arrangements, and effective disclosure controls; it reported no market or interest-rate risk at quarter-end.

Key facts for investors to verify

  1. Confirm the intended issuer: this filing is for Collier Creek Holdings, not Utz Brands, Inc.
  2. Verify whether and when Collier Creek subsequently completed a business combination, and review the transaction terms and redemption levels.
  3. Assess liquidity outside the trust account, the company’s expenses and its ability to fund transaction costs before the October 10, 2020 deadline.
  4. Review the treatment of redeemable public shares, deferred fees, forward-purchase securities, and founder-share conversion and dilution provisions.