Business context and reporting period
This is Industrea Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2018—not an operating-company 10-Q filed by Concrete Pumping Holdings, Inc. Industrea was a blank-check company and reported no operating activity or revenue; its reported results primarily reflect transaction-related costs and interest earned on its trust assets. On September 7, 2018, Industrea agreed to combine with Concrete Pumping Holdings (CPH).
Financial results and liquidity
| Metric | Three months ended September 30, 2018 | Nine months ended September 30, 2018 |
|---|---|---|
| Operating revenue | None | None |
| Trust investment income | $1.12 million | $3.11 million |
| General and administrative costs | $3.39 million | $4.36 million |
| Net income (loss) | $(2.55) million | $(2.02) million |
| Basic loss per share | $(0.37) | $(0.29) |
| Net cash used in operating activities | Not stated for quarter | $(1.50) million |
At September 30, 2018, cash outside the trust was $321,713; trust cash and marketable securities totaled $237.62 million. Current liabilities were $4.57 million, current assets $495,879, and working capital deficit approximately $4.1 million. Total liabilities were $12.62 million, including $8.05 million of deferred underwriting commissions payable only if a business combination closes. Industrea reported no long-term debt at quarter-end. Stockholders’ equity was $5.00 million; 21.62 million Class A shares were classified as subject to possible redemption.
Material changes versus comparable periods
Third-quarter net results shifted from $144,438 income in 2017 to a $2.55 million loss in 2018. General and administrative costs increased from $195,091 to $3.39 million, with approximately $3.3 million of 2018 quarterly costs attributed to the CPH merger. For the first nine months of 2018, the $2.02 million loss compared with $143,564 income from inception through September 30, 2017; the periods are not directly comparable because the 2017 period began at company inception. Accrued expenses rose to $3.99 million from $425,181 at December 31, 2017, principally in the context of merger costs. Trust assets increased from $235.20 million to $237.62 million.
Merger, outlook and risks
The proposed transaction valued CPH at $610 million, subject to customary adjustments. The expected cash consideration was $446.9 million to $550.0 million, varying with shareholder redemptions. Proposed financing included a $350 million seven-year term loan, a $60 million five-year asset-based revolver, and equity subscriptions, including $54.4 million from an Argand affiliate and additional amounts tied to redemptions. These were commitments or planned transaction financing, not debt outstanding on Industrea’s September 30 balance sheet. Closing remained subject to conditions, including Industrea shareholder approval; the filing provides no operating guidance for CPH.
Industrea had to complete a business combination by August 1, 2019 or redeem public shares and liquidate. Management said this deadline raised substantial doubt about Industrea’s ability to continue as a going concern; no liquidation adjustments were recorded. Risks disclosed for CPH included construction-market cyclicality and seasonality, adverse weather, competition and pricing, fleet maintenance and replacement needs, labor availability and multiemployer pension exposure, environmental and safety liabilities, foreign-exchange and U.K. risks, and the substantial debt planned for the combined company. The filing also highlighted potential dilution, sponsor and management conflicts, transaction costs, and uncertainty about listing and post-merger trading.
Most important facts for investors to verify
- Confirm the merger’s eventual closing status, final purchase consideration, redemption level, and shareholder approval; the transaction was pending at the filing date.
- Review CPH’s own financial statements and the merger’s pro forma disclosures for revenue, profitability, cash flow, debt, and capital expenditure trends; this 10-Q does not provide CPH’s operating results.
- Verify the final debt and equity financing terms, including leverage, interest rates, covenants, and any changes to committed facilities.
- Assess dilution and ownership under actual redemptions, rollovers, PIPE issuances, preferred-stock conversion, founder-share adjustments, and warrant exercise.
- Reconcile the filing’s chronology concerning approximately $311,000 owed to the Sponsor: it describes the amount as drawn by September 30, while the Sponsor Convertible Note is dated October 9, 2018.
- Evaluate the going-concern deadline, available non-trust cash, and reliance on sponsor funding if the transaction did not close.