Haymaker Acquisition Corp. 4 10-K Analysis & Summary – 3/14/2025

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Haymaker Acquisition Corp. 4

10-K

Annual report

Filing date:

03/14/2025

TLDR:

ELI5:

Haymaker Acquisition Corp. 4 is a special purpose acquisition company (SPAC) that is looking for a company to buy. They made money from interest on their savings account, but they need to find a company to buy by July 2025 or they might have to shut down.

Accession #:

0001410578-25-000354

Published on

March 16, 2025

Analyst Summary

Net income increased significantly due to interest earned on the Trust Account, but administrative expenses also rose.
The company faces a looming deadline of July 28, 2025, to complete a Business Combination.
Management acknowledges the impact of the 2024 SPAC Rules on completing a Business Combination.
The company’s liquidity condition raises substantial doubt about its ability to continue as a going concern.
The level of redemptions by public shareholders will be a critical metric to watch as it will directly impact the amount of capital available for a Business Combination.
Return on Assets (ROA) is 4.53%.
Current Ratio is 0.36, indicating potential liquidity issues.
Price-to-Earnings Ratio (P/E) is 28.68.
Net Income Growth is 140.87%.
EPS Growth is 22.58%.

Opportunities and Risks

Risk: Failure to complete Business Combination within the Combination Period.
Risk: High redemption rates by Public Shareholders could significantly reduce the capital available.
Risk: Competition from other SPACs and private equity firms.
Risk: Changes in SPAC regulations could increase costs and complexity.
Risk: Management and the Sponsor may have conflicts of interest in selecting a target.
Risk: Market conditions, economic uncertainty or downturns could adversely affect the ability to consummate a Business Combination.
Opportunity: Experienced management team with a track record of completing Business Combinations.
Opportunity: Focus on the consumer and consumer-related products and services industries offers potential for attractive acquisitions.
Opportunity: Funds held in the Trust Account provide a significant source of capital for a Business Combination.

Potential Implications

Company Performance

Failure to secure a Business Combination target by July 2025 could lead to liquidation.
High redemption rates could limit the capital available for a Business Combination, impacting the size and quality of potential targets.
Increased regulatory scrutiny and costs associated with the 2024 SPAC Rules could negatively impact profitability.
The company’s ability to continue as a going concern is uncertain due to limited cash outside the Trust Account.

Stock Price

Successful identification and completion of a Business Combination with a promising target could lead to an increase in stock price.
High redemption rates or failure to secure a target could lead to a decrease in stock price.
Any extensions to the Combination Period could be viewed negatively by investors and impact the stock price.

SEC Filing Report: Haymaker Acquisition Corp. 4 (10-K)

Executive Summary

This report analyzes Haymaker Acquisition Corp. 4’s (HYAC) 10-K filing for the fiscal year ended December 31, 2024. HYAC is a blank check company (SPAC) actively seeking a Business Combination. Key findings include a net income driven by interest earned on the Trust Account, offset by administrative expenses. The company faces a looming deadline to complete a Business Combination by July 28, 2025, and a potential going concern issue due to limited cash outside the Trust Account. The report highlights risks associated with SPAC regulations, competition, and potential conflicts of interest. Overall Assessment: Hold. Given the uncertainty surrounding the Business Combination and the potential for redemption, a hold rating is appropriate. Recommendation: Monitor HYAC’s progress in identifying and securing a Business Combination target, paying close attention to shareholder redemption rates and any extensions to the Combination Period.

Company Overview

Haymaker Acquisition Corp. 4 is a Cayman Islands-based SPAC formed to acquire a business in the consumer and consumer-related products and services industries. The company completed its IPO on July 28, 2023, raising $230 million. HYAC’s management team has a track record with previous Haymaker SPACs. The company is subject to SEC regulations governing SPACs, including the new 2024 SPAC Rules, and NYSE listing requirements.

Detailed Analysis

Financial Statement Analysis

Key Ratios and Trends

Metric	2024	2023	Trend
Net Income	$11,323,538	$4,701,033	Increasing
Interest Income on Trust Account	$12,263,797	$5,196,857	Increasing
General & Administrative Expenses	$940,259	$495,824	Increasing
Cash Outside Trust Account	$101,126	$205,975	Decreasing
Working Capital	$(509,895)	N/A	N/A

Analysis: The increase in net income is primarily driven by higher interest income earned on the Trust Account. However, the increase in general and administrative expenses and the decrease in cash outside the Trust Account are concerning, highlighting the costs associated with maintaining the SPAC and searching for a target. The negative working capital indicates a potential liquidity issue.

Management’s Discussion and Analysis (MD&A) Insights

Management emphasizes its experience in the consumer and consumer-related products and services industries and its network for sourcing deals. The MD&A acknowledges the impact of the 2024 SPAC Rules and the need to complete a Business Combination by July 28, 2025. The MD&A also mentions the possibility of extending the Combination Period, which would require shareholder approval and potential redemptions.

Red Flags

Going Concern: The MD&A explicitly states that the Company’s liquidity condition raises substantial doubt about its ability to continue as a going concern.
SPAC Rule Changes: The MD&A acknowledges that the 2024 SPAC Rules may materially affect the ability to negotiate and complete the initial Business Combination and may increase the costs and time related thereto.
Time Constraint: The company must complete its initial Business Combination by July 28, 2025.

Uncommon Metrics

The filing does not explicitly disclose uncommon metrics. However, the level of redemptions by public shareholders will be a critical metric to watch as it will directly impact the amount of capital available for a Business Combination.

Risk and Opportunity Assessment

Risks

Failure to Complete Business Combination: The company may not be able to find a suitable target or complete a Business Combination within the Combination Period, leading to liquidation.
Redemption Risk: High redemption rates by Public Shareholders could significantly reduce the capital available for a Business Combination.
Competition: The SPAC market is competitive, and HYAC faces competition from other SPACs and private equity firms.
Regulatory Risk: Changes in SPAC regulations could increase costs and complexity.
Conflicts of Interest: Management and the Sponsor may have conflicts of interest in selecting a target.
Economic Downturn: Market conditions, economic uncertainty or downturns could adversely affect the ability to consummate a Business Combination.

Opportunities

Experienced Management Team: The management team has a track record of completing Business Combinations with previous Haymaker SPACs.
Target Industry: The focus on the consumer and consumer-related products and services industries offers potential for attractive acquisitions.
Trust Account: The funds held in the Trust Account provide a significant source of capital for a Business Combination.

Conclusion and Actionable Insights

HYAC is a SPAC operating in a challenging environment. While the management team has experience, the company faces significant risks, including the looming deadline to complete a Business Combination, potential redemptions, and regulatory changes. The going concern warning is a major concern. Overall Assessment: Hold. Recommendation: Monitor HYAC’s progress in identifying and securing a Business Combination target. Closely track shareholder redemption rates and any attempts to extend the Combination Period. A buy recommendation would only be warranted if HYAC secures a promising target with favorable terms and low expected redemptions. A sell recommendation would be warranted if the company fails to secure a target or if redemption rates are expected to be high.

Financial Analysis of Haymaker Acquisition Corp. 4 (HYAC)

1. Commentary

Haymaker Acquisition Corp. 4 (HYAC), a special purpose acquisition company (SPAC), reported a net income of $11.3 million for the year ended December 31, 2024, a significant increase from $4.7 million in the prior period, driven primarily by interest earned on the Trust Account. The company is still in the pre-business combination phase, with its primary focus on identifying and acquiring a target business. A key risk is the upcoming deadline of July 28, 2025, to complete a business combination. The company’s financial statements reflect the typical structure of a SPAC, with a substantial portion of assets held in a Trust Account and a focus on managing operating expenses while seeking a suitable target.

2. Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin
- Metric: Not applicable for a SPAC in the pre-business combination phase.
Operating Profit Margin
- Metric: Operating Loss of $940,259 / No Revenue = Not Meaningful
Net Profit Margin
- Metric: $11,323,538 / No Revenue = Not Meaningful
Return on Assets (ROA)
- Metric: $11,323,538 / $250,043,147 = 4.53%
Return on Equity (ROE)
- Metric: $11,323,538 / (-$9,159,895) = Negative, Not Meaningful
Earnings Per Share (EPS) – Basic and Diluted
- Metric: $0.38 (Non-Redeemable Class A and Class B Ordinary Shares)

Liquidity

Current Ratio
- Metric: $282,493 / $792,388 = 0.36
Quick Ratio (Acid-Test Ratio)
- Metric: ($282,493 – $0) / $792,388 = 0.36 (Assuming no inventory)
Cash Ratio
- Metric: $101,126 / $792,388 = 0.13

Solvency/Leverage

Debt-to-Equity Ratio
- Metric: $9,442,388 / (-$9,159,895) = Negative, Not Meaningful
Debt-to-Assets Ratio
- Metric: $9,442,388 / $250,043,147 = 0.038 or 3.8%
Interest Coverage Ratio (Times Interest Earned)
- Metric: Not meaningful as there is no interest expense.

Activity/Efficiency

Inventory Turnover
- Metric: Not applicable for a SPAC.
Days Sales Outstanding (DSO)
- Metric: Not applicable for a SPAC.
Days Payable Outstanding (DPO)
- Metric: Not applicable for a SPAC.
Asset Turnover
- Metric: Not applicable as there are no sales.

Valuation

Price-to-Earnings Ratio (P/E)
- Metric: $10.90 / $0.38 = 28.68
Price-to-Book Ratio (P/B)
- Metric: Market Cap / Book Value of Equity. Book Value of Equity = -$9,159,895. Market Cap = 23,797,600 shares * $10.90 = $259,393,840. P/B = Not Meaningful due to negative book value.
Price-to-Sales Ratio (P/S)
- Metric: Not applicable as there are no sales.
Enterprise Value to EBITDA (EV/EBITDA)
- Metric: EV = Market Cap + Debt – Cash. Market Cap = $259,393,840. Debt = $9,442,388. Cash = $101,126 + $249,760,654 = $249,861,780. EV = $259,393,840 + $9,442,388 – $249,861,780 = $18,974,448. EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = $11,323,538 + 0 + 0 + 0 = $11,323,538. EV/EBITDA = $18,974,448 / $11,323,538 = 1.67

Growth Rates

Revenue Growth
- Metric: Not applicable as there is no revenue.
Net Income Growth
- Metric: ($11,323,538 – $4,701,033) / $4,701,033 = 140.87%
EPS Growth
- Metric: ($0.38 – $0.31) / $0.31 = 22.58%

Other Relevant Metrics

Administrative Services Agreement and Advisory Services Agreement: The company has agreements in place for administrative and advisory services, with monthly payments to affiliates of the Vice President and CFO, respectively. The advisory service payments are contingent upon the successful completion of a business combination. These related-party transactions are common in SPACs but warrant scrutiny to ensure they are conducted at arm’s length.
Trust Account: A significant portion of the company’s assets is held in a Trust Account, earmarked for the business combination. The interest earned on this account is the primary driver of net income.
WCL Promissory Note: The company has a Working Capital Loan (WCL) Promissory Note with the Sponsor, which can be converted into units of the post-business combination entity. This provides the Sponsor with potential upside and aligns their interests with the success of the business combination.