Business Description:
$140 billion potential market with currently $27 billion market and $38 billion existing customer opportunity
Major Competitors: SpartanNash (NASDAQ:SPTN), C&S Wholesales Groger and Kehe
Minor competitors (serves mostly to restaurants, schools and other small units): Sysco (NYSE:SYY) and US Food Holdings (NYSE:USFD)
Over 60 distribution centers (total 28.8 million sq ft) vs 19 for SPTN (8.2 million sq ft)
Diversified with moat in fast growing natural and organic
Customers:
Chains
Independent retailers
supernatural
retail
Largest customer: Whole Foods with about 18% of revenues in 2020
6 product categories:
Grocery and general merchandise
Produce
Perishables and frozen foods
Nutritional supplements and sports nutrition
Bulk and food service products
Personal care items
2 business segments
Wholesale
Retail
Catalysts:
Changing consumer habits into natural and organic
Deal with Amazon extended till 2027
Divestiture of retail business to raise capital for debt repayment
Pandemic favors business
Leased trucks - no fear of depreciation of assets or electrification
Risks:
Took high debt for Supervalu acquisition with high interest payments
Depends on derivatives to handle debt repayments at lower interest rates
Unionized workers and high pension expenses
Financial Analysis:
Revenues of $6.9 billion in 2Q21 up 7.1% from 2Q20
Revenues of $27.9 billion in TTM up from 26.5 billion in FY20 (ended in July 2020) and $8.4 billion in FY16
Adjusted EBITDA of $206 million in 2Q21 up 54% from 2Q20
Net income of $58.9 million in 2Q21 vs net loss of $30.7 million in 2Q20
Net income of $198 million in TTM vs net loss of $254 million for FY20
Net loss in FY19 and FY20 mostly because of impairment of goodwill of $293 million and $495 million respectively, after the Supervalu acquisition
FCF of $365 million vs $284 million for FY20 (excluding $102 million in divestitures from sales of retail stores)
Owner’s earnings (including divestitures as they offset interest payments to bondholders) of $403 million in TTM vs $382 million in FY20
Net debt repayment of $242 million with lowering of borrowing rate by 0.75 pp
Balance Sheet
Total assets: $7.49 billion ; total liabilities: $6.26 billion; book value: $1.22 billion
Cash: $40 million, debts: $2.37 billion, current assets: $3.64 million, current liabilities: $2.29 billion
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