John A. Jaeger, CCE, MBA

Transcription

1 John A. Jaeger, CCE, MBA

2 Session Outline General Info Review Company Introduction & Industry Review Company Financials Ratio Analysis Discussion Strengths & Weaknesses Decision

3 Extend Credit Management Financial Analyst Investor

4 Trend analysis comparing the company to itself Comparing the company to a like company Compare the company to published standards Compare the company to your standards

5 Establish the Objectives Study the Industry and Economic Climate Know the Firm Evaluate the Financial Statements Summarize the Findings

6 Category for Ratios Liquidity Short term solvency Liquidity Current Assets Activity Leverage Debt Profitability

7 Those who fail to learn from history are doomed to repeat it. Sir Winston Churchill

8 Supervalu Inc. Eden Prairie, MN

9 Current Structure

10 Proposed Structure

11 Supervalu Profile, 2018 Business started in 1925 Core Business Distribution of grocery and other products Provisions of logistics and professional services Value Added Distributor 28 distribution centers 21 Million square feet Over 175,000 sku s 114 Retail stores Cub foods, Shoppers Food & Pharmacy, Hornbachers

12 Strategic pillars of 2018 Growth for Core Wholesale Business Acquired Unified Grocers in 2017 Acquired Associated Grocers of Florida in 2018 Optimizing our Asset base Sell some retail to concentrate on wholesale DE levering the balance sheet Proceeds from asset sales to pay down debt Taking advantage of mergers and acquisitions

13 Additional actions in 2018 Exit Farm and Fresh banner Announced sale of Shop n Save and Shop n Save East retail operations Concentrate on Wholesale Business

14 Financial Statements Balance Sheet Income Statement Statement of Cash Flows

15 Current Assets (000 s) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Assets Cash Investments Net AR Inventory Other PrePaid Discontinued Ops Current Assets 1,861 1,541 1,635 1,700 1,543

16 Non Current Assets 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 PPE 1, ,021 1,470 1,497 Intangibles Other Long Term Deffered Taxes Notes and Goodwill Discontinued Ops Long Term Assets 2,526 2,039 2,735 2,785 2,831 Total Assets 4,387 3,580 4,370 4,485 4,374

17 Current Liabilities (000 s) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Accounts Payable 1, ,121 1,043 Accrued Expenses Current Maturities Other Discontinued Ops Current Liabilites 1,548 1,229 1,572 1,533 1,491

18 Non Current Liabilities (000 s) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Long Term Debt 1,724 1,263 2,197 2,480 2,486 Long Term Capital Lease Pension Discontinued Ops Other Total LTD 2,332 1,968 3,231 3,588 3,613 Total Liabilities 3,880 3,197 4,803 5,121 5,104

19 Shareholder Equity (000 s) Stock 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 APIC 2,848 2,831 2,811 2,813 2,865 Retain Earnings (2,130) (2,175) (2,825) (3,003) (3,195) Other (211) (273) (419) (446) (400) Equity (433) (636) (730) Total Liabilties & Equity 4,387 3,580 4,370 4,485 4,374

20 Income Statement (000 s) Revenue 14,157 12,480 12,907 17,820 17,153 Cost of Goods 12,706 10,693 11,033 15,242 14,623 Gross Profit 1,451 1,787 1,874 2,578 2,530 Impairment Charges 15 6 Operating Expenses 1,258 1,589 1,570 2,154 2,107 Operating Income Interest Exp Non Operating Exp (16) (5) (5) (4) (2) Income Before Tax Tax & Minority 28 (20) Net Income Other (4) Net Earnings

21 Cash Flow Statement (000 s) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Operations Discontinued Ops (4) (101) Investing (506) 1,021 (288) (285) 49 Discontinued Ops (12) 1,170 (116) 135 Financing 87 (1,110) (195) (92) (143) Discontinued Ops (1) (3) (3) (36) Net Cash Change (284) 275 (57) 31 (66) Beginning Cash Ending Cash Discontinued Ops (17) 1, (2)

22 Common size Balance Sheet Income Statement Vertical Horizontal

23 Assets Vertical 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Assets 42.42% 43.04% 37.41% 37.90% 35.28% Non Current Assets 57.58% 56.96% 62.59% 62.10% 64.72%

24 Assets Horizontal 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Assets % 99.87% % % % Non Current Assets 89.23% 72.02% 96.61% 98.38% %

25 Liabilities & Equity Vertical 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Liabilities 35% 34% 36% 34% 34% Non Current 53% 55% 74% 80% 83% Shareholder Equity 12% 11% -10% -14% -17%

26 Liabilities & Equity Horizontal 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Liabilites 54.68% 43.41% 55.53% 54.15% % Non Current Liabilities 64.54% 54.47% 89.43% 99.31% % Shareholder Equity % % 59.32% 87.12% %

27 Equity 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 APIC 64.92% 79.08% 64.32% 62.72% 65.50% Retain Earnings % % % % % Other -4.81% -7.63% -9.59% -9.94% -9.14%

28 Equity Horizontal 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 APIC 99.41% 98.81% 98.12% 98.18% % Retain Earnings 66.67% 68.08% 88.42% 93.99% % Other 52.75% 68.25% % % % Equity % % 59.32% 87.12% %

29 Specific Accounts Working Capital 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Cash Investments 0.93% 9.13% 0.96% 2.54% 1.90% Net AR 13.45% 10.50% 9.29% 10.75% 11.27% Inventory 22.36% 18.02% 16.89% 21.94% 19.68% Accounts Payable 25.96% 22.96% 18.97% 24.99% 23.85%

30 Income Statement 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Revenue 100% 100% 100% 100% 100% COGS 89.75% 85.68% 85.48% 85.53% 85.25% Gross Profit 11.42% 16.71% 16.99% 16.91% 17.30% Operating Expenses 8.89% 12.73% 12.16% 12.09% 12.28% Operating Income 1.36% 1.47% 2.31% 2.38% 2.47% Non Operating Exp -0.11% -0.04% -0.04% -0.02% -0.01% Income Before Tax 0.54% 0.06% 0.84% 1.04% 0.10% Tax & Minority 0.20% -0.16% 0.19% 0.33% 0.03% Net Income 0.35% 0.22% 0.65% 0.71% 0.08%

31 Income Statement Horizontal 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Revenue 82.53% 72.76% 75.25% % % COGS 86.89% 73.12% 75.45% % % Gross Profit 57.35% 70.63% 74.07% % % Impairment Operating Expenses 59.71% 75.42% 74.51% % % Operating Income 45.63% 43.26% 70.45% % % Interest 32.43% 44.47% 47.91% 59.71% % Non Operating Exp % % % % % Income Before Tax % 38.89% % % % Tax & Minority % % % % % Net Income % % % % %

32 Liquidity Ratios Short term solvency Working Capital Current Ratio Quick Ratio Current asset liquidity DSO DPO Inventory Turnover

33 Solvency Working Capital Current Assets Current Liabilities Current Ratio Current Assets / Current Liabilities Quick Ratio (Current Assets Inventory) / Current Liabilities

34 Working Capital, Current Ratio 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Current Assets - Current Liabilities Current Assets/ Current Liabilities

35 Quick Ratio 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 (Current Assets - Inventory) / Current Liabilities

36 Current Asset Liquidity DSO Net AR / Ave Daily Sales Inventory Turnover COGS / Inventory DPO AP/ Ave COGS

37 DSO, Inventory Turnover Accounts Receivable / (Revenue / 365) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/ Inventory / COGS 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/

38 DPO Accounts Payable / (COGS / 365) 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/

39 Profitability Ratios Gross Profit Operating Profit Net Profit

40 Gross Profit Operating Profit / Net Profit 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Gross Profit GP/Rev 10.2% 14.3% 14.5% 14.5% 14.7% Operating Profit OP/REV 1.4% 1.5% 2.3% 2.4% 2.5% Net Profit NP/REV 0.3% 0.2% 0.7% 0.7% 0.1%

41 Activity Ratios Accounts Receivable in Days Inventory in Days Accounts Payable Days Payable Outstanding Account Payable Turnover

42 Accounts Receivable / Inventory in Days AR in Days 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 AR/(Rev/365) Inventory Days Inv / (COGS/365)

43 Accounts Payable AP in Days 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 AP / Ave COGS A/P Turnover COGS / AP

44 Leverage / Debt Debt Ratio Debt to Equity Times Interest Earned

45 Debt Ratio / Debt Equity 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 Debt Ratio TL/TA 88% 89% 110% 114% 117% Debt Equity TL/Equity 765% 835% -1109% -805% -699%

46 Times Interest Earned Times Interest Earned 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 (NI + IntExp)/Int Exp

47 DuPont Method Return on Equity NI / SE Components Margins NI / Sales Turnover Sales / Assets Leverage Assets / Equity

48 Calculation Net Income Sales X Assets X Sales Assets Equity

49 Return on Equity 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/2014 NI/SALES 0.3% 0.2% 0.7% 0.7% 0.1% SALES/TA 322.7% 348.6% 295.4% 397.3% 392.2% TA/EQUITY 865.3% 934.7% % % % 9.7% 7.0% -19.4% -20.0% -1.8% NI / Equity 9.66% 7.05% % % -1.78%

50 Return on Assets Net Profit /Assets 2/24/2018 2/25/2017 2/27/2016 2/28/2015 2/22/ % 0.8% 1.9% 2.8% 0.3%

51 Altman Z Score Given Z=1.2XI + 1.4X X X X5 X1=Working Capital/Total Assets X2=Retained Earnings/Total Assets X3=EBIT/Total Assets X4=Market Value of Equity/Total Liabilities X5=Net Sales/Total Assets

52 Altman Z Score Inputs Total Assets $ 4,387 $ 3,580 $ 4,370 Working Capital $ 313 $ 312 $ 63 Retained Earnings $ (2,130) $ (2,175) $ (2,825) Pre-Tax Earnings (EBIT) $ 77 $ 7 $ 108 Market Value of Equity $ 579 $ 7,241 $ 10,725 (If not public use book value) Reverse 1/7 split Total Liabilities $ 3,880 $ 3,197 $ 4,803 Sales $ 14,157 $ 12,480 $ 12,907 Altman Z Score Z greater than 2.99 Z between Z less than 1.81 Indicates a non-bankrupt company Indicates the Zone of Ignorance Indicates a bankruptcy prone company

53 Discussion