Food & Beverage. M a r k e t M o n i t o r S p r i n g

Transcription

1 Food & Beverage M a r k e t M o n i t o r S p r i n g

2 Investment Banking & Advisory - Selected Recent Food & Beverage Transactions 2

3 Food & Beverage Economic and M&A Landscape: Winter Commentary The return of an inflationary environment has continued to put upward pressure on the FAO Food Price Index in early Near record highs in Consumer Confidence, low unemployment and payroll growth are contributing to increased prices and increased acceptance of higher priced natural, organic, and fresh products. To cater to changing preferences, increased investment will likely be seen in faster-growing perishable categories that are typically found in the perimeter of grocery stores, as opposed to slower-growing processed/packaged food categories typically found in the center of stores. Private label brands will continue to be important for strategic buyers seeking differentiation and an additional profit driver so long as customer sentiment and brand recognition remain positive. Transaction valuations are expected to remain robust in 2018 as Strategic buyers seek to continue to stay on top of changing preferences and leverage potential synergies in packaging and distribution. Record highs in Private Equity committed capital and overhang are also contributing to strong transaction valuations. High transaction valuations likely will cause 2018 transaction volume to be consistent with 2017 levels. Macroeconomic Consumer Indicators Commodity Costs & Pricing Levels Source: Capital IQ, Food and Agriculture Organization of the United Nations, Moss Adams Capital research, USDA, US Agricultural Trade Data, CFRA research

4 Valuations NTM Revenue and EBITDA for publicly-traded Food & Beverage companies are expected to grow 2.8% and 6.7%, respectively. By comparison, the S&P500 s revenue and EBITDA are expected to grow 6.0% and 11.6%, respectively. EV/EBITDA valuations for Food companies have risen through YTD 2018, with the exceptions of the Confectionary index, which has decreased slightly. Valuations for Beverage companies have continued to rise in line with the S&P 500. NTM Estimated Revenue Growth Selected Public Market Valuations: EV / EBITDA 4 Note: The indices in the chart above are composed using the public companies included on the following three pages. Source: Capital IQ

5 Public Food & Beverage Company Valuations ($U.S. in millions, except per share data) 2/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA TTM TTM Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA Sales EBITDA NTM Sales NTM EBITDA Packaged Foods Nestlé S.A. $81.02 $ $78.93 $247,728 $268,384 $92,474 $18, % 5.8% 5.8% 2.9x 14.8x 2.7x 13.9x The Kraft Heinz Company , ,560 26,232 8, % 1.3% (2.2%) 4.3x 13.5x 4.2x 13.8x Mondelez International, Inc ,714 82,175 25,896 4, % 4.3% 18.9% 3.2x 17.8x 3.0x 15.0x General Mills, Inc ,269 41,186 15,568 3, % 1.6% 6.1% 2.6x 12.7x 2.6x 12.0x Kellogg Company ,601 31,951 12,923 2, % 1.3% (7.9%) 2.5x 11.0x 2.4x 11.9x Campbell Soup Company ,215 16,925 7,858 1, % 2.8% (9.4%) 2.2x 8.6x 2.1x 9.5x Conagra Brands, Inc ,400 17,932 7,821 1, % 1.7% 5.2% 2.3x 12.5x 2.3x 11.8x The J. M. Smucker Company ,954 18,711 7,360 1, % 2.0% 5.4% 2.5x 11.5x 2.5x 10.9x McCormick & Company, Incorporated ,778 18,632 4, % 13.4% 24.4% 3.9x 20.7x 3.4x 16.7x Post Holdings, Inc ,034 10,841 5, % 17.9% 32.9% 2.0x 11.1x 1.7x 8.4x 5 The Hain Celestial Group, Inc ,503 4,131 2, % 4.6% 27.6% 1.4x 14.9x 1.4x 11.7x TreeHouse Foods, Inc ,225 4,612 6, % (3.8%) (10.0%) 0.7x 7.7x 0.8x 8.6x B&G Foods, Inc ,061 3,892 1, % 9.1% 16.6% 2.4x 11.9x 2.2x 10.2x SunOpta Inc ,163 1, % 1.5% 40.8% 0.9x 17.8x 0.9x 12.6x Farmer Bros. Co % 14.4% 41.0% 1.1x 14.1x 0.9x 10.0x Median $17,932 $7,360 $1, % 2.8% 6.1% 2.4x 12.7x 2.3x 11.8x Average $42,246 $14,604 $3, % 5.2% 13.0% 2.3x 13.4x 2.2x 11.8x Confectionery The Hershey Company $97.47 $ $95.21 $20,452 $22,993 $7,515 $1, % 5.7% 5.9% 3.1x 12.8x 2.9x 12.0x Tootsie Roll Industries, Inc ,185 2, % NA NA 4.0x 18.7x NA NA Rocky Mountain Chocolate Factory, Inc % NA NA 1.9x 11.0x NA NA Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings. Median $2,069 $518 $ % 5.7% 5.9% 3.1x 12.8x 2.9x 12.0x Average $8,378 $2,691 $ % 5.7% 5.9% 3.0x 14.1x 2.9x 12.0x

6 Public Food & Beverage Company Valuations ($U.S. in millions, except per share data) 2/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA TTM TTM Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA Sales EBITDA NTM Sales NTM EBITDA Baked & Snack Foods J&J Snack Foods Corp ,515 2,385 1, % 2.7% 6.7% 2.1x 14.5x 2.1x 13.6x Lancaster Colony Corporation $ $ $ $3,286 $3,107 $1,202 $ % 2.1% 6.4% 2.6x 15.4x 2.5x 14.5x John B. Sanfilippo & Son, Inc % 4.1% NA 0.9x 10.9x 0.8x NA Snyder's-Lance, Inc ,902 6,020 2, % (0.7%) 17.3% 2.7x 21.4x 2.7x 18.2x Flowers Foods, Inc ,383 5,210 3, % 1.0% 13.5% 1.3x 12.8x 1.3x 11.3x 6 Median $3,107 $1,202 $ % 2.1% 10.1% 2.1x 14.5x 2.1x 14.0x Average $3,489 $1,865 $ % 1.9% 11.0% 1.9x 15.0x 1.9x 14.4x Protein Tyson Foods, Inc. $74.85 $ $57.20 $27,450 $36,860 $39,307 $3, % 4.7% 11.5% 0.9x 9.4x 0.9x 8.4x Hormel Foods Corporation ,479 17,973 9,219 1, % 7.7% 8.0% 1.9x 13.6x 1.8x 12.6x Pilgrim's Pride Corporation ,201 8,369 10,768 1, % 2.5% 4.3% 0.8x 6.1x 0.8x 5.9x Seaboard Corporation 4, , , ,735 3,751 5, % NA NA 0.6x 10.7x NA NA Cal-Maine Foods, Inc ,072 1,873 1, % 17.3% 524.6% 1.6x NM 1.3x 10.7x Sanderson Farms, Inc ,757 2,368 3, % 1.5% (13.4%) 0.7x 4.6x 0.7x 5.4x Median $6,060 $7,514 $ % 4.7% 8.0% 0.9x 9.4x 0.9x 8.4x Average $11,866 $11,622 $1, % 6.8% 107.0% 1.1x 8.9x 1.1x 8.6x Dairy Danone $80.92 $ $75.17 $50,882 $73,419 $29,631 $5, % 4.1% 12.5% 2.5x 14.2x 2.4x 12.6x Glanbia plc ,228 5,680 2, % (1.9%) 1.0% 2.0x 14.3x 2.0x 14.1x Dean Foods Company ,828 7, % (3.2%) 3.2% 0.2x 5.3x 0.2x 5.2x Lifeway Foods, Inc % 0.2% NA 0.9x 16.2x 0.9x NA Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings. Median $3,754 $5,372 $ % (0.9%) 3.2% 1.4x 14.3x 1.5x 12.6x Average $20,260 $10,125 $1, % (0.2%) 5.6% 1.4x 12.5x 1.4x 10.7x

7 Public Food & Beverage Company Valuations ($U.S. in millions, except per share data) 2/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA TTM TTM Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA Sales EBITDA NTM Sales NTM EBITDA Fruit & Vegetable Fresh Del Monte Produce Inc. $47.97 $ $43.02 $2,400 $2,756 $4,086 $ % NA NA 0.7x 11.6x NA NA Calavo Growers, Inc ,509 1,524 1, % 17.9% 25.8% 1.4x 21.7x 1.2x 17.3x Seneca Foods Corporation , % NA NA 0.6x 17.7x NA NA Median $1,524 $1,315 $70 5.8% 17.9% 25.8% 0.7x 17.7x 1.2x 17.3x Average $1,674 $2,159 $ % 17.9% 25.8% 0.9x 17.0x 1.2x 17.3x Beverage The Coca-Cola Company $43.83 $ $41.59 $185,424 $214,339 $35,410 $10, % (11.3%) 6.2% 6.1x 20.0x 6.8x 18.8x PepsiCo, Inc , ,846 63,525 12, % 3.1% 7.6% 2.8x 13.7x 2.7x 12.8x Monster Beverage Corporation ,618 35,522 3,312 1, % 11.1% 9.5% NM 27.0x 9.7x 24.6x 7 Dr Pepper Snapple Group, Inc ,636 25,062 6,690 1, % 3.3% 1.2% 3.7x 15.9x 3.6x 15.7x National Beverage Corp ,578 4, % 15.7% 19.1% 4.9x 21.9x 4.2x 18.4x Cott Corporation ,080 3,520 3, % (38.9%) (26.1%) 0.9x 8.4x 1.5x 11.3x Median $30,292 $5,261 $1, % 3.2% 6.9% 3.7x 17.9x 3.9x 17.0x Average $76,289 $18,947 $4, % (2.8%) 2.9% 3.7x 17.8x 4.7x 16.9x All Selected Food & Beverage Companies Median $5,445 $4,460 $ % 2.8% 6.7% 2.0x 13.6x 2.1x 12.0x Average $30,744 $11,115 $2, % 3.4% 24.0% 2.1x 13.9x 2.3x 12.6x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings.

8 8 Selected Recent Food & Beverage M&A Activity $ in millions Close Transaction EV/ EV/ Date Acquirer/Investor Target Target Description Value Revenue EBITDA Feb-18 EnWave USA Corporation nutradried LLP nutradried LLP produces cheese snacks. $ x - Feb-18 Cott Corporation Crystal Rock Holdings, Inc. Crystal Rock Holdings, Inc. produces, markets, and distributes bottled water to homes and offices in New England, New York, and New Jersey. $ x 6.7x Feb-18 Total Produce plc Dole Food Company, Inc. Dole Food Company, Inc. engages in growing, sourcing, processing, marketing, and distributing fresh fruits and vegetables to wholesale, retail, and institutional customers; and other food product companies worldwide. $ x 9.6x Feb-18 Hostess Brands, Inc. Certain U.S. Breakfast Assets of Aryzta Producer of baked goods. The company's bakery products include danish and LLC cinnamon rolls, honey buns, cake, donuts and cakes. $ Dec-17 Conagra Brands, Inc. Sandwich Bros. of Wisconsin Business of Kangaroo Brands, Inc. Producer of frozen breakfast and entree flatbread sandwiches intended to offer fast food items made from antibiotic-free chicken and Angus beef. The company's frozen breakfast and entree flatbread sandwiches include turkey sausage and cheese, egg white and turkey sausage, cheese burgers, chicken melts and meatballs, enabling on-the-go consumers to have hygienic and tasty snacks. $ Dec-17 GreenSpace Brands Inc. Galaxy Nutritional Foods, Inc. Galaxy Nutritional Foods, Inc. produces plant-based cheese-free products. $ x - Dec-17 Gladstone Land Corporation Organic Almond Orchard in California Organic Almond Orchard in California comprises an almond orchard and is located in the United States. $ Producer of roasted nuts and snack mixes. The company's products include Nov-17 John B. Sanfilippo & Son, Inc. Squirrel Brand LP., Certain Assets almond snacks, salted pistachios, truffle cashews, caramel pecans and other related food items, enabling customers to enjoy a fine taste of the product. $ Nov-17 Maple Leaf Foods Inc. Field Roast Grain Meat Co., Inc. Field Roast Grain Meat Co., Inc. produces and markets vegan meat products. $ x - Nov-17 Ajinomoto North America, Inc. Cambrooke Therapeutics, Inc. Cambrooke Therapeutics, Inc. produces and sells medical formulas and food for the management various medical conditions for people with serious unmet $ medical nutrition needs. Nov-17 Tyson Foods, Inc. Original Philly Holdings, Inc. Original Philly Holdings, Inc., through its subsidiaries, produces raw and fullycooked Philly-style sandwich steak and cheesesteak appetizer products. $ x - Nov-17 Freiberger USA Inc. Richelieu Foods Inc. Richelieu Foods Inc. is engaged in the production of private label food products for retail, corporate brands, and contract packing customers. $ x - Nov-17 Unilever United States, Inc. Tazo Tea Company Tazo Tea Company offers tea and herbal beverages. $ x - Nov-17 Saputo Inc. Betin, Inc Betin, Inc, doing business as Montchevre, produces and sells goat cheese. $ x - Oct-17 Undisclosed Kettle Business of Tyson Foods, Inc. Kettle Business of Tyson Foods, Inc. comprises business that produces cooking sauces, appetizer dips, and side dishes. $ Oct-17 Hormel Foods Corporation Columbus Manufacturing, Inc. Columbus Manufacturing, Inc. produces salamis and deli meats. $ x - Discussed on page 10

9 9 Selected Recent Food & Beverage M&A Activity $ in millions Close Transaction EV/ EV/ Date Acquirer/Investor Target Target Description Value Revenue EBITDA Oct-17 Cooke Inc. Omega Protein Corporation Omega Protein Corporation develops, produces, and delivers products to enhance the nutritional integrity of foods, dietary supplements, and animal feeds $ x 8.1x worldwide. Oct-17 Warabeya USA,INC. Prime Deli Corporation Prime Deli Corporation packages and supplies sandwiches and salads. $ x - Sep-17 Kellogg Company Chicago Bar Company LLC Chicago Bar Company LLC, doing business as RXBAR, produces and sells food protein bars in the United States. $ Sep-17 Conagra Brands, Inc. Angie's Artisan Treats, LLC Angie's Artisan Treats, LLC produces and sells popcorns and other snack items. $ Sep-17 Mccall Farms, Inc. Sager Creek Vegetable Company, Inc. Sager Creek Vegetable Company, Inc. produces and distributes canned vegetables. $ Sep-17 Oregon Potato Co. Aug-17 WealthColony Management Group LLC Rader Farms Inc. and Willamette Valley Fruit Company, LLC Soupman, Inc. Aug-17 Utz Quality Foods, LLC Inventure Foods, Inc. Aug-17 The Chefs' Warehouse, Inc. Fells Point Wholesale Meats, Inc. Aug-17 Coca-Cola Southwest Beverages, LLC Great Plains Coca-Cola Bottling Company, Inc. Aug-17 MamaMancini's Holdings, Inc. Joseph Epstein Food Enterprises, Inc. Aug-17 B&G Foods, Inc. Back to Nature Foods Company, LLC As of September 22, 2017, Rader Farms Inc. and Willamette Valley Fruit Company, LLC were acquired by Oregon Potato Co. Inventure Foods, Inc., Frozen Division comprises frozen food operations. Soupman, Inc. manufactures and sells various types of soup in the United States. Inventure Foods, Inc. manufactures and markets healthy/natural and indulgent specialty snack food products in the United States and internationally. Fells Point Wholesale Meats, Inc. processes, cuts, and prepares meat for delivery and produces a specialty protein. Great Plains Coca-Cola Bottling Company, Inc. produces, distributes, and merchandises Coca-Cola products in Oklahoma and Northwest Arkansas. Joseph Epstein Food Enterprises, Inc. manufactures food products, which includes turkey meatballs. Back to Nature Foods Company produces cookies, crackers, granolas, juices, and nuts. $ $ $ x 66.4x $ $ $ $ Aug-17 Farmer Bros. Co. Boyd Coffee Company, Inc. Boyd Coffee Company, Inc., produces and sells roasted coffee. $ x - Aug-17 Hormel Foods Corporation Capitol Wholesale Meats, Inc. Capitol Wholesale Meats, Inc. engages in the production and sale of meat cuts of beef, pork, and veal; and pizza supplies, cooked Italian sausages, fresh cut $ chickens, and ground hamburgers. Aug-17 Effem Holdings Ltd. Preferred Brands International Inc. Preferred Brands International Inc. produces ready-to-eat Indian entrees, Asian noodles, and rice products. $ Aug-17 Corbion N.V. TerraVia Holdings Inc., Substantially All Producer and seller of food, nutrition, and specialty ingredients intended to Assets harnesses the power of algae. $ Jul-17 Innophos Holdings, Inc. Novel Ingredient Services, LLC Novel Ingredient Services, LLC engages in the manufacture and supply of ingredients for nutraceutical, food and beverage, sports nutrition, and pet care industries. $ x - Median $ x 8.9x

10 Overview of Notable Transactions Total Produce acquires 45% stake in Dole Food Company North American Middle-Market Food & Beverage M&A Volumes February 1 st, 2018 Total Produce announced an investment in Dole Food Company, a producer and marketer of fresh fruit and vegetables, for $300 million in cash (0.4x Rev; 9.6x EBITDA for the twelve months ended 10/7/17). The transaction brings together two industry leaders to create a group with increased scale and diversification both geographically and product-wise. Dole s strong presence in North America will complement Total Produce s position in the European market. Total Produce and Dole have jointly agreed to a strategic plan to expand the business in the years ahead. Specifically, Dole and Total Produce expect to deliver annualized synergies and cost savings at Dole of $15-20 million in the short term and $35 million over the medium term. 10 Unilever to Acquire TAZO from Starbucks November 2 nd, 2017 Unilever announced the acquisition of TAZO, a leading brand in the specialty tea category, for $384 million in cash (3.4x Rev; 10.0x pro forma EBIT). The transaction includes the TAZO brand and its related recipes, intellectual property, and inventory. Unilever executives praised the acquisition as something that will cater to millennial needs and enhance the company's existing tea offerings -- which include Lipton, Pure Leaf, PG Tips and Pukka. According to Nielsen, the specialty tea segment makes up 48% of the total U.S. $1.6 billion (FY 2016) at-home tea category and trends suggest it will become more prominent in the future. Source: Company-issued press releases. Source: Capital IQ as of 2/23/2018

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