Breville Group. Keurig no small drip. Earnings and target price revision. Price catalyst. Catalyst: 1H13 results. Action and recommendation

Transcription

1 AUSTRALIA BRG AU Price (at 06:10, 23 Aug 2012 GMT) Outperform A$5.25 Volatility index Medium 12-month target A$ month TSR % Valuation - EV/EBIT A$ GICS sector Retailing Market cap A$m day avg turnover A$m 2.0 Number shares on issue m Investment fundamentals Year end 30 Jun 2012A 2013E 2014E 2015E Revenue m EBIT m Reported profit m Adjusted profit m Gross cashflow m CFPS CFPS growth % PGCFPS x PGCFPS rel x EPS adj EPS adj growth % PER adj x PER rel x Total DPS Total div yield % Franking % ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x BRG AU vs Small Ordinaries, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, August 2012 (all figures in AUD unless noted) 23 August 2012 Macquarie Securities (Australia) Limited Keurig no small drip Event BRG reported FY12 NPAT of $46m up 28% on the adjusted pcp (Macq E $47m). Directors declared a final dividend of 11.5cps (Macq E 9cps) Impact No surprises in headline numbers given July upgrade. Higher interest expense was the key difference between the result and our forecasts. Continued strong results from the North American operations (both Breville and Keurig distribution) coupled with improved 2H performances from International Distribution and the Australian operations drove the strong profit growth. Circa 10% 2H revenue growth from the Australian operations was a particularly strong performance given the consumer environment. We have said for some time the main attraction of BRG was the medium term growth potential of its international operations. FY12 marks a step change for the group with international earnings contributing over 70% of group EBITDA. The FY12 results are the culmination of strategies put in place five plus years ago to exit homewares, become a kitchen appliance focused organisation that can expand internationally. The main surprise in recent years has been the stunning growth of the Keurig distribution agreement in Canada. Increased disclosure (which we commend) showed commission income from Keurig grew from $9.9m to $19.5m in FY12. We estimate EBIT contribution not far off $10m or 15% of group earnings. The ongoing renewal and performance of this distribution agreement are now clearly material to group performance. Balance sheet finished in net cash position of $47m. BRG is well placed to consider further capital management, acquisitions or increase investment in accelerating organic growth opportunities in international markets. As expected no FY13 guidance was provided. BRG enters FY13 with good momentum across its divisions. The uncertainty around the CEO position has also finally been resolved with Jack Lord appointed. Earnings and target price revision No material change to earnings. PT $5.85 from $5.20. Price catalyst 12-month price target: A$5.85 based on an EV/EBIT methodology. Catalyst: 1H13 results Action and recommendation Retain Outperform. While Australian operations are mature, the International and US operations have the potential to drive significant medium term growth for the group. The balance sheet provides further flexibility to accelerate growth initiatives or provide capital management. Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website

2 Analysis Fig 1 FY12 result snapshot A$m 1H11a 2H11a FY11a 1H12a 2H12a FY12a Change FY12e Change Sales % % EBITDA % % D & A % 6.7 3% EBIT % % Net Interest % % Pre-tax Profit % % Tax % % NPAT % % Net Abnormals % 0.0 Reported NPAT % % Adjusted NPAT % % Gross cashflow % % EPS adj % 36.0 DPS EBITDA/Sales 16.7% 11.9% 14.8% 19.3% 14.5% 16.9% 17.1% EBIT/Sales 15.3% 9.8% 13.1% 17.9% 12.6% 15.3% 15.5% Earnings split 70% 30% 64% 36% Few surprises in headline numbers given the July update. Higher interest charge, the main difference between the result and our forecasts. The pcp included $5.4m pre tax onerous lease expense which we treated as a one off in our adjusted earnings. Results also included revenue contribution from the now exited North American homewares operations. Excluding homewares underlying revenues increased 13%. Results came in well above the $65-$67m guidance range issued in February. Continued strong results from the North American operations (both Breville and Keurig distribution) coupled with improved 2H performances from International Distribution and the Australian operations drove the strong profit growth Fig 2 Cash conversion A$m FY07(a) FY08(a) FY09(a) FY10(a) FY11(a) FY12(a) EBITDA Operating Cashflow (reported) Tax Paid Net interest paid Ungeared Pre tax Cashflow Profit to cash Conversion 68.8% 111.2% 98.3% 134.7% 92.3% 90.5% BRG has consistently converted a high proportion of its earnings to cash. Slightly lower cash conversion likely reflects the working capital investment to support the stronger sales growth. BRG s growing volumes does put it in a good position to drive further improvement in trading terms from its suppliers. Balance sheet finished in net cash position of $47m. BRG is well placed to consider further capital management, acquisitions or increase investment in accelerating organic growth opportunities in international markets. The payout ratio was lifted to 68%. Franking credits are limited given previous losses and now with further growth in offshore earnings future dividends are expected to be partially franked. 23 August

3 Fig 3 Division detail A$m 1H11(a) 2H11(a) FY11(a) 1H12(a) 2H12(a) FY12(a) Change Macq E Change Australia pcp Macq Revenue % % EBIT % % Margin 14% 5% 10% 12% 7% 10% 10% New Zealand Revenue % % EBIT % 3.7 3% Margin 13% 9% 11% 15% 11% 13% 14% Hong Kong Revenue % % EBIT % % Margin 32% 29% 31% 31% 34% 29% 30% North America Revenue % % EBIT % % Margin 16% 15% 15% 26% 18% 23% 23% Result composition was largely in line with our forecasts. Australia Circa 10% 2H revenue growth from the Australian operations was a remarkable performance given the consumer environment and appears to be well ahead of that achieved by Sunbeam. The stronger revenues translated to a greater lift in EBITDA given the operating leverage. The strong 2H growth was attributed to increased focus on the department store and specialist electrical channels and the launch of higher value product. Results also benefitted from increased focus from the now dedicated local management team and restructuring of the cost base. The group enters 1H13 with good sales momentum. FY13 results will benefit from a full period of the lower cost base and a number of new products and category extensions. New Zealand NZ maintained its strong 1H momentum into H2. Growth was again driven by the higher value new releases and Phillips distribution business. The New Zealand operations have not faced the same home brand headwinds as Australia. International Distributors Delivered strong 2H growth. 2H11 presented a more normal comparative period. While Europe is still the major end market, BRG continues to expand its distributor network in Asia. Results in this division can be lumpy with half on half variability given the nature of the sales process. North America The standout performer in FY12. Excluding homewares in the pcp, underlying sales increased 40%. Breville branded sales increased 35% with continued market share gains in new and existing categories. Commission income from Keurig grew from $9.9m to $19.5m. The outlook for the North American operations remains positive but we would not expect circa 40% growth rates to be maintained. BRG is cycling a period of particularly strong juicer sales but does have a number of new products and category extensions to drive further sales. It will continue to focus on premium retail customers. The increased disclosure surrounding the Keurig distribution business in Canada is a positive given its increased materiality. Ball park figures suggest gross turnover in the order of $200m. We estimate net contribution to earnings in the order of $10m. The ongoing renewal and performance of this distribution agreement are now clearly material to group performance. The terms of this agreement have not been disclosed. We understand it has been renewed at least once and would expect it would have a typical 3-5 year term which suggests another renewal in the next twelve to eighteen months. 23 August

4 Keurig a meaningful contributor to group earnings Green Mountain Coffee Roasters (GMCR.O) makes the Keurig machines and system, and roasts and distributes coffee for them in single serve K Cups. GMCR s strategy is to drive brewer sales in order to generate ongoing demand for KCup portion packs. GMCR currently use third party distributors in both the USA and Canada. BRG distribute Keurig machines and the pods in their usual channels (i.e. not supermarkets) in Canada and their own Breville branded machine in the US and Canada The US distributor is a company called M.Block & Sons. MBlock and GMCR are reported to have fielded enquiries from the SEC regarding revenue recognition practices but no charges have been laid. In their 1Q update in May, GMCR highlighted strong Canadian brewer sales with Keurig s dollar share of all coffee makers increasing to 34.8% compared to 20.9% in the pcp. Keurig was the second- ranked brewer in the region based on unit sales, with unit sales increasing to 22.8% share from 12.3% in the pcp. Shares in Green Mountain Coffee Roasters have fallen from $110 in September 2011 to ~$25 this week. In addition to ongoing questions on its accounting practices, the group warned in May that after several quarters of robust adoption, they now expect a more moderate growth trajectory going forward in the US for both Keurig brewer and K cup pack sales. The single serve coffee sector industry dynamics also have the potential to change in the next few years with several key US patents on the KCups reported to be expiring. Competition is expected to increase with new machine entrants and lower cost super market brands expected to begin making single serve cups for the Keurig machines. Keurig recently introduced the higher volume Vue range which we expect is in part designed to protect their consumables market. We note that the BRG agreement is for the Canadian market only which is behind the USA in terms of penetration of machines. Investor presentations suggest Keurig household penetration in Canada is ~5% versus 10% in the USA. We expect continued growth from Keurig in FY13 but clearly not at the 100% rate achieved in FY12. Fig 4 FY13 valuation Valuation - FY13 EBIT Multiples Valuation EV/EBITA Valuation High Low High Low EBITA ($m) $642 $606 Less Net Debt ($m) -$62.8 -$62.8 Equity Value ($m) $696.7 $661.5 Value Per share $5.85 $5.42 Source: Macquarie Research, August 2012 FY13 valuation is detailed above. Price target rolled forward from $5.20 to $5.85. Retain Outperform. While Australian operations are mature, the International and US operations have the potential to drive significant medium term growth for the group. The balance sheet provides further flexibility to accelerate growth initiatives or provide capital management. 23 August

5 (BRG:$5.46) 23-Aug-12 Interim results 2H/10A 1H/11A 2H/112A 1H/13E Profit & Loss 2012A 2013E 2014E 2015E Revenue Revenue $m EBITDA $m EBITDA $m Depreciation $m Depreciation $m Amortisation of goodwill $m Amortisation of goodwill $m EBIT $m EBIT $m Net Interest expense $m Net interest expense $m Pre-Tax Profit $m Pre-Tax Profit $m Tax Expense $m Tax Expense $m Net Profit $m Net Profit $m Outside equity interests $m Outside equity interests $m Net Abn/Extra $m Net Abnormals/Extra. $m Reported Earnings $m Reported Earnings $m Adjusted Earnings $m Adjusted Earnings $m Gross Cashflow $m Gross Cashflow $m EPS (Adj/dil) c EPS (adj/diluted) c EPS growth % EPS growth % CFPS c PE (adj) x CFPS Growth % CFPS c EBITDA/Sales % CFPS Growth % EBIT/Sales % PGCFPS x Earnings Split % DPS c Revenue Growth % Yield % EBIT Growth % Franking % Profit and Loss ratios 2012A 2013E 2014E 2015E Cashflow Analysis 2012A 2013E 2014E 2015E Revenue Growth % EBIT Growth % Pre-tax Profit $m EBITDA/Sales % Depreciation & Amortisation $m EBIT/Sales % Tax Paid $m Effective tax rate % Gross cashflow $m Payout ratio % Changes in working capital $m EV/EBITA x Other $m EV/EBITDA x Operating Cashflow $m EV/Sales x Acquisitions $m Capex - Plant & Equip. $m Balance sheet ratios Asset Sales $m ROE % Other $m ROA % Investing cashflow $m ROFE % Dividend (ordinary) $m Net Debt $m Equity raised $m Net Debt/Equity % < 0 < 0 < 0 < 0 Other $m Interest Cover x 72.1 nmf nmf nmf Financing cashflow $m Price/NTA x NTA per share $ Net Change in cash/debt $m EFPOWA m Historical performance 2009A 2010A 2011A 2012A Balance Sheet 2012A 2013E 2014E 2015E Cash $m Revenue $m Receivables $m EBITDA $m Inventories $m Depreciation/Amortisation $m Investments $m EBIT $m Property, plant & equipment $m Net interest expense $m Intangibles $m Pre-Tax Profit $m Other Assets $m Tax Expense $m Total Assets $m Net Profit $m Payables $m Net Abn/Extra $m Short Term Debt $m Long Term Debt $m EPS (adj/dil) c Other Liabilities $m EPS growth % Total Liabilities $m Ordinary DPS c Shareholders Funds $m EBITDA/Sales % Minority Interests $m EBIT/Sales % Total Shareholders Equity $m ROE % ROFE % Total Funds employed $m EFPOWA m Divisional information 2010a 2011a 2012a 2013e Australia New Zealand Global North America Total sales revenue Australia New Zealand Global North America Unallocated Total EBIT Sydney (612) London (171) Melbourne (613) Munich (89) Hong Kong New York (852) (212) August

6 Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down % in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 30 June 2012 AU/NZ Asia RSA USA CA EUR Outperform 55.67% 61.00% 53.43% 42.58% 69.23% 46.60% (for US coverage by MCUSA, 9.05% of stocks followed are investment banking clients) Neutral 30.50% 22.11% 36.99% 52.41% 28.02% 33.69% (for US coverage by MCUSA, 8.14% of stocks followed are investment banking clients) Underperform 13.83% 16.89% 9.59% 5.01% 2.75% 19.71% (for US coverage by MCUSA, 0.45% of stocks covered are investment banking clients) Company Specific Disclosures: Important disclosure information regarding the subject companies covered in this report is available at Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN (AFSL No ) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General Disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Securities Ltd and its Taiwan branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; Macquarie First South Securities (Pty) Limited; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. MGL provides a guarantee to the Monetary Authority of Singapore in respect of the obligations and liabilities of Macquarie Capital Securities (Singapore) Pte Ltd for up to SGD 35 million. This research has been prepared for the general use of the wholesale clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this research in any way. If you received it in error, please tell us immediately by return and delete the document. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. MGL has established and implemented a conflicts policy at group level (which may be revised and updated from time to time) (the "Conflicts Policy") pursuant to regulatory requirements (including the FSA Rules) which sets out how we must seek to identify and manage all material conflicts of interest. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your investment objectives, financial situation or particular needs. Macquarie salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions which are contrary to the opinions expressed in this research. Macquarie Research produces a variety of research products including, but not limited to, fundamental analysis, macro-economic analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research, whether as a result of differing time horizons, methodologies, or otherwise. Before making an investment decision on the basis of this research, you need to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of your particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients should contact analysts at, and execute transactions through, a Macquarie Group entity in their home jurisdiction unless governing law permits otherwise. The date and timestamp for above share price and market cap is the closed price of the price date. #CLOSE is the final price at which the security is traded in the relevant exchange on the date indicated. Country-Specific Disclaimers: Australia: In Australia, research is issued and distributed by Macquarie Securities (Australia) Ltd (AFSL No ), a participating organisation of the Australian Securities Exchange. New Zealand: In New Zealand, research is issued and distributed by Macquarie Securities (NZ) Ltd, a NZX Firm. Canada: In Canada, research is prepared, approved and distributed by Macquarie Capital Markets Canada Ltd, a participating organisation of the Toronto Stock Exchange, TSX Venture Exchange & Montréal Exchange. Macquarie Capital Markets North America Ltd., which is a registered brokerdealer and member of FINRA, accepts responsibility for the contents of reports issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any person wishing to effect transactions in the securities described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with Macquarie Capital Markets North America Ltd. The Research Distribution Policy of Macquarie Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and 23 August

7 distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated by the Financial Services Authority (No ). Germany: In Germany, this research is issued and/or distributed by Macquarie Capital (Europe) Limited, Niederlassung Deutschland, which is authorised and regulated by the UK Financial Services Authority (No ). and in Germany by BaFin. France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United Kingdom by the Financial Services Authority (No ). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie Capital Securities Ltd, which is licensed and regulated by the Securities and Futures Commission. In Mainland China, Macquarie Securities (Australia) Limited Shanghai Representative Office only engages in nonbusiness operational activities excluding issuing and distributing research. Only non-a share research is distributed into Mainland China by Macquarie Capital Securities Ltd. Japan: In Japan, research is issued and distributed by Macquarie Capital Securities (Japan) Limited, a member of the Tokyo Stock Exchange, Inc. and Osaka Securities Exchange Co. Ltd (Financial Instruments Firm, Kanto Financial Bureau (kin-sho) No. 231, a member of Japan Securities Dealers Association and The Financial Futures Association of Japan and Japan Securities Investment Advisers Association). India: In India, research is issued and distributed by Macquarie Capital Securities (India) Pvt Ltd., 92, Level 9, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai , India, which is a SEBI registered Stock Broker having membership with National Stock Exchange of India Limited (INB ) and Bombay Stock Exchange Limited (INB ). Malaysia: In Malaysia, research is issued and distributed by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company registration number: W) which is a Participating Organisation of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission. Taiwan: Information on securities/instruments that are traded in Taiwan is distributed by Macquarie Capital Securities Ltd, Taiwan Branch, which is licensed and regulated by the Financial Supervisory Commission. No portion of the report may be reproduced or quoted by the press or any other person without authorisation from Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Research Associate(s) in this report who are registered as Clerks only assist in the preparation of research and are not engaged in writing the research. Thailand: In Thailand, research is produced with the contribution of Kasikorn Securities Public Company Limited, issued and distributed by Macquarie Securities (Thailand) Ltd. Macquarie Securities (Thailand) Ltd. is a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is an exchange member of the Stock Exchange of Thailand. Macquarie Securities (Thailand) Limited and Kasikorn Securities Public Company Limited have entered into an exclusive strategic alliance agreement to broaden and deepen the scope of services provided to each parties respective clients. The strategic alliance does not constitute a joint venture. The Thai Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can be accessed at: South Korea: In South Korea, unless otherwise stated, research is prepared, issued and distributed by Macquarie Securities Korea Limited, which is regulated by the Financial Supervisory Services. Information on analysts in MSKL is disclosed at South Africa: In South Africa, research is issued and distributed by Macquarie First South Securities (Pty) Limited, a member of the JSE Limited. Singapore: In Singapore, research is issued and distributed by Macquarie Capital Securities (Singapore) Pte Ltd (Company Registration Number: C), a Capital Markets Services license holder under the Securities and Futures Act to deal in securities and provide custodial services in Singapore. Pursuant to the Financial Advisers (Amendment) Regulations 2005, Macquarie Capital Securities (Singapore) Pte Ltd is exempt from complying with sections 25, 27 and 36 of the Financial Advisers Act. All Singapore-based recipients of research produced by Macquarie Capital (Europe) Limited, Macquarie Capital Markets Canada Ltd, Macquarie First South Securities (Pty) Limited and Macquarie Capital (USA) Inc. represent and warrant that they are institutional investors as defined in the Securities and Futures Act. United States: In the United States, research is issued and distributed by Macquarie Capital (USA) Inc., which is a registered broker-dealer and member of FINRA. Macquarie Capital (USA) Inc, accepts responsibility for the content of each research report prepared by one of its non-us affiliates when the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc. s affiliate s analysts are not registered as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Any persons receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at or contact your registered representative at MAC-STOCK, or write to the Supervisory Analysts, Research Department, Macquarie Securities, 125 W.55th Street, New York, NY Macquarie Group 23 August