食品分销市场动态

Looking for perspective on decipheringqualitycompanies andqualityinvestmentsamid a foggy operating environment?The markets have been choppy but continue to improvesteadily as we approach the end of the year.In this piece, we provide some perspective on assessing valuationand performance benchmarks in the food distribution industry,which remains a large and opportunity-rich marketplace.We are seeing more signs of improvement and welcomeopportunities to share our perspectives and be a strategicresource for you.We hope this piece is useful for you, and we alwayswelcome your feedback on how to focus future editions.22Managing Director, Houlihan Lokey 1Pages3–10Valuations across the food distribution industryvary widely, and much has changed since2020–2021;how do I assess fundamentalvaluations for companies in this market?2Pages 11–13Is the environment becomingany moreconducive to volume growth?3Pages14–15What are successful distributors doing tonavigate the operating environment?Aggregating conversations and feedbackfrom our clients and relationships in theindustry, three questions emerge: Valuations Across theFood Distribution IndustryVary Widely, and MuchHas Changed Since 2020–2021; How Do I AssessFundamental Valuationsfor Companies in ThisMarket? Sources: S&P Capital IQ as of September 11, 2024.Definitely an EmergingPattern in Public Share PricesDivergence in public share priceperformance points to what is working.Foodservice distributors have clearly re-established themselves as the preferredprofile for public market investors.Sharper focus on core markets andexecuting margin-enhancement initiatives.4 Public Food Distribution Companies’ Stock Price Change Since 2023Foodservice-focused distributorsRetail-focused distributors(Individual stock price index; Indexed to January 2023=100)Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024 104070100130160190 Arguably, now more than ever, a clear sizepremium has emerged in the M&A market.The market for smaller deals hasbeen very slow to recover, while largerestablished platforms are benefiting fromimproved capital markets activity.Maybe a Pattern Emerging inM&A Market Multiples?5 Small-CapTransactions(<$125M EV)Mid-CapTransactions($125M–$500M EV)Large-CapTransactions($500M+ EV)EV/EBITDASelected Food Distribution Precedent Transaction Multiples Since 2022Albeit with a limited sample size, we believe the size premium is a meaningfulnew(er) trend in the M&A market. 7.0x8.0x9.0x10.0x11.0x12.0x13.0x14.0xSource: Public filings. What Is Fogging the Valuation Lens Right Now?On a national view, continued sluggishness in restaurant foot traffic.Restaurant Foot Traffic Index(National Restaurant Association customer traffic current situation index)92949698100102104106Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Mar-23May-23Jul-23Sep-23Sources: National Restaurant Association; Q2 2024 company earnings call transcripts.6 Nov-23Jan-24Mar-24May-24 “U.S. comparable restaurant sales werenegative 10 basis points, andtraffic wasnegative 380 basis points… it all comesdown to traffic.We’ve seen a lot ofvolatility in the industry.”“The [Maggiano’s] brand reported 2.5%positive comp sales…offset by negative8.9% traffic…When we do our buildingblocks for our traffic, we built in a 4% to 5%decline in the industry, which is what wehear from our third-party insight groups.”“Same-restaurant sales at both Capital Grilleand Eddie V’s were negative asthe finedining category as a whole continues tobe challenged.” What Is Fogging the Valuation Lens Right Now?Uneven restaurant traffic/volume trends across the country.Source: OpenTable.Note: Represents YTD 2024 data.YoY Trends in Seated Diners(Volume of seated diners from online reservationson a monthly basis in 2024 vs. 2023)7Seattle, Washington(5.7%)San Francisco, California1.3%Los Angeles, California(3.7%) Dallas, Texas9.7% What Is Fogging the Valuation Lens Right Now?Uneven commodity trends.88090100110120130140150160170Jan-19May-19Sep-19Jan-20May-20Sep-20Jan-21May-21Sep-21ProduceMeatsSeafoodSources: FRED Producer Price Index; Fruits and Melons, Fresh/Dry Vegetables and Nuts, Meats, and Unprocessed and Prepared Seafood.Meat Prices Continue Comparatively Steady Climb, Bucking the Conventional Wisdom From 2020/2021(Producer Price Index; indexed to January 2019=100) Jan-22May-22Sep-22Jan-23May-23Sep-23 What Is Fogging the Valuation Lens Right Now?Persistent cost structure inflation.9$900$940$980$1,020$1,060$1,100Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24Notes: (1) U.S. Bureau of Labor Statistics; Production and nonsupervisory employees, seasonally adjusted; (2) U.S. Energy Information Administration.(Transportation and warehousing industry average weekly earnings)(1)Industry Wage Levels Seem to Be Sticky $1.50$2.00$2.50$3.00$3.50$4.00$4.50$5.00$5.50$6.00Jan-19Sep-19May-20Jan-21Sep-21May-22Jan-23Sep-23(U.S. on-highway diesel fuel prices; $ per gallon)(2)Watching Fuel Prices as Further Potential Relief forProfit Margins How