contract manufacturers for food & beverage: in … · hearthside produces a broad range of...

FOOD & BEVERAGE INSIGHT

2

Contract Manufacturers for Food & Beverage: In-demand Assets

BIG FOOD

There are several factors contributing to why the contract

manufacturing of F&B products is a growing (and now thriving)

segment. Admittedly there are some outsourced food verticals that

still have overcapacity resulting in thin margins, but overall the tide

is rising. Many “Big Food” Companies have been outsourcing a

portion of production allowing them to focus on their core sales and

marketing competencies. Several have quietly sold off

manufacturing facilities and entered into long term co-

manufacturing agreements with their acquirers. At the same time

most have been intensely focused on cost cutting measures, with

the elimination of significant capital expenditures supporting these

cost cutting initiatives.

PRIVATE LABEL

Additionally, in the U.S., Private Label brands continue to grab

KEY TAKEAWAYS

Demand for contract manufacturers is

on the rise, making them much more

valuable assets than ever before. If

you have an executive level contact in

the contract manufacturing segment,

now is an excellent time to discuss

M&A and investment opportunities. If

you are interested in discussing these

opportunities, please contact Brian

Boyle in the Food & Beverage

Investment Banking Group.

share now representing about 22% of the market. Most national grocery chains and mass market retailers do not

own manufacturing facilities, relying instead on an outsourced manufacturing model. Private label brand

penetration still lags significantly behind Europe’s percentages, so continued and steady growth is expected by

most experts. Co-packers that supply industrial clients are also in a great position to service retailers since there

are no brand conflicts.

EMERGING BRANDS

Furthermore, we are seeing significant contract manufacturing demand from smaller, typically earlier stage

companies. Earlier this year, I attended Expo West, arguably the largest F&B show in the world, with close to

4,000 exhibitors.

The amount of innovation taking place within potentially disruptive F&B Companies (and displayed at the show)

Over the last 25 years, contract manufacturers of food & beverage products (often called co-packers)

were considered much less attractive assets, from an investment/acquisition standpoint, than other food

producers. The criticisms of these types of companies were plentiful: “They don’t own a brand”, “they

don’t have a direct link with the consumer”, “they are at risk for losing customers because production can

be brought in-house”, “they don’t have pricing power”, “they are often exposed to commodity risk”, and

they “often have customer concentration”. Furthermore, contract manufacturers had to saddle the burden

of meaningful capital expenditures, often leveraging their balance sheets with debt in the process. Given

the risk factors mentioned above, and coupled with the heavy capital requirements necessary to grow

with customers, many investors (especially PE Groups) stayed clear of these assets or penalized them

from a valuation standpoint. However, this has changed in recent years.


3

was staggering. Yet the vast majority of the companies that we spoke with were “asset light”, meaning they require

a third party manufacturer to produce their products. Needless to say demand for co-packers is strong and we

expect this trend to continue. According Mattson, a premier F&B design and development firm, only about 12% to

15% of food production in the U.S. is outsourced. This percentage is low because Big Food still controls such a

large share of the market and maintains most their production in-house. But with persistent stagnant sales, these

companies will continue to rationalize their manufacturing footprint and outsource more production.

TO WHOM MUCH IS GIVEN, MUCH WILL BE REQUIRED

As demand for outsourced manufacturing has increased, the requirements and responsibilities for co-packers have

also increased as well. The standards for quality assurance (QA), for example, have become quite rigorous usually

exceeding regulatory requirements. Also, many larger customers are asking co-packers to assume full

responsibility for managing the supply chain, finished goods inventory, and even the coordination of warehousing

and distribution. Lastly, some co-packers are being relied on for R&D and other product development capabilities

as well.

While these additional responsibilities clearly increase operational costs for manufacturers, in the long run, the

relationship between contract manufacturers and their customers are becoming increasingly intertwined and

“sticky”. With more value added services being tethered, the importance of co-manufacturers for branded food

businesses is higher than ever. And with increased demand for line space, contract manufacturers are gaining

leverage to negotiate better terms making them much more valuable assets than ever before.

RECENT M&A ACTIVITY

Private equity investors are increasingly investing in food and beverage contract manufacturing. With record

fundraising levels and the need to deploy capital — combined with high levels of innovation and the positive

secular headwinds outlined prior — it is an opportune time for investment in this space.

Cold Spring Brewing to Acquire Carolina Beverage (May 2018)

On May 16, 2018, Cold Spring Brewing Company agreed to acquire the Carolina Beverage Group for $270 million,

or 9.0x EBITDA based on LTM EBITDA of $30 million. Carolina Beverage manufactures high-quality products out

of its three manufacturing facilities located in Cold Spring, MN, Mooresville, NC, and Fort Worth, TX. By combining

Cold Spring and Carolina Beverage, the sponsor, Brynwood Partners, has created one of the largest contract

manufacturers in the beverage sector.

Charlesbank Capital Partners and Partners Group to Acquire Hearthside Food Solutions (April 2018)

On April 17, 2018, Charlesbank Capital Partners and Partners Group agreed to acquire Hearthside Food Solutions

for $2.4 billion, or 11.0x EBITDA based on LTM EBITDA of $213 million. Headquartered in Downers Grove, IL,

Hearthside produces a broad range of high-quality nutrition bars, cookies, cereals, and other baked foods &

snacks for some of the world's premier food brands. It operates 25 manufacturing facilities across the U.S. and

Europe and employs around 7,900 people. The investor consortium will work closely with Hearthside's

management team on a number of value creation initiatives. These will be focused on promoting organic growth

through innovative product solutions, executing add-on acquisitions, and optimizing existing manufacturing

processes and KPIs.


4

New Water Capital Partners to Invest in Pegasus Foods (March 2018)

On March 20, 2018, New Water Capital announced it has made an investment in Pegasus Foods. Founded in

1998, family-owned Pegasus Foods produces frozen snacks and other products for retail grocers, club stores,

restaurants, and packaged foods businesses. New Water Capital, providing growth capital to Pegasus, will support

the company's recent expansion into a second manufacturing plant, a 135,000-square-foot facility in Rockwall,

Texas.

Berner Food and Beverage Weighs Strategic Options (October 2017)

On October 13, 2017, Berner Foods retained Goldman Sachs to explore strategic options. The Company is a

co-manufacturer of shelf-stable dips, sauces, aerosol cheese, and ready-to-drink coffee for large food and

beverage companies. Berner is currently owned by Austin-based Peak Rock Capital.


5

Da te Ta rge t Ente rprise Ente rprise Va lue /

Announc e d Ac quire r Ta rge t De sc ription Se gme nt Loc a tion Va lue (US $ MM) LTM Re v LTM EBITDA

May- 18 Cold Spring Brewing Carolina Beverage

Carolina Beverage manufactures high- quality beers for

beverage clients out of its three manufacturing facilities

in Cold Spring, MN, Mooresville, NC, and Fort Worth, TX

Beers USA 270 - 9.0x

Apr- 18

Charlesbank Capital

Partners; Partners

Group

Hearthside Food

Solutions

Engaged in the contract manufacturing and packaging

of granola bars, croutons, cereals, popcorn and snack

mixes

Grains;

Snacks and

Sweets

USA 2,400 1.3x 11.3x

Apr- 18 FGF Brands Hill Country Bakery

Contract manufacturer and supplier of bakery products

such as tandoori naans, sandwich flats, pizzas for larger

food companies

Frozen USA n.a. - -

Mar- 18 New Water Capital Pegasus Foods

Company produces frozen snacks and other products

for retail grocers, c lub stores, restaurants, and packaged

foods businesses

Frozen USA n.a. - -

Nov- 17 Freiberger USA Richelieu FoodsPrivate label developer, manufacturer, and supplier of

frozen pizza, dressings, and saucesFrozen USA 435 1.3x 12.0x

Oct- 17Hearthside Food

Solutions

Standard Functional

Foods Group

Engaged in contract manufacturing of nutritional bars,

healthy snacks, candy bars, and confectionary

Snacks and

Sweets;

Confectionary

USA 150 1.3x 11.4x

Oct- 17The Riverside

CompanyParker Products

Developer and manufacturer of bakery products,

confectionary, and specialty ingredients for food and

beverage companies

Bakery;

ConfectionaryUSA n.a. - -

Jun- 17 Imperial Frozen Foods Greystone Foods

Engaged in manufacturing and packaging provider of

private label frozen vegetables for larger food

companies, as both final products and inputs

Frozen USA n.a. - -

Jan- 17 Blackford Capital Ellison BakeryUS- based contract manufacturer of cookies and cookie-

based productsBakery USA 55 0.9x 10.2x

Aug- 16 Cott Corporation S&D Coffee

Coffee and tea coffee blender and roaster that sells

through several channels and specializes in contract

manufacturing for larger companies

Coffee and

TeaUSA 355 0.6x 6.0x

Aug- 16Hearthside Food

SolutionsOak State Products

Contract manufacturer of cookies, bars and other baked

foods

Snacks and

SweetsUSA 60 0.9x 9.2x

Aug- 16 Kettle Cuisine Del Monaco Foods

Company specializing in custom recipe formulation and

manufacturing for wholesale refrigerated and frozen

soup

Frozen USA n.a. - -

Me a n 1.1x 9.9x

Source: MergerMarket and Capital IQ. Me dia n 1.1x 10.2x

Note: Transactions between 1/1/2016 and 7/1/2018 that derive majority of revenue from contract manufacturing. >$50MM transaction value.

RECENT TRANSACTIONS: CONTRACT MANUFACTURING


6

PUBLIC COMPS

Stock Price

16-17

EPS

Long-

term

Total

Debt

7/12/18 % 52 Week Market Enterprise EV/Revenue EV/EBITDA P/E Growth Growth to LTM

Company Name High Low Cap Value LTM 2017A 2018E LTM 2017A 2018E LTM 2017A 2018E Rate Rate (5Y) EBITDA

Diversified Foods

Associated British Foods plc $38.50 84% 122% $30,343 $29,530 1.42x 1.41x 1.34x 11.5x 11.5x 11.0x 18.7x 18.7x 21.0x 46.6% 10.1% 0.5x

B&G Foods, Inc. 34.65 73% 117% 2,304 4,134 2.57x 3.00x 2.36x 12.7x 12.9x 10.8x 22.9x 20.0x 15.5x NA NA 5.7x

Bridgford Foods Corporation 12.55 70% 120% 114 103 0.67x 0.74x NA 7.4x 7.4x NA 13.5x 14.7x NA NA NA NA

Campbell Soup Company 47.11 73% 105% 14,162 17,465 2.23x 2.25x 2.17x 8.9x 8.7x 9.9x 16.5x 16.3x 15.9x 59.7% 4.6% 1.8x

Conagra Brands, Inc. 37.94 91% 118% 15,498 18,942 2.42x 2.41x 2.41x 10.8x 11.5x 12.6x 22.7x 30.9x 19.9x NM 6.3% 2.1x

Farmer Bros. Co. 31.70 84% 110% 529 553 1.02x 1.03x 0.89x 13.1x 12.6x 10.2x 24.6x 21.9x 76.7x -73.2% 8.0% 0.7x

General Mills, Inc. 59.41 93% 120% 33,807 43,724 2.81x 2.79x 2.79x 13.2x 12.5x 12.9x 21.8x 21.4x 19.1x 0.0% 8.9% 3.0x

Kellogg Company 68.73 90% 117% 23,744 31,734 2.48x 2.42x 2.49x 13.8x 14.1x 11.7x 30.8x 35.1x 16.1x NA 6.8% 3.6x

McCormick & Company,

Incorporated 102.11 96% 114% 13,379 18,601 4.07x 4.21x 3.45x 22.3x 23.5x 16.7x 28.3x 27.7x 21.8x NA 10.3% 6.7x

Mondelez International, Inc. 42.68 90% 109% 63,781 82,021 3.19x 3.17x 3.10x 16.9x 18.1x 14.9x 29.8x 40.6x 18.1x NA 10.7% 4.2x

Nestlé S.A. 85.44 96% 117% 264,749 286,435 3.11x 3.13x 2.98x 15.4x 15.6x 15.2x 27.9x 30.3x 21.7x NA 7.8% 1.5x

Pinnacle Foods Inc. 59.03 89% 112% 7,026 9,867 3.16x 3.17x 3.11x 14.7x 15.3x 13.3x 39.7x 33.0x 21.1x NA 12.6% 4.4x

Post Holdings, Inc. 79.98 90% 106% 5,296 11,168 2.14x 2.13x 1.89x 11.8x 11.8x 9.4x 160.0x 160.0x 21.4x NA 10.0% 7.8x

SunOpta Inc. 8.03 74% 125% 696 1,264 0.99x 0.86x 0.97x 19.4x 15.3x 12.9x NM NM 73.0x NA NA 7.5x

The Hain Celestial Group, Inc. 40.60 89% 131% 4,214 4,852 1.68x 1.77x 1.62x 17.6x 18.7x 13.9x 53.5x 62.5x 24.6x 41.3% 8.6% 2.8x

The J. M. Smucker Company 124.39 87% 125% 14,130 19,204 2.62x 2.60x 2.60x 11.9x 11.5x 11.4x 25.2x 24.4x 15.9x -11.5% 9.4% 3.3x

Treehouse Foods, Inc. 49.90 55% 124% 2,855 5,393 0.84x 0.87x 0.87x 8.4x 8.8x 8.5x NM NM 18.0x NA 1.8% 4.2x

Mean: 2.20x 2.23x 2.19x 13.5x 13.5x 12.2x 35.7x 37.2x 26.2x 10.5% 8.3% 3.7x

Median: 2.42x 2.41x 2.39x 13.1x 12.6x 12.2x 25.2x 27.7x 20.5x 20.7% 8.8% 3.4x

Candy, Nuts, & Snacks

Amplify Snack Brands, Inc. $12.27 101% 257% $923 $1,505 4.05x 5.48x 3.83x 18.3x 19.0x 17.2x 88.7x 34.1x 46.3x NA 12.5% 7.2x

The Hershey Company 112.42 97% 111% 23,686 26,597 3.52x 3.61x 3.43x 15.0x 16.4x 13.7x 33.6x 33.7x 21.3x NA 9.2% 1.8x

John B. Sanfilippo & Son, Inc. 63.27 85% 115% 715 780 0.93x 0.92x 0.90x 10.8x 10.7x NA 19.8x 20.0x 19.1x 18.3% 4.0% 0.9x

J&J Snack Foods Corp. 149.73 95% 124% 2,795 2,646 2.44x 2.48x 2.33x 16.5x 16.5x 15.5x 35.6x 35.6x 32.0x 4.0% 7.0% 0.0x

Rocky Mountain Chocolate Factory,

Inc. 12.03 91% 120% 71 68 1.80x 1.75x NA 10.0x 10.0x NA 20.4x 20.7x NA -20.5% NA 0.5x

Snyder's-Lance, Inc. 50.11 99% 161% 4,873 5,990 2.68x 2.84x 2.67x 21.3x 21.7x 17.8x NM 111.4x 38.3x NA 14.1% 4.0x

Tootsie Roll Industries, Inc. 36.10 91% 105% 2,261 2,145 4.14x 4.14x NA 19.4x 18.6x NA 34.3x 34.3x NA NA NA 0.1x

Mean: 2.80x 3.03x 2.63x 15.9x 16.1x 16.0x 38.7x 41.4x 31.4x 0.6% 9.4% 2.1x


Baked Goods

ARYZTA AG $38.98 83% 145% $3,462 $5,490 1.24x 1.25x 1.25x 10.6x 10.6x 11.4x NM NM 19.6x NA -9.7% 5.6x

Flowers Foods, Inc. 18.99 90% 113% 3,980 4,830 1.23x 1.25x 1.23x 11.7x 10.9x 10.4x 47.5x 24.3x 20.4x NA 2.5% 2.1x

George Weston Limited 86.69 86% 104% 11,088 25,783 0.67x 0.67x 0.66x 7.4x 8.6x 7.7x 18.3x 27.8x 15.0x NA 10.0% 3.0x

Grupo Bimbo, S.A.B. de C.V. 2.27 88% 104% 10,661 14,486 1.05x 1.10x 0.98x 9.0x 9.0x 8.6x 48.2x 34.8x 21.2x NA 27.5% 2.5x

Lancaster Colony Corporation 128.63 86% 113% 3,530 3,373 2.79x 2.82x 2.73x 15.8x 15.4x 15.4x 31.8x 30.6x 27.4x -5.4% 10.0% NA

Mean: 1.40x 1.42x 1.37x 10.9x 10.9x 10.7x 36.4x 29.4x 20.7x -5.4% 8.1% 3.3x

Median: 1.23x 1.25x 1.23x 10.6x 10.6x 10.4x 39.6x 29.2x 20.4x -5.4% 10.0% 2.7x

Dairy

Danone $85.04 98% 122% $53,469 $75,593 2.72x 2.84x 2.41x 15.2x 16.4x 13.0x 24.0x 25.3x 18.5x NA 10.7% 5.4x

Dean Foods Company 11.61 53% 129% 1,057 1,979 0.25x 0.26x 0.27x 5.8x 4.3x 5.6x 34.1x 8.8x 14.1x NA 2.7% 2.8x

Emmi AG 711.34 90% 116% 3,806 4,205 1.26x 1.27x 1.21x 12.6x 12.7x 11.8x 25.5x 26.4x 23.2x NA NA 1.9x

Glanbia plc 16.96 72% 101% 5,004 5,951 1.67x 1.82x 2.03x 12.7x 13.3x 14.3x 17.8x 19.6x 15.0x NA 7.3% 2.6x

Lifeway Foods, Inc. 8.16 67% 113% 131 130 1.06x 1.03x 1.02x 18.8x 14.3x NA 69.9x 37.9x 40.8x NA NA 0.9x

Parmalat S.p.A. 3.77 95% 110% 6,978 6,924 0.84x 0.87x 0.79x 14.6x 15.1x 10.3x 90.4x 73.8x 25.7x NA NA 1.6x

Saputo Inc. 35.47 91% 112% 13,718 14,852 1.62x 1.69x 1.61x 14.1x 14.4x 13.6x 23.3x 24.1x 22.5x 21.9% 9.1% 1.2x

Savencia SA 95.82 87% 118% 1,331 1,973 0.35x 0.37x 0.33x 4.9x 5.2x 4.9x 8.4x 10.9x 10.4x NA NA 2.9x

Mean: 1.22x 1.27x 1.21x 12.3x 12.0x 10.5x 36.7x 28.3x 21.3x 21.9% 7.5% 2.4x



7

PUBLIC COMPS CONTINUED

Stock Price

16-17

EPS

Long-

term

Total

Debt



Non-Alcoholic Beverages

A.G. BARR p.l.c. $9.03 98% 135% $1,031 $1,021 2.81x 2.93x 2.78x 14.4x 15.3x 14.2x 22.4x 21.8x 22.0x 3.6% NA 0.2x

Cott Corporation 16.43 90% 152% 2,289 3,749 0.98x 1.09x 1.33x 8.9x 9.8x 9.6x NM NM 42.5x NA -1.5% 3.6x

Dr Pepper Snapple Group, Inc. 95.77 96% 115% 17,290 21,708 3.28x 3.41x 3.13x 13.8x 13.2x 12.8x 24.0x 21.1x 19.2x NA 8.2% 2.9x

Jones Soda Co. 0.38 69% 127% 16 16 1.13x 0.98x NA NM NM NA NM NM NA NA NA NM

Lassonde Industries Inc. 200.24 97% 126% 1,399 1,582 1.31x 1.34x 1.30x 11.5x 11.6x 10.8x 23.5x 25.7x 21.3x NA NA 1.1x

Monster Beverage Corporation 63.36 98% 154% 35,733 34,637 10.46x 11.35x 9.17x 26.3x 28.6x 23.2x 46.3x 53.2x 36.4x NA 18.9% NA

National Beverage Corp. 95.54 74% 210% 4,452 4,318 4.74x 5.33x 4.40x 21.3x 24.6x 19.3x 35.6x 41.7x 32.0x 74.8% NA NA

Pepsico, Inc. 118.33 98% 117% 168,282 189,134 2.98x 3.05x 2.88x 15.0x 15.6x 13.7x 24.5x 27.1x 21.0x NA 7.5% 3.1x

The Coca-Cola Company 46.08 97% 115% 196,332 218,175 5.85x 5.19x 7.08x 18.2x 17.6x 18.9x 44.4x 30.9x 23.1x NA 5.1% 4.5x

Mean: 3.73x 3.85x 4.01x 16.2x 17.0x 15.3x 31.5x 31.7x 27.2x 39.2% 7.6% 2.6x


Alcoholic Beverages

Anheuser-Busch InBev SA/NV $113.85 86% 102% $220,161 $342,908 5.99x 6.54x 5.90x 16.5x 18.3x 14.5x 42.2x 146.5x 22.4x NA 21.2% 5.9x

The Boston Beer Company, Inc. 187.90 95% 146% 2,186 2,116 2.42x 2.38x 2.42x 11.3x 11.3x 12.6x 25.8x 27.7x 27.6x NA 1.2% NA

Brown-Forman Corporation 68.11 98% 156% 25,959 27,951 8.90x 9.40x 8.62x 24.5x 26.6x 24.0x 35.5x 39.8x 34.4x -34.5% 10.1% 1.9x

Carlsberg A/S 121.41 99% 125% 18,384 22,529 2.20x 2.20x 2.17x 10.0x 10.8x 10.0x 23.2x 25.5x 21.3x NA 12.8% 2.1x

Constellation Brands, Inc. 225.79 98% 157% 44,155 52,993 7.11x 7.30x 6.94x 19.4x 21.0x 18.8x 25.9x 30.0x 26.8x 45.2% 17.4% 3.3x

Craft Brew Alliance, Inc. 19.05 95% 159% 368 393 1.89x 1.95x 1.77x 27.6x 35.0x 18.0x 211.3x NM 61.7x NA 49.0% 1.8x

Crimson Wine Group, Ltd. 10.60 92% 118% 254 249 4.07x 3.89x NA 25.6x 25.3x NA 76.7x 78.0x NA NA NA 2.5x

Diageo plc 36.22 98% 126% 89,839 103,012 6.31x 6.42x 6.14x 18.1x 18.1x 17.8x 24.8x 24.8x 23.1x 20.9% 8.7% 2.4x

Heineken N.V. 105.26 97% 126% 59,966 76,766 3.00x 3.05x 2.76x 13.5x 13.8x 11.7x 27.3x 32.3x 20.5x NA 9.4% 3.4x

Kirin Holdings Company, Limited 25.40 97% 160% 23,183 28,908 1.93x 1.82x 1.68x 13.2x 13.5x 12.4x 16.3x 22.1x 25.0x NA -3.0% 2.3x

Pernod Ricard SA 158.40 99% 128% 41,826 51,541 4.74x 4.76x 4.73x 16.4x 16.4x 16.1x 25.0x 25.0x 23.0x 12.9% 6.8% 3.3x

Sapporo Holdings Limited 30.86 94% 124% 2,404 4,448 0.91x 0.92x 0.89x 11.7x 10.8x 10.3x 28.2x 28.6x 24.4x NA NA 5.6x

Willamette Valley Vineyards, Inc. 8.16 92% 111% 41 51 2.44x 2.63x NA 9.1x 9.5x NA 20.9x 19.0x NA NA NA 1.6x

Mean: 3.99x 4.10x 4.00x 16.7x 17.7x 15.1x 44.9x 41.6x 28.2x 11.1% 13.3% 3.0x


Protein

Cal-Maine Foods, Inc. $43.80 87% 131% $2,127 $2,013 1.83x 1.90x 1.51x NM NM 15.7x NM NM 30.9x NA 12.5% NM

Hormel Foods Corporation 36.45 96% 123% 19,307 19,117 2.09x 2.08x 1.94x 13.5x 13.5x 13.0x 23.2x 23.2x 22.1x -4.3% 9.0% 0.2x

Industrias Bachoco, S.A.B. de C.V. 57.96 86% 128% 2,898 2,307 0.73x 0.90x 0.67x 5.0x 6.4x 6.0x 12.1x 15.1x 11.6x NA NA 0.6x

JBS S.A. 3.07 79% 189% 8,367 22,989 0.46x 0.43x 0.44x 6.2x 6.4x 5.1x 15.7x 71.7x 7.4x NA 70.9% 5.0x

Nathan's Famous, Inc. 74.50 74% 141% 312 382 3.76x 4.00x NA 13.7x 13.9x NA 42.0x 41.9x NA 29.9% NA 4.7x

Pilgrim's Pride Corporation 29.47 77% 163% 7,331 9,549 1.13x 1.25x 0.88x 7.9x 10.7x 6.6x 11.7x 17.0x 9.9x NA NA 2.1x

Sanderson Farms, Inc. 133.98 76% 153% 3,058 2,639 0.79x 0.82x 0.76x 5.0x 5.0x 5.4x 10.9x 10.9x 11.4x 47.0% 3.0% NA

Seaboard Corporation 4,384.61 93% 135% 5,132 4,366 0.78x 0.82x NA 10.7x 10.4x NA 15.7x 16.5x NA NA NA 1.6x

Tyson Foods, Inc. 80.22 95% 140% 30,082 39,982 1.05x 1.05x 0.99x 10.1x 10.1x 9.1x 16.7x 16.7x 13.7x 5.7% NA 2.6x

Mean: 1.40x 1.47x 1.03x 9.0x 9.5x 8.7x 18.5x 26.6x 15.3x 19.6% 23.9% 2.4x


Fruit & Vegetables

Calavo Growers, Inc. $86.50 99% 177% $1,517 $1,532 1.42x 1.39x 1.20x 21.7x 21.7x 17.3x 40.6x 40.6x 30.4x -2.3% NA 0.3x

Fresh Del Monte Produce Inc. 48.19 77% 112% 2,397 2,671 0.65x 0.66x NA 11.1x 7.6x NA 17.8x 11.1x 18.1x NA NA 1.2x

Seneca Foods Corporation 30.45 73% 110% 304 732 0.57x 0.59x NA 16.0x 13.0x NA 66.1x 24.0x NA -76.6% NA 9.8x

Total Produce plc 2.93 95% 138% 952 1,227 0.30x 0.34x 0.27x 9.6x 11.9x 11.1x 22.1x 27.6x 18.1x NA 4.5% 2.6x

Mean: 0.74x 0.74x 0.74x 14.6x 13.5x 14.2x 36.7x 25.8x 22.2x -39.4% 4.5% 3.5x


Ingredients & Flavors

Balchem Corporation $80.36 90% 112% $2,572 $2,773 4.81x 5.03x 4.48x 20.1x 20.3x 18.3x 40.6x 45.9x 29.8x NA 2.0% 1.7x

Givaudan SA 2,364.30 100% 135% 21,789 23,255 4.71x 4.76x 4.30x 22.8x 23.2x 18.9x 32.4x 33.2x 26.8x NA 10.8% 1.7x

Ingredion Incorporated 140.85 99% 125% 10,122 11,535 1.99x 2.01x 1.95x 10.8x 11.2x 10.0x 20.2x 21.5x 17.0x NA 11.0% 1.8x

Innophos Holdings, Inc. 46.60 80% 112% 908 1,170 1.68x 1.62x 1.47x 10.0x 9.9x 8.7x 21.4x 19.1x 16.1x NA 8.8% 2.5x

International Flavors & Fragrances

Inc. 153.76 98% 136% 12,144 13,507 4.08x 4.30x 3.81x 19.4x 20.1x 16.4x 29.5x 30.4x 24.3x NA 8.0% 2.4x

Kerry Group plc 111.57 97% 145% 19,657 21,198 2.80x 2.90x 2.62x 20.7x 21.1x 17.7x 30.5x 30.6x 24.9x NA 9.7% 2.1x

MGP Ingredients, Inc. 75.84 94% 184% 1,268 1,295 3.81x 4.13x 3.57x 23.3x 24.0x 20.4x 34.8x 41.8x 35.8x NA 14.5% 0.6x

Sensient Technologies Corporation 74.08 87% 104% 3,221 3,824 2.80x 2.74x 2.65x 14.6x 14.8x 13.1x 30.6x 27.0x 19.5x NA 9.6% 2.4x

Symrise AG 86.56 98% 132% 11,236 13,029 3.65x 3.71x 3.41x 17.5x 17.7x 15.8x 35.7x 36.8x 30.3x NA 10.6% 3.2x

Tate & Lyle plc 9.30 86% 110% 4,312 4,798 1.25x 1.31x 1.27x 7.5x 8.1x 8.0x 12.9x 12.7x 13.8x NM 0.6% 1.3x

Mean: 3.16x 3.25x 2.95x 16.7x 17.1x 14.7x 28.9x 29.9x 23.8x #DIV/0! 8.6% 2.0x

Median: 3.23x 3.30x 3.03x 18.5x 18.9x 16.1x 30.5x 30.5x 24.6x #NUM! 9.7% 1.9x


8

PUBLIC COMPS CONTINUED

Stock Price

16-17

EPS

Long-

term

Total

Debt



Agribusiness

AGT Food and Ingredients Inc. $17.56 59% 123% $526 $959 0.61x 0.58x 0.58x 14.3x 10.1x 12.0x NM 25.3x 17.8x NA NA 4.8x

Archer-Daniels-Midland Company 40.45 85% 105% 22,622 29,239 0.48x 0.47x 0.46x 9.9x 10.3x 10.0x 18.9x 18.7x 15.0x NA 16.0% 2.9x

Bunge Limited 70.47 84% 110% 9,909 15,758 0.34x 0.36x 0.33x 12.6x 9.4x 9.0x 21.6x 13.9x 14.8x NA 15.0% 4.7x

Darling Ingredients Inc. 18.42 99% 160% 3,033 4,758 1.32x 1.39x 1.28x 9.9x 9.3x 10.0x 47.9x 29.7x 27.1x NA NA 4.0x

Gruma, S.A.B. de C.V. 12.74 85% 108% 5,515 6,362 1.72x 1.82x 1.62x 10.8x 11.2x 9.8x 17.5x 17.9x 15.4x NA 8.5% 1.8x

Landec Corporation 12.90 86% 115% 355 410 0.78x 0.75x 0.75x 18.2x 14.4x 12.9x 43.1x 33.9x 25.0x NA 29.0% 2.6x

Olam International Limited 1.54 83% 110% 4,802 12,868 0.68x 0.83x 0.79x 13.4x 15.3x 12.3x 16.1x 18.3x 14.4x NA NA 9.8x

The Andersons, Inc. 31.85 74% 108% 896 1,352 0.36x 0.34x 0.34x 9.8x 11.9x 8.4x NM 77.7x 18.6x NA 13.0% 3.8x

Mean: 0.79x 0.82x 0.77x 12.3x 11.5x 10.5x 27.5x 29.4x 18.5x #DIV/0! 16.3% 4.3x

Median: 0.64x 0.67x 0.67x 11.7x 10.8x 10.0x 20.3x 22.0x 16.6x #NUM! 15.0% 3.9x

Agricultural Equipment

Ag Growth International Inc. $42.96 89% 114% $694 $1,094 1.95x 2.56x 1.60x 13.3x 16.0x 9.5x 27.1x 42.4x 17.0x NA NA 5.7x

AGCO Corporation 72.06 95% 124% 5,732 7,548 0.96x 1.01x 0.85x 11.0x 12.1x 10.1x 28.4x 36.8x 19.4x NA 13.6% 3.2x

Art's-Way Manufacturing Co., Inc. 3.00 64% 150% 12 18 0.93x 0.85x NA NM 64.7x NA NM NM NA NA NA NM

Buhler Industries Inc. 3.59 92% 109% 90 100 0.40x 0.39x NA 31.2x 31.2x NA 216.3x 216.3x NA NA NA 3.6x

CNH Industrial N.V. 13.94 102% 161% 19,010 40,994 1.64x 1.70x 1.47x 15.5x 16.8x 14.1x 43.6x NM 20.8x NA 20.3% 10.1x

Deere & Company 159.64 100% 154% 51,499 83,378 2.87x 2.83x 2.62x 18.5x 18.5x 16.4x 23.9x 23.9x 19.6x 38.9% 7.4% 8.9x

Lindsay Corporation 88.97 92% 121% 954 961 1.81x 1.84x 1.70x 15.9x 16.9x 13.5x 37.3x 41.0x 28.3x 17.3% 18.2% 1.9x

Titan Machinery Inc. 23.56 102% 202% 503 881 0.75x 0.68x 0.75x 28.6x 32.3x 32.5x NM NM NM NA 22.5% 13.7x

Mean: 1.41x 1.48x 1.50x 19.1x 26.1x 16.0x 62.8x 72.1x 21.0x 28.1% 16.4% 6.7x


Food Retail

Costco Wholesale Corporation $189.10 97% 126% $83,035 $82,906 0.62x 0.63x 0.60x 14.7x 15.1x 13.8x 30.1x 31.1x 28.9x 14.1% 9.7% 1.2x

Ingles Markets, Incorporated 35.15 71% 169% 712 1,566 0.39x 0.39x 0.39x 6.6x 6.6x 6.7x 13.2x 13.2x 13.8x -0.6% 6.5% 3.7x

J Sainsbury plc 3.28 85% 109% 7,168 9,149 0.24x 0.26x 0.24x 6.1x 6.6x 4.9x 23.8x 14.6x 12.7x -26.5% 2.2% 2.0x

Koninklijke Ahold Delhaize N.V. 22.24 88% 125% 27,692 31,501 0.41x 0.52x 0.42x 6.2x 8.3x 6.0x 18.7x 22.8x 12.9x NA 12.2% 1.8x

Natural Grocers by Vitamin Cottage,

Inc. 8.67 63% 181% 194 249 0.32x 0.33x 0.31x 5.7x 5.7x 5.5x 28.3x 28.3x 34.6x -39.8% -5.2% 1.4x

Sprouts Farmers Market, Inc. 24.23 93% 139% 3,224 3,690 0.82x 0.92x 0.70x 11.8x 12.6x 10.3x 25.0x 29.2x 21.5x NA 12.1% 1.6x

SUPERVALU Inc. 20.93 61% 144% 804 2,410 0.18x 0.20x 0.15x 5.0x 4.9x 5.0x NM 34.5x 8.9x -69.0% 7.0% 3.8x

Tesco PLC 2.86 98% 128% 23,264 30,710 0.40x 0.41x 0.39x 8.6x 9.6x 7.9x 37.7x 239.7x 21.1x -72.9% 14.3% 4.2x

The Kroger Co. 26.98 77% 137% 23,779 38,250 0.32x 0.34x 0.31x 6.8x 6.5x 6.5x 16.0x 13.2x 13.3x -0.5% 4.5% 2.6x

Village Super Market, Inc. 22.91 73% 102% 330 298 0.19x 0.19x NA 4.7x 4.6x NA 15.1x 14.3x NA -9.4% NA 0.7x

Weis Markets, Inc. 40.86 60% 131% 1,099 1,067 0.30x 0.34x NA 6.4x 6.1x NA 14.5x 12.6x NA NA NA 0.3x

Mean: 0.38x 0.41x 0.39x 7.5x 7.9x 7.4x 22.2x 41.2x 18.6x -25.6% 7.0% 2.1x


Wholesale, Foodservice, &

Distribution

AMCON Distributing Company $90.10 73% 110% $62 $94 0.10x 0.11x NA 11.3x 11.3x NA 21.2x 21.2x NA -49.1% NA 3.9x

Colabor Group Inc. 0.62 51% 118% 64 159 0.15x 0.14x 0.16x 7.6x 6.7x 8.3x NM 105.1x 9.8x NA NA 4.6x

Core-Mark Holding Company, Inc. 31.41 71% 120% 1,451 1,941 0.16x 0.17x 0.11x 15.4x 14.6x 11.0x 35.1x 26.8x 22.3x NA 16.2% 4.3x

Performance Food Group Company 33.30 99% 153% 3,363 4,720 0.28x 0.28x 0.26x 13.0x 13.8x 10.9x 32.3x 35.8x 26.0x 32.9% 16.4% 3.8x

SpartanNash Company 26.14 65% 141% 966 1,624 0.20x 0.21x 0.20x 7.1x 7.2x 6.4x NM 17.2x 11.6x NA -0.3% 2.9x

Sysco Corporation 60.84 97% 125% 31,701 39,862 0.71x 0.72x 0.69x 13.1x 13.2x 12.1x 27.8x 29.3x 21.9x 26.8% 10.4% 3.0x

The Chefs' Warehouse, Inc. 20.15 92% 170% 574 889 0.69x 0.75x 0.63x 15.3x 16.3x 11.9x 37.3x 172.8x 33.8x NA -7.5% 5.5x

United Natural Foods, Inc. 43.93 83% 149% 2,214 2,640 0.28x 0.31x 0.27x 8.2x 8.3x 7.8x 17.0x 17.2x 15.9x 2.4% 5.9% 1.4x

US Foods Holding Corp. 32.23 100% 127% 6,920 10,478 0.44x 0.45x 0.42x 11.4x 11.9x 9.4x 27.6x 31.3x 18.7x NA 23.0% 4.0x

Mean: 0.33x 0.35x 0.34x 11.4x 11.5x 9.7x 28.3x 50.7x 20.0x 3.2% 9.1% 3.7x


Pet Food and Products

Blue Buffalo Pet Products, Inc. $32.60 99% 152% $6,366 $6,452 5.23x 5.64x 4.66x 21.6x 24.4x 18.0x 37.5x 50.2x 30.2x NA 16.5% 1.3x

Central Garden & Pet Company 38.12 90% 131% 1,927 2,292 1.12x 1.14x 1.09x 11.6x 11.6x 10.9x 25.1x 25.1x 22.8x 74.7% 11.0% 2.0x

Freshpet, Inc. 18.70 91% 202% 652 655 4.38x 4.99x 3.50x 79.0x 85.4x 29.0x NM NM 166.2x NA NA 0.7x

Mean: 3.58x 3.92x 3.08x 37.4x 40.5x 19.3x 31.3x 37.6x 73.1x 74.7% 13.8% 1.3x



9

SENIOR BANKING TEAM

Brian Boyle

Managing Director

Head of Food & Beverage

Investment Banking

312.655.2713

[email protected]

Mark Goodman

Managing Director

Head of Consumer

Investment Banking

410.525.5171

[email protected]

David Clark

Managing Director

Head of Financial Sponsors

Investment Banking

617.624.7006

[email protected]

Ben Rodman

Managing Director

Financial Sponsors

312-655-2633

[email protected]

Monika Nickl

Managing Director

Consumer

+ 49.892-323-7766

[email protected]

Dirk Damegger

Managing Director

Consumer & Retail

+ 49.69.219.337.19

[email protected]


10

NOTES & DISCLOSURES

Sources of data include Capital IQ, FactSet and other

news organizations. Information obtained from third-party

sources is considered reliable, but we do not guarantee

that the information herein is accurate or complete. This

report was prepared within Raymond James &

Associates’ Investment Banking Department and is for

information purposes only. This report is not a product of

Raymond James & Associates’ Research Department;

recipients of this report should not interpret the

information herein as sufficient grounds for an investment

decision or any other decision. The report shall not

constitute an offer to sell or the solicitation of an offer to

buy any of the securities mentioned herein; past

performance does not guarantee future results. Any

performance mentioned does not include transaction fees

and costs which would reduce an investor’s return. An

investment cannot be made directly in a market index.

EBIT: Earnings Before

Interest and Taxes

EBITDA: Earnings Before

Interest, Taxes, Depreciation and

Amortization

EPS: Earnings per Share

LTM: Last Twelve Months

NA: Not Applicable

NM: Not Meaningful

PE: Price Earnings Ratio

TEV: Total Enterprise Value

Raymond James & Associates, Inc. member New York Stock Exchange/SIPC .

contract manufacturers for food & beverage: in … · hearthside produces a broad range of...

Documents