Wholesale and Distribution Industry
Key Performance Indicators (KPIs)
NAW Billion Dollar Company CFO Roundtable
June 10, 2014
Paul Melville
Partner
T 312-602-8360
E paul.melville@us.gt.com
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Contents
Section
Page
1. Introduction
3
2. Industry and sub-industry overview
7
3. Key performance indicators – wholesale industry
11
4. Electrical & electronics equipment & components wholesalers
14
5. Food & grocery wholesalers
20
6. Containers, packaging, paper & forest products wholesalers
26
7. Appendix – supporting schedules
32
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
2
Section 1
Introduction
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Introduction
Overview
Scope of presentation
This presentation will cover the key financial metrics which are important to the operation of a successful wholesale/distribution business. We will discuss the metrics lenders
and investors look at when assessing a wholesaler /distributor as well as identify the best in class for those metrics.
Presenter profile
Paul Melville
Paul Melville is a Principal in Grant Thornton’s Corporate Advisory & Restructuring Services (CARS) practice and is based in
Chicago, Illinois.
Paul has over 18 years experience in all areas of corporate advisory and has advised stakeholders including management, Board of
Directors, Bank groups, customers, suppliers and shareholders in a number of different scenarios including company viability,
reconstructions and debt restructuring, strategic options and formal insolvency. He has also worked on a number of cross border
restructurings.
Prior to moving to the US where he spent three years in the firm’s Detroit office, Paul was a corporate recovery and restructuring
partner in Grant Thornton UK.
Principal
T: 312.602.8360
E: paul.melville@us.gt.com
While in the UK Paul also worked in the Credit & Risk department of one of the UK's largest banking institutions. As part of his
role, he oversaw a number of credit files involved in both the sanctioning of new loans and monitoring and review of existing credits.
Licences and Affiliations
• Licensed Insolvency Practitioner
• Turnaround Management Association
(TMA)
• American Bankruptcy Institute (ABI)
• INSOL International
• Board of Directors, Commercial Financial
Association Educational Foundation
• The Board of Governors of Kohl Children's
Museum of Greater Chicago
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
4
Introduction
Presentation outline
Agenda
— Industry and sub-industry overview:
− set context for US wholesale and distribution market
− key metrics associated with sub-industry performance
— Stratification and observation of key performance metrics for all publicly traded wholesalers1, identifying:
− what lenders and investors look at
− trends driving price / earnings ("P/E") multiples
− benchmark data for individual industry analysis
— Detailed analysis of following sub-industries:
− Electrical & electronics equipment & components wholesalers
− Food & grocery wholesalers
− Containers, packaging, paper and forest products wholesalers
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Non-durable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that
do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
5
Introduction
Interactive panel presentation
Key performance metrics
Key performance metrics
— Market value
− P/E multiple
− Market capitalization
— Profitability
− Gross margin %
− Sales, general & administration %
− EBIT margin
− EBITDA margin
− Return on total assets
− Return on capital
− Return on equity
— Efficiency
− Total asset turnover
− Fixed asset turnover
— Cash cycle
− Days sales outstanding
− Days payables outstanding
− Days inventory outstanding
— Liquidity
− Current ratio
− Quick ratio
— Leverage
− Debt / EBITDA
− EBITDA / Interest Expense
— Capital Structure
− Debt / Equity
− Debt / Capital
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
6
Section 2
Industry and sub-industry overview
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Industry and sub-industry overview
Industry overview
US wholesale and distribution market
— The US wholesale market is a remarkably large and complex universe. It represents $6TRN of sales from
over 300,000 distributors as of May, 20141
— Sales are most broadly segregated between nondurable (54%) and durable (46%) goods which are further
broken down into the categories 2 in the charts below
— In the US, the industry is highly fragmented with the 50 largest distributors generating approximately 25
percent of the industry revenues1
Durable Goods Industry ($ billions)
Non-Durable Goods Industry ($ billions)
Motor, parts & supplies
228
248
Home furnishings
35
69
69
262
90
152
Paper & packaging
49
Pharmaceuticals
259
73
Lumber & construction
Apparel
Commercial equipment
Computer equipment
242
146
130
437
Farming products
Metals & Minerals
Electrical goods
Grocery products
348
73
146
Chemicals
Petroleum
Plumbing & heating equipment
Beer & Wine
Machinery equipment
Miscellaneous nondurable
Sources:
1. Industry Profile – Wholesale Sector Report, First Research, May 2014
2. U.S. Census Bureau – Most Recent Data as of May, 2014
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
8
Industry and sub-industry overview
Sub-industry overview
Median values for metrics by sub-industry
Sample
Sub-Industry
Size
Industry Median
P/E correlation
Market
Total
Gross
Capital
Rev enue
Margin
SG&A as
21
11
8
7
13
5
14
14
7
2
15
15
3
11
EBITDA
% of Sales EBIT Margin
Market Data
($ in millions)
Petroleum
Pharmaceuticals
Commercial Equipment
Motor, parts and suppliers
Machinery Equipment
Chemicals
Electrical Goods
Metals and Minerals
Paper and Packaging
Farming Products
Computer Equipment
Miscellaneous
Apparel
Grocery Products
P/E
Return on
Return on
Return on
Margin Total Assets
Capital
Equity
Profitability
26.6 $
24.2
19.8
19.3
18.5
17.1
16.2
14.0
13.6
12.2
10.8
6.4
1.2
0.2
804
1,067
2,107
4,224
1,376
79
140
330
121
1,474
464
52
25
181
$
1,638
811
3,206
1,140
1,300
210
110
1,016
1,228
3,939
517
828
63
130
9.7%
56.6%
24.8%
30.4%
28.0%
34.5%
21.2%
17.6%
20.0%
11.9%
11.3%
23.9%
32.7%
17.4%
3.3%
12.8%
18.6%
23.5%
19.5%
35.2%
17.2%
11.5%
14.1%
7.8%
8.7%
20.0%
27.7%
16.4%
2.8%
4.5%
5.6%
7.2%
6.9%
8.0%
3.8%
1.7%
1.3%
4.1%
1.3%
4.3%
5.0%
3.1%
4.4%
6.5%
6.2%
8.2%
9.0%
10.7%
4.4%
3.0%
2.0%
5.4%
3.0%
5.1%
5.9%
3.9%
4.1%
6.7%
7.5%
2.7%
6.8%
7.6%
3.4%
1.9%
2.8%
3.5%
2.3%
4.6%
6.6%
7.1%
5.6%
15.7%
10.7%
6.6%
9.0%
8.8%
5.2%
2.9%
5.0%
4.8%
7.0%
6.7%
8.1%
9.6%
12.5%
17.4%
15.3%
9.4%
12.9%
9.0%
4.2%
1.8%
9.2%
13.6%
7.5%
9.3%
6.5%
5.4%
16.2 $
432
$
819
32.5%
19.9%
22.5%
14.2%
(25.0)%
3.5%
21.8%
4.5%
29.7%
4.7%
(6.1)%
7.0%
17.2%
10.0%
55.9%
Key observations
— The fourteen sub-industry's comprising the Wholesale market have materially different characteristics which places limitations on industry wide analysis.
Some such characteristics are Capital intensive (Machinery equipment, Chemicals) or High volume low margin (Petroleum, Computer equipment).
Consequently this overview section is broad brush and directional
— By way of background the sub-industry median P/E multiple ranges from 0.2 to 26.6 with a median of 16.2. In comparison the:
− Dow industrial is 16.36
− Dow transportation 18.74
− S&P 500 18.26
Sources: 1. Capital IQ 2.WSJ – June 4, 2014
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
9
Industry and sub-industry overview
Sub-industry overview
Median values for metrics by sub-industry
Total Asset Fix ed Asset
Sub-Industry
P/E
($ in millions)
Market Data
Turnov er
Turnov er
DSO
Efficiency
DPO
DIO
Cash Cy cle
Current
Quick
Ratio
Ratio
Debt / EBITDA / Net Debt /
EBITDA
Liquidity
Int. ex p.
EBITDA
Lev erage
Debt /
Debt /
Equity
Capital
Capital Structure
Petroleum
Pharmaceuticals
Commercial Equipment
Motor, parts and suppliers
Machinery Equipment
Chemicals
Electrical Goods
Metals and Minerals
Paper and Packaging
Farming Products
Computer Equipment
Miscellaneous
Apparel
Grocery Products
26.6
24.2
19.8
19.3
18.5
17.1
16.2
14.0
13.6
12.2
10.8
6.4
1.2
0.2
2.1
2.3
2.0
0.8
1.7
1.0
1.8
1.6
3.2
1.8
2.4
1.8
1.4
3.6
4.6
36.6
54.9
5.9
12.0
3.8
36.0
6.9
21.3
8.7
79.0
36.6
20.2
25.6
22.9
27.8
41.6
57.4
50.8
38.6
53.0
41.1
36.3
38.2
62.6
41.9
51.7
28.4
28.6
47.5
32.1
47.2
34.6
61.7
46.0
24.4
27.8
25.1
50.8
37.8
20.7
21.1
8.2
33.4
70.1
100.0
77.4
88.6
53.0
73.8
55.5
87.2
30.9
62.3
102.2
28.4
1.4
1.3
1.8
1.6
2.0
2.5
4.1
3.0
2.0
2.5
1.6
2.1
4.9
1.7
1.0
0.7
1.0
0.9
1.2
1.4
1.9
1.3
1.0
0.8
0.8
1.0
2.3
0.9
4.4
1.4
1.0
2.6
3.2
1.0
2.1
4.3
2.6
3.4
1.5
1.8
0.3
1.3
5.6
9.2
14.8
11.4
10.7
21.3
6.9
5.4
6.8
8.4
10.9
5.3
77.3
5.0
4.4
2.0
0.9
2.4
3.3
53.6
2.0
4.5
2.6
2.8
1.7
2.1
1.2
1.0
77.8%
46.5%
20.5%
25.8%
53.6%
5.9%
14.5%
52.9%
57.9%
29.1%
16.4%
1.6%
1.2%
16.3%
51.4%
31.2%
15.0%
19.2%
34.3%
5.3%
10.8%
34.4%
38.1%
17.8%
12.3%
3.0%
1.2%
17.0%
Industry Median
P/E correlation
16.2
1.9
(27.0)%
20.1
(15.6)%
39.7
(20.9)%
35.6
40.5%
38.8
(20.1)%
1.9
(43.4)%
1.1
(34.9)%
2.1
43.3%
7.1
(40.9)%
2.7
14.3%
25.8%
62.4%
20.4%
60.2%
US Wholesale and Distribution market
— The closest correlation between the sub-industry median P/E multiple and key metrics are:
− Return on equity 55.9% correlation;
− Debt / equity 62.4%; and
− Debt / capital 60.2%
− The above correlations are expected as these ratios are related to equity and net income, an absolute measure of profitability, and risk factors such as a
Company’s ability to meet its liabilities and confidence in the business
— Similar correlation was not observed for Profitability metrics such as Gross margin (22.5% correlation) and EBITDA margin (29.7% correlation)
Sources: 1. Capital IQ 2.WSJ – June 4, 2014
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
10
Section 3
Key performance indicators – wholesale industry
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Key performance indicators – wholesale industry
Key performance indicators – wholesale industry
Key observations
Wholesale industry in aggregate (Median analysis)
($ in millions)
Market Value
PE multiple
Rev enue
Market Cap
Profitability
GM %
SGA %
EBIT margin
EBITDA margin
ROA
ROC
ROE
$
$
Top 10
Aggregate
Bottom 10
22.9
263.5
194.8
16.2
819.3
432.5
(71.9)
253.2
344.8
21.2%
17.2%
4.3%
4.9%
3.4%
5.2%
4.2%
Top 10
Sub-industry
CTD Holdings Inc.
Chemicals
Infosonics Corp.
Electrical Goods
Richardson Electronics Ltd.
Electrical Goods
Univ ersal Pow er Group Inc.
Electrical Goods
Central Steel and Wire Company Metals and Minerals
SemGroup Corporation
Petroleum
Plains GP Holdings, L.P.
Petroleum
NGL Energy Partners LP
Petroleum
Arc Logistics Partners LP
Petroleum
Amex drug Corp.
Pharmaceuticals
Notes:
$
$
$
$
19.9%
14.2%
3.5%
4.5%
4.7%
7.0%
10.0%
Bottom 10
Sub-industry
Digital Riv er Inc.
Computer Equipment
Agily sy s Inc.
Computer Equipment
Coffee Holding Company , Inc. Grocery Products
Central Garden & Pet Company Grocery Products
GreenParts International, Inc.
Metals and Minerals
InnerWorkings Inc.
Miscellaneious
Ironclad Performance Wear Corp.Miscellaneious
Coast Distribution Sy stem Inc. Motor, parts and suppliers
Stock Building Supply Holdings, Inc.
Paper and Packaging
Martin Midstream Partners LP Petroleum
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Nondurable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies,
companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
23.0%
20.8%
0.5%
3.2%
0.5%
0.9%
(3.1%)
The table opposite sets out the median KPI's for the Top 10 (ranked by P/E
multiple), Aggregate and Bottom 10 publicly traded wholesalers. The key
observations are:
Size
— Revenue level is not a driver of P/E multiple
— The correlation between revenue and the P/E multiple is only 13%
Profitability
— Despite a correlation of only 8% between EBIT margin and P/E, the Top 10
companies have higher EBIT margins than both the Aggregate and Bottom 10
company's
— The Top 10 businesses deliver this with a balanced focus on GM and SG&A cost
control. However SG&A is the primary differentiator between poor performers
and Aggregate
— Return on assets, return on capital and return on equity ratios highlight that the
Aggregate group delivers a greater return on capital than the Top 10 companies.
This highlight's a critical point which is that while the P/E multiple is the ultimate
metric for publicly traded companies and lenders and investors it does not
correlate to pure financial metrics and is impacted by a number of subjective
factors including:
− confidence and risk, core financial performance, market sentiment,
competitive landscape, company leadership, and industry and technology
trends
— The difference between the EBIT and EBITDA margins for the Top 10 is 0.6%
as compared to 2.7% for the Bottom 10, indicating higher depreciation and
amortization. The sub-industry category table illustrates that the Top 10 are heavily
weighted by Electrical and Petroleum companies with higher initial capital
investment as compared to the diversified sub-industries included for the Bottom
10 analysis
— We have analyzed drivers behind this in more detail when looking at specific
industries
12
Key performance indicators – wholesale industry
Key performance indicators – wholesale industry
Wholesale industry in aggregate (Median analysis)
($ in millions)
Efficiency
TA turnov er
FA turnov er
Cash Cycle
DSO
DPO
DIO
Liquidity
Current ratio
Quick ratio
Leverage
Debt / EBITDA
EBITDA / Int ex pense
Capital Structure
Debt / Equity
Debt / Capital
Key observations
Top 10
Aggregate
Bottom 10
1.8
36.0
1.9
20.1
1.7
15.0
53.0
46.0
64.2
39.7
35.6
38.8
58.0
37.2
50.6
3.6
1.4
1.9
1.1
2.4
1.5
2.2
3.7
2.1
7.1
4.5
3.0
14.5%
10.8%
25.8%
20.4%
47.2%
31.6%
The table opposite sets out the median KPI's for the Top 10 (ranked by P/E
multiple), Aggregate and Bottom 10 publicly traded wholesale. The key observations
are:
Efficiency
— The Top 10 companies are significantly outperforming the Aggregate in terms of
Fixed Asset turnover, which means that these business either require less
investment in fixed assets than Aggregate or that they are managing them more
efficiently
— We will analyse this in detail in the individual sector sections
Cash cycle
— The Top 10 companies have a 71 day cash cycle vs 42.9 for Aggregate and 71.4
for the Bottom 10. All three appear to be collecting receivables less than 60 days
and are paying vendors in less than 45 days
— This is surprising and could be driven by:
− the Top 10 companies holding greater inventory to be able to ensure rapid
service of clients needs
− The Top 10 may have been able to negotiate longer payment terms because of
their strength
Liquidity
— These metrics are indicators of risk and a Company's ability to meet it's liabilities
when they fall due
— The Top 10 have much higher ratios than the Bottom 10. This would be an
attractive metric for lenders and investors
Leverage and capital structure
— These ratios suggest that the Top 10 have much lower debt leverage and better
capital structures than those of the Bottom 10
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Nondurable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies,
companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
— It is not surprising therefore that there is a high correlation between P/E multiples
and favorable ratios. This speaks to market sentiment, business confidence and
appropriate balance sheet structures that minimize risk
13
Section 4
Electrical & electronics equipment & components wholesalers
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Electrical & electronics equipment & components wholesalers
Industry overview - Electrical & electronics equipment & components wholesalers
Overview
— 17.5% or $241BN of durable goods segment
— Wholesalers of electrical construction materials, wiring supplies, electric light fixtures, light bulbs, security systems and
electrical power equipment for the generation, transmission, distribution or control of electric energy (e.g. switchboards,
circuit breakers, switches and fuses)
Drivers of change include
—
—
—
—
Offshoring of production
Industry consolidation
Rebound in the construction industry
Competition from e-tailers which are cutting out wholesalers
Demand factors
—
—
—
—
—
—
Corporate profits
Price of semiconductor and electronic components
Per capita disposable income
Demand from building, developing and general contracting
Electric power consumption
Demand from manufacturing
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
15
Electrical & electronics equipment & components wholesalers
Industry overview - Electrical & electronics equipment & components wholesalers
Competitive market characteristics
—
—
—
—
—
Low market concentration
Low barriers to entry
Low capital intensity
High internal competition
Medium technology change
Key Success Factors
—
—
—
—
—
Ability to quickly adopt new technology
Provision of superior after sales service
Establishment of brand names
Having links with suppliers
Ability to control stock on hand
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
16
Electrical & electronics equipment & components wholesalers
Comparables – Electrical & electronics equipment & components wholesalers
Industry comparables
Company Name
TEV ($MM)
Current
Price
Electrical & Electronics Equipment & Components Wholesalers
Universal Power Group Inc.
$
20 $
1.65
ADDvantage Technologies Group Inc.
32
3.00
Houston Wire & Cable Company
269
11.68
WESCO International Inc.
5,227
85.97
Anixter International Inc.
4,109
101.91
Wireless Xcessories Group Inc.
4
0.96
TESSCO Technologies Inc.
247
30.72
Arrow Electronics, Inc.
7,674
57.89
Avnet, Inc.
7,150
43.64
Surge Components Inc.
2
0.80
Taitron Components Inc.
4
0.99
5Barz International Inc.
36
0.20
Median
Mean
S&P Performance
Stock Performance
1-Month
1-Year
Change
Change
LTM Margins
% of LTM
High
EBITDA
Gross
6.5%
(7.7% )
(3.1% )
(2.1% )
4.2%
(5.9% )
(6.2% )
2.3%
1.5%
3.9%
(3.0% )
2.6%
(3.5% )
33.1%
(16.6% )
15.8%
32.8%
(56.6% )
34.4%
45.6%
27.8%
23.3%
(1.0% )
30.1%
75.0%
84.5%
77.5%
90.7%
88.0%
36.9%
73.2%
94.6%
90.6%
86.0%
69.9%
55.7%
1.7%
6.1%
7.1%
6.6%
6.2%
1.2%
5.4%
4.4%
3.7%
5.6%
(13.1% )
-
19.7%
27.7%
21.8%
20.5%
23.0%
18.3%
24.7%
13.2%
11.7%
27.0%
22.6%
-
(0.3%)
(0.6%)
25.5%
13.8%
81.0%
76.9%
4.9%
2.9%
21.2%
19.2%
2.3%
17.3%
99.8%
TEV / EBITDA
2013 LTM
n/a
2014E
Revenue
3 Year
CAGR
10.4x
9.7x
10.4x
10.7x
n/a
7.5x
8.4x
8.0x
1.6x
(6)
(11)
9.1x
9.5x
10.1x
7.6x
6.9x
-
(9.7% )
(8.4% )
3.9%
12.0%
4.6%
27.2%
(2.6% )
3.0%
2.9%
5.0%
(5.9% )
-
8.2x
4.9x
3.6x
3.0%
2.7%
Key observations
— The key things investors and lenders would look at on this slide would be the industry CAGR, stock performance and the EBITDA margin %
— Stock performance is ahead of S&P's on a median basis. This provides positive sentiment. However, the group has realized a CAGR of 3.0% and hence,
further analysis would indicate that the positive year over year stock price change is not driven by core Company performance, but more by the general
uplift in the market sentiment and positive outlook for overall electrical, electronics and telecommunications industry as evidenced by the NASDAQ annual
return of 22.3%2. The 3% CAGR indicates slow growth in the industry, and would lead stakeholders to look to see if the industry is maturing
— Median EBITDA margin of 4.5% would suggest that this industry's players might not be able to support much debt burden so stakeholders would look at
capital structures
Sources: 1. Capital IQ 2. Wall Street Journal
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
17
Electrical & electronics equipment & components wholesalers
Key performance indicators – Electrical & electronics equipment & components
wholesalers
Electrical equipment & components wholesale (Median analysis)
Wholesale
Top 5
($ in millions)
Market Value
PE multiple
Rev enue
Market Cap
Profitability
GM %
SGA %
EBIT margin
EBITDA margin
ROA
ROC
ROE
$
$
Aggregate
27.1
389.3 $
235.7 $
15.9
81.6
125.6
21.8%
17.2%
5.8%
6.2%
5.8%
8.3%
7.0%
20.5%
17.1%
4.3%
4.9%
4.8%
8.1%
7.0%
Bottom 5
$
$
Industry ov erall
(5.6)
26.3 $
35.2 $
11.7%
8.4%
1.6%
1.9%
(3.1)%
(5.7)%
16.2
819.3
432.5
19.9%
14.2%
3.5%
4.5%
4.7%
7.0%
10.0%
Key observations
This analysis is based upon a sample of 13 businesses
Market capitalization
— The P/E multiple is highly correlated to revenue size, with the Top 5
Companies revenue being 4.8 times Aggregate and the Bottom 5
companies being a quarter of Aggregate
Profitability
— The Top 5 and Aggregate businesses profitability metrics are very closely
aligned indicating that the EBIT margin is driven by volume
— The delta between the EBIT and EBITDA margins for all three categories
is very similar at 0.4%, this is less than the 1% for the wholesale industry as
whole and implies less investment in capital expenditure
— Further analysis of the sub-industry indicate that the larger companies in
the group (as measured by Revenue and Market cap) enjoy a much higher
EBITDA margin, ROE and ROA indicators. This is indicative that larger
firms in this sub-industry are able to enjoy economies of scale and
synergistic operations
— The Bottom 5 businesses have significantly lower gross margins which
means that despite their SG&A control they will struggle to deliver EBIT
comparable to their better performing competitors
— This sub-industry performs significantly ahead of industry in terms of
margin and also P/E multiple despite being smaller (Revenue and Market
cap) than the wider industry
Notes:
1 - Includes Companies under the SIC code 5060 Electrical goods - wholesale (Primary); the data set has
been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not
actively trade 2. Please see appendix for detailed breakdown
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
18
Electrical & electronics equipment & components wholesalers
Key performance indicators – Electrical & electronics equipment & components
wholesalers
Electrical equipment & components wholesale (Median analysis)
Wholesale
($ in millions)
Efficiency
TA turnov er
FA turnov er
Cash Cycle
DSO
DPO
DIO
Liquidity
Current ratio
Quick ratio
Leverage
Debt / EBITDA
EBITDA / Int ex pense
Capital Structure
Debt / Equity
Debt / Capital
Top 5
Aggregate
Bottom 5 Industry ov erall
1.7
55.2
1.7
34.7
0.4
1.3
1.9
20.1
53.4
46.5
104.2
49.4
46.5
51.0
29.0
39.1
18.3
39.7
35.6
38.8
2.6
1.3
2.6
1.3
3.7
2.6
1.9
1.1
3.0
8.6
2.2
7.9
1.0
-
2.1
7.1
52.0%
33.6%
14.5%
12.4%
9.0%
8.3%
25.8%
20.4%
Efficiency
— Fixed asset turnover is materially above the industry average of 20.1. This
indicates that the Companies in the sub-industry are effectively using their
capital and have either outsourced logistic or have maximized their
footprint compared to wider industry counter parts
— The Top 5 companies are significantly outperforming both aggregate and
the bottom 5 in relation to FA turnover. This may reflect challenges
associated with the cost of infrastructure in businesses with shrinking
revenues
Cash cycle
— The average cash cycle for the Top 5 companies is 111 days, primarily
because of the 104 days of inventory on hand. This compares to 53 days
for the Aggregate, 8 days for the Bottom 5 and 43 days for the industry
— This would suggest that one of the key requirements in the sector is scale
and being able to carry additional and diverse inventory to be able to
quickly meet customer orders. This would support both the high
performance of the Top 5 and the difficulty for the Bottom 5
— However, upon closer examination, only the smaller size companies
(Market Cap < $250MM) of the Top 5 have a very high DIO. The larger
firms (Market Cap >$1BN) within the Top 5 and Bottom 5 have DIO
days that track the Aggregate. Hence, it can be inferred that the smaller
firms might be holding larger inventory balances on a relative basis,
including possibly obsolete inventory
Liquidity, leverage and capital structure
Notes:
1 - Includes Companies under the SIC code 5060 Electrical goods - wholesale (Primary); the data set has
been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not
actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
— Despite the significant investment in inventory the Top 5 companies
current ratio is in line with the Aggregate current ratio, indicating lower
short term borrowings and that the debt to equity is driven by a lower
equity investment and not significant debt
— The P/E multiple will be flattered by the Debt / EBITDA ratio which
while higher than the Aggregate and overall industry are not at risky levels
19
Section 5
Food & grocery wholesalers
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Food & grocery wholesalers
Industry overview – Food & grocery wholesalers
Overview
— 21.5% or $348BN of non-durable goods segment
— Grocery wholesale distributors focus are typically either fresh or frozen foods distributors. Distributors of fresh foods,
typically specialize in a limited line of goods, whereas distributors of canned or frozen foods cover a wider selection
Drivers of change
—
—
—
—
—
Discerning consumers
Low calories
Offer additional health benefits
Industry consolidation
Supermarket consolidation and slow growth from supermarkets its putting wholesalers under pressure
Demand factors
—
—
—
—
Food service and consumption demand
Mature supermarket industry
Agriculture price fluctuations
Efficiency in distribution channels
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
21
Food & grocery wholesalers
Industry overview – Food & grocery wholesalers
Competitive market characteristics
—
—
—
—
—
Low market concentration
Medium barriers to entry
High capital intensity
Medium internal competition
Medium technology change
Key success factors
—
—
—
—
Expert operators
Close supplier relationships
Access to specialty goods and niche markets
Efficient and effective quality and distribution processes
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
22
Food & grocery wholesalers
Comparables – Food & grocery wholesalers
Industry comparables
Company Name
Food & Grocery Products Wholesalers
ForeverGreen Worldwide Corporation
United Natural Foods, Inc.
The Chefs' Warehouse, Inc.
Sysco Corporation
Calavo Growers Inc.
Zurvita Holdings, Inc.
Consumer Capital Group Inc.
Innovative Food Holdings, Inc.
Pizza Inn Holdings, Inc.
Coffee Holding Company, Inc.
Central Garden & Pet Company
TEV ($MM)
$
29
3,599
580
24,788
556
18
98
11
53
44
909
Current
Price
$
Median
Mean
S&P Performance
1.35
67.29
18.33
37.64
33.39
0.13
5.00
1.42
5.97
7.62
7.75
Stock Performance
1-Month
1-Year
Change
Change
LTM Margins
% of LTM
High
EBITDA
Gross
TEV / EBITDA
2013 LTM
2014E
Revenue
3 Year
CAGR
(17.2% )
(0.2% )
(2.7% )
3.9%
8.2%
(47.7% )
(6.6% )
0.2%
2.4%
(4.6% )
350.0%
27.2%
(2.9% )
11.4%
12.4%
(70.8% )
(0.8% )
294.3%
23.9%
8.9%
(0.3% )
67.5%
84.5%
61.1%
86.7%
90.3%
28.5%
34.5%
71.0%
65.7%
88.8%
89.7%
3.7%
3.9%
5.9%
5.3%
5.5%
(9.3% )
(14.6% )
6.2%
(0.9% )
(0.4% )
5.4%
75.0%
16.8%
25.4%
17.4%
9.2%
19.6%
1.4%
29.0%
7.5%
4.9%
27.9%
53.6x
15.7x
13.1x
10.0x
16.5x
n/a
(104)
8.3x
79.6x
(42)
10.6x
13.4x
12.2x
10.7x
13.3x
9.2x
32.9%
16.0%
28.1%
5.3%
20.1%
49.2%
(26.4% )
33.4%
0.3%
14.0%
1.6%
(0.2%)
(5.8%)
11.4%
59.4%
71.0%
69.9%
3.9%
1.0%
17.4%
21.3%
11.9x
6.1x
5.4x
16.0%
15.9%
2.3%
17.3%
99.8%
Key observations
— Despite the strong revenue growth of 16% CAGR, this sub-industry has underperformed the S&P by almost 6.0%
— This sub-industry's performance is highly sensitive to external changes such as food, transportation and commodities prices. Further, it has a low EBITDA
margin of 3.9%. Consequently, it is not surprising that the P/E multiple reflects the risks associated within this sub-industry
— Our analysis of the Bottom 10 companies' performance indicates signs of distress and loss, which weighs the Aggregate P/E multiple downwards as
illustrated on the next page
Sources: 1. Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
23
Food & grocery wholesalers
Key performance indicators – Food & grocery wholesalers
Key observations
Food and groceries wholesale industry (Median analysis)
Wholesale
Top 5
($ in millions)
Market Value
PE multiple
Rev enue
Market Cap
Profitability
GM %
SGA %
EBIT margin
EBITDA margin
ROA
ROC
ROE
$
$
Aggregate
27.7
748.7 $
525.0 $
0.2
130.0
181.2
17.4%
13.6%
4.3%
5.3%
9.1%
11.0%
17.9%
17.4%
16.4%
3.1%
3.9%
7.1%
9.6%
5.4%
Bottom 5
$
$
Industry ov erall
(26.9)
42.4 $
49.2 $
7.5%
16.4%
(0.8)%
(0.4)%
(2.2)%
(2.8)%
(15.2)%
16.2
819.3
432.5
19.9%
14.2%
3.5%
4.5%
4.7%
7.0%
10.0%
The table opposite sets out the median KPI's for the Top 5 (ranked by P/E
multiple), Aggregate and Bottom 5 publicly traded wholesalers. The key
observations are:
Market capitalization
— Company size, as measured by revenue, seems to matter in determining the
P/E ratio multiple; the Top 5 have a much higher market capitalization
and revenues than that of the Bottom 5
Profitability
— Average gross margin for the Top 5 companies in the sub-industry is
approximately 2.5% lower than the overall industry average. However, the
Bottom 5 appear to have a gross margin significantly lower. This would
signify that the top companies are able to negotiate better terms with their
vendors. This metric is especially important to lenders
— Average SG&A as a % of sales for Top 5 companies is 0.6% lower than
the industry average indicating better overhead management, thus resulting
in a higher EBIT margin. This helps offset the lower than industry gross
● While the Aggregate P/E multiple for this sub-industry is 0.2, this is
margins. However, the sub-industry average is almost 2.2% higher than the
skewed by a large negative multiple for Central Garden and Pet Company.
wholesale industry average, indicating that most companies are not able to
When normalized for Central Garden and Pet Co., the median Aggregate is
manage overhead as efficiently
11.1 times
Note on P/E multiple
● The P/E multiple for the Top 5 companies is 27.7, much higher than the
industry median of 16.2. Most of the Top 5 companies are large in size and
have CAGR growth of an average of 20.5%, justifying the higher multiple
— Average Top 5 and Aggregate ROA is higher than the industry average by
almost 3.0% to 5.0%. This ratio is significantly lower for the Bottom 5,
which appear to be in distress
● In comparison, the Bottom 5 companies have a P/E multiple of (26.9)%.
These companies are much smaller in size and have negative ROE,
justifying the negative multiple
— The difference between the EBIT and EBITDA margins for Top 5
companies is almost 1.0% as compared to 0.4% for Bottom 5, implying
higher capital investment, which helps fuel growth and may reflect M&A
activity in the sector
Notes:
1 - Includes Companies under the SIC code 5140 Groceries and related products - wholesale (Primary); the data
set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not
actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
— Average Aggregate ROE appears to be almost half of the industry average.
However, after eliminating the outliers, it increases to 10.9%, inline with
industry average. This metric is especially important for investors
24
Food & grocery wholesalers
Key performance indicators – Food & grocery wholesalers
Food and groceries wholesale industry (Median analysis)
Key observations
Wholesale
($ in millions)
Efficiency
TA turnov er
FA turnov er
Cash Cycle
DSO
DPO
DIO
Liquidity
Current ratio
Quick ratio
Leverage
Debt / EBITDA
EBITDA / Int ex pense
Capital Structure
Debt / Equity
Debt / Capital
Top 5
Aggregate
Bottom 5 Industry ov erall
3.6
18.5
3.6
25.6
3.1
25.6
1.9
20.1
27.4
21.1
35.1
28.4
21.1
28.4
29.1
27.2
28.4
39.7
35.6
38.8
1.7
0.9
1.7
0.9
1.7
1.0
1.9
1.1
1.3
19.7
1.3
5.0
1.4
1.3
2.1
7.1
40.3%
35.7%
16.3%
17.0%
9.1%
8.0%
25.8%
20.4%
The table opposite sets out the median KPI's for the Top 5 (ranked by P/E
multiple), Aggregate and Bottom 5 publicly traded wholesalers. The key
observations are:
Efficiency
— Total asset turnover and fixed asset turnover ratios are much higher than
the wholesale industry average both for the Top 5 and for the Aggregate
companies. This appears to be in line with the hypothesis that a lot of
companies in this sub-industry employ sub-contracted transportation
companies rather than owning trucking fleets, which would inflate the
fixed assets on the balance sheet
— The correlation between total asset turnover and the P/E multiple is
approximately 40%, suggesting that the higher the efficiency, the more
positively the company is rewarded by investors
Cash cycle
— The cash cycle for the Top 5 companies is 41 days, compared to 43 days
for the Aggregate wholesale companies
— The Bottom 5 companies have a cash cycle of approximately 30 days,
implying lower working capital needs
Liquidity
— Liquidity is an especially important KPI for the lenders and given that this
sub-industry has a lower than industry DSO, the availability of asset based
lending is low, forcing companies to rely on cash flow based lending
Leverage and capital structure
— Leverage tends to be higher for Top 5 as compared to Bottom 5, implying
greater funding availability
Notes:
1 - Includes Companies under the SIC code 5140 Groceries and related products - wholesale (Primary); the data
set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not
actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
25
Section 6
Containers, packaging, paper & forest products wholesalers
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Containers, packaging, paper & forest products wholesalers
Industry overview – Containers, packaging, paper & forest products wholesalers
Overview
— 3.0% or $48BN of non-durable goods segment
— Key products sold include writing and printing paper, newspaper, coated and laminated paper, packaging materials, paper
board, plastics foil and paper bags
Industry trends
— The sector is experiencing year on year declines in demand and production as result of move from print to electronic
media and communication
— Five year revenue forecast to decline at an average annual rate of 1.6%
— Horizontal expansion - increased partnership trends amongst paper wholesalers and manufacturers with companies that
offer complementary products like print management and software, to sustain demand and enhance growth
— Increased vertical integration trends merging manufacturing and distribution in order to gain from economies of scale
through reduced transportation and operating costs and to contain the degree of wholesale bypass
Drivers of change
— Increasing competition from technology and internet
— Developments in media technology
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
27
Containers, packaging, paper & forest products wholesalers
Industry overview – Containers, packaging, paper & forest products wholesalers
Demand factors
— Increased demand from cardboard box and container manufacturing
— Paper converters - analyst estimates, accounts for 21.5% of revenue in the industry and marks an increase from previous
levels driven by increased demand for cardboard packaging products
— Demand for laminated and coated paper has also increased over the same period as companies turned to direct mail
advertising in the stead of more costly advertising mediums
— Decreased demand from printing and publishing
— Increase in paper price
Competitive market characteristics
—
—
—
—
—
Low market concentration
Low barriers to entry
Medium capital intensity
High internal competition
Medium technology change
Key success factors
— Proximity to key markets and constituents
— Automation
— Cost pass-through
Sources: IBIS World Report and U.S. Bureau of Labor Statistics
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
28
Containers, packaging, paper & forest products wholesalers
Comparables – Containers, packaging, paper & forest products wholesalers
Industry comparables
Company Name
TEV ($MM)
Current
Price
Containers, Packaging, Paper & Forest Products Wholesalers
Sealed Air Corporation
$ 11,548 $ 33.13
Insignia Systems Inc.
21
3.18
ZAGG Inc
132
4.58
3M Company
97,356
142.32
Bemis Company, Inc.
5,482
41.26
Avery Dennison Corporation
5,650
49.94
Orchids Paper Products Company
243
29.73
CSS Industries Inc.
119
23.38
SugarMade, Inc.
1
0.02
Proguard Acquisition Corp
1
0.10
ADB International Group, Inc.
6
0.02
Chase Packaging Corp.
2
0.06
Median
Mean
S&P Performance
Stock Performance
1-Month
1-Year
Change
Change
LTM Margins
% of LTM
High
EBITDA
Gross
TEV / EBITDA
2013 LTM
2014E
Revenue
3 Year
CAGR
(0.2% )
4.3%
2.7%
1.6%
2.7%
3.2%
12.1%
(6.0% )
57.5%
19.4%
20.0%
37.9%
59.8%
(9.3% )
29.1%
5.4%
14.8%
18.8%
(15.4% )
(95.0% )
(50.0% )
(53.3% )
300.0%
89.1%
91.4%
77.2%
99.3%
97.4%
95.6%
86.9%
73.2%
1.4%
5.3%
21.5%
75.0%
13.7%
9.9%
15.8%
26.1%
12.3%
10.1%
22.1%
11.1%
n/a
(0.9% )
-
34.0%
44.4%
39.6%
48.0%
19.3%
26.5%
23.3%
32.2%
(105.7% )
13.2%
-
11.1x
6.0x
3.8x
12.1x
8.9x
9.0x
9.3x
3.2x
n/a
n/a
n/a
n/a
10.6x
4.0x
11.5x
8.5x
7.9x
8.7x
-
19.0%
(2.7% )
32.0%
4.0%
(0.8% )
2.5%
7.7%
(5.8% )
-
3.0%
9.8%
10.1%
20.2%
82.1%
67.8%
11.1%
10.9%
24.9%
14.6%
8.9x
7.9x
2.0x
4.3x
4.7%
2.3%
17.3%
99.8%
Key observations
— Investors and lenders primary focus will be the CAGR, stock performance and EBITDA margin %. The investor's sentiments are reflected by the subindustry's stock performance that has been much lower at 10.1% and 5.4% (normalized for Chase Packaging) as compared to that of the overall S&P's at
17.3%
— Stock performance below the S&P and no growth will be the primary driver of a lower P/E multiple. However an EBITDA of 1.1% suggests the stronger
businesses can fund debt or diversification and investment
Sources: 1. Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
29
Containers, packaging, paper & forest products wholesalers
Key performance indicators – Containers, packaging, paper & forest products
wholesalers
Key observations
Packaging & paper wholesale industry (Median analysis)
Wholesale
Top 3
($ in millions)
Market Value
PE multiple
Rev enue
Market Cap
Profitability
GM %
SGA %
EBIT margin
EBITDA margin
ROA
ROC
ROE
$
$
Aggregate
39.7
216.9 $
142.3 $
20.1
320.5
251.0
39.6%
24.9%
9.8%
13.7%
5.3%
7.7%
4.0%
32.2%
20.7%
8.7%
12.3%
6.0%
8.5%
12.1%
Bottom 3
$
$
Industry ov erall
11.9
117.5 $
247.0 $
16.2
819.3
432.5
23.3%
14.1%
8.7%
11.1%
6.0%
6.9%
11.5%
19.9%
14.2%
3.5%
4.5%
4.7%
7.0%
10.0%
● This data is extracted from a sample of 9 businesses. The limited sample
has resulted in some anomalies which are outlined below
● Further Capital IQ has included Zagg Inc.. as a packaging wholesale
business, which is technically correct, except it is in a niche market
distributing iPhone, cellular phone and other electronic packaging (cover)
items
Market capitalization
— The median of the Top 3 Company's P/E multiple fairly reflects
performance, however the revenue of $216.9 is skewed as the Top
company has revenue or $7,690
— When normalized for this company, a correlation between size and P/E
multiple is not as apparent
— However, given the challenges and projected downward trend in this subindustry, it would seem reasonable that a premium is placed on scale in the
sub-industry, which would allow for economies of scale, diversification and
investment in new technologies as well as possible consolidation to realize
inorganic growth or gain of market share
Profitability
— The Top 3 businesses have both higher GM% and SG&A% than the
Aggregate but due to the volume this translates into a higher EBIT and
EBITDA, reconfirming the importance of size in this industry
— The Top 3 and Aggregate have a 1% delta between EBIT and EBITDA
more than the Bottom 3 indicating higher D&A expenses resulting from
higher depreciable asset balances and/or higher amortization expenses
related to recent transaction
Notes:
1 - Includes Companies under the SIC codes 2670 Converted paper and paperboard products, except
containers and boxes (Primary) and 5110 Paper and paper products - wholesale (Primary); the data set
has been scrubbed by GT for outliers and anomalies
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
30
Containers, packaging, paper & forest products wholesalers
Key performance indicators – Containers, packaging, paper & forest products
wholesalers
Packaging & paper wholesale industry (Median analysis)
Efficiency
Wholesale
($ in millions)
Efficiency
TA turnov er
FA turnov er
Cash Cycle
DSO
DPO
DIO
Liquidity
Current ratio
Quick ratio
Leverage
Debt / EBITDA
EBITDA / Int ex pense
Capital Structure
Debt / Equity
Debt / Capital
Top 3
Aggregate
Bottom 3 Industry ov erall
0.9
14.6
1.1
6.7
1.1
11.6
1.9
20.1
60.6
41.5
56.8
53.0
41.2
56.8
18.7
20.4
48.0
39.7
35.6
38.8
3.8
1.8
2.5
1.3
3.3
1.9
1.9
1.1
3.0
0.7
33.4
0.3
107.3
2.1
7.1
-
20.3%
15.8%
8.0%
6.8%
25.8%
20.4%
— Fixed asset turnover for the Top 3 is skewed by Zagg Inc. which has a
fixed asset turnover of 45.7, which reflects the relative high value of items
sold. When this is normalized the FA turnover for the Top 3 and
Aggregate are in line with no clear trends. Similarly the smallest 3 FA
turnover is skewed by one company with a FA turnover of 354.6, this is
skewed because its subsidiaries hold the fixed assets
— When normalized, the FA turnover for the Top 3 and the Bottom 3 would
be approximately 6.5, much lower than the industry median and suggesting
an inefficient use of capital
Cash cycle / Liquidity
— The Top 3 businesses have a 75 day cash cycle compared to an Aggregate
of 68 and Bottom 3 of 46. This compares to industry of 42. The primary
driver of the 75 day cash cycle are an extended period collecting
receivables compared to the bottom three and the industry average
— The lower DSO in the Bottom 3 companies could also suggest that those
companies might be in distress and might use either factors or other
discounts to collect faster
Leverage and capital structure
— Four of the Company's in the sample group appear to be debt free based
upon data within Capital IQ. This creates anomalies, resulting in
inconclusive data. However, lower or no debt does lower default risk
— But in Aggregate the sub-industry appears to have healthy EBITDA /
Interest expense coverage at 33.3 compared to an industry average of 7.1.
This masks a number of outliers. For instance:
Notes:
1 - Includes Companies under the SIC codes 2670 Converted paper and paperboard products, except
containers and boxes (Primary) and 5110 Paper and paper products - wholesale (Primary); the data set
has been scrubbed by GT for outliers and anomalies
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
− The business with the highest P/E multiple of 43 Sealed Air
Corporation has Debt / EBITDA of 4.6, EBITDA / Interest expense
coverage of 3.0 which is materially below the industry averages. We
would expect lenders and investors to be paying close attention to this
and to pricing in a risk discount
31
Section 7
Appendix – supporting schedules
01. Introduction
02. Industry and sub-industry overview
03. Key performance indicators – wholesale industry
04. Electrical & electronics equipment & components wholesalers
05. Food & grocery wholesalers
06. Containers, packaging, paper & forest products wholesalers
07. Appendix – supporting schedules
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
Appendix – supporting schedules
Industry metrics – Wholesale Industry
Top 10 Companies With Highest P/E ratios in the Industry
Return on
Company Name
($ in millions)
Whole Sale Industry1
Infosonics Corp.
SemGroup Corporation
Plains GP Holdings, L.P.
CTD Holdings Inc.
Richardson Electronics Ltd.
Amex drug Corp.
Central Steel and Wire Company
Univ ersal Pow er Group Inc.
NGL Energy Partners LP
Arc Logistics Partners LP
Top 10 Companies Median
Top 10 Companies Average
Industry Median
Industry Average
Market
Total
P/E
Capital
Market Data
Rev enue
201.5 $
140.6
85.7
51.9
27.1
18.6
16.4
15.9
15.9
13.8
22.9 $
58.7 $
16.2 $
11.7 $
EBITDA
Total
Return on
Return on
Margin % of Sales
Margin
Margin
Profitability
Assets
Capital
Equity
50 $
42
154
138
9
82
33
33
236
389
3,694
7,516
3,225
6,259
4
40
289
560
5,734
21,590
195 $
264
1,343 $ 3,665
18.3%
29.8%
19.7%
27.7%
21.8%
20.5%
23.0%
18.3%
24.7%
13.2%
21.2%
21.7%
16.3%
29.7%
18.5%
22.9%
8.7%
13.8%
17.2%
17.1%
19.9%
8.8%
17.2%
17.3%
(0.8)%
0.1%
1.2%
4.8%
6.3%
5.8%
5.8%
0.9%
4.7%
3.8%
4.3%
3.3%
(0.2)%
0.9%
1.7%
6.1%
7.1%
6.6%
6.2%
1.2%
5.4%
4.4%
4.9%
3.9%
(1.0)%
0.1%
1.3%
2.0%
8.0%
5.8%
7.7%
8.7%
4.8%
3.4%
3.7%
(1.2)%
0.1%
1.5%
2.3%
9.1%
8.3%
11.7%
14.9%
8.1%
5.2%
5.5%
1.0%
0.6%
0.6%
1.5%
7.0%
14.4%
19.7%
14.8%
10.6%
4.2%
7.0%
432 $
2,290 $
19.9%
24.6%
14.2%
26.5%
3.5%
0.3%
4.5%
2.9%
4.7%
(1.4)%
7.0%
(5.9)%
10.0%
7.2%
819
6,249
Gross
SG&A as
EBIT
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Non-durable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that
do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
33
Appendix – supporting schedules
Industry metrics – Wholesale Industry
Bottom 10 Companies With Lowest P/E ratios in the Industry
Return on
Company Name
($ in millions)
Whole Sale Industry1
Digital Riv er Inc.
Coast Distribution Sy stem Inc.
Coffee Holding Company , Inc.
Martin Midstream Partners LP
InnerWorkings Inc.
Stock Building Supply Holdings, Inc.
Agily sy s Inc.
GreenParts International, Inc.
Ironclad Performance Wear Corporation
Central Garden & Pet Company
Bottom 10 Companies Median
Bottom 10 Companies Average
Industry Median
Industry Average
Market
Total
Capital
P/E
Market Data
Rev enue
(35.2) $
(35.4)
(46.4)
(61.1)
(68.3)
(75.6)
(95.1)
(182.9)
(207.9)
(560.4)
(72) $
(137) $
577
18
32
1,146
393
531
296
13
16
401
345
343
$
$
$
376
113
130
1,697
928
1,228
101
15
24
1,655
253
593
16.2 $
11.7 $
432
2,290
$
$
819
6,249
Gross
SG&A as
EBIT
EBITDA
Total
Return on
Return on
Margin % of Sales
Margin
Margin
Profitability
Assets
Capital
Equity
66.1%
17.8%
4.9%
9.7%
22.7%
23.3%
63.2%
20.4%
31.3%
27.9%
23.0%
28.2%
40.1%
17.5%
5.8%
1.8%
20.0%
21.6%
34.4%
15.8%
28.3%
24.8%
20.8%
21.0%
(2.0)%
0.2%
(0.8)%
4.7%
0.8%
1.0%
(4.4)%
4.6%
(0.5)%
3.1%
0.5%
0.7%
7.9%
0.8%
(0.4)%
7.9%
2.1%
2.0%
4.3%
6.0%
0.1%
5.4%
3.2%
3.6%
(0.5)%
0.3%
(2.2)%
4.7%
0.8%
2.4%
(1.4)%
7.0%
(0.6)%
2.4%
0.5%
1.2%
(0.8)%
0.4%
(2.8)%
5.6%
1.5%
4.3%
(2.3)%
8.0%
(0.8)%
3.0%
0.9%
1.6%
(3.4)%
(1.6)%
(4.4)%
(6.0)%
(2.3)%
(5.3)%
(2.8)%
(3.7)%
2.0%
(0.1)%
(3.1)%
(2.8)%
19.9%
24.6%
14.2%
26.5%
3.5%
0.3%
4.5%
2.9%
4.7%
(1.4)%
7.0%
(5.9)%
10.0%
7.2%
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Non-durable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that
do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
34
Appendix – supporting schedules
Industry metrics – Wholesale Industry
Top 10 Companies With Highest P/E ratios in the Industry
Fix ed
Total Asset
Company Name
($ in millions)
Whole Sale Industry1
Infosonics Corp.
SemGroup Corporation
Plains GP Holdings, L.P.
CTD Holdings Inc.
Richardson Electronics Ltd.
Amex drug Corp.
Central Steel and Wire Company
Univ ersal Pow er Group Inc.
NGL Energy Partners LP
Arc Logistics Partners LP
Asset
Turnov er Turnov er
Efficiency
Current
DSO
DPO
Cash Cy cle
DIO
Debt /
Ratio Quick Ratio
Liquidity
EBITDA / Net Debt /
EBITDA
Int. Ex p.
Lev erage
EBITDA
Debt /
Debt /
Equity
Capital
Capital Structure
Top 10 Companies Median
Top 10 Companies Average
2.0
0.6
1.7
0.7
2.0
1.6
2.1
2.9
2.0
1.8
1.6
175.9
24.4
73.2
4.6
55.2
37.4
60.7
24.4
34.7
36.0
49.1
103.0
52.5
49.4
43.0
59.2
53.4
71.2
48.6
78.7
53.0
55.9
14.4
45.5
36.7
47.9
13.9
46.5
53.3
49.9
67.0
46.0
37.5
33.4
131.8
164.1
339.0
104.2
49.0
75.5
53.0
40.4
64.2
99.0
4.6
10.3
2.4
4.6
5.8
2.1
2.6
5.5
2.4
1.7
3.6
4.2
3.2
8.3
0.8
1.3
2.4
1.2
1.5
2.5
1.3
1.2
1.4
2.4
9.9
3.2
2.2
3.0
2.2
0.4
0.1
2.3
2.2
2.3
4.2
6.3
12.4
8.0
3.3
4.2
2.7
3.7
4.1
NM
NM
8.7
0.9
2.2
2.8
2.0
NM
NM
2.0
2.1
3.1
14.4%
14.5%
52.0%
82.2%
81.1%
1.9%
50.7%
14.5%
29.7%
9.1%
12.4%
33.6%
44.5%
44.8%
1.9%
33.6%
10.8%
18.0%
Industry Median
Industry Average
1.9
2.6
20.1
65.0
39.7
43.3
35.6
46.0
38.8
56.7
1.9
2.9
1.1
1.6
2.1
5.0
7.1
49.7
2.7
6.1
25.8%
62.6%
20.4%
28.6%
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Non-durable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that
do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
35
Appendix – supporting schedules
Industry metrics – Wholesale Industry
Bottom 10 Companies With Lowest P/E ratios in the Industry
Fix ed
Total Asset
Company Name
($ in millions)
Whole Sale Industry1
Digital Riv er Inc.
Coast Distribution Sy stem Inc.
Coffee Holding Company , Inc.
Martin Midstream Partners LP
InnerWorkings Inc.
Stock Building Supply Holdings, Inc.
Agily sy s Inc.
GreenParts International, Inc.
Ironclad Performance Wear Corporation
Central Garden & Pet Company
Asset
Turnov er Turnov er
Efficiency
Current
DSO
DPO
Cash Cy cle
DIO
Debt /
Ratio Quick Ratio
Liquidity
EBITDA / Net Debt /
EBITDA
Int. Ex p.
Lev erage
EBITDA
Debt /
Debt /
Equity
Capital
Capital Structure
Bottom 10 Companies Median
Bottom 10 Companies Average
0.4
1.9
4.1
1.6
1.6
3.7
0.5
2.4
1.8
1.3
1.7
1.9
7.1
95.2
68.7
2.8
39.9
21.3
7.3
6.8
109.5
8.7
15.0
34.8
66.3
57.4
28.4
34.7
77.3
32.1
124.8
1.4
58.6
71.0
58.0
55.5
529.2
33.9
17.2
28.6
74.4
33.7
295.6
8.8
40.4
48.3
37.2
104.3
131.6
28.4
19.8
10.4
38.8
62.4
77.1
134.3
127.8
50.6
61.9
2.1
4.2
5.0
1.6
1.3
2.0
2.7
1.2
3.6
3.6
2.4
2.7
2.0
1.4
2.8
0.9
1.0
1.0
2.6
0.1
1.5
1.6
1.5
1.5
4.5
19.5
4.8
4.4
2.9
0.1
4.5
6.1
4.5
4.7
4.0
1.7
NM
3.0
5.3
7.4
23.5
1.5
0.4
2.0
3.0
5.2
NM
18.4
NM
4.8
3.3
2.6
NM
4.3
NM
5.7
4.6
6.3
36.4%
66.3%
251.4%
34.4%
57.9%
0.2%
145.7%
112.3%
47.2%
68.3%
26.7%
39.9%
71.5%
25.6%
36.5%
0.2%
38.3%
52.9%
31.6%
29.4%
Industry Median
Industry Average
1.9
2.6
20.1
65.0
39.7
43.3
35.6
46.0
38.8
56.7
1.9
2.9
1.1
1.6
2.1
5.0
7.1
49.7
2.7
6.1
25.8%
62.6%
20.4%
28.6%
Notes:
1 - Includes Companies under the SIC codes 5000 Durable goods – wholesale and 5100 Non-durable goods – wholesale; the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that
do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
36
Appendix – supporting schedules
Industry metrics – Electrical & electronics equipment & components wholesalers
Return on
Company Name
($ in millions)
Market
Total
P/E
Capital
Market Data
Rev enue
Gross
SG&A as
Margin % of Sales
EBIT
EBITDA
Total
Return on
Return on
Margin
Margin
Profitability
Assets
Capital
Equity
Electrical Equipment, Instruments and Com ponents1
Univ ersal Pow er Group Inc.
85.7
ADDv antage Technologies Group Inc.
51.9
Houston Wire & Cable Company
27.1
WESCO International Inc.
18.6
Anix ter International Inc.
16.4
Wireless Xcessories Group Inc.
15.9
TESSCO Technologies Inc.
15.9
Arrow Electronics, Inc.
13.8
Av net, Inc.
12.6
Surge Components Inc.
6.7
Taitron Components Inc.
(5.6)
5Barz International Inc.
(6.5)
Signature Group Holdings, Inc.
(14.0)
15.9 $
Sub-industry Median
18.3 $
Sub-industry Average
9
33
236
3,694
3,225
4
289
5,734
6,308
8
6
35
126
126
1,417
82
33
389
7,516
6,259
40
560
21,590
27,042
26
6
39
$
82
$ 4,547
19.7%
27.7%
21.8%
20.5%
23.0%
18.3%
24.7%
13.2%
11.7%
27.0%
22.6%
(6.1)%
20.5%
17.5%
18.5%
22.9%
8.7%
13.8%
17.2%
17.1%
19.9%
8.8%
8.4%
21.5%
38.7%
17.1%
15.2%
1.2%
4.8%
6.3%
5.8%
5.8%
0.9%
4.7%
3.8%
3.2%
5.3%
(16.1)%
NM
4.3%
2.3%
1.7%
6.1%
7.1%
6.6%
6.2%
1.2%
5.4%
4.4%
3.7%
5.6%
(13.1)%
NM
4.9%
3.1%
1.3%
2.0%
8.0%
5.8%
7.7%
8.7%
4.8%
5.2%
6.8%
(3.1)%
(64.7)%
(8.2)%
4.8%
(1.5)%
1.5%
2.3%
9.1%
8.3%
11.7%
14.9%
8.1%
8.4%
9.0%
(3.2)%
(111.4)%
8.1%
(2.4)%
0.6%
1.5%
7.0%
14.4%
19.7%
14.8%
10.6%
11.0%
11.8%
(5.7)%
(289.7)%
(16.4)%
7.0%
(15.2)%
16.2 $
11.7 $
432
2,290
$
$
19.9%
24.6%
14.2%
26.5%
3.5%
0.3%
4.5%
2.9%
4.7%
(1.4)%
7.0%
(5.9)%
10.0%
7.2%
Industry Median
Industry Average
819
6,249
Notes:
1 - Includes Companies under the SIC code 5060 Electrical goods - wholesale (Primary); the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
37
Appendix – supporting schedules
Industry metrics – Electrical & electronics equipment & components wholesalers
Fix ed
Company Name
Total Asset
Asset
Turnov er
Turnov er
($ in millions)
Electrical Equipment, Instruments and Components1
Univ ersal Pow er Group Inc.
ADDv antage Technologies Group Inc.
Houston Wire & Cable Company
WESCO International Inc.
Anix ter International Inc.
Wireless Xcessories Group Inc.
TESSCO Technologies Inc.
Arrow Electronics, Inc.
Av net, Inc.
Surge Components Inc.
Taitron Components Inc.
5Barz International Inc.
Signature Group Holdings, Inc.
Current
DSO
Efficiency
DPO
DIO
Cash Cy cle
Debt /
Ratio Quick Ratio
EBITDA
Liquidity
EBITDA / Net Debt /
Debt /
Debt /
Int. Ex p.
Equity
Capital
EBITDA
Lev erage
Capital Structure
Sub-industry Median
Sub-industry Average
1.7
0.7
2.0
1.6
2.1
2.9
2.0
2.6
2.0
0.3
0.4
1.7
1.4
73.2
4.6
55.2
37.4
60.7
24.4
34.7
53.6
366.4
1.3
34.7
53.3
49.4
43.0
59.2
53.4
71.2
48.6
78.7
65.7
55.3
29.0
49.4
43.1
36.7
47.9
13.9
46.5
53.3
49.9
67.0
48.2
39.1
53.3
46.5
35.9
164.1
339.0
104.2
49.0
75.5
53.0
40.4
36.5
56.5
NM
51.0
74.5
2.4
4.6
5.8
2.1
2.6
5.5
2.4
1.7
1.8
3.7
19.6
0.3
5.9
2.6
4.4
0.8
1.3
2.4
1.2
1.5
2.5
1.3
1.2
1.2
2.6
4.7
0.2
4.4
1.3
1.9
9.9
3.2
2.2
3.0
2.2
0.4
0.1
2.3
2.1
NM
NM
NA
2.2
2.5
3.3
46.4
28.0
5.9
8.6
170.9
7.9
9.2
NM
NA
7.9
24.0
8.7
0.9
2.2
2.8
2.0
NM
NM
2.0
1.1
NM
NM
NM
NA
2.0
2.7
14.4%
14.5%
52.0%
82.2%
81.1%
1.9%
50.7%
25.8%
9.0%
2.7%
41.9%
14.5%
27.9%
9.1%
12.4%
33.6%
44.5%
44.8%
1.9%
33.6%
18.0%
8.3%
2.3%
27.3%
12.4%
17.7%
Industry Median
Industry Average
1.9
2.6
20.1
65.0
39.7
43.3
35.6
46.0
38.8
56.7
1.9
2.9
1.1
1.6
2.1
5.0
7.1
49.7
2.7
6.1
25.8%
62.6%
20.4%
28.6%
Notes:
1 - Includes Companies under the SIC code 5060 Electrical goods - wholesale (Primary); the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
38
Appendix – supporting schedules
Industry metrics – Food & grocery wholesalers
Return on
Company Name
($ in millions)
Market
Total
P/E
Capital
Market Data
Rev enue
Gross
SG&A as
Margin % of Sales
EBIT
EBITDA
Total
Return on
Return on
Margin
Margin
Profitability
Assets
Capital
Equity
3
Food & Grocery Products
Forev erGreen Worldw ide Corporation
United Natural Foods, Inc.
The Chefs' Warehouse, Inc.
Sy sco Corporation
Calav o Grow ers Inc.
Zurv ita Holdings, Inc.
Consumer Capital Group Inc.
Innov ativ e Food Holdings, Inc.
Pizza Inn Holdings, Inc.
Coffee Holding Company , Inc.
Central Garden & Pet Company
Sub-industry Median
Sub-industry Average
Industry Median
Industry Average
46.3 $
31
27.9
3,352
27.7
525
23.2
21,047
22.1
488
0.2
1
181
(7.1)
13
(26.9)
49
(46.4)
32
(560.4)
401
0.2 $
181
(44.9) $ 2,375
16.2 $
11.7 $
432
2,290
$
26
6,457
721
45,831
749
19
6
24
42
130
1,655
$
130
$ 5,060
75.0%
16.8%
25.4%
17.4%
9.2%
19.6%
1.4%
29.0%
7.5%
4.9%
27.9%
17.4%
21.3%
71.4%
13.6%
20.6%
13.1%
4.3%
28.9%
16.4%
22.1%
10.6%
5.8%
24.8%
16.4%
21.1%
2.9%
3.2%
4.8%
4.3%
4.7%
(9.5)%
(15.0)%
5.1%
(4.2)%
(0.8)%
3.1%
3.1%
(0.1)%
3.7%
3.9%
5.9%
5.3%
5.5%
(9.3)%
(14.6)%
6.2%
(0.9)%
(0.4)%
5.4%
3.9%
1.0%
13.1%
7.1%
7.6%
9.6%
9.1%
(59.9)%
(29.0)%
15.2%
(8.3)%
(2.2)%
2.4%
7.1%
(3.2)%
NM
9.8%
9.6%
15.1%
12.2%
NM
(61.3)%
27.7%
(12.5)%
(2.8)%
3.0%
9.6%
0.1%
NM
10.9%
17.5%
18.5%
18.3%
NM
NM
(109.4)%
(26.0)%
(4.4)%
(0.1)%
5.4%
(9.3)%
$
$
19.9%
24.6%
14.2%
26.5%
3.5%
0.3%
4.5%
2.9%
4.7%
(1.4)%
7.0%
(5.9)%
10.0%
7.2%
819
6,249
Notes:
3 - Includes Companies under the SIC code 5140 Groceries and related products - wholesale (Primary); the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
39
Appendix – supporting schedules
Industry metrics – Food & grocery wholesalers
Fix ed
Company Name
Total Asset
Asset
Turnov er
Turnov er
Current
DSO
Efficiency
($ in millions)
DPO
DIO
Cash Cy cle
Debt /
Ratio Quick Ratio
EBITDA
Liquidity
EBITDA / Net Debt /
Debt /
Debt /
Int. Ex p.
Equity
Capital
EBITDA
Lev erage
Capital Structure
3
Food & Grocery Products
Forev erGreen Worldw ide Corporation
United Natural Foods, Inc.
The Chefs' Warehouse, Inc.
Sy sco Corporation
Calav o Grow ers Inc.
Zurv ita Holdings, Inc.
Consumer Capital Group Inc.
Innov ativ e Food Holdings, Inc.
Pizza Inn Holdings, Inc.
Coffee Holding Company , Inc.
Central Garden & Pet Company
Sub-industry Median
Sub-industry Average
Industry Median
Industry Average
7.2
3.6
2.5
3.6
3.1
10.1
3.1
4.7
3.1
4.1
1.3
3.6
4.2
64.7
18.5
31.4
11.6
14.0
320.8
153.4
25.6
7.9
68.7
8.7
25.6
65.9
9.8
22.0
32.2
27.4
30.1
8.6
29.1
14.5
30.6
28.4
71.0
28.4
27.6
44.7
21.1
20.4
24.9
17.2
41.9
27.2
17.6
17.2
48.3
21.1
25.5
45.8
49.7
35.1
23.8
15.5
49.0
15.9
14.8
28.4
127.8
28.4
36.9
0.9
2.8
2.9
1.7
1.3
0.5
0.5
1.0
1.7
5.0
3.6
1.7
2.0
0.6
0.9
1.7
1.0
0.8
0.3
0.1
0.7
1.0
2.8
1.6
0.9
1.0
2.1
1.1
3.5
1.3
1.3
NM
NM
1.4
NM
6.1
1.3
2.1
2.2
35.0
5.0
19.7
38.4
NM
NM
0.6
NM
NM
2.0
5.0
14.7
0.6
1.0
2.8
1.1
0.8
NM
NM
0.0
NM
NM
5.7
1.0
1.7
NM
23.6%
105.4%
57.1%
4.0%
46.5%
9.1%
112.3%
16.3%
35.8%
317.9%
19.1%
50.0%
35.7%
2.9%
17.0%
8.0%
52.9%
17.0%
45.8%
1.9
2.6
20.1
65.0
39.7
43.3
35.6
46.0
38.8
56.7
1.9
2.9
1.1
1.6
2.1
5.0
7.1
49.7
2.7
6.1
25.8%
62.6%
20.4%
28.6%
Notes:
3 - Includes Companies under the SIC code 5140 Groceries and related products - wholesale (Primary); the data set has been scrubbed by GT for outliers, anomalies, companies that have ceased operations and that do not actively trade
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
40
Appendix – supporting schedules
Industry metrics – Containers, packaging, paper & forest products wholesalers
Return on
Company Name
($ in millions)
Market
Total
P/E
Capital
Market Data
Rev enue
Containers & Packaging and Paper & Forest Products2
Sealed Air Corporation
43.1 $ 7,040
Insignia Sy stems Inc.
39.7
39
ZAGG Inc
30.5
142
3M Company
20.6
89,238
Bemis Company , Inc.
20.1
3,965
Av ery Dennison Corporation
19.9
4,797
Orchids Paper Products Company
18.6
247
CSS Industries Inc.
11.9
251
Proguard Acquisition Corp
(1.0)
0
20.1 $
251
Sub-industry Median
22.6
$
11,747
Sub-industry Average
Industry Median
Industry Average
16.2 $
11.7 $
432
2,290
Total
Return on
Return on
Margin % of Sales
Margin
Margin
Profitability
Assets
Capital
Equity
7,690
27
217
31,068
5,013
6,191
118
320
11
$
320
$ 5,628
34.0%
44.4%
39.6%
48.0%
19.3%
26.5%
23.3%
32.2%
13.2%
32.2%
31.2%
22.6%
38.5%
24.9%
20.7%
10.0%
17.5%
8.0%
23.5%
14.1%
20.7%
20.0%
9.8%
5.9%
10.2%
21.7%
8.6%
7.4%
15.3%
8.7%
(4.0)%
8.7%
9.3%
13.7%
9.9%
15.8%
26.1%
12.3%
10.1%
22.1%
11.1%
(0.9)%
12.3%
13.4%
5.3%
3.1%
8.3%
12.5%
6.3%
5.9%
9.0%
6.0%
(22.6)%
6.0%
3.8%
7.7%
3.7%
9.7%
17.2%
8.5%
10.4%
11.6%
6.9%
(311.7)%
8.5%
(26.2)%
11.3%
4.0%
4.0%
26.7%
12.8%
16.2%
15.7%
7.3%
NM
12.1%
12.3%
$
$
19.9%
24.6%
14.2%
26.5%
3.5%
0.3%
4.5%
2.9%
4.7%
(1.4)%
7.0%
(5.9)%
10.0%
7.2%
819
6,249
SG&A as
EBIT
EBITDA
$
Gross
Notes:
2 - Includes Companies under the SIC codes 2670 Converted paper and paperboard products, except containers and boxes (Primary) and 5110 Paper and paper products - wholesale (Primary); the data set has been scrubbed by GT for
outliers and anomalies
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
41
Appendix – supporting schedules
Industry metrics – Containers, packaging, paper & forest products wholesalers
Fix ed
Company Name
($ in millions)
Total Asset
Asset
Turnov er
Turnov er
Current
DSO
Efficiency
DPO
DIO
Cash Cy cle
Debt /
Ratio Quick Ratio
EBITDA
Liquidity
EBITDA / Net Debt /
Debt /
Debt /
Int. Ex p.
Equity
Capital
EBITDA
Lev erage
Capital Structure
Containers & Packaging and Paper & Forest Products2
Sealed Air Corporation
0.9
Insignia Sy stems Inc.
0.8
ZAGG Inc
1.3
3M Company
0.9
Bemis Company , Inc.
1.2
Av ery Dennison Corporation
1.3
Orchids Paper Products Company
0.9
CSS Industries Inc.
1.1
Proguard Acquisition Corp
9.1
1.1
Sub-industry Median
1.9
Sub-industry Average
6.7
14.6
45.7
3.7
3.9
6.7
1.3
11.6
354.6
6.7
49.9
53.1
79.0
60.6
53.0
49.7
61.0
18.7
49.8
13.5
53.0
48.7
41.5
64.9
41.5
41.2
36.5
67.6
13.8
20.4
27.8
41.2
39.5
56.8
9.0
111.9
87.9
61.6
42.6
48.0
102.3
0.7
56.8
57.9
1.3
6.2
3.8
1.7
2.5
1.3
3.3
6.9
0.4
2.5
3.0
0.7
6.0
1.8
1.0
1.3
0.8
1.9
4.5
0.3
1.3
2.0
4.6
0.8
2.4
1.8
0.6
NM
0.7
1.3
3.0
87.2
56.8
9.0
10.1
89.1
125.4
NM
33.4
47.6
4.2
NM
NM
0.5
2.1
1.4
0.1
NM
NM
1.4
1.7
277.7%
24.6%
86.8%
63.6%
16.1%
NM
20.3%
58.6%
65.4%
18.0%
46.2%
36.4%
13.7%
NM
15.8%
22.4%
1.9
2.6
20.1
65.0
39.7
43.3
35.6
46.0
38.8
56.7
1.9
2.9
1.1
1.6
2.1
5.0
7.1
49.7
2.7
6.1
25.8%
62.6%
20.4%
28.6%
Industry Median
Industry Average
Notes:
2 - Includes Companies under the SIC codes 2670 Converted paper and paperboard products, except containers and boxes (Primary) and 5110 Paper and paper products - wholesale (Primary); the data set has been scrubbed by GT for
outliers and anomalies
Sources: Capital IQ
© 2014 Grant Thornton | NAW Roundtable | June 2014
U.S. member firm of Grant Thornton International Ltd.
42