RE: Big Commerce26 Apr 2023 06:37
Worth highlighting this could save serious intangible capex
Remember they let slip that the £135M a year intangible can be switched off at any time as it’s not property is what they said - key statement
Without that £135M intangible SaSS spend the FCF in THG is relatively decent / ok
Nutrition and Beauty have a current combined EBITA margin
of 6.5% - target is 9%
But that’s after paying Ingenuity for its services and no rent to pay of note, Ingenuity pay that £20M rent
Refinance the £140M net debt post disposal property
Apollo are going to play ball, annual payment drops from
£60M to £14M, that’s a whopping £46M a year saving
So this is how it looks today - their numbers but not how they present them if we strip out Ingenuity / refinance debt
£130M EBITA profit from Nutrition & Beauty
No rent ( saved £20M ish)
Less Capex maintenance, in the past it was low single digit £millions but let’s go for £15M - that’s a super high amount but just in case
So the Core has £115M less £14M finance
They have £100M a year profit /pure cash no tax up to £2B losses on balance sheet
They push the blended EBITA margin to 9% and they drop £150M a year cash, USA Nutrition sales are growing at 10%
start putting those numbers into a spread sheet and run out 5 years on just 10% growth and you can see why it’s attractive to Apollo the business is churning cash - don’t forget they generated £70M FCF last 26 weeks they played that down a tad
Ingenuity is just bunce on top.
You can see why Apollo want THG as do potentially others, the activists can see above as well
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