Member Info for Okehurst1

Bid is over PP and it’s still up 100% since Xmas

Muti bagged on Bid

FCF driving the fundamentals there now - am holding and in for free but questions on Ingenuity capex not suggesting it’s worth a punt at 85p … it was a steal at 38p to 40p last week December

I have low targets for Boo, 50% to 100% uplift from here year end / Q1 …. 50p to 75p, think Peel are saying 75p but who knows

Yeah this year as an example … THG although am sceptical on Ingenuity capex but that’s for another BB

45p to £1.12 on a big chunk for me, sold half - kept half

I just use EBITDA as a cash position to work from - base point so to speak

On the conf call a few weeks ago they were guiding to a much improved gross for 2024 / medium term and saying 6% to 8%

If we look at COGS and the fact they have slashed by 25/% then 10% further 10% it’s a big aggregate number, put that back in the spread sheet and the margin is seriously improved

Tbh I’ve discounted a big chunk of COGS above and admin (3%) and ran with the 6%, it’s 2.5% above what was a bad year 2022 with distribution/ COGS massively up

Hope the above makes sense

Hi PP

I just work on $FCF for everything I invest in

So in BOO’s case, depending on them hitting 6% and capex not over £20M - RCF is £12M maybe if they require they could be £70M to £100M free cash flow

Caveats being capex phase 2 USA maybe

RCF - again maybe

Take RevB for example. Fair to use as we own a good chunk

Revb tell us they generated £3.5M EBITA last quarter, we could extrapolate out and say £15M EBITDA

Less one off costs / legals and £2M finance

Less £5M capex,

They will generate £7M FCF against £18M net debt

In theory they don’t need a £raise and that matters for us at Boo, I think FCF is the only way us little PI’s have a chance to measure risk before investing - personal view

I look it a different way PP - cash is king as they say

EBITDA margin, then what comes off after the gross and what’s the FCF ?

In Boo’s case they have no net debt but allow for £12M finance costs 2023 , although the £300M they have on deposit will earn income ,leases are taken above the line and maintenance capex is they tell us £20M for 2024 - gut feel this will be higher

For 2024 estimate your Revenue & EBITDA margin, they guide to 6% to 8% - am sticking with 6%

We may have the RCF even if unused

So for 2024 there could be £100M free cash less potentially a cost for an unused RCF

2025 put your numbers into your spread sheet as above

Hex

How do you reckon they get from £400M net assets to negative £133M on £138M lease liabilities ? - Genuine question btw

Any idea ?

You have to feel for retailers the high street, they have enogh issues to worry about

https://www.drapersonline.com/insight/comment/brc-on-the-shoplifting-scourge-thefts-are-spiking-by-an-alarming-rate

Hi PP

Kind of focused on FCF and then what do we do with the $$ after maintenance capex moving forward ?

Boo will drop £180M on capex last year/ this year, with a £400M m/cap and same NAV we would hope there is a decent ROI?

They have no debt so in theory they could distribute some back to shareholders - as long as they don’t buy RevB

Do we think 6% EBITDA is realistic target 2024? Looks possible to me with COGS reduction alone and that’s without Admin / Automation etc

Heavy capex complete 2023 they say but maybe phase 2 USA - am unsure on that one, going off Sheffield phase 2

Then place a £revenue number for 2024 ? With USA site fully open and they forecast back to growth can they hit £2B @ 6%? Doable ? Maybe won’t be far away and USA is currently 58% gross margin to average U.K. 48% ? £120M EBITDA looks achievable, currently $400M USA revenue, scope to get all growth from USA and Beauty ( USA & U.K. )

Potentially FCF for 2024 is £100M if we just have maintenance capex £20M as guided and we don’t splash out on RevB - kind of hope we don’t

That’s my take and place 9X on the EBITDA - market retail around 9.6? Beauty 13X

75p to the £squid IF they deliver

With £4B of capacity and heavy capex complete maybe Boo can start giving back via Share buybacks / divi

Any thoughts on above ? Appreciate not without risk but supported at 33p by NAV

Hi Broke

Thanks for your response

GL yourself as well

My main concern was Boo going to Bid for RevB and pay decent $ ?

Up to now Minto & Co look like they are holding on to their shares? Boo don’t need to sell or buy and Revb doesn’t need $$ - we know this now via Bob

Risk / reward is stacked to the upside if you can stomach the risk element

Am Long but I appreciate there is a bit of risk here - but limited via zero debt and £400M of assets put aside £300M under utilised RCF

We know COGS are getting slashed, Drapers keep telling us

25%, 10%,10% just in the past what 2 months or so?

It’s low hanging fruit for EBITDA margin and cash gen

They got working 47 days, not sure there much to go there

Administration is 3% higher cost of sales than 2019 - white collar

Automation slashed £50M costs with other last year, reckon more to come from what they guide on - blue collar workers

Then their own distribution costs down massively.

Nb am going off their most recent analyst meeting

discussing margins / cost cutting / £4B capacity once complete

Heavy capex done this year and it’s just maintenance capex

My biggest caveat for 2024 will USA site need a phase 2 capex

Only saying as Sheffield required 2 phases

Also capex last year was £91M but that was was £76M net RevB

This year they have £85M but we don’t know how much has been allocated to RevB if anything, could be a zero after seeing the RevB update

Hi Broke

Just out of interest, assume best case and Boo can get to £2B Rev 2024 @ 6% EBITDA less £20M maintenance Capex

FCF £100M

Zero debt

£400M net assets

£4B capacity

Appreciate a bit to do but they get the COGS down to 2019 percentages - looks like they are hammering COGS

moving from 4.5% EBITDA to 6% doesn’t look a heroes target?

I’ve dismissed their 8% - it’s possible but working on 6%

What do you put the share price on the above scenario ?

Genuine question btw

Hi Hex/ Wolf

Like your posts, well balanced

Ideally … Boo and Bob sit down over a beer and thrash out a compromise, maybe 2 directors from Boo ? They own over 20% ?

We know Boo are trying to remove the 3 executives and have their own chosen voted in

Thinking it through, Rev B is not at risk regarding AIM a rules as it’s on the market and has 3 non execs and with these 6 directors total Boo doesn’t in theory have full control - assume Boo won on the day

So it looks Minto/Tom couldn’t vote this week but they may be able to at the EGM ? Grey area but they hold the key

Just noticed in todays The Times

Long article

Suggest the paragraph of interest

‘The records for the meeting appear to confirm that neither Minto nor Allsworth voted. Revolution made a cryptic reference to “undertakings from certain shareholders that they would not vote in breach of their contractual obligations to the company”. What might this mean? If you dig out Revolution’s admission document (published when the shares were first listed) it says Minto and Allsworth signed a “relationship agreement” with the company, common practice where founders remain big shareholders. It says that the pair won’t do anything that will stop it complying with Aim rules, nor use their shares to try to affect the company’s independence’

https://www.thetimes.co.uk/article/mayhem-at-revolution-is-fun-to-watch-but-misery-for-investors-bsrddqwgx

Boo tells us

Average Basket size is £59.20 and 3.2 items

Call it £18.50 an item as an average, maybe 100M a year ?And Boo can handle 800,000 plus a day items just from Sheffield

With automation at USA & Sheffield guess Boo will shut the 3rd distribution centre in the U.K., serious capacity being put in place, think they said they can get to £4B Rev without spending heavy on capex after this year

Drive COGS down as they are doing

Heavy capex to put this all together including web sites

Automation - blue collar costs slashed

Retain marketing spend at 13% of sales

Work the tax charge next 5 years from the capex having been so high

Churn the cash

Just looking at todays valuation and it’s a gift at 33p

Hi Hex

Get your point

So if Rev B goes to 36p on last day of accounting period they could show a £15M profit - not disposed of but book value

Interestingly we would have had £20M net cash year end without RevB ‘capex’ - ex RCF a on top