Selecta: Hold recommended for1st liens based on trend of performance improvement and deleveraging

Jovan

Sep 13, 2023

1 min read

Investment Highlights

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Company Profile

•Ownership: Sponsor-owned (KKR)

•Industry: Food Tech/Self-service vending

•Primary markets: Europe (365k P.O.S machines)

•LTM Sales (Dec-31 2023): €1,351m

•Ratings: CCC /Caa3

•Market Share: ~10% (market dependent) in Europe (presence in 16 countries)

•Market position: #1 or 2 in coffee/food in 10 markers

•Channels: B2B/B2C

•Seasonality: Some during holiday season

•Customer concentration: Low

•KPIs: Net Sales/Machine/Working Day (“SMD”); Sales/FTE; Customer Retention

•LTM Adjusted EBITDA (Dec-23): €216.7m

•Main products: Self service coffee and hot drinks; cold drinks, snacks and fresh food; equipment and ingredients

•Employees: 6.5k

•Cost structure (% of FY22 sales): COGS: 43% (food drinks, spare parts); Salaries: 25% Overheads (IT/Fleet/RE/Logistics/PoS Maintenance/Selling): 13%

•Suppliers: Various with low concentration

•Primary Assets: Intangibles/PPE/Customer Contracts/Receivables/Inventory

•Facilities: Manufacturing/Distribution

•Logistics: Outsourced (TBC)

Geographic Segments by Revenue (FY22):

•South, UK & Ireland (31%): paid-vend, mixed channel vending - includes Italy, Spain and the UK & Ireland)

•Central (35%): paid-vend, mixed channel vending - includes Switzer-land, Germany, Austria and France, with a strong presence and expertise in the public business

•North (34%): free-vend, office coffee services (OCS) - includes Sweden, Norway, Finland, Denmark, Belgium, Netherlands, and the Pelican Rouge Roaster in the Netherlands

Recent Developments