Agribusiness Market Monitor: COVID-19, and its …...8/30/2018 Arable Capital Partners Universal...
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Agribusiness Market Monitor SUMMER 2020
Transcript of Agribusiness Market Monitor: COVID-19, and its …...8/30/2018 Arable Capital Partners Universal...
Agribusiness Market MonitorSUMMER 2020
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Investment Banking & Advisory - Select Agribusiness Tombstones
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Agribusiness companies across the value chain who are focused ondirect to consumer and grocery end markets continue to thrive. COVIDclosures and shutdowns in the food service channel have had asignificant impact in reshaping food supply chains.
According to the University of Missouri’s Food and Agricultural PolicyResearch Institute, the Trump administration is expected to invest arecord $33B in payments to farmers this year to help farmers hurt bytrade conflicts and the pandemic. Congress is also debating furtherfinancial support through the USDA’s Commodity Credit Corp. This iswelcome news as farm bankruptcies, fueled by the pricing pressurescaused by the pandemic and record debt levels, continue to rise.Without additional aid, farm income is expected to fall 12% in 2021.
Export markets continue to be challenging for most commodity andfarm product producers. Additional tariffs, border closures, andheightened trade tensions with China and Europe are expected tocause several key export markets to be unprofitable in 2020.
M&A activity through Q2 trails the levels seen during the same periodlast year. The sector is expected to see increased M&A activity throughthe remainder of the year and into 2021, as buyers and sellers regainfooting post-pandemic shock and pent up demand begins to hit themarket.
Agribusinesses Pivot, Expect Further Help
(1) Base year = 1982. All Farm Products include all grown fruit, berries, melons, and tree nuts.
Commentary
Source: USDA, WSJ, US Agricultural Trade Data, Moss Adams Capital research
Agriculture Producer Price Index(1)
Agriculture Trade
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As the greater market has rebounded from the impact of the coronavirus pandemic, the agribusiness market has bounced back as well.Average EV/EBITDA multiples have risen significantly since hitting a multi-year low in March 2020. Agricultural Products & Servicescompanies are trading at an average of 11.1x EBITDA while Agricultural Producers are trading at an average of 7.0x EBITDA. Theserepresent significant increases in value since the market bottomed in March 2020, but Agriculture Producers still lag their pre-recessionvaluation highs.
Due to the previous stimulus package, the contemplated fifth stimulus package, and increased funding and support for agribusinesscompanies from the current administration and Congress, Next Twelve Months (NTM) growth rates are expected to be positive.Agricultural Products and Services growth of 3.8% is expected to outpace the S&P 500’s expected growth of 2.9%. Agricultural Producersare expected to slightly trail the S&P 500 growth, growing at 2.1%.
Note: The indices in the chart above are composed using the public companies included on the following pages.
Source: Capital IQ
Valuations Bounce Back as Economy Shows Signs of Recovery
Public Market Valuations: EV / EBITDA NTM Estimated Revenue Growth
S&P 50015.4x
Agriculture Products & Services11.1xAgriculture Producers7.0x
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Public Company Valuations: Agriculture Producers
Note: Not meaningful (NM) if EV/Sales is greater than 10x, or EV/EBITDA is greater than 40x. NA if denominator is 0 for percentages and multiples or if estimates are not available. Next twelve months (NTM) figures are based on the median of Wall St. analysts.
Source: Capital IQ and company filings.
Average EBITDA multiples on this page will not match pages 3 and 4 due to index weightings, inclusions and omissions.
($US in millions, except per share amounts) NTM Est. Growth
8/5/20 52 week Market Enterprise EBITDA TTM TTMCompany Name Sh. Price High/Low Cap Value Sales EBITDA Margin Sales Sales EBITDA
Darling Ingredients Inc. $29.02 29.57 / 10.25 $2,906 $6,481 $3,403 $444 13.1% 2.1% 1.9x 14.6x
Calavo Growers, Inc. 60.56 100.58 / 48.31 943 1,189 1,206 54 4.5% NA 1.0x 21.9x
Sanderson Farms, Inc. 113.26 179.45 / 102.13 3,039 2,679 3,519 91 2.6% NA 0.8x 29.4x
Cal-Maine Foods, Inc. 43.99 47.00 / 30.74 1,900 1,919 1,352 64 4.8% NA 1.4x 29.8x
Pilgrim's Pride Corporation 15.32 33.67 / 15.75 4,694 6,430 11,740 697 5.9% NA 0.5x 9.2x
Tyson Foods, Inc. 62.93 94.24 / 42.57 21,899 34,955 42,609 4,363 10.2% NA 0.8x 8.0x
Fresh Del Monte Produce Inc. 24.22 38.79 / 22.98 1,654 2,013 4,306 157 3.6% NA 0.5x 12.8x
Adecoagro S.A. 4.30 8.70 / 3.58 480 1,462 883 311 35.2% 7.9% 1.7x 4.7x
Limoneira Company 14.20 24.77 / 10.60 246 413 169 (4) NA 15.6% 2.4x NA
Alico, Inc. 32.63 38.25 / 22.55 229 381 89 35 39.8% NA 4.3x 10.8x
Farmland Partners Inc. 6.80 7.22 / 5.05 170 989 54 35 65.0% (0.5%) NM 28.0x
S&W Seed Company 2.44 3.13 / 1.75 63 116 101 9 8.9% (15.1%) 1.2x 13.0x
Median $78 8.9% 2.1% 1.2x 13.0x Average $522 17.6% 2.0% 1.5x 16.6x
Agriculture Producers
TTM Data EV Multiple
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Public Company Valuations: Agriculture Products & Services
Note: Not meaningful (NM) if EV/Sales is greater than 10x, or EV/EBITDA is greater than 40x. NA if denominator is 0 for percentages and multiples or if estimates are not available. Next twelve months (NTM) figures are based on the median of Wall St. analysts.
Source: Capital IQ and company filings.
Average EBITDA multiples on this page will not match pages 3 and 4 due to index weightings, inclusions and omissions.
($US in millions, except per share amounts) NTM Est. Growth
8/5/20 52 week Market Enterprise EBITDA TTM TTM
Company Name Sh. Price High/Low Cap Value Sales EBITDA Margin Sales Sales EBITDA
FMC Corporation $107.01 $108.77 / $56.77 $8,895 $17,584 $4,617 $1,237 26.8% 5.8% 3.8x 14.2x
CF Industries Holdings 32.92 55.15 / 19.73 5,538 13,376 4,262 1,610 37.8% 0.3% 3.1x 8.3x
The Toro Company 71.94 84.26 / 52.07 6,326 8,413 3,270 489 15.0% 11.4% 2.6x 17.2x
The Mosaic Company 16.31 28.01 / 6.50 4,053 10,164 8,673 1,085 12.5% (1.6%) 1.2x 9.4x
Scotts Miracle-Gro 156.92 125.69 / 75.91 4,946 11,472 3,739 638 17.1% (10.9%) 3.1x 18.0x
AGCO Corporation 68.65 81.39 / 35.33 3,237 6,447 8,558 718 8.4% 6.4% 0.8x 9.0x
SiteOne Landscape Supply 121.77 119.42 / 53.29 2,757 6,214 2,465 206 8.4% 4.6% 2.5x 30.1x
Lindsay Corporation 101.31 111.76 / 71.86 921 1,112 448 59 13.1% 3.0% 2.5x 19.0x
CVR Partners, LP 0.96 4.13 / 0.60 103 694 355 77 21.7% (4.8%) 2.0x 9.0x
Intrepid Potash, Inc. 0.85 3.97 / 0.76 124 160 162 34 21.0% 13.3% 1.0x 4.7x
Titan Machinery Inc. 11.47 21.88 / 6.96 169 735 1,337 56 4.2% NA 0.5x 13.0x
Pure Cycle Corporation 9.25 13.83 / 7.18 219 198 25 4 16.2% (100.0%) 7.8x NM
Titan International, Inc. 1.59 7.25 / 1.35 111 581 1,275 11 0.9% 13.6% 0.5x NM
AgroFresh Solutions, Inc. 2.50 3.55 / 1.00 65 518 164 63 38.2% NA 3.2x 8.3x
Ceres Global Ag Corp. 2.38 4.88 / 2.33 74 225 539 13 2.3% NA 0.4x 17.9x
Median $77 15.0% 3.8% 2.5x 13.0x Average $420 16.2% (4.9%) 2.3x 13.7x
Agriculture Products & Services
TTM Data EV Multiple
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Select Recent Agribusiness M&A Activity
Discussed on following pages.
Announced Transaction Date Acquirer/Investor Target Target Description Value
7/28/2020 Albert City Elevator, A Cooperative AG Partners L.L.C. Offers seeds, grains, and feeds; a precision agricultural program; and risk management products. Undisclosed
7/7/2020 GrubMarket, Inc. Cali Fresh Produce Inc Produces and distributes fruits and vegetables. Undisclosed
7/1/2020 Swissgenetics Genossenschaft New Generation Genetics, Inc. Engages in animal breeding services. Undisclosed
6/29/2020 Kinderhook Industries, LLC Prairie Dog Pet Products, LLC Manufactures treats and antler products for pet dogs. Undisclosed
6/19/2020 Costa Farms, LLC Deleon's Bromeliads, Inc. Grows bromeliads and orchids. Undisclosed
6/15/2020 West Lake Creek Company, LLC Osage Gardens Inc. Produces organically grown culinary herbs and vegetables. Undisclosed
6/1/2020 Plantation Products, LLC Dyna-Gro, Inc. Produces and distributes liquid plant nutrient products. Undisclosed
5/29/2020 Henderson Turf Farm, Inc. Scarff's Nursery & Landscape LLC Owns and operates a nursery and landscape company. Undisclosed
5/28/2020 Lineage Logistics, LLC Henningsen Cold Storage Co. Provides multi-temperature controlled storage and refrigerated logistics services. Undisclosed
5/1/2020 Hoffman Landscapes, Inc. Kent Greenhouse & Gardens Provides landscape design, installation, and garden maintenance services. Undisclosed
2/27/2020 WaterVault America, Inc. Huerfano-Cucharas Irrigation Company Provides landscape design, installation, and garden maintenance services. Undisclosed
4/9/2020 Sakata Seed America, Inc. Vanguard Seed Produces lettuce seed. Undisclosed
3/26/2020 Michael Foods of Delaware, Inc. Henningsen Foods, Inc. Provides specialty egg, meat, and poultry products to the food processing industry. Undisclosed
3/25/2020 Wm. Bolthouse Farms, Inc. Carrot Operations of Rousseau Farming Company Comprises carrot farming services. Undisclosed
3/18/2020 Silver Spring Foods, Inc. Brede, Inc. Processes and sells horseradish, sauces, and other vegetable crops. Undisclosed
3/17/2020 Sloan Implement Co., Inc. Assets of Arends-Awe, Inc. Comprises harvesting equipment. Undisclosed
3/10/2020 Gold Leaf Farming, LLC 1,850-acre Almond Orchard in Fresno County 1,850-acre Almond Orchard in Fresno County. Undisclosed2/28/2020 K-Tec Earthmovers Inc. Ashland Industries, Inc. Ashland Industries manufactures earthmoving equipment and machinery for agricultural use. Undisclosed1/31/2020 AGRANA Marroquin Organic International, Inc. Marroquin Organic International, Inc. provides organic and non-GMO ingredients. Undisclosed
1/15/2020 Greenville Turf & Tractor Inc Reynolds Farm Equipment, Inc. Reynolds Farm Equipment, Inc. operates as an equipment dealer. Undisclosed
1/14/2020 SiteOne Landscape Supply, Inc. Assets and Liabilities of The Garden Dept. Corp. The Garden Dept. Corp. provides nursery services and horticultural distribution. Undisclosed
1/13/2020 BrightView Holdings, Inc. Signature Coast Holdings, LLC Signature Coast Holdings, LLC provides commercial landscaping services. Undisclosed
1/3/2020 The Coca-Cola Company fairlife, LLC fairlife, LLC provides a wide portfolio of value-added dairy products. $1,000.00
11/20/2019 Universal Corporation Fruitsmart, Inc. Fruitsmart processes fruits and supplies juices, concentrates, purees, fibers, and powders. Undisclosed
11/18/2019 Lineage Logistics, LLC Emergent Cold LLC Emergent Cold LLC owns and operates cold storage facilities. $900.00
11/13/2019 Gar Tootelian, Inc. Bennett Water Systems Bennett Water Systems manufactures large scale water systems. CONFIDENTIAL
5/1/2019 Monsanto Company Scotts Miracle-Gro Company's Weed Bus. Comprises weed control products manufacturing and selling operations. $35.00
8/19/2019 Fiera Comox Partners Inc. Auvil Fruit Company, Inc. Auvil Fruit Company engages in the growing and supply of fruits. It offers apples or cherries. Undisclosed
9/6/2019 StepStone Group LP; AGR Partners; StepStone Green Plains Cattle Company LLC Green Plains Cattle Company LLC operates cattle feedlots. $154.48
4/16/2019 Americold Realty Trust Chiller Holdco, LLC Chiller Holdco, LLC operates as a cold storage warehouse and processing company. $1,241.52
4/1/2019 RiceBran Technologies MGI Grain Processing, LLC MGI Grain Processing, LLC owns and operates barley and oat grain processing facility. $4.04
2/14/2019 Winsupply Inc. Baron Distributors, Inc. Baron Distributors, Inc. distributes and sells turf and agriculture irrigation products. Undisclosed
2/7/2019 BrightView Holdings, Inc. (NYSE:BV) Benchmark Landscapes, LLC Benchmark Landscapes offers landscaping design, construction, and maintenance services. Undisclosed
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Overview of Notable Transactions
Source: Moss Adams Research & Company-issued press releases.
Farmers Business Network raises $250mm in Series F Funding
August 3, 2020
Famers Business Network (FBN), the leading direct-to-farm ag tech platform and farmer network, announced the closing of $250mm in Series F funding.
FBN will use the capital to expand its Farmers First FBN Direct range of best value, direct-to-farm inputs including seed, crop protection and biologicals, which help farmers reduce their costs of production. It will also invest in building out its suite of FBN Crop Marketing and Financial Services solutions that help famers maximize the value of their crops.
Lead Investor: BlackRock Inc. New Investors: Baron Capital Group, Balyasny Asset Management LP, Mandi
Ventures, Lupa Systems and Ron Shaich. Existing Investors: DBL Partners, Temasek, funds and accounts advised by T.
Rowe Price Associates, Inc., GV, Expanding Capital, and Kleiner Perkins
Lineage Logistics, LLC, acquires Henningsen Cold Storage Co.
May 28, 2020
Lineage Logistics, the world's largest provider of temperature-controlled logistics solutions, announced its acquisition of Henningsen Cold Storage, Co., a fifth generation family business offering temperature-controlled warehousing and transportation services.
Henningsen’s assets included 14 cold storage facilities throughout the Pacific Northwest, and a transportation division, Henningsen Transportation Services.
This acquisition increases Lineage Logistics presence in the Pacific Northwest. It follows a series of deals as Lineage pursues a roll-up strategy in the cold storage market.
Note: Middle market M&A includes transactions w ithEV < $1000mm, and transactions w ith undisclosed EV.YTD as of July 28, 2020.
ARIZONAPhoenix
CALIFORNIAFresnoLos AngelesManhattan BeachNapaOrange CountySilicon ValleySacramentoSan DiegoSan FranciscoSanta RosaStocktonW alnut CreekWoodland Hills
COLORADODenver
KANSASKansas City
NEW MEXICOAlbuquerque
OREGONEugeneMedfordPortland
TEXASDallasHouston
WASHINGTONBellinghamEverettIssaquahSeattleSpokaneTacomaTri-CitiesWenatcheeYakima
940+ Food, Beverage & Agribusiness (FB&A) Clients 20+ FB&A M&A transactions advised in 2019
25+locations west of the Mississippi
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