FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 www.harriswilliams.com Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams is a trade name under which Harris Williams LLC and Harris Williams Ltd conduct business. FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 WHAT WE’RE SEEING 1 MARKET UPDATE Group Overview . Harris Williams is a leading advisor to the food and M&A activity in the food and beverage industry is continuing, with strategic buyers being beverage market. Our significant experience covers a broad range particularly active. US Foods announced it will acquire Smart Foodservice Warehouse of end markets, industries, and business models. This particular Stores, a wholesale food distributor and foodservice warehouse, for $970 million, from report focuses on trends and metrics in the following areas: Smart & Final Stores, a portfolio company of Apollo Global Management. Mondelēz . Agribusiness announced it will acquire Give & Go, a producer of baked goods, for $1.2 billion, from . Bakery . Beverages Thomas H. Lee Partners. Hormel Foods announced it will acquire Sadler’s Smokehouse, a . Branded and Private Label provider of premium pit-smoked meats, for $270 million. Dairy . Distribution . Ingredients . Meat and Protein WHAT WE’VE BEEN DOING . Natural and Organic . Processing CLOSED HARRIS WILLIAMS TRANSACTIONS . Produce . Restaurant and Retail . Snacks Contacts . Tim Alexander Managing Director [email protected] +1 (612) 359-2716 . Ryan Budlong Managing Director [email protected] +1 (415) 217-3409 . Brant Cash Managing Director [email protected] +1 (612) 359-2709 . Ryan Freeman Managing Director [email protected] +1 (612) 359-2703 . Andy Warczak Vice President [email protected] +1 (612) 359-2714 . Brant Wilczek Vice President [email protected] +1 (612) 359-2732 . Thomas DeMinico Vice President [email protected] +1 (612) 359-2719 . Richard Furseth Vice President [email protected] +1 (612) 359-2733 www.harriswilliams.com PAGE | 1 FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 HARRIS WILLIAMS ADVISES LANCASTER FOODS Harris Williams advised Lancaster Foods, a subsidiary of Guest Services, on its sale to The Coastal Companies, a portfolio company of Arlon Group. BUSINESS OVERVIEW KEY VALUE DRIVERS . Lancaster is a leading wholesale supplier of conventional Best-in-class sourcing capabilities and fresh-cut produce for retail customers across the Northeast U.S. One-stop-shop provider for conventional and fresh-cut needs . Founded in 1986, Lancaster operates a 220,000-square- Attractive position as go-to fill-in provider foot distribution and processing center in Jessup, Maryland, and operates a fleet of over 70 delivery vehicles. Industry-leading margin profile Attractively positioned to service the Mid-Atlantic region REPRESENTATIVE PRODUCTS Deep and experienced management team Conventional Produce Fresh-Cut Produce 90+ 70+ Varieties Varieties VITAL SIGNS COMMODITY PRICE INDICES 1 160 Wheat: 9.4% 120 Corn: 1.0% 80 Crude Oil: (7.7%) Commodity Commodity Price Index 40 Soybeans: Mar-15 Sep-15 Feb-16 Aug-16 Jan-17 Jun-17 Dec-17 May-18 Oct-18 Apr-19 Sep-19 Mar-20 (9.0%) Crude Oil Soybean Wheat Corn PROTEIN PRICE INDICES 2 , 3 110 Pork 8.1% 100 Beef: 1.3% Poultry Protein Price Price Protein Index 90 0.5% Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Beef Pork Poultry PAGE | 2 FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 VITAL SIGNS RESTAURANT AND GROCERY STORE SALES INDICES 4 Restaurant: 140 130 22.7% 120 110 100 Grocery: Sales Sales Index 90 15.8% 80 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Restaurant Grocery CONSUMER FOOD PRICE INDEX INFLATION 2 4.0 3.0 2.0 1.0 Infation (%) - (1.0) Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 VITAL SIGNS KEY TRADING STATISTICS 1 Stock Price % Change EV/EBITDA % Change Current Valuation Stats Net Debt / Industry and Segment 3 Month 1 Year 3 Month 1 Year Fwd PE LTM PE EV/EBITDA EBITDA Protein Processing (24.5%) 6.8% (15.1%) (1.9%) 10.5x 14.1x 12.3x 1.8x Fruit and Vegetable (15.7%) (6.7%) 0.2% (7.9%) 10.5x 17.6x 11.3x 3.9x Inputs Ingredients / Flavors (1.4%) (2.4%) (4.9%) (0.0%) 19.0x 29.9x 15.0x 2.3x Agribusiness (12.2%) (12.1%) 10.6% (4.0%) 14.1x 16.0x 8.5x 3.5x Branded Processed Foods (6.9%) 5.1% (4.8%) 0.2% 16.7x 21.6x 12.7x 3.7x Private Label Foods and Beverages (15.7%) 18.5% (0.1%) 2.1% 7.6x 20.2x 9.5x 4.7x Natural / Organic Foods / BFY (4.9%) 9.0% (0.2%) 25.2% 26.4x NA 23.3x 6.2x Baked Goods (8.0%) (2.3%) (3.8%) (7.0%) 19.3x 25.0x 11.3x 3.2x Dairy (4.0%) (14.5%) 5.0% (22.9%) 13.6x 21.6x 12.8x 2.5x Non-Alcoholic Beverages (1.3%) (4.7%) (3.1%) (11.6%) 21.2x 18.9x 11.4x 2.2x Food and Beverage and Food Alcoholic Beverages (12.9%) (8.4%) (17.8%) (5.8%) 19.2x 23.9x 11.8x 2.9x Snacks (7.9%) 7.6% (5.2%) 1.9% 21.3x 22.7x 17.1x 2.2x Grocery Distribution (12.2%) (32.6%) 21.6% 16.3% 10.3x 19.7x 10.3x 5.8x Food Retail (9.7%) (14.4%) 8.2% 13.1% 12.2x 14.4x 9.4x 4.2x Foodservice (14.7%) (3.9%) (13.3%) (1.4%) 14.8x 28.4x 14.6x 4.5x Quick Service Restaurant (11.3%) (6.4%) (9.5%) 8.8% 22.8x 24.7x 18.2x 5.4x Fast Casual (1.8%) 4.9% 80.0% 44.3% 42.1x NA 16.3x 5.7x Differentiated Casual (19.1%) (27.7%) 21.7% 25.5% 15.0x 13.7x 11.4x 5.3x Casual Dining Restaurant (10.3%) (12.9%) 1.2% 29.2% 13.1x 14.0x 11.5x 6.5x Fine Dining (18.1%) (26.6%) 19.2% 4.0% 12.7x 13.3x 11.3x 4.0x Consumer and Retail and Consumer Pizza 3.2% 34.2% 16.3% (0.7%) 35.9x 35.5x 23.9x 5.4x Beverage / Snack Retail (13.1%) (8.7%) 3.6% 5.9% 20.7x 24.4x 18.6x 6.0x Family Restaurant (6.8%) (0.1%) (4.7%) 7.2% 15.7x 12.4x 13.1x 2.3x Overall Median (10.6%) (5.8%) (0.1%) 2.8% 17.0x 20.0x 12.5x 3.9x PAGE | 3 FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 PUBLIC EQUITY MARKET OVERVIEW PUBLIC COMPANY SECTOR PERFORMANCE (MEDIAN ONE YEAR CHANGE IN STO CK PRICE) 1 Pizza Private Label Natural / Organic / BFY Snacks Protein Processing Branded Processed Foods Fast Casual Family Restaurant S&P Baked Goods Ingredients / Flavors Foodservice Non-Alcoholic Beverages Quick Service Restaurant Fruit and Vegetable Alcoholic Beverages Beverage / Snack Retail Agribusiness Casual Dining Restaurant Food Retail Dairy Fine Dining Differentiated Casual Grocery Distribution (80.0%) (65.0%) (50.0%) (35.0%) (20.0%) (5.0%) 10.0% 25.0% 40.0% 55.0% 70.0% 85.0% Inputs Food and Beverage Consumer and Retail RECENT EQUITY OFFERINGS 5 Close Date Filing Date Issuer Ticker Transaction Type Gross Proceeds ($M) Use of Funds Secondary - 03/05/20 Keurig Dr Pepper Inc DPS Follow-On $1,090.0 General Corp. Purp. 03/04/20 02/19/20 Else Nutrition Holdings Inc BABY Follow-On $6.0 General Corp. Purp. 02/28/20 12/03/19 Champignon Brands Inc SHRM IPO $2.1 General Corp. Purp. - 02/20/20 Centr Brands Corp - Follow-On $0.9 General Corp. Purp. 02/07/20 10/23/17 Muscle Maker Inc GRIL IPO $7.7 General Corp. Purp. 01/29/20 01/27/20 Grocery Outlet Holding Corp GO Follow-On $528.0 General Corp. Purp. - 01/10/20 The Very Good Food Co Inc NA IPO $2.7 General Corp. Purp. - 01/10/20 She Beverage Company, Inc. NA IPO $252.5 General Corp. Purp. 12/17/19 12/11/19 RiceBran Technologies RBIT Follow-On $7.4 General Corp. Purp. 11/20/19 11/18/19 Performance Food Group Co PFGC Follow-On $515.0 Reduce Indebtedness Working Capital 11/19/19 - The Chefs Warehouse Inc CHEF Convertible $150.0 General Corp. Purp. General Corp. Purp. 10/30/19 9/27/19 Diamond Estates Wines & Spirits Inc DWS Follow-On $1.8 Marketing & Sales PAGE | 4 FOOD AND BEVERAGE INDUSTRY UPDATE │ MARCH 2020 PUBLIC EQUITY MARKET OVERVIEW FOOD AND BEVERAGE INDUSTRY STOCK PERFORMANCE INDEX 4 150 8.4% 140 130 6.3% 120 5.6% 110 4.3% 100 Price Price Index 90 (0.4%) 80 (28.5%) 70 60 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 Restaurant Protein Processing/Dairy Natural/ Organic Beverage Private Label Food Manufacturing S&P 500 M&A MARKET OVERVIEW Highlighted Food and Beverage M&A Transactions1 US FOODS TO ACQUIRE SMART FOODSERVICE WAREHOUSE STORES . US Foods to acquire Smart Foodservice Warehouse Stores for $970 million from Smart & Final Stores, a portfolio company of Apollo Global Management.