Specialist
Former Director at Eddie Stobart Logistics plc
Agenda
- Movement pricing and volume, across retail, consumer, industry and rail segments
- Eddie Stobart's (LON: ESL) integration challenges of acquired assets
- Customer concentration risks
- Brexit scenario risks
- Views on management and strategic options post-takeover
Questions
1.
What are your views on Eddie Stobart’s recent profit warning? What should investors be taking out as the salient points here?
2.
Can we examine the new segments and contracts Eddie Stobart is expanding in? How might the terms have changed on newer contracts, and where would you expect the company to be flexing, if anywhere?
3.
Can you outline the salient operational differences between industrial and retail logistics contracts?
4.
Is Eddie Stobart still making contracts in industrial, similar to the Aggregate Industries project?
5.
How much CAPEX and specialist equipment would Eddie Stobart typically need for a GBP 30m industrial contract?
6.
What are Eddie Stobart’s working capital requirements for preparing to service those new contracts?
7.
How quickly has that increase in payment term lengths occurred? What would you say is the rough distribution of days across Eddie Stobart’s clients, and where are the biggest losses in payment days?
8.
How does Eddie Stobart typically react to these negotiations for longer payment length terms?
9.
What proportion of Eddie Stobart’s contracts do you think are on the standard 30-day payment terms?
10.
Examining payment terms, what do you think is the average number of days for a new contract coming to market now vs two years ago?
11.
You expect 60% of Eddie Stobart’s contracts to be around 30-day. Will those terms only be changed at contract renegotiation? What is a typical contract length, to estimate the time for those to shift over?
12.
What proportion of Eddie Stobart’s revenue would you expect to come from a contract the size of Tesco’s?
13.
How much value do you think there is in the relationship between Tesco and Eddie Stobart when it comes up for renewal? Do you think this will purely be a pricing-based contract for Tesco?
14.
Exploring a scenario in which Eddie Stobart’s Tesco contract comes up for renewal, and an equivalent transportation competitor makes a bid for it. What pricing discount would they likely have to offer, relative to what the pricing would determine in a deal five years ago? How different would the terms have to be?
15.
Do you think the size of the contract with Eddie Stobart will change significantly, or that the decrease in pricing will be offset by volume gains from Tesco?
16.
Examining market pricing trends, you alluded to margin compression over five years. How is pricing changing YoY in the retail segment specifically? What is your outlook for year-end into 2020?
17.
What margin expansion do you expect in the UK transportation logistics industry over the next year or so?
18.
If suppliers shift from open- to closed-book, do you get a tightening of prices in the closed-book space?
19.
Is that specific for retail, or do you expect similar pricing dynamics in consumer and industry as well?
20.
Can you outline the challenges Eddie Stobart has faced around its inorganic growth strategy and integration? What do you think the company needs to do to fully benefit from the assets it is acquiring?
21.
Why do you think Eddie Stobart has not integrated the assets? Do you think this is an attempt at execution that has gone awry, or a philosophy of leaving these businesses to operate separately?
22.
What are your broad thoughts on a Dbay Advisors takeover of Eddie Stobart? How likely could that be?
23.
What do you think would be the key strategic options for a Dbay post-acquisition? We touched on the degree of integration across some of the assets. Would you expect a carve-out, or just to fully close the industry part of the business, and potentially the rail part of the business too?
24.
Eddie Stobart’s ability to retain staff ties into Brexit. Roughly how many drivers does the company have, and what shortages do you think there are to fulfilling its current volume of contracts?
25.
What proportion of Eddie Stobart’s staff base do you think is at risk from unemployment due to Brexit?
26.
Could you outline why it is possible to claim on contracted work but not on subcontracted work?
