Specialist
Former C-level executive at Selecta Group BV
Agenda
- Assessment of Selecta's new management
- Selecta’s execution of density-driven business model – revenue and margin expansion
- Potential for further M&A of small competitors
- Long-term outlook on out-of-home consumption and Selecta's relative positioning
Questions
1.
What are your thoughts on the vending industry? Could you discuss any key trends and themes, including the impact of coronavirus?
2.
How are the European vending industry’s 10,000 players and 4-5 million machines organised? Are there local competitors with extremely small footprints by the square kilometre? How would you assess the industry’s supply side? You mentioned that only four or five companies have significant market share.
3.
How much impact have coffee capsules had on the private in-office vending machine market? You mentioned that the biggest downside facing the industry pre-coronavirus was capsules, and it seems as though the product has been around for a long time.
4.
Are there parts of the market where capsules could take complete market share from vending machines in 5-10 years? Do you think this product is a much longer-term threat?
5.
What are your thoughts on Selecta’s market offering? How do you assess it as a vending market player?
6.
Why do you think Starbucks entered a licencing agreement with Selecta? Is this a matter of scale? Does success breed success in the vending market?
7.
How do you think Selecta was executing on its density-driven business model pre-coronavirus?
8.
Do you think the general thesis behind Selecta’s density-driven profitability business model works? You mentioned that it’s going to plan. I understand that pre-coronavirus, Selecta was almost 3x its 2015 size and 2.8x its 2015 size by revenue, yet EBITDA and EBIT margins were in a relatively similar band through that time, with EBITDA at 11-14%. Would you expect increased revenues to drive outside increases in profitability under a density-driven model?
9.
Could the synergies between Pelican Rouge and Selecta still come to pass, if well-executed? Can cost still be cut out of the business that hasn’t yet been cut due to execution issues since Selecta’s 2017 acquisition of Pelican Rouge?
10.
Can you explain why the UK and French markets underperformed for Selecta and Pelican Rouge, despite being the companies’ two biggest markets?
11.
Do you think there is over-density in the combined UK and French machine parks?
12.
Do the density benefits that you discussed incorporate the OPEX and CAPEX of getting machines in machine parks?
13.
Do you think KKR and Selecta’s management will be mindful of conserving cash and delay CAPEX? Do you think the company will start to increase CAPEX in machine parks soon, based on the fact that to best position the business long-term, it can’t cut CAPEX for more than one year?
14.
Could Selecta keep CAPEX low and store business growth, focusing on cutting costs and fully integrating Pelican Rouge? It seems as if the integration process hasn’t quite finished.
15.
When do you think the environment might normalise post-coronavirus? How fast could Selecta recover after lockdowns end?
16.
Do you think the 10% long-term impact from the pandemic that you mentioned will be across the private in-office segment and the on-the-go public transport segment? Will it vary between the two?
17.
When would you expect demand to return to 90% of 2019 levels, assuming that lockdowns will end in the summer of 2021? Could it take 6-12 months?
18.
What effect on profitability will Selecta’s decision to cut around 3% of its 400,000 machines have? Can the company do this without hurting its economics, or is that a necessary effect of this decision?
19.
Do you think Selecta could cut its machine park further than 3%?
20.
How well-invested was the Pelican Rouge machine park? I understand Selecta has been investing in telemetry. Was the Pelican Rouge machine base also well-invested?
21.
What impact could a 10% demand decrease in the long term have on profitability for the remainder of Selecta’s machine parks? You mentioned that the company could cut about 5% of any machine park and probably improve its KPIs and profitability.
22.
Do you have any final points on Selecta?
