We recently added Black Rifle Coffee Company (SBEA) to our Consumer Staples long list
We will host a Black Book review on Friday at 12:30 PM ET.
Black Rifle Coffee Company (BRCC) is a veteran-founded coffee company. The company was founded in 2014 by Evan Hafer, a Green Beret. BRCC is a mission-focused company committed to supporting veterans, active-duty military, and first responders. BRCC has targeted the $28B coffee category as its serviceable addressable market. Our military is the most respected institution in the country, according to Gallup polls. Veterans are 7% of the population, while the active-duty military is less than 0.5%. Half of the company’s employees are veterans. BRCC gives preference to veteran-owned businesses as vendors and suppliers. The company also sends a bag of coffee to active-duty personnel for every coffee club subscription. Black Rifle Coffee Company’s mission to support veterans gives employees and customers a shared purpose. The large base of veterans has helped recruit store employees in a tight labor market. New employees are often attracted by working with other veterans and the upward mobility from the store growth plans. Black Rifle Coffee Company has a multi-channel growth strategy. The drivers in each channel provide visibility to exceed 20% top-line growth for the foreseeable future.
We are also like the current setup for CHEF and adding it to the Hedgeye Restaurant LONG list.
THE BASICS
The Chefs' Warehouse, Inc. distributes specialty food products to a select element of the restaurant industry. It focuses on serving the needs of independent chefs/owners/operators of menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, cruise lines, casinos, and specialty food segments. The Company's product portfolio includes artisan charcuterie, specialty cheeses, unique oils and vinegar, truffles, caviar, chocolate, and pastry products. The firm operates through East Coast, Midwest, and West Coast segments. It also offers a line of center-of-the-plate products, including custom-cut beef, seafood, and hormone-free poultry, and broad-line food products, such as cooking oils, butter, eggs, milk, and flour. The Company was founded by Christopher Pappas, John D. Pappas, and Dean Facatselis in 1985 and is headquartered in Ridgefield, CT.
RECENT PERFORMANCE
CHEF reported 3Q21 Non-GAAP EPS of $0.12 beats by $0.04; GAAP EPS of $0.09 beats by $0.01. Revenue of $484.3M (+90.6% Y/Y) beats by $34.22M. Organic sales increased $213.7 million, or 84.2%, versus the prior-year quarter. Adjusted EBITDA was $23.4M for the third quarter of 2021 compared to negative adjusted EBITDA of $4.9M for the third quarter of 2020. Due to the continued uncertainty regarding the pace of broader economic recovery and the timing of events and travel-related business activity, the Company will not be guiding 2021 at this time.
THESIS POINTS
CHEF is a lagging recovery play that will continue to benefit from reopening, especially country clubs, hotels, caterers, culinary schools, cruise lines, casinos, and specialty food segments, about one-third of the business. From a Hedgeye factor perspective, CHEF a LONG in QUAD 2 and into the potential transition into QUAD 1, where the Company sees the most robust performance. The Company has been active with M&A and has signed that there is more to come. The Company is currently trading at a premium to the peer group on the current fundamental trends. Still, I also see a CEO and largest insider holder that is 61 and wondering is it time to sell the Company?
More details to come
