Flu down under (PRGO)
Australia and New Zealand had their most severe flu season in five years. Australia has a robust flu-tracking system and their flu season offers a preview of what could be in store for the Northern hemisphere. The most prevalent strain circulating in Australia has been influenza A (H3N2) a strain that is included in this year’s influenza vaccine.
In the two weeks ended September 25, 9.9% of calls to the Healthdirect helpline have been related to influenza like illnesses, similar to the prior two-week period.
Perrigo would benefit from a typical flu and cough/cold season as retailers last year still had inventory from the 2020-2021 non-existent flu season.
Fewer miles driven (BJ, CASY)
45% of Americans say they are driving less than they did before the pandemic according to a survey released by NACS-The Association for Convenience and Fuel Retailing. 60% of drivers say that gas prices are the main reason they are driving less than they did pre-pandemic, up from 44% in the February survey. At the time of the most recent survey gas prices were roughly $3.50 per gallon nationally, 20 cents higher than at the time of the February survey. 21% of Americans say they are driving more than before the pandemic. 54% of drivers said they went inside the store the last time they purchased gas, down slightly from 58% in March. Drivers at convenience stores were more likely to go inside the store than at big box stores (62% vs. 47%). The most commonly cited purchase inside a convenience store was drinks at 44%, followed by snacks at 30%. While gallons purchased at club stores are up significantly (+18% for BJ in Q2), visits inside the clubs weren’t up nearly as much. Still, gas savings help the consumer quickly get a return on their club membership. At Casey’s, same store gasoline gallons decreased 2.3% in the most recent quarter, but inside same store sales rose 6.3%. The C-stores aren’t missing all of the visits they have lost.
Utz CEO transition (UTZ)
Utz Brands announced that its CEO, Dylan Lissette, is retiring and becoming Executive Chairman on December 15. Howard Friedman, Post Holdings current COO will succeed Dylan Lissette and become CEO. In Q2 of 2023, Dylan Lissette will become Non-Executive Chairman. The company said the CEO transition was contemplated at the time of the SPAC merger. Dylan Lissette has been CEO of Utz since 2013. Utz’s evolution to a salty snack portfolio of brands has largely been under Dylan Lissette. Mr. Lissette married into the Rice family ownership of Utz Brands. Roger Deromedi, the current Chairman, will become the lead independent director.
Cary Devore has been the CFO since 2019 before being promoted to COO a year ago. He was tasked with driving revenue growth, productivity, and operational excellence as well as spearheading acquisitions. He appears to be passed over for Howard Friedman, who has been COO of Post Holdings for the past year. Previously, Howard Friedman was CEO of Post Consumer Brands from 2018 to 2021. Prior to joining Post, he spent 20 years at Kraft Heinz.
Management reaffirmed their outlook for the year which was last updated on August 11 for sales growth of 13-15% and EBITDA growth of 2-5%. It is wrong to think the SPAC merger and now the retirement of the CEO was a sale and exit by the controlling family. 90% of the existing equity ownership was retained during the SPAC merger. 90% of the Lissette-Rice stock ownership is derived from The Rice Family Federation. The insiders still own their positions and they went outside the company for a new CEO. We do not expect a significant change in strategy. Utz Brands is on our long list.
