Q&A Call Today
We will explore the following topics:
- Discuss the pushback and feedback from our recent Black Book calls.
- Discuss trends that we are seeing during 4Q22 ahead of earnings.
- Discuss the most common and noteworthy inbounds we have received in the past month.
- Revisit changes to our Position Monitors.
- Provide updates on some of our best ideas.
- Discuss recent trend changes in consumer spending.
CALL DETAILS:
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Flu monitor (PRGO)
The CDC estimates that there have been at least 18 million illnesses from the flu this season through the week ended December 17. The flu test positivity rate is now 24.4% compared to 3% a year ago. The flu had surged since Thanksgiving but is declining in most areas. The cumulative hospitalization rate was more than six times higher than the highest cumulative in-season hospitalization rate observed for this week since 2010-11.
Perrigo’s Q4 is mostly set for the cough & cold season as orders are already in and production is maximized, especially for liquid medicines. Most retailers are short of cough & cold medicine. A larger or longer cough & cold season would be seen in Q1 results as retailers reorder more inventory.
Making the dictionary (STKL)
The Merriam-Webster dictionary added oat milk for 2022. Its definition “a liquid made from ground oats and water that is usually fortified (as with calcium and vitamins) and used as a milk substitute. It seems like a lagging indicator of its popularity, but oat milk still has a long way to go to supplant almond milk as the #1 plant-based milk. Sales of refrigerated oat milk grew 25.2% in the 12-week period ended October 30. Unit sales increased by 7.5%. Shelf stable oat milk sales increased by 35.5%. In comparison, plant based milk sales increased by 10.5% with units down 3% over the same period. Refrigerated almond milk sales increased 5.5% with units down 7.5% while soymilk sales decreased 0.7% with units down 9.5%.
Sale-leaseback (APPH)
AppHarvest entered into an agreement with Mastronardi for the sale-leaseback of its indoor farm facility in Berea, Kentucky for $127M. The initial lease rate will be 7.5% over ten years with four 5-year renewal terms. Mastronardi is also AppHarvest’s exclusive marketing and distribution partner. Some of the proceeds will be used to pay back the bridge loan from Mastronardi and the first two years of rent.The transaction improves the company’s balance sheet. AppHarvest has not had difficulty finding lenders, the problem has been the profitability of the business and the cash burn rate.
