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Village Super Market, Inc. Debt jumped on 766% and EBITDA surged on 37.8%

10/07/2020 • About Village Super Market, Inc. ($VLGEA) • By InTwits

Village Super Market, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • EBITDA Margin is relatively stable: 4.7% in FY2020 vs. 3.8% in FY2019 vs. 4.2% in FY2016
  • Village Super Market, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 37.4%
  • CAPEX is quite volatile: $54m in FY2020, $28m in FY2019, $35m in FY2018, $28m in FY2017, $20m in FY2016
  • The company has business model with low profitability: ROIC is 7.5%
  • It operates with medium-size leverage: Net Debt/EBITDA is 3.6x while industry average is 3.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased on 9.8%. Revenue growth showed acceleration in FY20Q4 - it increased 19.9% YoY. During FY2016-FY2020 Revenue growth bottomed in FY2017 at -1.9% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.96 pp from 3.8% to 4.7% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2018 at 3.6% and was growing since that time.

Gross Margin showed almost no change in FY2020. Gross Margin grew at 0.23 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.63 pp from 24.0% to 24.7% in FY2020. SG&A as a % of Revenue grew at 0.41 pp per annum in the last 5 years.

Net Income margin showed almost no change in FY2020.

Investments (CAPEX, working capital and M&A)

In FY2020 the company had CAPEX/Revenue of 3.0%. Village Super Market, Inc.'s CAPEX/Revenue increased slightly on 1.3 pp from 1.7% in FY2017 to 3.0% in FY2020. Average CAPEX/Revenue for the last three years was 2.3%. The company invested a large share of EBITDA (63.8%) to CAPEX.

Return on investment

The company operates at low ROIC (7.5%) and ROE (7.7%). ROIC decreased on 2.0 pp from 9.5% to 7.5% in FY2020. ROE decreased slightly on 0.55 pp from 8.2% to 7.7% in FY2020. ROIC stuck to a declining trend at -1.7 pp per annum in FY2016-FY2020.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 4.9x. Net Debt / EBITDA jumped on 4.5x from -0.8x to 3.6x in FY2020. Debt surged on 766% while cash surged on 10.4%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2019 at -0.8x.

Village Super Market, Inc. has no short term refinancing risk: cash is higher than short term debt (424.5%).

Valuation and dividends

The company's trades at EV/EBITDA 6.4x and P/E 9.5x.

Management team

Village Super Market, Inc.'s CEO Robert Sumas has spent 2 years with the company. Village Super Market, Inc.'s CFO is John L Van Orden. John L Van Orden has 5 years tenure at the company.

Financial and operational results

FY ended 07/25/2020

Village Super Market, Inc. ($VLGEA) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit44543744345750610.9%
Net Income2523252625-2.3%
Balance Sheet
Short Term Debt1111262,370.5%
Long Term Debt44434848396730.1%
Cash flow
Revenue growth3.2%-1.9%0.7%1.8%9.8%
EBITDA growth2.3%-4.7%-10.4%6.0%37.8%

Gross Margin27.2%27.2%27.4%27.8%28.1%0.3%
EBITDA Margin4.2%4.1%3.6%3.8%4.7%1.0%
SG&A, % of revenue23.0%23.2%23.8%24.0%24.7%0.6%
Net Income Margin1.5%1.4%1.6%1.6%1.4%-0.2%
CAPEX, % of revenue1.2%1.7%2.2%1.7%3.0%1.3%

Net Debt/EBITDA-0.6x-0.7x-0.8x-0.8x3.6x4.5x

Village Super Market, Inc. ($VLGEA) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
Revenue407437458501 1.5%2.2%15.9%19.9%
EBITDA15152728 -4.0%-17.3%105.9%86.3%
Net Income32119 -59.1%-73.5%124.4%37.2%
Balance Sheet
Cash787590112 -12.3%-30.5%-14.0%10.4%
Short Term Debt12131226 690.8%1,275.3%1,163.6%2,370.5%
Long Term Debt128128125396 162.1%165.3%161.1%730.1%
Gross Margin27.9%27.0%28.3%28.9% -0.0%-0.5%0.4%1.1%
EBITDA Margin 3.7% 3.3% 6.0% 5.6% -0.2%-0.8%2.6%2.0%
Net Income Margin 0.6% 0.5% 2.4% 1.8% -0.9%-1.3%1.2%0.2%

Peers in Food Retail

Below you can find Village Super Market, Inc. benchmarking vs. other companies in Food Retail industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.