KeHE Distributors Holdings LLC

Overview Key strengths Key risks Expanding presence in the on-trend and growing specialty, natural and organic (N&O), and fresh foods grocery channels. Niche player in the intensely competitive wholesale grocery industry. Modestly positive annual free operating cash flow (FOCF) generation. High customer concentration, with top three customers accounting for approximately 50% of sales. Historically aggressive financial policy, though this has moderated. The company?s S&P Global Ratings-adjusted debt to EBITDA declined to 4.7x as of the end of fiscal year 2022 (ended April 30, 2022) due to improved operational efficiencies, the benefits from its past acquisitions, and a continued expansion across all of its channels. Prior to the pandemic, KeHE achieved solid top-line growth, with its net sales increasing by a

...KeHE reduced its leverage by more than two turns between fiscal year 2018 and fiscal year 2021. The company's S&P Global Ratings- adjusted debt to EBITDA declined to 4.7x as of the end of fiscal year 2022 (ended April 30, 2022) due to improved operational efficiencies, the benefits from its past acquisitions, and a continued expansion across all of its channels. Prior to the pandemic, KeHE achieved solid top-line growth, with its net sales increasing by a double-digit percent compounded annual growth rate (CAGR) over the prior three years ended 2019, on continued changes in consumer tastes and the rising preference for natural and fresh products. In fiscal year 2022, the company expanded its revenue at a more moderate pace on lower volumes because of a partial normalization in consumer behavior amid a shift in consumer preferences toward dining away from home. However, we expect KeHE will continue to focus on growing its customer pipeline, optimizing its distribution routes, and improving...

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