Moran Foods LLC

In 2021, we believe the company's shift to become a wholesale platform will reduce its overhead expense and capital expenditure (capex) requirements. That said, we expect the reduction in its number of corporate stores and new retail partner business model will cause its revenue to decline in the long term. We forecast that Moran Foods' same-store sales trends will normalize in 2021 due to a pullback from the unique and partially pandemic-related rise in demand in 2020. We forecast the company will moderately increase its EBITDA on an improvement in its S&P Global Ratings-adjusted EBITDA margin (in the low-3% range) and a drop in its leverage (to the mid- to high-7x range) over the next 12 months. The negative outlook

...We continue to forecast positive business trends for Moran Foods (doing business as Save-A-Lot) amid the prolonged pandemic environment as it executes on its ongoing transformation plan and stabilizes its business through 2021. Moran Foods successfully completed its recapitalization in April 2020, though it is still reorganizing its retail operations to become a wholesale distributor. We believe the prolonged headwinds stemming from the COVID-19 pandemic and economic uncertainty in 2020 delayed the company's transformation plan and now expect it to complete its store conversion and business transition before the end of 2021. After it completes its transformation, Moran Foods will be a wholesale platform serving about 915 retail partner stores, while keeping 21 corporate retail stores for testing and demonstration purposes. We continue to forecast positive sales momentum for the company during the pandemic; however, we see the potential for execution risks and performance volatility as it...

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