Callouts & quotes from 662+ activist slides

"Despite a massive revenue decline of $4.8 billion from 2007 to 2012, total G&A expense has actually increased, causing G&A expense as a percentage of revenue to increase from 4.2% to 6.3% and Adjusted EBITDA margins to decline from 5.3% to 3.1% over the same time period."

"ESG & Climate segment Adj. EBITDA Margins have increased 720bps from Sept 2022 – 2023 with headcount having grown from under 1,000 to approximately 1,300 according to the Head of ESG. While Retention Rate declines and revenue growth slows, we expect margins to contract."

"In a base-case scenario in which member owner sharebacks gradually rerate close to the average market rate, and in which PINC’s FY22 EV/EBITDA multiple contracts by ~35% as the economics of the business are reset, Spruce Point sees close to 70% downside in PINC shares."

"Assuming 75% of G&A is allocated to the Real Estate and Franchise business, an allocation that McDonald's management indicates is conservative, we indicate below the EBITDA for McOpCo and the Real Estate and Franchise businesses, as depicted in the reported financials."

"Avery is more expensive and levered than it appears. We believe Avery inflates Adjusted EBITDA and EPS with dubious restructuring add-backs. In addition, it obscures reporting of operating leases, which are also debt, and ignores pension and environmental liabilities."

"Amcor trades in excess of its long-term forward EV/EBITDA and in-line with its forward EV/Sales multiple. In the context of evidence that both Amcor and Bemis are experiencing declining revenues, we believe Amcor should trade at a multiple below its long-term average."

"As GAAP gross margins have declined, the Company's poor financial performance is shown by its negative operating and net margins. However, the Company's non-GAAP adjustments create the illusion of Sunnova being a profitable business with high Adjusted EBITDA margins."

"We observe that CHD’s related purchases from Armand mysteriously dropped to a 6.5yr low at $14.6m and management fees (benefiting EBITDA through a reduction to SG&A) has increased even while underlying performance from these entities doesn’t appear to be improving."

"We believe Huntsman is deliberately including the positive impact of M&A in order to overstate its 2021 Adjusted EBITDA results by $92 million, in order to fool shareholders into believing its FALSE narrative of almost having achieved its 2018 Investor Day target."

"To maximize the value of Dye & Durham, the Board needs to incentivize management to optimize its return on invested capital, focus on organic growth and consider acquisitions in a measured and disciplined way – instead of trying to hit an arbitrary EBITDA target."

"FBHS currently trades ~9.7x LTM EBITDA and ~16.5x LTM cash earnings. If no recovery occurs, FBHS is trading at ~10x our estimate of cash earnings. If a recovery occurs, FBHS trades at ~4x to 7x our estimates of cash earnings, depending on the strength of recovery"

"BHP claims its petroleum business provides unique risk-mitigation diversification benefits. Over the last ten years, however, BHP’s EBITDA trend has shown noticeably higher volatility than Rio Tinto’s – the precise opposite of what diversification should provide"

"There is a $229m difference between the 2011 Adjusted EBITDA reported by Axalta and DuPont, for its Coatings business (same company, same year). We believe much of the difference is excess corporate expense, which in our view, burdens all of DuPont’s businesses"

"There is a $229m difference between the 2011 Adjusted EBITDA reported by Axalta and DuPont, for its Coatings business (same company, same year). We believe much of the difference is excess corporate expense, which in our view, burdens all of DuPont’s businesses"

"McDonald’s company-operated restaurants (“McOpCo”) appeared to contribute ~50% of total EBITDA. However, once adjusted for market rent and franchise fees, McOpCo actually constituted ~20% of total EBITDA, with Brand McDonald’s contributing ~80% of total EBITDA."

"We are valuing legacy HSIC at a one turn discount to its current long-term EV/ EBITDA multiple of ~13.0X. We think a slight discount to its current valuation is warranted since the legacy HSIC will no longer be exposed to the higher growth animal health sector"

"In 2004, McDonald's company-operated restaurants appeared to contribute 46% of total EBITDA. However, once adjusted for a franchise fee and a market rent fee, McOpCo constituted only 22% of total EBITDA, with Brand McDonald's contributing 78% of total EBITDA."

"TCM's and Cartoon Network's 2005E EBITDA margins are estimated to be towards the high end of the profitability of other cable networks. TNT's and CNN's estimated 2005E margins of approximately 39% and 35% respectively, fall in the mid-to low end of the range."

"At a minimum, this indicates that iHub has not been driving accelerated cost savings since inception. Furthermore, this savings doesn't reconcile with another claim made by the CEO that iHub contributed 40% (or approximately $25m of 2022 EBITDA contribution)."

"Agrium's other business, agricultural distribution ("Retail"), accounts for 30%+ of total EBITDA, ~50% of total value and $4bn+ of acquisition capital, yet Agrium does not have a single independent director with any relevant distribution industry experience."

"Spruce Point finds clear that Saputo is struggling in Europe, and recently made modifications to its competition discussion that suggests a loss of share. We observe that the percentage of retail sales are in decline, and that EBITDA margins are declining."

"Bob Evans continues to be viewed as a restaurant company by investors and there are no packaged foods analysts following Bob Evans, even though almost half of Company EBITDA is generated by the growing and highly-profitable BEF Foods packaged foods segment"

"Spruce Point believes DY's margins are not likely sustainable and may have benefited from various actions that may be difficult to continue. As further evidence of our concern, management has walked back talk of what its long-term EBITDA margin should be."

"TASK is the only company among its peers that we could identify trying to sell investors on COVID-19 related expense adjustments to improve EBITDA and EPS. Analysts aren't asking any questions or pushing back on what we believe are aggressive adjustments."

"In this illustration, we assume the JV takes on initial leverage of 5.8x net debt / EBITDA, or $6.9 billion(1), which enables Macy’s to repay debt at the parent-level in order to achieve a target leverage ratio of 3.5x Adjusted Debt / EBITDAR at the OpCo."

"Miraculously, there are still sell-side analysts recommending to buy Zillow’s stock despite the Company eliminating its 2025 revenue target, lowering 2024 revenue guidance and consensus estimates for Adj. EBITDA being way below management’s 2025E target."

"Spruce Point believes omitting a clearly identifiable 10.71% minority interest in a principal subsidiary undermines the reliability of the Company’s financial reporting and risks overstating EBITDA, profits, and cash flow available to SGHC shareholders."

"We are valuing legacy HSIC at a one turn discount to its current EV/ EBITDA multiple of ~13.0X. We think a slight discount to its current valuation is warranted since the legacy HSIC will no longer be exposed to the higher growth animal health sector"

"Monster is trading in-line with its 5-year EV / NTM EBITDA multiple despite our belief that its business has fundamentally deteriorated over this time. As a result, we believe it should be trading at a discount to its long-term average of 23x EBITDA."

"We have presented our belief, supported by interviews with former executives, that EBITDA in not an appropriate metric to analyze Sunnova. Despite this, the sell-side chooses to focus on EBITDA to evaluate NOVA's financial performance and valuation."

"Once adjusted for market rent and franchise fees, McOpCo would be contributing only 14% of total EBITDA-Maintenance Capex, with the Real Estate and Franchise business contributing 86% of total EBITDA-Maintenance Capex ,based on FY 2005E projections."

"EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. It measures the business profitability. We use EBITDA because it removes discretionary accounting and financing decisions that often vary based on management choices."

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl,"(1) a level that even VLO (best-in-class operator) is not expected to achieve"

"In 2014, there was no disclosure about significant asset disposal gains in Other Operating Income, leading us to believe that substantially all of the gains were excluded from Other Operating Income, and therefore are included in Casino's EBITDA."

"We find Sunnova reports metrics that are not aligned with those its peers report. Spruce Point has concerns about the quality and relevance of these metrics including Adjusted EBITDA, Adjusted Operating Expenses and Adjusted Operating Cash Flow."

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl," a level that even VLO (best-in-class operator) is not expected to achieve"

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl," a level that even VLO (best-in-class operator) is not expected to achieve"

"70% of AMR's Annual Incentive Bonus is tied to EBITDA and Cost of Coal Sales Per Ton. As we pointed out earlier, neither metric incorporates the cost of operating its key DTA asset that facilitates over $1.7 billion of AMR's export coal sales."

"By factoring in the U.K. pension debt, we estimate Saputo's true Net Debt / EBITDA leverage to be 3.5x. Looked at another way, with over $4.5 billion in net debt, each manufacturing facility is indebted $68m and every employee by almost $240k."

"Spruce Point believes it is a huge red flag that Bunge failed to provide revenue projections for Viterra in its proxy statement which it likely had formulated if it were able to provide Adj. EBIT, EBITDA and Unlevered Free Cash Flow estimates."

"Spruce Point begrudges Rollins’ cavalier treatment that an $8 million civil fine related to accounting management charges should be added to EBITDA and believes it should increase investors’ skepticism about its financial reporting practices."

"To avoid admitting a large miss, management has recently started saying that "to get to its mid-cycle EBITDA Phillips 66 needs adjusted gross margin of $14.50/bbl," a level that even Valero (best-in-class operator) is not expected to achieve"

"Ambry Genetics was acquired at a notable discount relative to other advanced genetic and molecular diagnostic testing companies, despite the entire peer group, including Ambry, showing double-digit sales growth and EBITDA margins above 10%."

"Kratos is trading at peak valuation on the inflated belief that “this time is different” and that its aspirations in the heavily promoted unmanned systems (aka: Drones) will drive nearly $800m of revenues and near record 10% EBITDA margins."

"To avoid admitting a large miss, management has recently started saying that “to get to its mid-cycle EBITDA Phillips 66 needs adjusted gross margin of 14.50/bbl,” a level that even Valero (best-in-class operator) is not expected to achieve"

"Management compensation is a significant percentage of EBITDA and has been immune to Kratos’ struggles and poor performance. Among small cap aerospace and defense contracting peers, Kratos’ management is excessively paid relative to EBITDA"

"If SGHC is improperly consolidating 100% of Raging River’s financial results rather than 89.29%, we estimate it may be overstating 2025E EBITDA by approximately $30.7 million which represents the 10.71% non-controlling (minority) interest."

"Given our concerns about the reliability of Aerojet’s Adjusted EBITDAP, we believe the most conservative way to value the Company is on its revenues, which we can estimate with insights from the defense budget and current rocket programs."

"The main thing that confuses me is when companies on the front pages of their annual report always show any adjusted earnings or EBITDA and do not show what really interests me as a shareholder, namely EBIT and what is there after taxes."

"AMC's EBITDAR to Rent is well below O's corporate average of 2.7x and has weakened significantly in the most recent YTD period. The equity markets have already identified the theater level risk: AMC's stock is down ~64% from January 2017"

"PBF has 60% capacity coming from disadvantaged markets. This leads to the Company being a high-cost peer with almost no EBITDA during 2024 (mid-cycle approximation). As such, PBF trades at a substantial discount to other public refiners."

"PBF has 60% capacity coming from disadvantaged markets. This leads to the Company being a high-cost peer with almost no EBITDA during 2024 (mid-cycle approximation). As such, PBF trades at a substantial discount to other public refiners."

"Legacy MDA missed its own revenue and EBITDA estimate by a staggering $115m and $19m, respectively. MAXR also made an accounting change to boost DigitalGlobe’s sales and EBITDA, so the disappointment was even worse than we illustrated."

"Adopt an improved equity compensation and incentive scheme based on clear and transparent KPIs that are disclosed to investors (e.g. ROE, ROIC, operating profit, operating profit margin, debt to EBITDA and/or total shareholder return)"

"The Company has diluted shareholders at a rate of 20%+ p.a. and has generated negative cumulative free cash flow throughout its public history. This has resulted in just $0.53 cents of “Adjusted” EBITDA per share to existing holders."

"Based on recent precedent M&A transactions for property software and analytics companies and clear evidence of challenges with the transaction, we believe MSCI wildly overpaid for RCA at approximately ~13x and 48x revenue and EBITDA."

"At an 8.0x valuation multiple, the non-HDD business valuation is JPY 888 billion, and when combined with the HDD business at 7.5x, our total estimate for enterprise value is JPY 1,420 billion or a combined EV/EBITDA multiple of 7.7x."

"In the instances where HMA missed the low end of their guidance range, the average magnitude of difference between reported metrics relative to the midpoint of the initial guidance range averages to be -8% for EBITDA and -14% for EPS"

"Based on the assumptions below, the Pro Forma combined Company would have $473mm of '08E EBITDA without any cost savings. Assuming cost savings, the Pro Forma combined Company would have $633mm of EBITDA and is trading at 6.3x EBITDA"

"We believe the Street has failed to capture accounting gimmicks to boost CHD’s 2018 EBITDA. Analysts simply take CHD’s recent annual results at face value, and use it as a base-line for future year EBITDA growth and margin expansion."