CH

Chobani Financial Model

• Greek yogurt: thick/creamy, 3x milk per cup vs. traditional, more protein, fewer calories, natural ingredients
• Chobani introduced the Greek yogurt category in the US in 2007; remains market-leader with ~16–19% dollar share of total yogurt
• NPS of 28 vs. Dannon –1, Yoplait –3, Oikos 6; second only to premium niche player Fage (37)
• Highest velocity (sales per distribution point) of any yogurt brand - 14% above nearest competitor
• Strong innovation pipeline (e.g. Pumpkin Spice - fastest-selling product launch in company history; 51k cases/week at peak)
• Founded 2005 by Hamdi Ulukaya; $800K SBA loan to buy abandoned Kraft factory in NY

• Total US yogurt retail spend: ~$6.5B in 2013 ($3.4B traditional + ~$3.1B Greek)
• Category CAGR 2001–2013: ~9% total yogurt; Greek yogurt subcategory CAGR far higher - grew from 2% of spend in 2007 to 48% in 2013
• Greek yogurt dollar CAGR 2009–2013: ~77%; traditional yogurt declining at –2%
• Chobani market share of total yogurt (dollar): ~16.8% as of Oct 2014, recovering from 16.3% trough in Sep 2014
• SAM/SOM not explicitly sized beyond the $6.5B US retail category; no international TAM stated

• Single product category: branded Greek yogurt sold in retail grocery
• Key SKU formats: 5.3oz single-serve cups, 4-pack and 8-pack multipacks, 2% and 0% fat variants, flavored (fruit-on-bottom, Flip, Limited Batch seasonal)
• Channels: major US grocery chains - Walmart (3,423 → 5,542 distribution points projected), Kroger (3,142 → 3,799), Target, Costco
• No pricing per unit disclosed; revenue from volume × price per case
• Revenue is volume-driven: production capacity at Idaho facility is the primary growth constraint (20% utilization at deal close)
• No subscription, licensing, or DTC revenue mentioned

• Revenue by year ($ millions) - annual sales chart vs. Google/Facebook for comparison:
• Year 3 after first sale (2009): $71M
• Year 4 (2010): $86M (vs. Facebook $150M, Google $244M)
• Year 5 (2011): $265M
• Year 6 (2012): $439M (vs. Facebook $550M, Google $629M)
• Year 7 (2013): $915M
• Year 8 (2014 est.): $1,000M+ (>$1B stated)
• 2013 quarterly EBITDA: Q1 $21M, Q2 $20M, Q3 –$28M, Q4 –$87M (full-year EBITDA approximately –$74M)
• 2013 quarterly net debt: Q1 $534M, Q2 $579M, Q3 $643M, Q4 $708M
• Chobani dollar share of yogurt market (Nielsen 4-wk periods):
• Jul 2013: 18.3%; trough Sep 2014: 16.3%; Oct 2014 (most recent): 16.8% - recovering
• Production - NY plant: 370M lbs actual vs. 420M lbs capacity (89% utilization)
• Production - Idaho plant: 129M lbs vs. 644M lbs capacity (20% utilization)
• Annualized spend base (1H 2014 basis): $1,352M total - breakdown: Milk $404M, Fruit $140M, Packaging $131M, Indirect Procurement $84M, Other Plant Ops $179M, Warehousing & Logistics $91M, SG&A $255M, Capex $68M
• Procurement savings: $10M saved to date; target $30M
• Total waste identified at Twin Falls: $76M (Finished Goods $33M, Raw Material $18M, Milk Yield $12M, Product Donations $13M)
• Unfulfilled orders ("cuts"): 1H 2014 avg 80k cases/week → declining to 2,446 cases in week 41
• Chobani velocity: 5,500 vs. Dannon 4,042, Yoplait 3,472, Fage 4,828, Private Label 2,582
• Total distribution points: 3,150 vs. Dannon 6,309, Yoplait 5,865 (significant distribution upside)

• Gross margin at deal close: <20%; target: 30%
• EBITDA margin at deal close: <5%; target: 15%
• Key COGS driver: milk is largest cost at $404M of $1,352M spend base (30% of total costs); milk price per CWT rose from $16.77 (2012) to $19.18 (2013) to $23.73 (2014 YTD)
• Competitor combined media spend (Danone/Yoplait/Fage): grew $18M → $50M → $131M (2011–2013)
• Idaho facility total capex: $530M; NY facility + Idaho = ~$1B of capex in the ground
• No CAC, LTV, or payback period disclosed (CPG brand, not DTC)

• Main competitors: Dannon (parent Danone), Yoplait (General Mills), Fage, Oikos (Danone), Private Label
• Combined competitor media spend tripled 2011–2013 ($18M → $131M)
• Chobani moat: NPS #2 in category (28), highest in-store velocity, proprietary brand recognition as the Greek yogurt category creator, world's largest yogurt plant (Twin Falls, 644M lb capacity), strong innovation pipeline
• Weakness acknowledged: lower distribution points than Dannon/Yoplait; share was declining through mid-2014

• Founder: Hamdi Ulukaya (CEO, retains controlling stake)
• TPG brings: industry/brand knowledge, ops capabilities, structuring expertise
• This is a PE deal update deck, not a fundraising deck. No new capital ask. Deal terms:
• Investment closed April 2014: $671M total (TPG VI $336M + TOP II $168M + TOP III $168M)
• Structure: TPG Second Lien Term Loan $750M + Bank First Lien Debt $405M (revolver fully drawn + $18M priority) + TPG/Founder equity (residual)
• 2nd lien terms: L+400 cash / 800 PIK interest, 6-year maturity, non-call 2
• TPG ownership: 35% fully diluted
• Use of funds: balance sheet restructuring + liquidity injection; supports Idaho facility ramp, procurement improvements, sales team build-out

• Archetype + why: PE portfolio company 3-statement operating model with leveraged capital structure / debt schedule. This is not a startup - it's a PE-owned CPG company with $1B+ revenue, complex capital structure (first lien bank debt + TPG second lien), significant operating leverage from underutilized manufacturing capacity, and a clear ops improvement thesis (margin expansion from <5% → 15% EBITDA). The model must track the debt waterfall, PIK interest accrual, and covenant headroom alongside the P&L and cash flow.

• Forecast horizon & granularity: 5-year annual model (2014–2019) with quarterly detail for Year 1 (2014) to reflect the rapid operational improvement trajectory already visible in cuts/waste/procurement data. Income statement, balance sheet, cash flow statement.

• Key drivers & assumptions:

*Revenue:*

• Volume (millions of lbs produced and sold): Idaho at 20% utilization (129M lbs) in 2013; management plan shows 372M lbs (2014) → 508M → 651M → 804M → 943M lbs by 2018. Use as base case.
• Price per lb / revenue per case: implied ~$1.08–1.12/lb based on ~$1B revenue vs. ~420M lbs NY production run-rate; refine when gross revenue is disclosed
• Market share: 16.8% Oct 2014; stabilize then recover to 18–19% as distribution expands
• Distribution point expansion: Walmart 3,423 → 5,542; Kroger 3,142 → 3,799 by Jan 2015

*COGS / Gross Margin:*

• Milk cost: $404M annualized (2014); milk price Class II $23.73/CWT as of mid-2014. normalize toward long-run average; model sensitivity to ±$3/CWT
• Fruit: $140M annualized
• Packaging: $131M annualized
• Other plant ops: $179M annualized
• Procurement savings: $10M realized; target $30M; phase in $20M incremental over 12–18 months
• Waste reduction: $76M identified at Twin Falls; 50% recoverable within 2 years
• GM% target: 30% (from <20% at deal close)

*EBITDA / Opex:*

• SG&A: $255M annualized (2014); grows with revenue but at slower pace as fixed cost leverage kicks in
• W&L (warehousing & logistics): $91M annualized
• EBITDA% target: 15% (from <5% at deal close)

*Capital structure / debt:*

• Bank first lien: $405M; LIBOR + typical first lien spread ~250bps; amortizing per credit agreement
• TPG second lien: $750M; L+400 cash / 800 PIK; 6-year maturity (2020), non-call 2
• PIK interest accrual: LIBOR ~0.25% (2014) → TPG cash coupon ~4.25%, PIK ~8%; model both on outstanding balance
• Capex: $68M annualized (2014 spend base); declining as Idaho ramp completes; maintenance capex ~$30–40M/yr long-run
• D&A: ~$80–100M/yr given $1B+ capex in ground; refine with asset base detail

*Valuation:*

• Exit comps: EV/LTM Revenue 2.7x–3.9x (transaction comps); 2.4x–4.6x (public comps)
• Implied Chobani EV range: $2.7B–$5.1B
• target exit in 4–5 years at 3.0–3.5x revenue = ~$3.5B–$4.5B EV on $1.2B projected revenue

• Scenarios (Base / Bull / Bear - which variables flex):
• Base: Idaho ramps to management plan (~372M lbs 2014 → 943M lbs 2018); GM expands to 28%; EBITDA 12–13%; milk cost normalizes; exits at 3.0x revenue
• Bull: Distribution fully recovers to prior peaks; market share back to 18.5%; procurement savings hit $30M target; EBITDA 15%; exits at 3.5x revenue
• Bear: Idaho ramp stalls (stays below 50% utilization through 2016); milk costs remain elevated; market share erodes further below 16%; EBITDA stays sub-8%; debt covenant pressure; exits at 2.5x or requires recap

• Required sheets / outputs:

1. Assumptions & inputs (all drivers tagged DECK or ASSUMED)
2. Income statement (annual 2014–2019, quarterly 2014)
3. Balance sheet
4. Cash flow statement
5. Debt schedule (first lien amortization, second lien PIK accrual, interest waterfall)
6. Idaho facility volume ramp tracker (lbs produced, % utilization, revenue contribution)
7. Margin bridge (waterfall: actual EBITDA → target EBITDA, showing procurement savings, waste reduction, fixed cost leverage)
8. Valuation / returns (EV/Revenue comps, TPG MoM / IRR at various exit years and multiples)
9. Scenario toggle (3 scenarios on key variables)