Marston's Share Discussion Threads

[rmillaree] 18/10/2024 13:16

So despite the free cash flow being mythical and the targets being fluff,

my point was that the proof of the pudding is the year end accounts detailing the reduction in debt - more slightly skeptical than thinking its fantasy.

Note per my stocky history forecasts for both this years and next years eps has been falling for the last 12 months - so their track record of delivering above expectations or at expectations isnt brilliant - its excatly then opposite. 12 months ago current year eps expectations were 7.2p eps and we are now at 5.8p eps. for next year thats dropped from 8.7p to 8.1p. I havent noticed any recent upgrades.
Note as recently as july we were expected 6.8p eps.

In the same time wetherspoons have upped their expectyations for this year from 47p eps to 52p eps and had similar upgrade to next year.

perhaps they have glas full of pedigree ale when they make the forecasts at te start of the year - will Tim Martin is sat there with half empty cup of coffee!!

[tygwyg] 18/10/2024 13:00

A recording was supposed to be available???Only slides made available so far on the website.What q&a don't they want to give wide audience to? Any in person accounts?

[wigwammer] 18/10/2024 12:44

Ah. I see millaree. So despite the free cash flow being mythical and the targets being fluff, you think the shares are probably going up. Jolly good - I agree with your conclusion.

[skinny] 18/10/2024 11:53

Oh well, as its Friday -

Cheers!

[rmillaree] 18/10/2024 11:07

2) it appears circa £30m fcf/net debt reduction has come from operations this year.

I await the results with interest - i supect it will be mesy this year


One thing which is certainly not same old is the price you are paying - a substantial discount to book, and an absolute price level not seen in its pre covid history.

the business is a far poorer buisness than was the case pre covid - the level of risk if off the scale compared to pre covid.

pre covid they were making £85 mill net profit - yes debt was significant higher but their ability to pay down debt quicker was far superior (they chose not to pay down debt) - its clear to me its a much riskier business now with lower profits even though debt is down a bit. IMHO the pre covid company deserved the higher rating it had due to the profits being significantly higher.

Note i am not 100% negative here - £50 mill per year is tidy sum that they can use to pay debt add future profits - its just an ultra risky play in a sector where there will always be some future event that impacts things - if they needed to go back to market cap in hand then at lower level dilution ould be much larger. I am not saying this wont go back to a pound - it can do just that to me they havent really proved they are excellent operators (unlike spoons)

I would say though it is currently more rosy than bleak

[wigwammer] 18/10/2024 09:41

Mill - if promises don't mean owt then I don't think anything they say is likely to appease you very much. I agree actions speak louder than words - 1) net debt HAS fallen aggressively and they repeatedly commit to further deleveraging.. 2) it appears circa £30m fcf/net debt reduction has come from operations this year.. 3) £30m post tax is likely close to £40m pre tax ie. not far from the £50m fcf they anticipate now - so perhaps not quite the mythical target you describe... One thing which is certainly not same old is the price you are paying - a substantial discount to book, and an absolute price level not seen in its pre covid history. I suspect the shares will be materially higher in 1-3 years, whereas it sounds like you're on the fence. So let's see. ATB

[rmillaree] 18/10/2024 08:53

wigwammer
but the presentation as a whole makes clear that further deleveraging is both possible and desirable.

I dont doubt that this could and should be the case - perosnally i was just hoping that they would have soem firm targets to reduce debt rather than fluff. To be honest promises dont mean owt anyway its only the action of debt reducing imho that will reduce the risk for anyone holding the shares. Previously they had very detailed targets with regard to debt reduction going towards 2040 - there doesnt appear top be any of that now.

With regard to market leading growth you gotta laugh

wetherspoons last set of 12 month figures lfl growth 7.6% - martsons 4.8%
3 months ended sep wetherspons lfl growth 4.9% martsons 3.8%

So clearly they are behind the easiest company to compare them with - ref last 3 months they even had thE cheek to say "a strong result that comes despite the very wet weather towards the end of the period." whereas jdw trumped them and didnt feel the need for any self congratulation.

[blueclyde] 18/10/2024 08:05

NAV is 101p a share as of last December, so this will have increased as debt has been paid down from cash flow over and above disposals, the revenues of the pubs have increased therefore making them with more and interest rates are falling making the NAV more valuable also. The point being I guess is it has to be a take over target if it is true they have market leading growth and being at such a big discount to NAV which we know is accurate as the disposals are happening close to NAV.

[wigwammer] 18/10/2024 05:50

Careful and blueclyde - agree, the valuation is important to the story. As far as I can see, prior to Covid, Marstons has never traded at this level before, and combined with recovering performance I can see corporate interest being reawakened at this level. Blueclyde - not sure where the 120p nav comes from, from memory it is currently circa 95p (and brewing disposal unlikely to change that much).

[wigwammer] 18/10/2024 05:46

Millaree - stating they have a stable debt profile is not the same as stating they will not reduce net debt. Stating that capital allocation will be committed to long term growth is not the same as stating free cash flow will be consumed by capex. The free cash flow target is AFTER capex. On slide 51 they state the current financing structure supports "continued leverage reduction". On slide 55 they commit to "a stable balance sheet with reducing leverage". They retain the "optionality to do value accretive projects" - make of that what you will - but the presentation as a whole makes clear that further deleveraging is both possible and desirable.

[blueclyde] 17/10/2024 20:13

Now that debt has been paid down it is now clear with the market leading growth that this is never going bust or anything like that. I estimate the NAV currently is about probably at least 120p. That's not a number to get too hung up about. My point is there is plenty of scope for private equity to come in and buy this for 100p a share and everyone is happy. Hard to see how this would not be accepted considering what happened after the last offer was rejected.

[jeff h] 17/10/2024 18:43

I recall a few years ago the company was allocating approx £25m a year to build new pubs. I went in one that was virtually empty, waited whilst a couple ordered some food, the waitress disappeared into a back room did not come out for a few mins and when another waitress appeared she served the only other customer who had just walked in and was waiting like me by the bar, so I walked out and sold the shares I owned at the time the next day which proved to be a good decision.

Last week I was in another of their new builds asked about food at 6.30pm to be told they stopped serving food (mainly baguettes) at 6pm but they had peanuts and crisps - reminded me of pubs from the 80's stale cheese cobs etc.

I would like to see Marstons succeed but the management needs to up its game.

[careful] 17/10/2024 17:11

Things looking good long term,
Not long ago the target was less than £1bn debt with a £1bn turnover.
We sit at around £850m with a stronger cash flow.

Targeting an even lower debt by disposing of some underperforming assets makes sense.
Interest charges will be lower, and the bottom line need not be affected.

It will be interesting to see the net asset value per share after recent disposals and sales.

Holding here for the long term, plenty of upside here and any talk of an existential risk is obsolete.

[rmillaree] 17/10/2024 15:02

Cheers - i would looking for clues ref reducing debt and there aint much

they say the following

Significantly derisked and stable debt profile

i would have preferred to here reducing rather than stable - and some sort of 5 year target. I can see perhaps why investment may give higher returns but perosnally i wish the would do nothing but pay debt down over the next 3 years unless there is compelling value elsewhere.

Note they do list 4 things on capital allocation framework and they see number 1 as being - invest in long term organic growth.

ok number 2 of 4 is "Pay down debt and reduce leverage"


I see why they are all or nothing here and want to pretend that they can grow the estate and that will pay for itself in no time - my problem with that is that it failed so miserably previously and its not as if building a new pub is cheap in current markets. They may be able to acquire trading sites but not convinced stuff being offloaded by others is stuff thats likely to be money making machine.

to me the simple current obvious thing to do is pay down debt short term and that in itself will provide enhanced free cashflow as interest charges reduce.

sounds like its more of the same old same old.

Hopefully though if they are making this mythical £50 mill at least they have soem options available.

[wigwammer] 17/10/2024 14:53

Thanks knowing. Looking through and slides and focusing on the numbers : 1) they confirm circa £30m free cash flow expected this year - so they are already paying down net debt from ops cash flow.. 2) they state the £50m+ pa recurring free cash flow is anticipated "in the near term"... 3) they state they have no material refinancing requirement for at least 10 years (this was also mentioned in the RNS)... they also show the priorities for use of free cash, with paying down debt taking precedence over dividends. ATB

[knowing] 17/10/2024 13:35

Hard copy available

[blueclyde] 16/10/2024 18:09

Nope not there. Why have they done this anyway, private equity been lurking in the back ground again? Also I see new broker ratings but anyone any idea what they are price wise?

[rmillaree] 16/10/2024 18:06

i cant even find the presentatiojn to listen too - it doesnt seem to be up on the website unless i am looking in the wrong place (quite possible)

[wigwammer] 16/10/2024 14:46

Haven't had time to listen to the presentation yet. But based on figures available, another 2 or 3 years paying down perhaps another £100m net debt will bring the tangible equity ratio above 30%. At which point most of that £38m FCF pa will be available for distribution. They don't have to pay back all the debt people, for it to become a solid prospect... 14% FCY at current 43p a share... Looks very good value. AIMO. ATB

[wigwammer] 16/10/2024 14:33

??? I am not suggesting the speed with which they pay down debt. THEY are... And given they are suggesting it then I guess we DO have info about when they think they can start to repay the debt. 5 years at circa £38m pa would make material inroads.. I agree the net debt is at the top end of what is appropriate and should be bought down over time. But the repeated and consensus suggestion that an asset backed company of this nature should not be carrying a material mix of debt in its capital structure is odd. GLA

[rmillaree] 16/10/2024 13:31

"To repeat.. Over ?50m recurring FCF pa. Impressive. This is a post capex number (and presumably post interest, pre tax). At current valuation and assuming 25% tax rate, would suggest a free cash yield around 14%. So if they get there near/medium term the stock looks materially undervalued at current levels.. :)"


I would love it if they could get debt down as fast as you suggest - i thinki teh reality is there ability to reduce debt will be nothing like you would hope - if they are able to reduce debt at a lick i would expecting them to be shouting from then rooftops with what they present to analysts.

do we have any further info with regard to whether they think they can START to reduce debt materially anytime in the next 5 years?

[creddy] 16/10/2024 13:02

Doubled my money here overnight back in 2020 on news of the carlsberg deal. Never get emotionally attached to a stock. They should have sold at north of £1 per share when offer was made. Substantially different business now and can't see any catalyst for substantive growth. Better value elsewhere. Like mobico. IMHO. ADYOR.

[skinny] 16/10/2024 12:20

Did you men this link :-

[knowing] 16/10/2024 12:17

He added: “At today's CMD we are outlining a differentiated strategy for growth that is anchored in the needs of our guests and focused on driving sustained value for our shareholders.

Brokers were largely receptive to Marston’s CMD announcement. Both Shore Capital Markets and Panmure Liberum reiterated their buy rating on the stock, with the latter stating that Marston’s “continued robust trading, much improved free cash generation and ongoing deleveraging” are not reflected in the group’s 42.75p share price.