Yet Another Value Podcast - Kingdom Capital's David Bastian on United Natural Foods $UNFI

Episode Date: July 25, 2025

In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back David Bastian of Kingdom Capital to analyze United Natural Foods Inc. (UNFI), a grocery distributor at the center of a complex turnaround story. They examine UNFI’s legacy issues, including its troubled SuperValu merger, the fallout from over-earning during COVID, and a recent cyberattack. David discusses management's new strategic direction, margin normalization efforts, and the implications of UNFI’s critical relationship with Whole Foods and Amazon. They also explore valuation frameworks, industry dynamics, and UNFI’s potential path to sustainable earnings growth under improved leadership.______________________________________________________________________[00:00:00] Podcast and guest introduction[00:02:34] What is UNFI[00:03:45] History and UNFI challenges[00:09:24] Cyberattack and recovery[00:10:47] Impact on Whole Foods[00:14:30] Long-term EBITDA targets[00:18:37] Sell-side doubts[00:21:08] Peer margin comparisons[00:24:19] Amazon relationship[00:30:17] Margin paradox[00:34:02] Business asset value[00:40:21] Return on replacement cost[00:43:37] Inflation effects[00:45:18] Industry consolidation[00:48:58] Board ownership concerns[00:54:58] Final thoughts on UNFI[00:58:47] Simplified supplier agreements[00:59:17] Podcast close and disclaimerLinks:Yet Another Value Blog: https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the yet another value podcast with your host, me, Andrew Walker. Today's podcast is my friend David Bastion from Kingdom Capital comes back on the podcast. I thought it was his third or fourth time on the podcast. It might be a second time. We talk pretty frequently. David is a super smart guy. We dive deep into Finchwit's probably favorite turnaround stock in the like value Finchwood community, United Foods, UNFI. There's a disclaimer at the end of the podcast.

You can listen to that. investing advice, all that. But it's a really interesting podcast. We dive really deep into it. I think, I mean, David's done a thousand times more work than me, but both of us thought really deeply about this and I've done a lot of work on this. So I think it's a really fascinating and interesting conversation about, again, the stock that's got kind of the Finchwit turnaround community buzz. So we'll hop there in a second, but first, a word from our sponsors. Today's episode is brought to you by FinTool. Fintool is the AI junior analyst tailored specifically for individual investors. Everyone in finance is racing to figure out how AI can best be

integrated into their investment process, and one of the biggest areas that is catching on with institutional investors is analyzing SEC filings and earnings call transcripts. FinTool takes hours of combing through filings and control-effing transcripts down to seconds, whether it's comparing the current call with prior quarters, finding that sneaky change in the footnotes or compiling the key facts into an easy-to-digest one-pager, FinTool is saving you hours so that you can go deeper and search wider because your time is better spent, turning over more rocks, or researching the things that AI can't. Go to fintool.com to transform your research process. That's fintool.com. All right. Hello, and welcome to yet another value podcast. I'm your host, Andrew Walker,

with me today. I'm happy you have on, David, is this the third or fourth time? I'm not sure. You're approaching shirt territory, but David Bastian from Kingdom Capital. David, how's it going? I'm doing pretty well, Andrew. Thanks for having me back. Hey, thanks for coming on. Super excited to talk about the stock. We're going to talk about today. Before we get there, a quick disclaimer, remind everybody on nothing on this podcast is investing in advice. You can see a full disclaimer at the end of the podcast, but I'll just let you guys know. David and I hit a crap staple together a couple months ago,

and after seeing the results from that crap stable, I'm going to encourage everyone. Don't listen to anything the two of us have to say. Neither here nor there. David, company we're talking about today is United, I don't even know their name. I just call them UNIFI, United National Foods. What's the full name?

What's the official name? United Natural Foods Incorporated. There you go. UNFI, I would call them Finch, Swet's favorite turnaround stock, but I don't want to spoil the beans. I'll toss over to you. What is UNFI and why are they so interesting? Sure.

So UNFI is a nationwide and Canada distributor of groceries. So they have about 50 distribution centers all over the U.S. They service people in every state. And they move groceries from suppliers to their distribution centers to grocery stores. They're not like a Cisco or U.S. foods, which works a lot with restaurants. They're a grocer distributor and one of the, well, soon to be the only one trading in the public markets after Spartan Ash finishes getting bought by CNS. No, that's great, great background.

Lots to talk about here, again, this is Fingwood's favorite turnout stock, but let's just start high level. Markets competitive place. This is a billion-dollar company. I think when most people think Kingdom Capital, they think, small companies way off the radar. This is a billion-dollar company, two and a half billion EV,

if I'm remembering correctly, I don't have my spreadsheet in front of me. But what about this company? The market's competitive place, this is big, so you can't just say, hey, no one's looking. This is big, well-known, one of the few food distributors there.

Why is this a risk-adjusted alpha opportunity in your mind? Sure. So the story certainly changed a few times since I first became familiar with them. The first time I took a serious look at the company was back in 2019. They were about a year into digesting their merger with super value. Most of the current problems with the company can be traced to that decision.

So I was looking at the time, I think the merger had gone through when the stock was trading around $50 a share. I think it had been as high as 80 in years around that time. It was down to about 10 in 2019 when I started looking at it. It was one of those stories where they pitched the merger. out a ton of debt to make it happen. And there was a lot of synergies promised. There was a lot of growth promised.

And then things didn't go quite according to plan. All of a sudden, leverage ratios were blowing out. And late in 2019, the question started to be, all right, like, are these guys going to be able to de leverage fast enough to make this work? Well, then come 2020, I'm having a similar experience to many other people of watching the market slowly implode in February. And I had in the back of my mind. that, like, all right, as we're starting to go into shutdowns,

like UNFI is a grocery distributor, and that suddenly was one of the only, you know, games in town. Like, all the restaurants are closed, grocery is where it's at. So that was when this became a big position for me the first time. I was buying a lot of this into the lockdowns. And it was one of those lucky, right place, right time ideas. Like, I wasn't looking for grocery distributors, but I was looking at this company and it was like, wow, this is, you know,

these I seem like they're perfectly set up. for you know the crazy environment we've just gotten into um so then we kind of had this COVID fueled boom year and a half where all of a sudden UNFI was hitting their targets and growing and earning a lot of cash and in some ways it seemed like COVID had saved their business in the sense of the you know this integration wasn't going well then all of a sudden you know they're actually like getting pretty close to hitting their integration targets because of how much they're earning from this pandemic fuel grocery demand. And that's where things went off the rails again.

And so rather than actually fixing a lot of the issues that existed, prior management kind of took those boom years as a sign that they had done what they needed to do to get the business in a good place. Earning started to drop. Overall, it started becoming clear that they were over-earning. And fast forward to fiscal 24, which for them ends in July. July of last year, the company actually had negative cash flow from, or free cash flow was about a negative $100 million.

So they went from, hey, we fixed things to all of a sudden, like, we're losing money again. And the stock's back down to single digits, and round trip the whole way from five to 60 back to, you know, $8. And so that's where trip number two through the stock has started. UNFI brought in a new CFO, Mateo. He is great. He looked at where the business was at and said it's time for us to actually do some of the integration

and work that should have been done years ago after this merger. And so he has been quarter by quarter slowly fixing the problems at UNFI. He's been increasing efficiency, closing redundant distribution centers, renegotiating contracts. the company is finally starting to head back towards their, you know, long-term financial targets. So the opportunity here is, one, a lot of people got burned by the stock twice in the last seven years. So once going to 2019, as they failed to integrate the merger well, and then once again, coming out of COVID when they proved them to be over-earning from the grocery fueled boom. And so there's a lot of people that look at this thing and are very cautious

because it's burned a lot of people twice in the last seven years. And under the hood, I mean, if you go look at what they're earning right now. I mean, this company, when they first did the merger, they pitched that they were going to be doing $28 billion of sales and $900 million of EBITDA by 2022. They almost got there thanks to the pandemic. But this past year, they were down about $550 million of EBITA. So they are solidly below the long-term targets they set out for themselves. and there's still work left to be done,

but the signs that the turnaround is taking hold have finally started to appear. And then I guess lastly, it would be a month ago, UNIFI dropped to 8K saying, hey guys, we had a cyber attack, you know, moxies, more news to come, but it could be material. And so I did what most other UNIFI investors

were doing at the time, which is hopped onto the Whole Foods Reddit to see how things were going as Whole Foods is their primary customer and became clear that nothing was going out or coming in and that basically the entire network was shut down. So went from, you know,

hey, earnings are going to be tomorrow. I'm really looking forward to this earnings report. It's probably going to be really good to, oh no, the company is not currently functioning. They put out of just absolute bar and burner of a report the next day. Ernings were amazing. They beat all estimates and the stock was down because they couldn't really tell you on the call how things were going because they were like yeah we're shut down right now you know our computers are blue screens we know as much as you do yeah so that definitely increased the uncertainty here and

kind of you know you see something like that you don't really know how long or how bad it's going to be and overall I think they were shut down for most of 10 days but they've subsequently come out with initially an 8K and then now they had earnings call last week where they went through and quantified the actual impact of them. And it turns out it was way less material than you might expect for distributor being shut down for a week and a half almost entirely. So that's that's a special situation's angle and the backdrop of how we got here. This is a great overview. And there's basically everything you said is what I want to pull apart in this podcast. But let's start with the upfront thing. I got a lot of emails when

yesterday was July 21st. I always regret my days. July 21st said, hey, David's coming on the podcast tomorrow to talk about Unify. And I got a lot of emails from people like, oh, too bad you missed it by a week. Because as you said, last week on Thursday,

they come out with an, not an earnings release, an update, updated guidance, a conference call that says, hey, cybersecurity, here's the impact. It's not going to affect your business going forward, all that to yourself. And the stocks up like 15% on all that. So a lot of people are like, oh, you missed it.

Forget that you missed it part. I just want to ask, do we on this podcast, as we talk here July 22nd, do we need to spend more time talking about the cyber attack, or is that kind of behind us at this point? As far as I'm concerned, it's behind us. I think the company did a pretty good job

of putting that to rest. And I think that that chapter, at least, I mean, while there's, you know, on one hand, you could argue that there's always a chance that they have to come back and say, hey, the impact was actually a little bit worse than we thought because of this reason or that reason. They're back to operating normally.

They confirmed no customer material placement, material customer loss on the call. So there's not any ongoing drags from that. They said it's contained to the fourth quarter, which ends here in a week. So as far as I'm concerned, the cyber event is in the rear view mirror now, and it's the opportunity to show kind of get back to the story of a turnaround absent that issue. I think I agree with you.

The one thing I worry about is, so as you said, Whole Foods is their major customer. Whole Foods for 10 days, Unified is not doing anything because of the, because of these issues. And Whole Foods can't exactly say, hey, for 10 days, all of our stores are barren, right? So they find a backup supplier to implement. And in the short term, Unifies come out and said, hey, we're not losing any suppliers.

But the one thing I do wonder, and I don't know the answer to this, I talk to industry people. I know you've talked to industry people because we did a call together with at least one. In the medium term, I don't know if your Whole Foods or some other big customer, if you say, hey, that backup supplier, maybe we need to buy a little bit more from them,

just in case this happens again, or, hey, their service was really good. We're Whole Foods, which we'll talk about them more later. I think their contract now runs through 2032. So, you know, it's eight years away. And, you know, that might be the heat death of the universe for as long as a fund is concerned. But, you know, do they kind of think, hey, that service was really good? Like, I don't know if there's a medium or longer term risk that we haven't adjusted for there. So I'll let you quickly comment on that.

Then we can dive to maybe more fruitful grounds. No, and that's a fair question. I mean, the short answer is ultimately I'm not privy to all those conversations. So I certainly think there is a chance that you see some attrition from that or people getting a little nervous like, hey, you know, losing my supply for a week and a half was pretty bad. I think on a, you know, when you zoom out a little bit, I don't think UNFI is a sole supplier really for any significant number of grocery stores.

So most of them already have some level backup in place. The store of UNFI is selling, and if you listen to their call, last week is like, look, you know, we executed well on what was a very tough hand and nobody else is going to be able to come in here and say, don't worry, we won't get cyber attacked. You can trust us. You know, nobody can fully prevent themselves from being open to something like this. So while I certainly think it is going to make people reexamine their supply chains, I think this in some ways kind of just highlighted how integral unify is to a lot of this grocery supply chain and a lot of of stores around the country in a way that, you know, I just don't, I don't think you can get away

from them as easily as people might think. And there really aren't a lot of alternatives to getting them to do your supply here. Perfect, perfect. Okay, let's switch to, so, look, I think a lot of the UNFI thesis, and not all, but a lot of it has rested on this turnaround. And the turnaround, to my mind, it starts earlier than this, but I think investors really start gaining momentum when I believe it's October of 2024. They kind of come out with this long-term guidance, this long-term death. I think they say, hey, this is our fiscal 2012-27 guidance. I believe they pull it to fiscal 2006. And you can correct me on any of those dates or any of those numbers. I'll

just finish. They kind of say, hey, we're going to hit about $650 million in EBIT off where it's now fiscal 2006 is kind of the goals that they're setting, right? And please tell me if I'm wrong on any of that before I continue. Directionally, yeah. They said we're going to grow EBITDA, high single digits. We're our revenues, keep them roughly flat, and we're going to get back to two and a half times leverage by July of 2027. So I think the bull case is, hey, they hit this 650 million. Evida, this is a quite levered company, you know, about a $1.8 billion market cap, about $1.8 billion in that debt. They pay down some of that debt. Ebidaw grows from, you know, $5.50 this year to $6.50 next year,

paid down some of that debt. And the equity leverage is wow. First question I want to ask you, you know, you mentioned they have the cyber attack the next day they report blowout earnings they reaffirmed the 2006 guidance then last week they come out there say cyber attack contained reaffirmed 2026 guidance they've now guided two times in a row for this 2012 26 2007 earnings are growing you mentioned Q3 earnings were great it seems absent the cyber attack they've got all the momentum on their side all of this sort of stuff uh I don't believe self side has taken any of their numbers up you were the one who told me if you listen to the last week. Sell side sounded almost grumpy that they're not going to be able to take their

numbers down or say like the company hasn't taken their numbers down. So I'm going to ask why. Why? You know, I also don't think those stocks at 27, if people really believe they were going to hit their targets, I don't think the stock would be here. I don't think it would be $270 per share, but I think it would be a little bit higher. We can talk metrics, but all that. But why is no one believing this management team that's guided choice in a row that's got the turnaround in place? what's the doubt here sure so i think one of it comes back to you know the guys covering this thing have twice seen a story play out where there was a story and then they faced planted um so i think the desire to stick your neck out for this company um is pretty low on the cell side

um so if you look at the the cadence of price targets and and earnings upgrades over the last year and a half as they've really started to pull out of the ditch they were in um it has been very cautious. And I get it. I don't begrudge them for not wanting to get burned a third time by this company. I think if I wasn't as confident about Mateo and the trajectory they're on right now, like I feel like they have the right people in place and those people were not in place previously, I would be a lot more cautious too. I mean, this is the prior management team signed some pretty disastrous deals. They did a buyback at the absolute top back in 2020. too. These are guys that did not manage this capital stack well, and, you know,

shareholders paid for it. And they paid for it back in 2019 when the integration went much worse than people expected. So there's definitely that. I think everybody is cautious. You know, most of the notes that have come out since the report last week were like, hey, cyber is contained, you know, things are looking up. We'll raise our price target. We'll keep it in neutral, but constructive neutral or something, you know, something that kind of sounds like enough but isn't. So I definitely think there's some interest in some belief that they're past the worst of it here. But if you go look at the consensus estimate for next year, the company's saying, hey, we're going to get the two and a half times leverage within a year. And the numbers

that are out there don't get you there. So for the company to do what they're going to say, what they're saying they're going to do and for street estimates to come up, there's some room to meet in the middle here. Someone directly asked about that. that on the call last week. And basically said, like, hey, Mattel, like, how are you going to get there? You know, how should we be thinking about that? And he's like, I've got plenty of ways to get there. I can get my leverage and down the two and a half times, you know, more than one way.

So I think, you know, I think earnings are planning to come up. I think there's going to be some asset sales. There was an interesting 8K last night where they can the president of their retail operations, which, you know, that's, they've been talking about divesting the rest of those. for seven years now. So you could read into that or not. But there's definitely some different ways here to try and bring a leverage down

and hit that long-term target. I think they are looking at all of them. Look, this actually transitions really nice thing to my next question. So we just asked why no one appears to leave them on the long-term targets. I guess the counters of that question would be, why is management so competent in these targets?

Because if you look at this business historically, it's been, I mean, it's grocery distribution, So it's not like you're falling off a cliff and then ramping, you know, we're not talking steel manufacturing or rims for tires or something. But we are, you know, it has had some visibility and really inflation is a big, big driver here. And with tariffs and everything, I don't think people really have a lot of clue where inflation is going. So I guess the kind of would be, why is management so competent in the visibility in a business that historically has not had that much visibility? Sure. So I think one of the things that really helps with this business is,

just go look at what's out there in terms of competitors. Kehe is the main other natural and organic distributor. A little bit of Googling, even though they're private, you can find that they run 4% EBITDA margins. And so that's the closest direct competitor to UNFI. If you go find some S&P credit notes out there, these guys are doing 4% margins. If you go look at Spartan Nash, who owns some grocery stores

and does grocery distribution and is getting bought by CNS, they do about two and a half. You go look at Cisco, U.S. foods, Performance foods, associated wholesalers, which is not public, but still has some public financials out there. All these food distributors, grocery distributors, are doing two and a half to three percent debata margins. And UNFI is over here on an island that they're stuck under 2%.

And if you look at legacy UNFI before their super value acquisition, they were doing two and a half to three percent unadjusted. You go look at super value. I think they were doing two and a half percent adjusted. So all the pieces are out there that you can run a distribution business and earn two and a half to three percent margins without a whole lot of variability here. And I think this business has been run poorly enough

that they are really the only one out there you can look at and say that they're just not hitting that target. And then there's really no reason they shouldn't be able to get back there. And I think that just management, a lot of confidence that, like, look, you can run a distribution business. We are the biggest one. we can run a distribution business at margins that are comparable to our peers, you know, organic and natural are higher margin segments,

and that is where we specialize. Like, if KHE can do 4% on lower volumes, like, why can't we? It's a really interesting argument because, you know, I built this podcast on, hey, they're doing 550 million this year, 650 next year. This is a business that does, let's just call it 32 billion in sales to make the numbers nice and easy. like if you run that on 2.5% margins, you're talking 800 million in EBITI. You're not talking 650. And if you're talking three, you're talking approaching a billion dollars of sales, right? And you

mentioned at their merger, I haven't gone back and looked at their merger decks too closely, but they are projecting 900. So, you know, it is one of those ones where, hey, no one believes next year's number, but you know what no one really believes that this business can be like kind of average to above average versus peers. And you're certainly not paying for any of that at this price. I'll Paul was there and let you comment on anything I kind of hit on there. Sure. And look, I don't want to say like, hey, these guys are going to 4%. 18 months out. Like, I don't want anyone to come away with that question. Yeah, I mean, let's go get some leaps, buddy. Not a messing advice, no option or anything, but 4%. Yeah. No, I brought up the Cahue margins on my last

call with these guys. They're like, yeah, usually will just want us to get to two and a half. And I was like, yes, please start there. But yeah, I think, I think when you look at this, You know, there are puts and takes with these businesses. Whole Foods is over 20% of their sales. You are working with Amazon, who is the distribution king. That is one of the things that's most scary about this business. People point to Amazon acquiring Whole Foods and then UNIFI running out and buying super value a year later and say, wow, it looks like UNIFI panicked was worried that Amazon

was going to cut them out and went to try to diversify. So there is a reason to say, like, hey, there's legitimate reason to be concerned about being in the distribution business and working for Amazon and thinking, wow, like, that's a very bad place to be historically. So I don't want to minimize that. I don't think you're going to earn top industry margins doing that. However, I do think the Whole Foods contract allows them to have a lot of scale and to do higher margin distribution with other grocery stores in a way that makes the business work.

So you want to look at the Whole Foods contract as kind of the anchor to a lot of this network. I think some of the distribution centers are completely dedicated to Whole Foods at this point. I mean, it was over a third of their business, I believe, prior to the Super Value merger. This was, this is a business that has been built significantly around the Whole Foods business. This is, that's the, you know, they don't have any other customers at over 5% of their sales. So, you know, be very clear up front. That is the one main elephant in the room here. That is one reason why margins aren't going to be as high as they could be. So, yeah, he's at four, but they're not dealing with Amazon.

So on the other hand, like you said earlier, the Amazon contract goes out to 2032 with Whole Foods. So we're looking at seven more years. This has been extended ahead of time every time since the merger. Amazon does not seem interested in trying to run this on a one or two year timetable and look at cutting them out. And frankly, it's because I think that they're getting this on a low enough margin basis that there's not a whole lot of upside for them to try and cut UNFI out and do it themselves. Let me ask on that. So I would encourage listeners if you're interested in, again, this is Finchwood's favorite turnaround, so you should at least have some interest.

Go look at like kind of the max stock price chart that you can look at here. This is a business that went public in 1997. And if you look at the max stock price chart, it maxes out in early 2015. And I believe that's right before Amazon buys Whole Foods, right? And since then, it's gone from 75 to 27. And look, this is Elmer Fudge stepping on a rake over and over and over again here, right? But, you know, the stock I'm looking in 1996, it's trading for $8.50-ish share, and today it's 2750. So that is not a great IRA.

I don't believe there were dividends paid in the meantime. So that's a very terrible IRA. Now, I would just ask you, it seems like Amazon buying Whole Foods changed this business, because again, the stocks come down by two-thirds. And yes, maybe Amazon hasn't come off them, but Amazon always has that hammer of, you know, they'd love to do everything. themselves. So they always have that hammer of, hey, you guys, we are the, your anchor customer, you need to do things for us at forget zero margin, negative margin, just to justify your scale. And if you don't, if you ever even think about leaving us, we're going to go do this on our own and we'll do it for other people. And it'll subsidize all sorts of other parts of our

business. So I wonder about that camera. And I'd love to just talk a little bit more about the Amazon relationship here. Sure. So yeah, I mean, you make a great point. And I don't, like I said, I don't think that there's anything special they're earning on that contract. Again, you go look at what does you and if I do that other distributors don't do? Because obviously they're large, they've survived. What is it about them that they're offering? And basically, in the natural and organic space of the skews they cover, I want to say it's like over 200,000 skews that they say in their annual report that they distribute.

you. They have a lot of specialized product. They have a lot of niche products and it's the kind of stuff you see at Whole Foods. You don't go to Whole Foods to, you know, buy your Cheetos. You're looking for, you know, your organic Cheetos. So they are, they're doing very specialized stuff that doesn't move as fast as some of the bigger mainline distributors. So if you pull up a UNFI inventory turnover and stack it next to Performance Foods and Cisco and U.S. food and Spartanash, Unify is bottom of the pack in inventory turnover. They are very close to the bottom of the pack and revenue per square foot of distribution center space.

So the legacy of UNFI business is a little bit higher margin on the natural and organic side and a little bit slower moving. So that is kind of their product offering. It's like, hey, you don't really want, you know, 50 cases of this niche organic product. You want two of them. But we'll consolidate it.

We'll break them down. We'll put a couple on your truck. we'll put it up on your truck and then move it out to you. The super value side of the business is a lot more than conventional, just like fast moving, high velocity, you know, here's your regular Cheetos. This is not Whole Foods food. This is your regular grocery store.

So that's the unified value prop. That is how the business historically made money. It's how they continue to offer value to be able to distribute into larger, you know, chains that have otherwise gone to self-distribution. If you go look at CNS, which is the main private competitor of UNFI, this is just conventional distribution. They don't do any of the, you know, they don't do fancy, natural and organic. They are, we will get you your groceries for the lowest price. We get them to you the fastest.

They have gotten hammered over the last few years just in terms of having a lot of their mainline customers go to self-distribution internally. And I think that's the primary reason they're going to. out and buying Spartan Ash right now is to try and plug some of the holes from that lost revenue. But UNFI is doing stuff that companies don't really want to internalize. It's usually harder stuff to move, more difficult, more specialized. And so that's the niche that they're trying to fit inside of. So, you know, I don't ever want to come out and say, you know, Amazon is not going to try and do this themselves. Amazon is the king of doing it themselves.

But if they're extending your contract seven, eight years in advance repeatedly and they've doubled their business with you since their acquisition of Whole Foods, it doesn't seem like they're really trying to cut you out. It doesn't seem like they're slowly trying to do it themselves. It seems like they're trying to give you more business relative to what they were doing when they acquired their company. And I assume they're doing that because they realize that you're the best deal in town. If they want to go to Khe, if they want to have them do more of the national organic side,

the entire Whole Foods contract, I think, is larger than Cahey's revenue base right now, or roughly the same. So, Kay, he would need to go buy a lot more DC space if they were going to even start to try and ship away at this contract. I think you said it well. The one thing that's, the one thing that worries me again, and I'll come back to like stock price bro in one second, but you mentioned a lot of this is slower moving niche products. And generally, a slower moving niche product, you should get higher margins. Right? Like people like to say, oh, grocery store margins are 1%. And that is true. It is a low margin competitive business. But they also turn their inventory over like, you know, 12 times per year. So they end up getting decent returns on assets. Well, it's good. So not great, but you know, decent. That's how they do it.

If you've got a niche product that isn't really moving, you should get higher margins. And then you look at this like, hey, these guys hit the worst of both worlds, right? They have slower moving assets and they have lower margins. And now maybe that was a prior management team problem. But you look at those two, like, How did they manage to do niche, slower moving, and have the worst margins? Like, it's pretty incredible to have that combo. Yeah. Well, and that, again, points to prior management issues. I think nothing really highlights how bad things had gotten there.

Then on the earnings call in June, they announced they were firing key foods, which at the time was actually their second largest customer behind Whole Foods. And this was a customer that prior management stole from CNS back in 2021. It was a big rollout during their. you know, again, this is the COVID boom years. You know, hey, we've got key foods. We're going to do a billion dollars of sales with them a year for the next decade. And we're going to have this dedicated Allentown Distribution Center for them.

And, you know, look at us. We're growing the business. Well, fast forward to last month. And, you know, it's the day after the cyber attack. They say, oh, by the way, you know, we also are firing key foods. We talked to them and we decided it's better for them to leave rather than us try to rework the agreement. Yep. The UFI is paying $53 million to get key foods to go to someone else.

This is an EBITDA negative contract that they've been working on. So, again, when you think about it in terms of margins, like here's a billion dollars of revenue that prior manage went out and signed four years ago that has been losing them money, even on an EBITDA basis, before CAPEX, before all the other overhead. There were some really bad things in here. They're cycling out. They've closed three distribution centers in the last year. consolidated the volumes into other locations.

There's been some very low-hanging fruit that, you know, it's like, yeah, they have lower margins, like, yes, because there's been some really bad missteps that were done in the name of growth or trying to make something work. And that's where the opportunity is here, is that you have a team that's now finally writing some of those past wrongs. Now, it's funny because if we've done this podcast a year ago, all we would have been talking about, I think, I mean, I wasn't super closely following this up, was key foods. and when they would get enough like kind of inventory through there

and other customers bolted onto their facilities to make that contract an EBITDA positive one. And today it's like we're 35 minutes of the podcast and we just say, hey, they casually wrote $53 million check plus some other write-ups and stuff, probably $100 million. They casually wrote it and like nobody even cares about it anymore. They just get it off the books.

It's very funny. And they're promising a one-year payback, or they're estimating a one-year payback on cutting them out here. So again, if you want to talk about how much money they were losing on this contract, you know, this is significant potatoes. You and I, I mentioned we did an expert calls together. And there's one thing that jumped out to me.

I like to end all my calls, especially with former, by saying, hey, ignore the valuation, but tell me, would you, if I was managed your money or if you were just fine stock, would you hold stock in the company? And the former we talked to, Basics, said, well, yeah, I guess I'd hold stock in UDFI if you wanted exposure to grocery distribution, but I don't know why anyone would have any exposure to grocery distribution. Like, it's a really shitty business, terrible margins, your customers, like, you need Amazon or you need Whole Foods or you need Albertson, you need a big anchor customer

who just beats the crap out of you for margin all the time. So he's basically like, I just wouldn't want exposure to the sector general. I've probably asked this question to 200 formers, and I've never heard someone say, I'd like to stay away from the industry entirely. So I want to post that to you, you know. I mentioned earlier, go look at the stock chart. It's, you know, it's basically flat over 20 years. We talked about the margin.

We talked to, why do we want exposure to this industry in general, to this sector? And I'm not saying that in a, hey, let's go bet on AI. I'm seeing like, we'll talk multiple or everything. But why do we want exposure to this? Isn't this just a shitty business that should trade for like kind of asset value? Well, you know, at the end of the day, if it trades for asset value, you'll probably still do okay from here. but that's neither here or there. Well, let's talk about that.

What do you think the asset value is here? How do you estimate that? Because that is one thing I was kind of playing around within a model. I've tried to put it together. My guess is if you wanted to go build what they have in terms of distribution network and infrastructure that would cost you north to $5 billion. I'm not married to that number. I could see it being higher or lower.

But ballpark, I would think that, you know, the EV here is somewhere around like three, a quarter, three and a half. and I'm confident that if you told me tomorrow, hey, go build UNFI, I could not do it for under the current EV. That's an interesting answer. Let me ask my question a slightly different way. We mentioned the $2,000, $650 million in EBITDA number, and people can play around with it. But if you believe that number, the stock as we're talking high $27 per share is trading for about five and a half times EBITDA. And that's cheap.

But it's also trading for if I use about $285 million in CAPX, which is kind of their LTM number. And you can tell me that's too high and we can talk about it, trading for about 10 times unlevered free cash flow, right? So I just threw a lot of numbers up there. But 10 times unlevered free cash flow, if you told me, hey, I've got a commodity business, not that great, historically pretty bad returns an asset today. 10 times unlevered free cash flow sounds about right. Now, again, we can pull lots of different pieces apart. You can say they're under earning. You can say the CAPX too low.

But it did kind of strike me like, you just. jump and you say five and a half times EBDA, de-leveraging, all this sort of stuff. But when you pull those numbers, you say, oh, it really looks more like it's just very levered and you get a little bit of inflection, but it doesn't look that cheap on an absolute basis. Sure. So I don't disagree with you that, you know, 2% margin businesses, 2% margin businesses are tough to own, especially, again, when Amazon is your top customer. So I think there's a population of investors that are never going to own this stock for those reasons.

and I am completely fine with that. It's not going to be a compounder bro stock. It's not, I don't, I'm pretty sure it's never going to be on the 100 bagger every four to six months Twitter account. It probably will not be. What I do think, you know, everything has a price. I don't think people go look at some of the, you know, stocks like U.S. food and Cisco and say, wow, these are really terrible businesses. I mean, they earn good returns on capital.

They distribute food. And I think it's possible to do it well. and their margins aren't a whole lot higher. You know, they are a little bit higher, and that's, I think, part of the opportunity here. I think UNFI can approach that. But I think that's one of those things where there's a perception, I think it's one of those things where when they have executed poorly,

that kind of reinforces the narrative. I think this business can earn two and a half time, two and a half percent even without margins. I think, you know, down the road, maybe three is reasonable. I think that, like what you said, you know, 285 million, 300 million of CAPEX a year, is probably about the right number. I don't think that's super high, super low.

I think long term, they can keep it around that level. I mean, they've, you know, if you look at historically what they've spent, there was also, I think, 63 distribution centers when they did their merger and were getting close to 50. So they've been slowly reducing the footprint while growing sales and getting their inventory turn up. They've been getting their, you know, sales per square foot up. But by closing stores and increasing sales, I think they're doing the right thing

to make this footprint more efficient. and yeah, 300 million of CAPEX on 650 million of EBITDA really does eat into your cash conversion. But when that EBITDA number is 750 or 800, like I think it can be a year or two from now, the 300 million of CAPEX is still there. Oh, by the way, the interest expense is going to be more reasonable because you've gotten your debt down by a billion dollars over the last six years. And I think they're going to get down by another few hundred million in the next 12 months. and you're going to refine your term loan that you're paying 9% on right now down to 6 in line with the rest of your cost of capital.

And then suddenly your cash conversion looks really good. And if you're throwing off $300 million of cash flow every year, then suddenly buying that for $1.6 billion doesn't seem so bad. It's a steady business. I think grocery is a defensive space to be in when it's run well. People don't get as concerned about it. I think because you've got COVID in there, because you've got a merger, that they're there's just a lot of noise in the numbers for like what you said should be a pretty steady,

boring business. So I think UNFI screens like it's a lot less stable of a business than it has been. And I think that if they can show the street, we're actually a pretty stable company. We can generate a decent amount of cash flow. We have valuable assets. And we can thoughtfully allocate that capital rather than making more boondoggle acquisitions that they will get a higher multiple and they will be able to put that cash to work and reasonable rates of return. Look, I think the numbers you threw out are very interesting in just several respects, but the one I just kind of thinking about, again, when I look at a business that I think this is a cost of capital business, and that's what I ultimately think grocery distribution is, I find the best way to look at it is replacement of value of assets, right? And the number, if you believe you're $5 billion replacement value of asset number, which I think you said you couldn't replace them for $5 billion, so be higher. But that number would drive actually very well with the numbers you talked about, right? $800 million in EBIT as a, let's call it medium, term-ish target, $300 million comes out to $500 million, an unlevered free cash flow number. That's a 10% return on replacement value, $500 divided by $5 billion.

That's obviously a pre-tax number. After-tax, you're talking about 7.5% return. That feels about right for replacement costs, right, for return on a replacement cost commodity business. So I do think it's interesting. You're buying the whole package for $3.5 to $3.3.3 billion. You're saying replacement costs about $5 billion. Like, there's multiple ways that's going to cat, but that's kind of how.

I, what I think is interesting. So this is just me personally. I think it's interesting because you get the, it's trading below replacement costs, management team who's saying we've got the, we've got the turn coming. We're going to get, like they're still not even earning their cost of capital to pay at their target.

So I think all that's interesting. I have some other questions, but I just threw a lot of ramble out at you. Please comment on anything I said, missed, elaborate anything. Sure. Look, I don't disagree with that framing at all. I mean, I don't, again, I'm not super married to one number of the other here. Like if you told me, like, I think it's going to cost $4 billion to replace these assets. And I said five, like, look, I'm not going to lose sleep fighting you about that.

You know, I could, I came up with an estimate, you'd come up with an estimate to actually go hire 25,000 people and open 50 distribution centers. You know, good luck. Startup costs on that sound pretty challenging. And, you know, again, if you're, if you're one of their customers here and you want to internalize this, like, Yeah, you know, they're earning 10% on, you know, with all these customers in here. But if you want to try internalize it, like your, your overhead's going to be higher relative to what you're doing. I just don't see anyone else, you know, no one else has their scale. No one else is going to be able to just go out and build this attractive enough cost to say, yeah, I'm going to go try and steal this, you know, whatever it is, 500, 800 million of EBITDA at this cost.

I don't think that appetite exists. And I also think that that is worth something. and that something is probably more than where it's trading right now. So I think it's a steady business. I think, you know, you also are going to start having the conversation like, hey, if they hit their leverage target next year, you know, running this business with two, two and a half times leverage is a pretty reasonable range. And so then it starts, you start looking at it like, all right, well, you know,

are they going to be able to start paying a dividend? You know, if there's $300 million of free cash flow in this business long term, even if there's 200, you know, that would be north of a 10% yield at today's price that they could start returning to shareholders, but with buybacks, with dividends, you know, maybe there's some tuck-in acquisitions they want to do, and given the way this team is allocating capital, I'd be more interested in that. But I think the key here is just you look at it and say, you know, these have a price. I think the current price is too low.

And yes, it's a low-margin business. Yes, you know, former, you know, former employee may not want to buy it here because he thinks it's a tough business. But, you know, it's a very necessary business. It's a defensive business, and it's one that I think is going to finally show some stability after years of struggles to do so. That's perfect. Let's talk inflation real quickly.

So distributors, not always, but generally benefit from inflation, right? And the reason is simple. If you buy a banana today, if you're a distributor, you buy a banana today and a week from now, you're going to put it into a grocery store, actually hopefully fastened that for a banana. But, you know, something like that. If the prices of bananas go up 20,000. percent in between now and then, well, you just windfalled into 20 percent of margin, right? If the prices go down 20 percent, you just windfalled into a loss.

And obviously, I'm very simplifying there. But in general, inflation, good for distribution, deflation, bad. So it's tough to buy this business without some view on inflation. I'm not saying you have to be like a macro prognosticator. But if you told me, Andrew, I think we're going to have, you know, 10 percent deflation and we're going into gold cans and gunstom, I'd be like, hey, maybe let's not buy the distributor. Maybe let's not buy anything. But, you know, it also strikes me they could have a windfall. Tariffs cause inflation really quickly. They could have a huge windfall there.

Inflation does seem to be a little sticky. Do you have any views or inflation or any cares about inflation here? Yeah. So I think you go back and look at some of their comments and Cahey's and Spartan ashes over the last few years. You know, they all talk about how inflation gave them earnings boosts to some extent. And it's one of those things where, you know, it's not a whole lot. But when you're doing $30 billion of sales, you know, if the stuff you own, you know, if prices inflated, half a percent while you have them, you're running a business with two and a half percent margins, like, oh, exactly. So, there's definitely, there's definitely some, some margin to be had there.

I don't have a really strong view on the macro question of, will we have deflation in the next year or not? If I was going to be more worried about hedging something for my portfolio, it would be re-accelerating inflation, and I would want to own this in that case over a lot of other things. So if I think about what I am more afraid of, that's probably how I would want to be positioned in business defensive in that regard. I want to wrap up with consolidation. You mentioned CNS buying Spartan Ash, and I had a few people reach out to me, and they were wondering, hey, I don't know if this is risk. I don't know if this is opportunity. You could say risk because you've got two people merging, bigger business might try and come post some customers

or something better. Or you could say opportunity in terms of, you know, exactly what happens in UNFI, FI. CNS and Spartan Nash are integrating. They might take their eyes off the ball. Or, hey, what if they have a little divesture package they need to put out that UNFI I can acquire for a song? So you could tell me any of them, and I believe you. I'd love to just, you know, it doesn't have to be CNS and Svartanash specifically,

but just the industry consolidation. How do you view that for UNFI? Sure. So, CNS and Spartan Ash are more traditional mainline distribution. Spartan Ash has a decent size. I think they have over 100, maybe 200 retail banners in their portfolio. So they actually own some grocery stores. UNIFI has like 75.

So it's a small piece of the business, but, you know, one of the ways that these distributors have been evolving has been acquiring some retail banners and distributing into their own stores. I think, you know, I mentioned earlier, I think Unify is more like. likely to try and exit that line as opposed to wanting to grow it. But if you go look at CNS for the last couple of years, they have been rumored to be connected just about anything that was retail banner divestager oriented.

The Kroger Albertson's deal, CMS was trying to acquire stores that need to be sold as part of that deal. They got linked to another, I think it was pigly-wiggly deal at one point. Now they're going out and buying Spartan Nash, which has both the distribution and the retail banner component. So I see a CNS that has lost two huge customers in the last decade that went to self-distribution and is just looking to buy something to try and help keep their business afloat.

So I look at them more like buying UNFI in 2018 after they overpaid for super value than I would, you know, as an opportunity, as like a risk to UNFI that they're going to come in here and start doing anything really negative for us. I think, frankly, on the contrary, UNFI will probably be better with CNS being a little bit more stable and a little bit less desperate to go win customers because they've bought some margin and have a larger, more stable company. So I would rather them be focused on integrating that than going out and trying to steal UNIFI's customers by underbidding them and, you know, driving everyone's margins into the dirt. No, it makes sense. A lot of times an investment thesis can be boiled down to one thing. if you had a kind of irrational competitor and they get taken out for any reason, right,

they can go bankrupt or a rational competitor buys them, industry consolidates, you get a little bit, this is a kind of oligopoly industry. You get a little bit closer to the oligopoly. The returns tend to go up. So I think it's much more opportunity than risk for them. That kind of fall there. Actually, I do have one more question, and then we can do any closing thoughts that you have. But, you know, I look at this board, and this is just because I've been on an activism kick

lately, and I've been looking at, as you and I've texted on and off a few times, at these really crappy biotech companies where, you know, the whole board owns 10 shares combined and all of them get paid $300,000 a year. In between them, they might own $4,000 worth of stock. When I look at this board, I don't see any huge shareholders, right? I mean, James Pappas, who I don't know, but who has, I think, a pretty good refutation owns almost 500,000 shares, which, you know, that's meaningful money, but it's not crazy. Most of the directors own, let's call it, $500,000 worth of shares, and they get paid about $300,000 per year to be on this board.

So I look at this and I say, hey, a lot of the directors have been here since, you know, the mergers that went bad, some bad deals and everything, board member since 2019. There's been a refresh, but I kind of look and say, hey, is this a little bit of a sleepier board? You know, there's a board member who's been on here since 2013, board member who's been on here since 1990, and the stock has not done up that much as 1996. I'm not throwing shots at anyone, but I'm just kind of asking, if you worry, sleep or bored,

like maybe they don't allocate capital the way you want. Maybe they're not as, you know, a lot of them were here when it got to the point where it needed to turn around. How do you kind of look at the insider ownership here? Yeah. No, it's definitely not as high as you'd want to see. I mean, Bapa's ran an activist campaign

with a little bit less than 1% of the stock and got on the board. So it's incredible. I've owned more of the companies than that and they've been like, that's you, man, who are you? Yeah. No, he got in there. So, you know, relative to his, you know,

the capital that he's managing, it's a significant position. He's got a pretty good track record. You know, I run into him quite a bit in other ownership table, so we don't have a personal relationship if we haven't talked about this investment. But I think he's got a pretty good reputation

in this space and I think his involvement is one of the good signs for me that, you know, yeah, it's an activist. Yeah, it's not a huge position relative to the total cap stack. But you've got somebody in here who is advocating for shareholders and doing the right things and has made some noise. And I think that helps offset some of the sleepier concerns that you pointed out. I think without him and there, I would be more concerned.

I think you can go look at the last proxy, but they've reworked some of the executive incentives here to be a little bit more shareholder aligned. And there was some prior, you know, prior compensation was definitely dilutive to investors. And you go look at the share count. I think it went up 20 percent, like two years between 2020 and 2022, just from very heavy stock-based compensation when the price was low. So it's always a tough needle of the thread. Like everyone wants the insiders to own a ton of stock that they paid a ton of money

for and the company doesn't give them anything. And like at some point, you do actually have to incentivize your people. And, you know, not every company has huge insider ownership. but I do think the incentives here are pretty well aligned. I do, I like the presence of an activist on the board and the steps that have been taken. It's been very shareholder friendly. And so I can get over it. But, yeah, I would rather that the insiders came out next week and bought, you know,

millions of dollars worth of stock in the open market and got even more aligned. And, you know, there's been enough stuff going on that I don't know how unlocked some of these guys are to even be able to do that. Like, obviously in the middle of the cyber attack, like, I'm sure these guys would, I'd love to come out and buy a sock at $21, but there's been a lot happening. So, yeah, I think that's one of the valid points. You can go look here and say, like, total insider ownership is like 2.5% and for a $1.6 billion company, that's on the low end.

You would like to see more than that. And I would like to see more than that, but I get comfortable with an activist and with the incentives that are in place for management. No, I generally agree. I think you and I are aligned. Like, we'd love to see boards with, you know, every director owns 1% of the company and there's two like 6% shareholders, and particularly directors, I mean, I just, I can't believe there are directors who will go on a board for 10 plus years and just at the end of it, they own

no stock. And you're like, man, this guy, you know, I'll talk to directors to like every director I've ever worked with completely focused on shareholder value and building shareholder. I'd be like, if that was sure, they'd at least hold on to some of these shares, like these guys train it like, they'll tell you stock comp is not real comp, you know, you can ignore it, but they sure is all treated like cash. As soon as that thing, invests, it's out of their account and into the money market fund. So look, I think we've done, not to pat ourselves on the back, I think we've done a nice job

of prepping, talking through all the things, at least for me, I thought we're pertinent, but I just want to pause for a second. Anything else you think people need to be hearing about, you think about with UNFI, listeners should be thinking about if they're thinking about UNFI. Look, you know, I think overall it's one of those stories where, you know, everything has a price and I think this company is more stable and has more earnings power than people realize I think it's being managed the best it has been in the last decade maybe ever but I have less of opinion on the time prior you're not going to tell me about how they were

performing in the glory days of 1997 there's a director you can call for that but yeah I mean they were a steady two and a half three percent margin business pre-acquisition of super value it was a face plant, you know, the exiting COVID proved that margins were less durable than they thought, you know, they got a lot of one-time inflation and, you know, shut down benefits. And look, I think they're finally doing the hard work to get this business back to what it should be, which is a minimum two and a half percent EBITDA margin, distribution company like every other distribution company. And so I think that's the easy part of the thesis is like this can be done because everyone can do it that distributes food except for this company.

Everyone else has been able to figure it out and these guys are finally doing the work to get there. So I don't see anything structurally about the business that can't do that, given that both UNFI and Super Value have shown in the past they can do it and that smashing them together did not result in them doing it somehow better. But we're getting there. We got a cyber attack in the middle of it and they've dodged that bullet pretty well. and from the best I can see, handled it better than I expected. So I think it's interesting.

I think it's durable. I think, you know, we didn't really talk about it, but grocery distribution is a pretty defensive space for recessions and things in general. So again, it protects me from inflation and from recessions. I mean, go look at their investor presentation on their website right now. They've got a really interesting chart where they show grocery demand by quarter and through the last three recessions.

I think they're telling the story better than they. have been. I think they're executing better than they have been. And I think a lot of people got distracted by a cyber attack and that, you know, if you look at where this thing was trading two days before the cyber attack and, you know, the earnings report they put out, we would probably be sitting somewhere like $35, $37 a share and we're 27. So you feel like you missed it. I would point you to that. I don't know how the stock's going to trade in the short term, but I feel really good about what they're doing and how they're executing. And I think, I think going forward, they're going to, you know, surprise to the upside relative to where estimates currently are.

Speaking of surprise, I have one last surprise question for you. I'd be remiss if I didn't ask this. They launched the, I believe it's the simplified supplier approach where they started charging fees in early 2024, mid-200, I can't remember exactly. Does that, it seems like that roll-outs in the past, it seems like, does that give them more visibility, just the fact that they're charging all of those fees and everything? I think it's different, but does this program just give them a little bit more visibility the way they're charging, do you think? So, yeah, there's two pieces of that.

I think this got talked about a lot, like you said last year, in a few different corners of the value investor world. There's two fee structures they have on the supplier side. One was the one that you're talking about, they got a lot of press, which is the simplified supplier agreement that they did. And basically, that one was normally they charge their suppliers a one and a half percent fee on the product they're selling. into the business. And then there was a just huge laundry list of other things that suppliers can opt in or out of, you know, hey, do you want to get data on how your product's doing in grocery stores? Hey, do you want to get, you know, this access that there's all sorts of things that were add-ons and, you know, nickel and dime charges. And you and if I can that,

I went back to those suppliers and said, hey, this is now going to be just one flat, two and a half percent fee and you're going to get all these things whether or not you were paying for them previously so what does that mean for that that was probably 90 percent of the suppliers they work with but these are the smaller suppliers so the way management framed it to me was that's about 20 percent of the volumes that they push to their distribution centers so you think of that as 20 percent of the stuff went from one and a half and change to a flat two and a half percent fee and they're adamant working that, you know, hey, we can show our suppliers that they're getting their 1% of value by us having, giving them better data and helping them sell their products through

better. And that's, that's their story and they're running with it. If you go look at Cahey's, I believe theirs was either two or two and a half percent already. So this isn't an industry difference. This is kind of them coming up to that industry side. They're offering services to these companies. It's not just, hey, we're raising our fee on you and you don't get anything in return. But that was one of the things that, you know, that's in the margins. But I, I think that was only about 20% of their products. So my guess is that somewhere around like 50 million of EBITDA improvement is going to come through those contracts lapping. The one that, the other side of that is they have these supply, their top 10% of their suppliers, which are like 80% of their volumes.

Those are one by one just like negotiations. They don't go to those guys and say, hey, we're going to, here's your new fee. It's, hey, you know, previously you guys were at one in a quarter. And we'd like to go to one and a half. And, you know, you are, you know, you 10% of the cost of our suppliers are 80% of our volume. So you all have more specialized agreements. And so that has been being worked through and has probably gotten less press overall. So those are kind of like that's, that's the overview of how that's worked.

And that is going to be a tailwind, I think, for earnings. I think there might have been some stuff that came out about that that got a little bit oversold in terms of how much of a boost this was going to be. for their margins, but it is material. It's just, it's part of how they're trying to work more closely with their suppliers to help them sell better. And given how things have gone so far, they seem to be selling that pretty convincingly. I haven't seen evidence of supplier attrition in their results.

But that's what's going on there. Most of that, I think, is already kind of working its way into the numbers and laughing in the next 12 months. But that's what's going on with that piece. Perfect. Perfect. Well, I'm sure people wanted to end with a discussion of supplier fees and everything. That's the stuff that people really listen to this podcast to get excited about. But David Bastion, one of my favorites have on. I'm going to go review how many podcasts we're on.

You're getting close to that you have another value podcast shirt. But appreciate you coming on. Looking forward to chatting soon. And we'll go from there. Sounds good. Thanks, Andrew. Later, buddy. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. please do your own work and consult a financial advisor. Thanks.