Earnings before interest, taxes, depreciation and amortization

We've seen some, we saw the numbers to June, and that was looking fairly good.

Adjusted EBITDA was up 17%, HEPS was 38, RAND up 9%.

Secunda production at a five-year high.

Above guidance, that was helped by the stoning plant, better coal quality.

Maybe it's closer to 55.

So H2 versus H1 tells the story, right? $92 Brent versus $66 Brent.

EBITDA, $40 billion versus $21 billion.

That $66 to $92.5 almost doubled EBITDA.

So if I'm not careful, if I pick stocks based on peg ratios, I'm going to find a lot of high growth stocks are cheap to me, and low growth, actually biased against low growth stocks, it's biased towards high growth stocks.

Let's talk about EBITDA multiples.

Remember we talked about how cross holdings kind of kick into EBITDA multiples? Here again I want to focus in on specifically the issue of cross holdings.

If you remember in the numerator, your market value of equity plus debt minus cash, that's the enterprise value divided by the EBITDA.

Let's suppose you have a company with a lot of cross-holdings, small holdings and other companies.

And I put that into the pile and I compute EV to EBITDA.

Will this company look cheap or expensive on an EV to EBITDA basis if it has a lot of cross-holdings? What happens if you have a lot of cross-holdings? Your market value will reflect the cross-holdings, right? So your market value is going to be higher.

So you take a Tata modus, it's going to be a lot of, you know, holdings.

Win with the customer, of course, drive profitable growth, and modernize how Kroger operates every single day.

The financial framework, roughly 3%, comparable sales growth in 2029, excluding fuel and pharmacy, of course, adjusted EBITDA growth of 3% to 6% a year from 27 to 29, and adjusted EPS growth of 7% to 11%.

That actually excludes the important Giant Eagle acquisition, which Kroger expects to close only in 2027, and it's also pending regulatory approval, so that adds up.

And how does Kroger pay for this? A $4 billion structural cost takeout, which it calls its largest ever, that includes sourcing more directly, taking sourcing from under 1% today to over 10%, buying smarter and cost-to-goods, cutting indirect spending and scaling a new capability center in Bengaluru, India, with about 3,000 corporate roles impacted over time.

And when those two things come together, you have, I would say, almost 100% chance of success in your investment.

It translates into revenues and EBITDA and growth in a business because you've led in that sort of way in your business.

And again, I could rank a bunch of our portfolio, but that's what I see as probably the two most important things that we've gotten out of leaders in our business.

And it is helpful when you have a lot of cases you can study over decades, over various market cycles, and you can see what works over time.

We're very active in the wealth sector.

It's a great sector for a bunch of reasons.

multiples in that sector have been in the 20s, 20 times EBITDA, which is hard to sustain over a long period of time.

And I think that it's been going now for three or four or five years.

And those things are the biggest metrics that drive the value of an agency is, is the agency growing? Is it profitable? And is the is that growth and performance repeatable.

The EBITDA number is 100% tied to the value of an agency because it is one of the two numbers in the equation that directly says what the value of the agency is.

It's the EBITDA times the multiple equals the value of an agency.

So if you don't know your EBITDA or what it should be, or how you compare to other agencies your size, you really are missing one of the biggest metrics inside your agency.

So that's a non-negotiable for us.

We then look at revenue per employee because it helps us with, are you staffed appropriately? Your largest controllable expense is your people.

And one of the things that drives the value of your agency more than anything is that renewable income or that retention rate.

So if you don't know your true retention, you won't know if there's something you need to do to solve it.

And I think that's an important anecdote for our investors that are looking to see their money at work in a way where it can be fortuitous for them.

And I want to talk analysis of that EBITDA and why it's so important, and then talk about our reservoir analysis that we use to basically stress test the company and its financial performance.

Just to make sure that it can cover.

So, Richie, would you mind just spending a few minutes talking about that preliminary analysis? You called it due diligence, which it totally is.

you on succeed, the underwriting piece.

For any of the companies that we look at before it even gets to the reservoir analysis and we... do a little bit more in-depth vetting there.

We're living and breathing off of that EBITDA.

Sometimes advertised as seller discretionary earnings, it can go back and forth between those two.

Top line was pushing like it was right under $20 million.

EBITDA was like $3 million.

So, I mean, we were, you know.

Kicking butt, man.

Yeah.

So the pool business, I mean, we're looking for businesses aggressively.

So across the Sunbelt, if it's a Sunbelt location, I mean, preferably if we're going to go into a new market, we'd like to have a hub like somebody with some significant EBITDA.

It's a very fragmented business.

To wrap this up, management lifted the 2026 outlook.

for revenue, for adjusted EBITDA and adjusted free cash flow.

So everything is better than expected so far this year.

That kind of like fueled the enthusiasm for investors.

I guess it's better.

Guidance were reaffirmed.

So they're on target for their revenue, their EBITDA, their CapEx, their free cash flow.

So that's great.

It's not with money that shows up in your bank account after all expenses are paid.

So what a buyer is really going to look at is EBITDA, earnings before interest, taxes, depreciation, and amortization, or really, truthfully, after-tax money that shows up in your account after everything is paid.

And so that's really what they're buying, and they're buying that stream of income ongoing.

And the better you're able to represent... that that is going to be consistent, ongoing, and potentially increasing the bigger your sale value.