Blue Nile Investment Thesis

8/20/2019 Blue Nile Investment Thesis

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B I. (E: IE)

L P $55.84 R P $11.34 CAGR 10.40%

P/E 66.4 RP/E 11.19 5 G M 20.90%

52 R $32.03$67.16 P $10.78 5 O M 6.70%

M C ($MM) $808.79 PGO $45.06 5 ROIC 23.80%

O (MM) 14.481 +PGO $55.84 5 EP $0.86

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HIBI 1: HIICA ICE AEE

2004 . 2005 . 2006 . 2007 . 2008 . 2009

) N 169,242.0 #DI/0! 203,169.0 20.0% 251,587.0 23.8% 319,264.0 26.9% 295,329.0 7.5% 302,134.0 2.

) C 131,658.0 #DI/0! 158,127.0 20.1% 200,734.0 26.9% 254,060.0 26.6% 235,333.0 7.4% 236,790.0 0.

) G 37,584.0 #DI/0! 45,042.0 19.8% 50,853.0 12.9% 65,204.0 28.2% 59,996.0 8.0% 65,344.0 8.

G 22.2% 22.2% 20.2% 20.4% 20.3% 21.6%

) , G & A 22,727.0 #DI/0! 26,993.0 18.8% 34,296.0 27.1% 42,792.0 24.8% 44,005.0 2.8% 45,997.0 4.

) A #DI/0! #DI/0! #DI/0! #DI/0! #DI/

) O (EBI) 14,857.0 #DI/0! 18,049.0 21.5% 16,557.0 8.3% 22,412.0 35.4% 15,991.0 28.6% 19,347.0 21.

O 8.8% 8.9% 6.6% 7.0% 5.4% 6.4%

) I (772.0) #DI/0! (2,504.0) 224.4% (3,423.0) 36.7% (4,175.0) 22.0% (1,865.0) 55.3% (331.0) 82.

) O () #DI/0! #DI/0! #DI/0! #DI/0! #DI/0! #DI/

) P 15,629.0 #DI/0! 20,553.0 31.5% 19,980.0 2.8% 26,587.0 33.1% 17,856.0 32.8% 19,678.0 10.

0) I 5,642.0 #DI/0! 7,400.0 31.2% 6,916.0 6.5% 9,128.0 32.0% 6,226.0 31.8% 6,878.0 10.

1) N 9,987.0 #DI/0! 13,153.0 31.7% 13,064.0 0.7% 17,459.0 33.6% 11,630.0 33.4% 12,800.0 10.

2) E $0.60 #DI/0! $0.75 24.3% $0.79 5.2% $1.10 39.0% $0.78 29.0% $0.88 13.

3) 16,563.0 #DI/0! 17,550.0 6.0% 16,563.0 5.6% 15,919.0 3.9% 14,925.0 6.2% 14,480.0 3.

4) 36.1% 36.0% 34.6% 34.3% 34.9% 35.0%


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EHIBI 2: B H

2004 2005 2006 2007 2008 2009

(15) C 101,367.0 114,788.0 98,433.0 122,793.0 54,451.0 93,149.0(16) A 1,028.0 1,877.0 1,640.0 3,576.0 1,709.0 1,835.0

(17) I 9,914.0 11,764.0 14,616.0 20,906.0 18,834.0 19,434.0

(18) O 9,220.0 4,067.0 1,338.0 1,871.0 1,739.0 1,426.0

(19) C 121,529.0 132,496.0 116,027.0 149,146.0 76,733.0 115,844.0

(20) N PP&E 3,916.0 3,261.0 3,391.0 7,601.0 7,558.0 7,332.0

(21) O 2,937.0 2,248.0 2,697.0 3,839.0 5,374.0 7,239.0

128,382.0 138,005.0 122,115.0 160,586.0 89,665.0 130,415.0

(22) 203.0 208.0 197.0 276.0 246.0 249.0

(23) A 37,775.0 50,157.0 66,625.0 85,866.0 62,291.0 76,128.0

(24) A 5,713.0 5,262.0 7,315.0 9,549.0 6,607.0 9,805.0

(25) I

(26) C 43,691.0 55,627.0 74,137.0 95,691.0 69,144.0 86,182.0

(27) L 0.0 0.0 0.0 880.0 839.0 796.0

(28) O 1,071.0 863.0 666.0 538.0 374.0 168.0

(29) D

(30) C / 104,684.0 106,341.0 115,751.0 134,207.0 144,913.0 156,030.0

(31) R (19,515.0) (6,362.0) 7,110.0 24,569.0 36,199.0 48,999.0

(32) 636.0 18,008.0 75,395.0 95,391.0 161,841.0 161,841.0(33) C 913.0 456.0 163.0 (92.0) (37.0) (81.0)

(34) E 83,620.0 81,515.0 47,303.0 63,477.0 19,308.0 43,269.0

/ 128,382.0 138,005.0 122,106.0 160,586.0 89,665.0 130,415.0


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EHIBI 3: AEE F CAH F

2004 2005 2006 2007 2008 2009

N 9,987.0 13,153.0 13,064.0 17,459.0 11,630.0 12,800.0

(35 D 1,510.0 1,717.0 1,868.0 1,772.0 2,110.0 2,593.0

(36 I

(37 C 12,496.0 7,415.0 15,926.0 12,806.0 (22,773.0) 16,096.0

(38 G , 5,758.0 8,987.0 9,660.0 9,418.0 6,106.0 7,529.0

(39 29,751.0 31,272.0 40,518.0 41,455.0 (2,927.0) 39,018.0

(40 C (1,826.0) (1,064.0) (1,907.0) (4,874.0) (2,000.0) (2,345.0)

(41 P

(42 D (41,470.0) (989.0) 22,972.0 19,890.0 0.0 (15,000.0)

(43 (43,296.0) (2,053.0) 21,065.0 15,016.0 (2,000.0) (17,345.0)

(44 N

(45 P

(46 P

(47 N 42,516.0 (17,372.0) (57,387.0) (19,996.0) (66,450.0) 0.0

(48 D

(49 O 145.0 575.0 2,423.0 7,700.0 3,093.0 1,981.0

(50 () 42,661.0 (16,797.0) (54,964.0) (12,296.0) (63,357.0) 1,981.0

(51 C 0.0 0.0 0.0 78.0 (58.0) 44.0

I () 29,116.0 12,422.0 6,619.0 44,253.0 (68,342.0) 23,698.0


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EHIBI 4: H C F A

D 2005 2006 2007 2008 2009

N 203,169 251,587 319,264 295,329 302,134 1

C 158,127 200,734 254,060 235,333 236,790 2

G 45,042 50,853 65,204 59,996 65,344 3

R&D 0 0 0 0 0 N/A

G&A 26,993 34,296 42,792 44,005 45,997 4

A 0 0 0 0 0 5

EBI 18,049 16,557 22,412 15,991 19,347

+ A 0 0 0 0 0 5

EBIA 18,049 16,557 22,412 15,991 19,347

EBIA / 8.9% 6.6% 7.0% 5.4% 6.4%

I 7,400 6,916 9,128 6,226 6,878 10

(902) (1,185) (1,433) (650) (116) ( 7 8)* 14

A 11,551 10,826 14,717 10,415 12,585

R 36% 35% 34% 35% 35%

C (964) (34,990) 11,644 (45,896) 22,076 L

C ( ) (653) 39 3,102 (110) (248) ( 40 * 1) 35

A ( ) 989 (22,972) (19,890) 0 15,000 ( 41 + 42) * 1

I (628) (57,923) (5,144) (46,006) 36,828

F C F 12,179 68,749 19,861 56,421 (24,243)

D 2005 2006 2007 2008 2009

N 13,153 13,064 17,459 11,630 12,800 11

+ A 0 0 0 0 0 5

A 13,153 13,064 17,459 11,630 12,800

O , 2,504 3,423 4,175 1,865 331 7 8

(902) (1,185) (1,433) (650) (116) ( 7 8)* 14

A 11,551 10,826 14,717 10,415 12,585

C (964) (34,990) 11,644 (45,896) 22,076 L C ( ) (653) 39 3,102 (110) (248) ( 40 * 1) 35

A ( ) 989 (22,972) (19,890) 0 15,000 ( 41 + 42) * 1

I (628) (57,923) (5,144) (46,006) 36,828

F C F 12,179 68,749 19,861 56,421 (24,243)


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EHIBI 5: C C

1. K = + ( * ) 2. K = * (1 )

R (10 ) = 3.87% R (10 ) = 3.87%

B = 1.66 = 1.30%

E = 4.50% = 35.0%

K = 11.34% K = 3.36%

3. D ( ) 4.

= 1,045.0 K= 3.4% 25.0% 0.8%

= 14,480 K= 11.3% 75.0% 8.5%

= $55.84

C D/ = 0.13% ACC = 9.345%

/ = 25.00%


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EHIBI 6:

D 2004 2005 2006 2007 2008 2009 C 101,367 114,788 98,433 122,793 54,451 93,149 15

A 1,028 1,877 1,640 3,576 1,709 1,835 16

I 9,914 11,764 14,616 20,906 18,834 19,434 17

D 0 0 0 0 0 0 N/A

O 9,220 4,067 1,338 1,871 1,739 1,426 18

121,529 132,496 116,027 149,146 76,733 115,844

NIBCL 43,488 55,419 73,940 95,415 68,898 85,933 23 + 24 + 25

N 78,041 77,077 42,087 53,731 7,835 29,911

+N PP&E 3,916 3,261 3,391 7,601 7,558 7,332 20

+G N/A+ I N/A

+O 2,937 2,248 2,697 3,839 5,374 7,239 21

I 84,894 82,586 48,175 65,171 20,767 44,482

(*) = 4 .

D 2004 2005 2006 2007 2008 2009

C L 203 208 197 276 246 249 22

L 0 0 0 880 839 796 27

D 0 0 0 0 0 0 29

+O 1,071 863 666 538 374 168 28+M N/A

' 83,620 81,515 47, 303 63,477 19,308 43,269 34 15 + ( 1 * 4%)

I 84,894 82,586 48,166 65,171 20,767 44,482

I (I)

D 2005 2006 2007 2008 2009

C (964) (34,990) 11,644 (45,896) 22,076 L

C ( ) (653) 39 3,102 (110) (248) ( 40 * 1) 35

A ( ) 989 (22,972) (19,890) 0 15,000 ( 41 + 42) * 1

I (628) (57,923) (5,144) (46,006) 36,828


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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

302,134 347,454 375,250 397,765 417,654 438,536 460,463 478,882 493,248 508,046 523,287 538,986 555,155 571,810 588,964

2.3% 15.0% 8.0% 6.0% 5.0% 5.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

A 19,347 22,585 24,391 23,866 20,883 21,927 18,419 19,155 14,797 15,241 15,699 16,170 16,655 17,154 17,669 EBIA M

A 6.4% 6.5% 6.5% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% D

35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%

A 12,585 14,680 15,854 15,513 13,574 14,252 11,972 12,451 9,618 9,907 10,204 10,510 10,826 11,150 11,485 EBIA * (1 R)

() 22,076 3,172 1,946 1,576 1,392 1,462 1,535 1,289 1,006 1,036 1,067 1,099 1,132 1,166 ( L ) * C

C () 14,752 453 278 225 199 209 219 184 144 148 152 157 162 167 ( L ) * F C C

36,828 3,626 2,224 1,801 1,591 1,671 1,754 1,473 1,149 1,184 1,219 1,256 1,294 1,332

C F (24,243) 11,054 13,631 13,712 11,983 12,582 10,218 10,977 8,469 8,723 8,985 9,254 9,532 9,818 NOPA I F

FCF 10,110 11,400 10,488 8,382 8,049 5,978 5,874 4,144 3,904 3,677 3,464 3,263 3,073 D FCF

P FCF 10,110 21,510 31,998 40,380 48,429 54,407 60,281 64,425 68,329 72,006 75,470 78,732 81,806

169,653 165,999 145,249 152,512 128,110 133,234 102,924 106,011 109,192 112,467 115,841 119,317 122,896 D NOPA

R 157,087 155, 154 138, 838 111, 101 106,686 81,957 77, 951 55,0 71 51, 87 5 4 8,8 65 46, 02 9 43 ,358 40,8 42 38 ,472 R NOPA

165,264 160,348 143,098 147,066 130,386 132,358 115,351 116,300 117,193 118,035 118,828 119,575 120,278

0 0 0 0 0 0 0 0 0 0 0 0 0 0 C A

1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 D F B..

O 0 0 0 0 0 0 0 0 0 0 0 0 0

164,219 159,303 142,053 146,021 129,341 131,313 114,306 115,255 116,148 116,990 117,783 118,530 119,233

14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 14,480 O

$11.34 $11.00 $9.81 $10.08 $8.93 $9.07 $7.89 $7.96 $8.02 $8.08 $8.13 $8.19 $8.23 / O

1 2 3 4 5 6 7 8 9 10 11 12 13 P

20,767 24,393 26,616 28,418 30,009 31,679 33,433 34,907 36,056 37,240 38,459 39,715 41,009 42,341 I

() 71.5% 65.0% 62.2% 56.4% 46.5% 46.2 % 36.8% 3 6.4% 27 .1% 2 7.0% 27 .0% 26.9 % 2 6.8 % 26.8% NOPA/ A 2 I C

A B

/

7.00% 156,042 $10.78

F 1.00% G 652,522 $45.06

C C 9.345% 808,563 $55.84

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Blue Nile Investment Thesis