Welcome

A few times a month, I am looking to break down a business that is prepping for an IPO or had an IPO earlier. Please note that nothing mentioned here should be looked upon as financial advice. I am looking forward to doing more of these going forward, so let me know what would you like me to discuss going forward.

And with that, let’s talk about today’s briefing.

Company Summary

If you have used Myprotein or Optimum Nutrition, then you would know what Applied Nutrition does. Applied Nutrition specializes in sports nutrition products designed to enhance athletic performance and overall health. The company aims to deliver innovative and high-quality supplements to support fitness enthusiasts and professional athletes. With the support of JD Sports, Applied Nutrition is now preparing for a £1 billion IPO on the London Stock Exchange. Their vision is to become a leading global brand in the sports nutrition market, driven by significant growth and a commitment to quality and innovation in their product offerings.

Applied Nutrition is founded by Thomas Ryder in 2014 and is the only Liverpool-based business among The Sunday Times Top 100 prestigious ranking of Britain's fastest-growing private companies in 2024. Despite being relatively new to the market, Applied Nutrition has quickly established itself as a formidable player in the sports nutrition industry. The company has secured a diverse and growing customer base, leveraging the strong support from JD Sports, which acquired a 32% stake in 2021. Applied Nutrition's financial performance has been impressive, with a reported turnover of £61 million for the fiscal year ending July 2023. This represents a substantial 74% increase from the previous year, highlighting the company's rapid growth trajectory. The business generated more than £10 million in cash from operations, underscoring its strong financial health and efficient operations.

The company is targeting £100 million in revenue for the current financial year, demonstrating confidence in its growth strategy and market demand for its products. This projected growth positions Applied Nutrition favourably for its upcoming £1 billion IPO, despite the broader challenges in the London IPO market​

Brief

• Applied Nutrition specializes in sports nutrition products designed to enhance athletic performance and overall health.

• The global sports nutrition market was valued at approximately $26.11 billion in 2020. The market is expected to reach $58.27 billion by 2026, growing at a compound annual growth rate (CAGR) of around 15.01%

• Applied Nutrition reported a turnover of £61 million for the fiscal year ending July 2023, marking a 74% increase from the previous year.

• The company generated over £10 million in cash from operations, highlighting its strong financial health and operational efficiency. Looking ahead, Applied Nutrition aims to reach £100 million in revenue for the current financial year.

• The company is preparing for a £1 billion IPO on the London Stock Exchange in 2024

Management Team

Applied Nutrition's leadership team is a blend of experienced professionals from diverse backgrounds in the nutrition and health industry, combining expertise in business strategy, operations, finance, and sales.

Thomas Ryder, CEO

CEO since 2014, Thomas Ryder has been instrumental in driving the company’s growth and strategic direction. Before joining Applied Nutrition, Ryder held senior leadership roles in the health and wellness sector, leveraging his extensive experience to scale businesses and foster innovation. Thomas Ryder's LinkedIn

Steven Granite, COO

Steven Granite brings a wealth of operational expertise to Applied Nutrition. As COO, Granite is responsible for overseeing the company's day-to-day operations, ensuring efficiency and excellence in execution. His background includes significant experience in operational leadership within the nutrition and consumer goods industries. Steven Granite's LinkedIn

Joseph Pollard, CFO

Joseph Pollard manages the financial strategy and operations of Applied Nutrition. With a strong background in finance and accounting, Pollard ensures the company maintains robust financial health and compliance. His previous roles include senior financial positions in both public and private companies. Joseph Pollard's LinkedIn

Mike Fabiano, VP of Sales

Mike Fabiano leads the sales efforts at Applied Nutrition, driving revenue growth and expanding market reach. His extensive experience in sales leadership across various sectors, including health and nutrition, equips him with the skills to develop and implement effective sales strategies. Mike Fabiano's LinkedIn

Aaron Heidebreicht, CEO of Applied Nutrition USA

Aaron Heidebreicht is the CEO of its US business, trading as AN USA LLC. Aaron is a former professional athlete who has held leadership positions in some of the US's biggest sports nutrition brands including GNC, Nutrabolt (makers of C4 and Xtend), and KAGED, where he was Chief Commercial Officer Aaron Heidebreicht's LinkedIn

Investors

Applied Nutrition's forthcoming IPO looks set to offer substantial returns to its key investors.

Thomas Ryder, the CEO of Applied Nutrition, currently owns around 55% of the group. As part of the IPO, Ryder is believed to be looking to reduce his stake to 30%, potentially resulting in a payout of approximately £125 million. Ryder's continued significant ownership stake post-IPO signals his ongoing commitment to the company's future success.

JD Sports Fashion PLC (LSE.), which acquired a 32% shareholding in Applied Nutrition in 2021 for £25 million, is also expected to reduce its stake. JD Sports plans to sell down its shareholding to between 5% and 10%.

Business Model

Applied Nutrition offers a comprehensive range of sports nutrition products designed to support athletic performance and general health. The product portfolio includes:

• Protein Powders: Formulated to enhance muscle recovery and growth, these products are available in various flavours and formulations to cater to different dietary needs and preferences.

• Vitamins and Supplements: These include a variety of vitamins, minerals, and specialized supplements aimed at boosting overall health, immunity, and specific athletic goals.

• Pre-workout and Post-workout Formulations: Designed to enhance energy, focus, and recovery, these products are targeted at optimizing workout performance and outcomes.

Distribution Channels Applied Nutrition has adopted a multi-channel distribution strategy to maximize its market reach:

• Retail Partners: The company collaborates with major retailers, including supermarkets, specialty health stores, and fitness centers. This widespread retail presence ensures that products are accessible to a broad consumer base.

• E-commerce Platforms: Recognizing the growing trend of online shopping, Applied Nutrition has a strong presence on major e-commerce platforms. This includes their own website as well as third-party sites like Amazon, allowing for direct-to-consumer sales and increased convenience.

Growth and Expansion In recent years, Applied Nutrition has focused on expanding its product line and entering new markets. Key initiatives include:

• Innovative New Products: Regular introduction of new and improved products to meet the evolving needs of athletes and fitness enthusiasts

• International Expansion: Building on its success in Europe, Applied Nutrition is actively expanding into new geographical markets, including North America and Asia.

• Partnerships and Sponsorships: Collaborating with athletes, fitness influencers, and sports organizations to enhance brand visibility and credibility.

Market Opportunity

The global sports nutrition market is projected to reach $753.60 billion by 2030, growing at a CAGR of 7.6%. Applied Nutrition aims to capitalize on this growth with its robust product portfolio and strong brand reputation.

Financial Highlights

Headquartered in the UK, the company reported a revenue of £61 million for the fiscal year ending July 2023, which is a 74% increase from the previous year. The company’s 74% year-over-year (YoY) revenue growth is a testament to its expanding market presence and successful product strategies. This rapid growth has positioned Applied Nutrition favourably in the competitive sports nutrition market. Applied Nutrition has also demonstrated strong cash generation capabilities, with over £10 million in cash generated from operations.

Competition

Applied Nutrition faces competition from major players like Glanbia and Abbott. However, its focus on quality and innovation positions it favourably in the market.

Myprotein and Optimum Nutrition (ON) are significant competitors in the sports nutrition market. Myprotein, part of The Hut Group (THG), is known for its extensive range of products and strong online presence. However, Applied Nutrition differentiates itself with a more focused approach on quality and innovation. Myprotein's broad product line includes everything from protein powders to vitamins and activewear, but Applied Nutrition's targeted product development and high-quality formulations offer a unique value proposition.

Optimum Nutrition, a subsidiary of Glanbia, is another formidable competitor. Known for its popular Gold Standard Whey Protein, ON has a strong reputation for quality. However, Applied Nutrition’s commitment to innovative formulations and clean labelling practices appeals to health-conscious consumers looking for transparency and high efficacy in their supplements.

Applied Nutrition's strategic focus on superior ingredients and scientific research sets it apart. While Myprotein leverages its massive e-commerce infrastructure and ON benefits from Glanbia's extensive distribution network, Applied Nutrition's emphasis on rigorous quality control and innovation ensures its products meet the highest standards, thereby fostering strong customer loyalty.

Summary of Competitors

• Glanbia (Optimum Nutrition)

  • Strengths: Strong brand reputation, extensive distribution network.

  • Weaknesses: Broader product range may dilute focus on specific needs.

• Abbott

  • Strengths: Established brand, extensive research and development resources.

  • Weaknesses: Primarily focused on broader health products beyond sports nutrition.

• Myprotein (THG)

  • Strengths: Wide product range, strong e-commerce presence.

  • Weaknesses: Large product variety may lead to inconsistent focus on quality.

• Optimum Nutrition (Glanbia)

  • Strengths: High-quality products, strong market presence.

  • Weaknesses: Less focus on innovation compared to Applied Nutrition.

Summing up

With strong backing from JD Sports, a growing market, and a diverse product range, Applied Nutrition is well-positioned for a successful IPO and future growth.

Applied Nutrition stands to benefit from its JD Sports support. This support boosts distribution and brand visibility. The growing sports nutrition market, driven by health consciousness, offers ample growth opportunities. Applied Nutrition’s broad product range targets both athletes and casual fitness enthusiasts, reducing risk and opening multiple revenue streams.

Strong fundamentals suggest a promising IPO, but maintaining growth will be key. Strategic focus and market differentiation will drive long-term success. Investors must weigh risks and rewards, as competitive dynamics will influence the outcome. The coming months will reveal if Applied Nutrition can sustain its momentum..