Subject: Re: PILOT
Did WEB overpay for Pilot? A respected writer on SA posted this snippet yesterday:


That leaves Pilot, with sales and margins both down. While retail volumes improved, revenue from bulk fuel sales and trading were both lower. As I stated at the 2023 annual meeting, I believe Berkshire greatly overpaid for Pilot by basing some of the purchase price on sales during a year of record fuel margins. Overall, Berkshire spent $13.65 billion to buy Pilot in three tranches. As you see below in my valuation model, if we value Pilot on H1 2025 sales at a multiple similar to Canadian fuel retailer Couche Tard (ATD:CA), fair value for Pilot would be more like $8 billion. Fuel margins could recover, but Pilot may end up being one of Warren's mistakes requiring an impairment charge.



Yes, most likely. Greg and Warren knew they were overpaying for the last tranche of Pilot. They probably got a fair deal on the earlier buys.

Revenue from Bulk fuel sales and trading are down because Pilot is exiting many of these non-core businesses. They completely exited the trading business. The water pipeline and water trucking business sound like the next businesses to be disposed of. When they dispose of these businesses, the seeking alpha writer will point to falling revenues again.

https://www.ttnews.com/article...

Pilot is paying down their once-substantial debt fairly quickly. The debt was expensive bank debt when Berkshire took control but was "re-financed" with National Indemnity as the lender.

I wouldn't be surprised to see a write down of the considerable good-will, but I think Pilot will turn out just fine.