The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Ultimate Products announces today that sales revenue fell by 7% in its FY2024 third quarter and is anticipated to remain in negative territory in Q4. As a result, the company believes that EBITDA will now be in the range of £17.5m to £18.5m compared with a current market consensus figure of £21.5m. Given the 17% cut in current year EBITDA expectations it seems prudent to adjust our fair value / share figure by a similar amount. So, we reduce it by 20% from 250p to 200p.
However, current sales setbacks look likely to prove temporary. The company clearly states its confidence in the group’s prospects for FY2025 as a whole.
UP’s core franchise values and investor attractions remain intact despite recent disruption. The company generates around two thirds of sales from the Beldray and Salter brands and continues to work on the improved messaging around these two important homewares goods names. Additionally, the business is structured as attractively capital light, due to outsourced manufacturing with positive implications for return on net equity and free cash flow.
Link to research note: https://www.equitydevelopment.co.uk/research/near-term-disruption-but-growth-case-remains-strong
Management of Ultimate Products conducted a live Investor Presentation following Interim Results (for the period to 31 Jan 2024).
Andrew Gossage (CEO) & Chris Dent (CFO) ran viewers through the financial and operational highlights of the period, which included stable profits (EBITDA) and a marked reduction in bank debt. The company also discussed trading in line with market expectations, its intention to buy back up to 10% of its shares, and the ongoing productivity drive through focus on continuous improvement, including the automation of hundreds of tasks across the business. The team also answered investor questions in a wide-ranging Q&A session.
The full video has been dividend into chapters as below:
0:00:03 Beginning
0:00:35 Introduction to Ultimate Products
0:03:00 Highlights of the period (Financial & Operational)
0:05:35 Strategy
0:17:01 Financial review
0:28:00 Summary & Outlook
0:31:42 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/ultimate-products-investor-presentation-interim-results-april-2024
Stable profits (EBITDA) and a marked reduction in bank debt were key features of Ultimate Products’ (‘UP’) interim results, released today. The company also announced its intention to buy back up to 10% of its shares. FY2024 full year results are expected to match current market expectations.
With revenue expansion likely to resume in H2 2024, and continue into FY2025, we argue that UP is more than capable of generating sales growth and free cash flow simultaneously.
Underlying 6% sales growth, a robust portfolio of six Premier Brands, the ability consistently to convert profits into cash and the prospect of a buyback programme support our view that UP’s shares merit a valuation significantly in excess of current levels. With a keen eye on relative valuation, we base our unchanged 250p fair value on 1.3x EV/sales, 10.3x EV/EBITDA and 14.7x P/E ratio. At this share price the dividend yield would still be 3.4% - i.e. in line with peers.
New research report here: https://www.equitydevelopment.co.uk/research/balancing-sales-growth-with-cash-flow-generation-interim-results
Ultimate Products, the owner of a number of leading homeware brands including Salter (the UK's oldest houseware brand, est.1760) and Beldray (est.1872), will be conducting a live investor presentation following the release of their Interim Results for the period to 31st January 2024.
The event will take place at 9.45am on Friday 12th April.
The online presentation will be hosting by Andrew Gossage (CEO) & Chris Dent (CFO) and is open to all existing & potential shareholders. Questions can be submitted during the presentation and will be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/ultimateproducts-investor-presentation-12april2024
Whoops! Meant 4% buyback obviously
Link to new research report: https://www.equitydevelopment.co.uk/research/cash-generation-drives-shareholder-value
Ultimate Products’ (UP) sales fell by 4% in the first six months of FY2024, with the likelihood of a broadly flat full year. But the company’s FY2024 profit expectations - and our own EBITDA forecasts - remain unchanged as improved gross margins should offset lower sales.
UP’s first half sales setback was caused by 3 important temporary effects. First, the company lapped an unusually strong period a year earlier when demand for air fryers was at a peak. Second, supermarket overstocking has taken longer to dissipate than might be expected. Third, UP was negatively affected by disruptions to global supply chains related to conflict in the Red Sea. In contrast, the gross margin outlook is significantly more positive as the uplift to gross margins achieved in the second half of FY2023 appears likely to be retained in FY2024. We increase our gross margin expectations in FY2024 from 25.5% to 26.6%.
Some idea of buyback potential is available from today’s trading update. The company targets long-term net debt/EBITDA at 1.0x. If our expectations for end-FY2024 net debt of £8.0m are met and £21.6m EBITDA are met, the implied headroom for share buy-backs would be of the order of £13m to £14m – equivalent to around 10% of the company’s current market cap.
With positive news on the scope for buybacks in our view offsetting lower than expected sales revenue in FY2024 we maintain fair value of 250p for the shares.
So revenue slightly down, margins slightly up.
13m conservative estimate of post tax profits gives a 10x FCF multiple
Strong brand identity and retailer relationships
And now they are returning 9% to shareholders via a 5% dividend and a 4% dividend (according to broker note) at today’s market cap
All good stuff if you ask me
This should break out > 154 and then a free run to around 175 or so. The company should hopefully sharply reduce its debt during FY24, helping the share price to break out. This is a fantastic company with huge potential in Europe, so let's see and hope what 24 offers.
Link is here: https://www.equitydevelopment.co.uk/research/ultimate-products-investor-presentation-video-recording-fy-results
Simon Showman (CEO), Andrew Gossage (Managing Director) and Chris Dent (CFO) of Ultimate Products ran investors through highlights of their Full Year Results for the period to 31st July 2023, which saw an 8% increase in revenue and +11% in gross profit, achieved with no overall price inflation.
Management provided a detailed financial overview and discussed the new European showroom in Paris as a catalyst for European expansion. The presenting team also answered a wide range of questions from the viewing audience.
The full video has been divided into chapters for ease of viewing, as below:
0:00:00 Beginning, team introduction
0:00:21 Highlights of FY23 period
0:02:24 Strategy
0:11:06 Financials
0:21:48 Summary & Outlook
0:23:38 Questions & Answers
May I be the first to post under the new name 🙋🏼♂️