Ultimate Prod Share Price (ULTP)

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