Lpa Group revenue jumped on 24.5% while EBITDA Margin decreased slightly on 1.7 pp from 11.6% to 9.9%

24 Jan 2019 • About Lpa Group ($LPA) • By InTwits

Lpa Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:

EBITDA Margin is quite volatile: 9.9% in FY2018, 11.6% in FY2017, 9.3% in FY2016, 4.4% in FY2015, 5.7% in FY2014
Lpa Group has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.3%. At the same time it's a lot of higher than industry average of 1.9%.
CAPEX is quite volatile: £0m in FY2018, £2m in FY2017, £1m in FY2016, £0m in FY2015, £2m in FY2014
The company has highly profitable business model: ROIC is 13.8%
It operates with medium-size leverage: Net Debt/EBITDA is 0.7x while industry average is -0.4x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Lpa Group's Revenue surged on 24.5%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 17.7 pp from 38.5% to 20.8% in 2018.

Gross Margin decreased on 2.8 pp from 28.2% to 25.4% in FY2018. SG&A as a % of Revenue increased on 4.7 pp from 12.7% to 17.4% in FY2018.

Net Income margin decreased slightly on 1.5 pp from 7.9% to 6.3% in FY2018. During the last 5 years Net Income margin topped in FY2017 at 7.9%.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 1.8% in FY2018. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average level of CAPEX/Revenue for the last three years was 5.0%.

Return on investment

The company operates at good ROIC (13.8%) and ROE (15.1%). ROIC decreased on 2.2 pp from 15.9% to 13.8% in FY2018. ROE decreased on 3.1 pp from 18.2% to 15.1% in FY2018. During the last 5 years ROE topped in FY2017 at 18.2%.

Leverage (Debt)

Debt level is 0.7x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 1.1x to 0.7x in FY2018. Debt increased slightly on 1.9% while cash surged on 703%. During the last 5 years Net Debt/EBITDA topped in FY2015 at 3.8x and was declining since that time.

Lpa Group has no short term refinancing risk: cash is higher than short term debt (296.9%).

Valuation and dividends

Lpa Group's trades at EV/EBITDA 4.9x and P/E 6.6x.

Financial and operational results

FY ended 30 Sep 2018

Lpa Group ($LPA) key annual financial indicators

mln. £	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	16.835	16.265	21.422	22.482	27.979	24.5%
Gross Profit	4.975	4.455	6.280	6.337	7.117	12.3%
SG&A		2.607	3.050	2.862	4.873	70.3%
EBITDA	0.968	0.711	1.993	2.603	2.761	6.1%
Net Income	0.295	0.694	1.462	1.768	1.771	0.2%
Balance Sheet
Cash	0.525	0.005	0.149	0.119	0.956	703.4%
Short Term Debt	0.235	1.174	0.385	0.493	0.322	-34.7%
Long Term Debt	1.784	1.548	2.305	2.379	2.605	9.5%
Cash flow
Capex	2.489	0.287	1.294	1.643	0.496	-69.8%
Ratios
Revenue growth	-4.5%	-3.4%	31.7%	4.9%	24.5%
EBITDA growth	4.0%	-26.5%	180.3%	30.6%	6.1%

Gross Margin	29.6%	27.4%	29.3%	28.2%	25.4%	-2.8%
EBITDA Margin	5.7%	4.4%	9.3%	11.6%	9.9%	-1.7%
SG&A, % of revenue		16.0%	14.2%	12.7%	17.4%	4.7%
Net Income Margin	1.8%	4.3%	6.8%	7.9%	6.3%	-1.5%
CAPEX, % of revenue	14.8%	1.8%	6.0%	7.3%	1.8%	-5.5%

ROIC	7.0%	2.1%	13.4%	15.9%	13.8%	-2.2%
ROE	4.1%	9.2%	17.5%	18.2%	15.1%	-3.1%
Net Debt/EBITDA	1.5x	3.8x	1.3x	1.1x	0.7x	-0.3x

Peers in Electronic & Electrical Equipment

Below you can find Lpa Group benchmarking vs. other companies in Electronic & Electrical Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Image Scan Hldgs ($IGE)		-22.2%	94.1%	51.9%	-31.2%
Flowgroup ($FLOW)	141.9%	21.1%	144.6%	39.8%
Gooch & Housego ($GHH)		12.3%	9.3%	30.2%	11.5%
Walsin Lihwa Corp ($WALS)		-8.4%	-4.0%	17.0%
Stadium Group ($SDM)	-1.1%	29.0%	-1.5%	15.2%
Median (16 companies)	-4.7%	-1.1%	-1.2%	8.9%	2.0%
Lpa Group ($LPA)		-3.4%	31.7%	4.9%	24.5%

Top companies by Gross margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Prophotonix Ltd ($PPIR)			45.4%	44.6%
Gooch & Housego ($GHH)	40.5%	39.4%	37.5%	41.1%	40.1%
Zytronic ($ZYT)	36.6%	41.9%	42.8%	41.1%	37.0%
Elektron Technology ($EKT)	34.8%	35.6%	37.2%	39.1%	49.7%
Image Scan Hldgs ($IGE)	30.7%		42.3%	38.3%	47.5%
Median (14 companies)	29.2%	24.1%	31.8%	32.4%	40.1%
Lpa Group ($LPA)	29.6%	27.4%	29.3%	28.2%	25.4%

Top companies by EBITDA margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Zytronic ($ZYT)	22.9%	27.8%	25.6%	28.8%	23.7%
Maruwa Co Ltd ($MAW)	17.8%	14.7%	19.6%	21.4%	28.7%
Morgan Advanced Materials ($BA29)	9.8%	12.8%	14.6%	19.2%
Gooch & Housego ($GHH)	13.4%	19.8%	17.3%	17.3%	14.1%
Dewhurst ($DWHA)	13.7%	14.7%	13.4%	13.6%	14.2%
Median (15 companies)	4.5%	8.5%	8.3%	8.9%	14.2%
Lpa Group ($LPA)	5.7%	4.4%	9.3%	11.6%	9.9%

Top companies by CAPEX/Revenue, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Maruwa Co Ltd ($MAW)	7.6%	6.5%	4.4%	6.1%	6.9%
Gooch & Housego ($GHH)	2.7%	3.9%	11.3%	5.2%	4.7%
Wintek Corp ($WTKA)	2.4%	0.6%	1.6%	4.2%
Solid State ($SSP)	1.3%	1.4%	2.0%	3.7%	0.9%
Morgan Advanced Materials ($BA29)	3.7%	7.0%	4.0%	3.4%
Median (16 companies)	1.3%	1.4%	1.7%	1.6%	1.3%
Lpa Group ($LPA)	14.8%	1.8%	6.0%	7.3%	1.8%

Top companies by ROIC, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Image Scan Hldgs ($IGE)	-45.6%		16.4%	39.8%	-8.5%
Morgan Advanced Materials ($BA29)	10.9%	18.4%	21.9%	31.6%
Prophotonix Ltd ($PPIR)				25.8%
Dewhurst ($DWHA)	24.5%	27.3%	24.6%	24.1%	18.9%
Zytronic ($ZYT)	17.0%	22.7%	18.1%	20.9%	15.1%
Median (16 companies)	4.7%	9.9%	9.4%	13.4%	15.1%
Lpa Group ($LPA)	7.0%	2.1%	13.4%	15.9%	13.8%

Top companies by Net Debt / EBITDA


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Apc Technology Group ($APC)	0.5x			5.2x
Walsin Lihwa Corp ($WALS)	3.9x	4.6x	2.7x	1.9x
Stadium Group ($SDM)	1.2x	0.3x	0.7x	1.4x
Morgan Advanced Materials ($BA29)	2.3x	1.8x	1.7x	0.9x
Solid State ($SSP)	0.4x	0.7x	0.7x	-0.3x	-0.2x
Median (13 companies)	0.5x	-0.2x	0.4x	-0.5x	-1.0x
Lpa Group ($LPA)	1.5x	3.8x	1.3x	1.1x	0.7x

Lpa Group stock price chart

Lpa Group financials

mln.	FY2010	FY2011	FY2012

Revenue	14.716	17.322	18.352
EBITDA	-0.035	0.804	1.219
Net income	-0.383	0.335	0.737
CAPEX	0.083	0.144	1.676
Debt	2.296	1.170	2.373
Cash	0.005	0.006	0.007

About Lpa Group

LPA Group Plc designs, manufactures, and distributes LED lighting, and electronic and electro-mechanical systems for rail, aerospace and defense, aircraft support, infrastructure, marine, and industrial markets primarily in the United Kingdom. The company offers ambient light responsive control systems; imperium LED highbay, a highbay luminaire; LumiBatten, a LED linear luminaire; LumiTray, a LED retrofit gear tray; LED lighting solutions; customized LED down lights; gooseneck LED reading lights; LED dimming unit and power supply units; LED emergency, flood, reading, step, and work lights; LumiMatrix light engine; LumiPanel LED luminaire replacement; LumiSpot for centralized power distribution; LumiStrip fluorescent tube replacement; LumiTile light engine; and marine LED spot lights. It also provides fluorescent lighting solutions for rail vehicles, such as battery back-up system, electronic ballast, and bespoke and long life fluorescent lighting solutions. In addition, the company offers connector systems, including aircraft ground power supply connectors, industrial and rail inter-car electrical connectors, rail electrical cabinets, rail auxiliary power systems, and rail repair and refurbishment systems. Further, it provides electrical components, including circuit breakers, connectors, contactors, fans, relays, snap action switches, and sockets for hermetically sealed relays; mechanical components comprising pipe and cable supports; and electronic and design manufacturing services for analogue and power electronics, printed circuit boards, and luminaries and electronics into enclosure or chassis. Additionally, the company offers LPA Transport+ support solutions, such as asset maintenance, refurbishment, repair, and upgrade solutions. The company also exports its products primarily to Europe, Asia, and Australia. LPA Group Plc was incorporated in 1961 and is based in Saffron Walden, the United Kingdom.