Redrow Net Income dropped on 65.7% and Revenue dropped on 36.6%
16 Sep 2020 • About Redrow (
$RDW) • By InTwits
Redrow reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Redrow has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has business model with low profitability: ROIC is 8.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.8x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Redrow's Revenue dropped on 36.6%. Revenue followed a declining trend in FY2016-FY2020. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 8.0 pp from 19.6% to 11.6% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 20.1% and was declining since that time.
Gross Margin decreased on 5.8 pp from 23.9% to 18.1% in FY2020. During the last 5 years Gross Margin topped in FY2018 at 24.4% and was declining since that time. SG&A as a % of Revenue increased on 2.6 pp from 4.4% to 7.0% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 4.4%.
Net Income margin decreased on 7.1 pp from 15.6% to 8.4% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 16.0% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.52% in FY2020. CAPEX/Revenue showed almost no change from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 0.27%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 0.060% and was growing since that time.
Return on investment
The company operates at low ROIC (8.4%) and ROE (7.0%). ROIC dropped on 17.0 pp from 25.4% to 8.4% in FY2020. ROE dropped on 14.4 pp from 21.4% to 7.0% in FY2020. During the last 5 years ROIC topped in FY2018 at 26.0% and was declining since that time. During the last 5 years ROE topped in FY2018 at 22.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 1.1x. Net Debt / EBITDA surged on 1.1x from -0.3x to 0.8x in FY2020. Debt jumped on 113% while cash dropped on 78.4%. During the last 5 years Net Debt/EBITDA bottomed in FY2019 at -0.3x.
The company has no short term refinancing risk: short term debt is zero.
Valuation and dividends
The company's trades at EV/EBITDA 9.1x and P/E 11.3x.
Management team
Redrow's CEO Matthew Pratt has spent 8 months with the company. The company's CFO Barbara M Richmond has spent 11 years with the company.
Financial and operational results
FY ended 30 Jun 2020
Redrow ($RDW) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,382 | 1,660 | 1,920 | 2,112 | 1,339 | -36.6% |
| Gross Profit | 334 | 405 | 469 | 504 | 242 | -52.0% |
| SG&A | 73 | 83 | 87 | 93 | 94 | 1.1% |
| EBITDA | 262 | 324 | 385 | 414 | 155 | -62.6% |
| Net Income | 200 | 253 | 308 | 329 | 113 | -65.7% |
Balance Sheet
|
|---|
| Cash | 135 | 62 | 68 | 204 | 44 | -78.4% |
| Short Term Debt | 44 | 45 | 0 | 0 | 0 | |
| Long Term Debt | 230 | 90 | 5 | 80 | 170 | 112.5% |
Cash flow
|
|---|
| Capex | 6 | 1 | 2 | 4 | 7 | 75.0% |
Ratios
|
|---|
| Revenue growth | 20.2% | 20.1% | 15.7% | 10.0% | -36.6% | |
| EBITDA growth | 22.4% | 23.7% | 18.8% | 7.5% | -62.6% | |
|
|---|
| Gross Margin | 24.2% | 24.4% | 24.4% | 23.9% | 18.1% | -5.8% |
| EBITDA Margin | 19.0% | 19.5% | 20.1% | 19.6% | 11.6% | -8.0% |
| SG&A, % of revenue | 5.3% | 5.0% | 4.5% | 4.4% | 7.0% | 2.6% |
| Net Income Margin | 14.5% | 15.2% | 16.0% | 15.6% | 8.4% | -7.1% |
| CAPEX, % of revenue | 0.4% | 0.1% | 0.1% | 0.2% | 0.5% | 0.3% |
|
|---|
| ROIC | 21.8% | 23.4% | 26.0% | 25.4% | 8.4% | -17.0% |
| ROE | 21.2% | 22.2% | 22.7% | 21.4% | 7.0% | -14.4% |
| Net Debt/EBITDA | 0.5x | 0.2x | -0.2x | -0.3x | 0.8x | 1.1x |
Peers in Household Goods & Home Construction
Below you can find Redrow benchmarking vs. other companies in Household Goods & Home Construction 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mcbride ($MCB) | - | -7.0% | 9.0% | 4.6% | -2.1% |
| Colefax Group ($CFX) | - | 4.7% | 6.9% | 0.4% | -9.3% |
| Barratt Developments ($BDEV) | - | 9.8% | 4.8% | -2.3% | -28.2% |
| M J Gleeson ($GLE) | - | 12.9% | 22.7% | 27.0% | -41.1% |
| |
|---|
| Median (4 companies) | 6.1% | 4.3% | 7.2% | 0.4% | -18.7% |
|---|
| Redrow ($RDW) | - | 20.1% | 15.7% | 10.0% | -36.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Colefax Group ($CFX) | 56.3% | 55.1% | 53.7% | 54.3% | 55.8% |
| Mcbride ($MCB) | 35.8% | 36.4% | 34.2% | 33.3% | - |
| M J Gleeson ($GLE) | 33.5% | 35.4% | 33.2% | 30.0% | 27.5% |
| Barratt Developments ($BDEV) | 18.9% | 20.0% | 20.7% | 22.8% | 18.0% |
| Crest Nicholson Hldgs ($CRST) | 26.7% | 26.4% | 22.0% | 16.9% | - |
| |
|---|
| Median (5 companies) | 26.7% | 30.0% | 32.1% | 30.0% | 27.5% |
|---|
| Redrow ($RDW) | 24.2% | 24.4% | 24.4% | 23.9% | 18.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Barratt Developments ($BDEV) | 15.9% | 17.3% | 17.8% | 19.0% | 15.0% |
| M J Gleeson ($GLE) | 20.4% | 21.1% | 19.2% | 16.8% | 5.6% |
| Crest Nicholson Hldgs ($CRST) | 20.6% | 20.4% | 16.4% | 10.8% | - |
| Colefax Group ($CFX) | 9.4% | 7.0% | 8.7% | 9.1% | 13.6% |
| Mcbride ($MCB) | 7.7% | 9.6% | 7.6% | 6.6% | - |
| |
|---|
| Median (5 companies) | 13.8% | 14.8% | 17.1% | 10.8% | 13.6% |
|---|
| Redrow ($RDW) | 19.0% | 19.5% | 20.1% | 19.6% | 11.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mcbride ($MCB) | 1.7% | 2.4% | 3.2% | 2.4% | - |
| Colefax Group ($CFX) | 3.0% | 5.1% | 2.8% | 2.4% | 4.1% |
| M J Gleeson ($GLE) | 0.7% | 0.7% | 0.7% | 0.7% | 1.6% |
| Crest Nicholson Hldgs ($CRST) | 0.2% | 0.2% | 0.2% | 0.3% | - |
| Barratt Developments ($BDEV) | 0.1% | 0.1% | 0.2% | 0.2% | 0.2% |
| |
|---|
| Median (5 companies) | 1.2% | 1.2% | 1.7% | 0.7% | 1.6% |
|---|
| Redrow ($RDW) | 0.4% | 0.1% | 0.1% | 0.2% | 0.5% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Barratt Developments ($BDEV) | 16.5% | 18.4% | 18.3% | 17.3% | 9.1% |
| Colefax Group ($CFX) | 20.2% | 11.2% | 17.6% | 18.3% | 7.9% |
| M J Gleeson ($GLE) | 20.2% | 20.9% | 20.7% | 20.7% | 2.5% |
| Mcbride ($MCB) | 19.1% | 23.8% | 18.4% | 14.0% | - |
| |
|---|
| Median (4 companies) | 19.1% | 15.6% | 18.2% | 17.3% | 7.9% |
|---|
| Redrow ($RDW) | 21.8% | 23.4% | 26.0% | 25.4% | 8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mcbride ($MCB) | 1.7x | 1.2x | 2.2x | 2.5x | - |
| Crest Nicholson Hldgs ($CRST) | -0.4x | -0.2x | -0.1x | -0.3x | - |
| M J Gleeson ($GLE) | -0.8x | -1.0x | -1.1x | -0.7x | -2.0x |
| Barratt Developments ($BDEV) | -0.9x | -0.9x | -0.9x | -0.8x | -0.5x |
| Colefax Group ($CFX) | -1.4x | -1.2x | -1.2x | -1.2x | 1.6x |
| |
|---|
| Median (5 companies) | -0.6x | -0.8x | -1.0x | -0.7x | -0.5x |
|---|
| Redrow ($RDW) | 0.5x | 0.2x | -0.2x | -0.3x | 0.8x |
