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James Halstead Net Income decreased on 9.1% and Revenue decreased on 5.7%

01 Oct 2020 • About James Halstead ($JHD) • By InTwits

James Halstead reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • James Halstead has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 2.1%
  • CAPEX is quite volatile: £3m in FY2020, £3m in FY2019, £8m in FY2018, £7m in FY2017, £5m in FY2016
  • The company has highly profitable business model: ROIC is 32.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


James Halstead's Revenue decreased on 5.7%. During FY2016-FY2020 Revenue growth topped in FY2017 at 6.5% and was decelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.72 pp from 20.3% to 21.1% in FY2020.

Gross Margin decreased slightly on 0.94 pp from 43.0% to 42.1% in FY2020. SG&A as a % of Revenue showed almost no change in FY2020.

Net Income margin decreased slightly on 0.54 pp from 14.9% to 14.4% in FY2020. Net Income margin stuck to a declining trend at -0.26 pp per annum in FY2016-FY2020.

Investments (CAPEX, working capital and M&A)


In FY2020 the company had CAPEX/Revenue of 1.8%. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 1.6%. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2018 at 1.4% and was growing since that time.

Return on investment


The company operates at high and attractive ROIC (32.3%) and ROE (25.4%). ROIC decreased on 4.4 pp from 36.7% to 32.3% in FY2020. ROE decreased on 3.5 pp from 28.9% to 25.4% in FY2020. ROIC declined at -4.0 pp per annum in the last 5 years. ROE stuck to a declining trend at -2.4 pp per annum in FY2016-FY2020.

Leverage (Debt)


Company's Net Debt / EBITDA is -1.2x and Debt / EBITDA is 0.1x. Debt jumped on 2,970% while cash decreased slightly on 1.8%.

James Halstead has no short term refinancing risk: cash is higher than short term debt (2,626.4%).

Valuation and dividends


James Halstead's trades at EV/EBITDA 19.6x and P/E 30.5x.

Financial and operational results


James Halstead ($JHD) key annual financial indicators

mln. £201620172018201920202020/2019
P&L
Revenue226.1240.8249.5253.0238.6-5.7%
Gross Profit96.0104.8104.5108.8100.4-7.8%
SG&A49.957.557.460.456.2-6.9%
EBITDA49.050.151.550.3-2.4%
Net Income35.336.536.737.834.4-9.1%
Balance Sheet
Cash44.152.550.768.767.4-1.8%
Short Term Debt0.00.00.00.02.6
Long Term Debt0.20.20.20.23.61,685.5%
Cash flow
Capex4.84.23.64.34.2-1.1%
Ratios
Revenue growth-0.5%6.5%3.6%1.4%-5.7%
EBITDA growth3.3%2.4%-2.4%

Gross Margin42.4%43.5%41.9%43.0%42.1%-0.9%
EBITDA Margin21.6%20.8%20.3%21.1%0.7%
SG&A, % of revenue22.1%23.9%23.0%23.9%23.6%-0.3%
Net Income Margin15.6%15.2%14.7%14.9%14.4%-0.5%
CAPEX, % of revenue2.1%1.8%1.4%1.7%1.8%0.1%

ROIC47.1%46.5%39.9%36.7%32.3%-4.4%
ROE34.6%34.5%30.2%28.9%25.4%-3.5%
Net Debt/EBITDA-0.9x-1.0x-1.3x-1.2x0.1x

Peers in Construction & Materials


Below you can find James Halstead benchmarking vs. other companies in Construction & Materials 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 FY2016 FY2017 FY2018 FY2019 FY2020
Volution Group ($FAN)18.7%19.8%11.1%14.6%-
Aukett Swanke Group ($AUK)9.0%-12.7%-18.5%4.7%-
Kier Group ($KIE)-3.4%2.7%-6.8%-13.4%
Alumasc Group ($ALU)-13.6%-6.1%-8.4%-15.7%
Titon Hldgs ($TON)6.6%18.1%6.3%-8.8%-
 
Median (6 companies)8.9%9.4%7.0%-7.6%-15.7%
James Halstead ($JHD)-6.5%3.6%1.4%-5.7%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Volution Group ($FAN)48.8%49.2%47.0%47.1%-
Titon Hldgs ($TON)29.7%25.9%28.9%30.2%-
Alumasc Group ($ALU)33.4%31.3%30.6%29.8%29.7%
Kier Group ($KIE)8.9%7.0%9.5%7.4%5.9%
Galliford Try ($GFRD)10.9%7.9%9.7%0.7%2.6%
 
Median (5 companies)29.7%25.9%26.2%29.8%5.9%
James Halstead ($JHD)42.4%43.5%41.9%43.0%42.1%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Volution Group ($FAN)22.2%20.6%17.6%18.9%-
Titon Hldgs ($TON)9.8%8.8%9.0%8.8%-
Alumasc Group ($ALU)9.7%9.8%7.8%3.9%6.9%
Aukett Swanke Group ($AUK)6.6%-0.9%-18.2%1.3%-
Kier Group ($KIE)0.7%0.8%3.5%-4.0%-2.9%
 
Median (7 companies)9.8%8.9%8.4%1.3%-2.3%
James Halstead ($JHD)21.6%20.8%-20.3%21.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Alumasc Group ($ALU)1.1%0.9%3.1%2.6%1.8%
Titon Hldgs ($TON)3.0%1.9%1.9%2.6%-
Volution Group ($FAN)1.9%1.3%2.3%1.8%-
Aukett Swanke Group ($AUK)0.8%0.2%0.6%0.7%-
Kier Group ($KIE)0.4%0.4%0.5%0.3%0.1%
 
Median (7 companies)2.4%2.0%2.1%0.7%0.1%
James Halstead ($JHD)2.1%1.8%1.4%1.7%1.8%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Titon Hldgs ($TON)13.3%12.0%12.2%9.5%-
Volution Group ($FAN)9.0%9.2%6.9%8.8%-
Alumasc Group ($ALU)47.8%50.2%23.1%4.8%7.8%
Aukett Swanke Group ($AUK)9.6%-6.9%-41.3%-0.9%-
Galliford Try ($GFRD)12.7%4.5%8.9%-4.5%-5.2%
 
Median (8 companies)8.6%8.0%7.3%-2.7%-5.2%
James Halstead ($JHD)47.1%46.5%39.9%36.7%32.3%


Top companies by Net Debt / EBITDA

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Volution Group ($FAN)1.0x1.0x2.1x1.7x-
Alumasc Group ($ALU)-1.0x-0.6x0.6x1.5x1.9x
Titon Hldgs ($TON)-1.0x-1.3x-1.3x-1.9x-
Aukett Swanke Group ($AUK)-0.6x---3.0x-
 
Median (4 companies)-0.6x-0.1x-0.7x-0.2x1.9x
James Halstead ($JHD)-0.9x-1.0x--1.3x-1.2x