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Thorpe(F.W.) Net Income dropped on 17.5% and EBITDA Margin decreased on 3.1 pp from 22.2% to 19.1%

01 Oct 2020 • About Thorpe(F.W.) ($TFW) • By InTwits

Thorpe(F.W.) reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • Thorpe(F.W.) has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's a lot of higher than industry average of 2.6%.
  • CAPEX is quite volatile: £118m in FY2020, £100m in FY2019, £90m in FY2018, £38m in FY2017, £35m in FY2016
  • The company has highly profitable business model: ROIC is 12.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased on 2.4%. Revenue decline was accelerating on average at -5.5 pp per annum in FY2016-FY2020. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.2 pp from -4.0% to -2.9% in FY2020.

Gross Margin decreased slightly on 1.4 pp from 45.5% to 44.1% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2018 at 46.8% and was declining since that time. SG&A as a % of Revenue showed almost no change in FY2020. SG&A as a % of Revenue followed a growing trend at 1.1 pp per annum in FY2016-FY2020.

Net Income margin decreased on 2.8 pp from 14.6% to 11.7% in FY2020.

Investments (CAPEX, working capital and M&A)

In FY2020 the company had CAPEX/Revenue of 6.2%. CAPEX/Revenue increased slightly on 1.0 pp from 5.1% in FY2017 to 6.2% in FY2020. Average CAPEX/Revenue for the last three years was 6.0%. CAPEX as a % of Revenue grew at 0.77 pp per annum in FY2016-FY2020.

Return on investment

The company operates at good ROIC (12.2%) while ROE is low (10.6%). ROIC decreased on 4.1 pp from 16.3% to 12.2% in FY2020. ROE decreased on 3.1 pp from 13.8% to 10.6% in FY2020. ROIC stuck to a declining trend at -1.5 pp per annum in FY2016-FY2020. During the last 5 years ROE topped in FY2017 at 15.1% and was declining since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is -2.0x and Debt / EBITDA is 0.0x. Debt jumped while cash jumped on 44.2%.

Thorpe(F.W.) has no short term refinancing risk: cash is higher than short term debt (20,191.8%).

Valuation and dividends

Thorpe(F.W.)'s trades at EV/EBITDA 13.6x and P/E 25.4x.

Financial and operational results

FY ended 30 Jun 2020

Thorpe(F.W.) ($TFW) key annual financial indicators

mln. £201620172018201920202020/2019
Gross Profit38.946.451.350.450.0-0.8%
Net Income13.014.516.116.113.3-17.5%
Balance Sheet
Short Term Debt0.
Long Term Debt0.
Cash flow
Revenue growth20.9%18.6%4.0%0.9%2.4%
EBITDA growth20.3%12.1%7.3%2.2%-11.8%

Gross Margin43.8%44.0%46.8%45.5%44.1%-1.4%
EBITDA Margin22.5%21.3%22.0%22.2%19.1%-3.1%
SG&A, % of revenue25.8%26.8%29.3%29.8%29.9%0.1%
Net Income Margin14.6%13.8%14.7%14.6%11.7%-2.8%
CAPEX, % of revenue2.9%5.1%5.5%6.2%6.2%-0.0%

Net Debt/EBITDA-0.9x-1.1x-1.2x-1.3x-2.0x-0.8x

Peers in Electronic & Electrical Equipment

Below we provide Thorpe(F.W.) benchmarking against other companies in Electronic & Electrical Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Univision Engineering ($UVEL)-24.0%16.6%154.3%-24.6%
Dewhurst ($DWHA)2.6%12.2%3.1%3.6%-
Gooch & Housego ($GHH)9.3%30.2%11.5%3.4%-
Zytronic ($ZYT)-0.8%8.6%-2.6%-9.8%-
Lpa Group ($LPA)31.7%4.9%24.5%-30.2%-
Median (6 companies)-0.8%8.9%3.1%-3.2%-24.6%
Thorpe(F.W.) ($TFW)-18.6%4.0%0.9%2.4%

Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Image Scan Hldgs ($IGE)42.3%38.3%47.5%54.1%-
Gooch & Housego ($GHH)37.5%41.1%40.1%34.8%-
Zytronic ($ZYT)42.8%41.1%37.0%33.8%-
Univision Engineering ($UVEL)32.3%34.3%32.5%22.5%19.4%
Lpa Group ($LPA)29.3%28.2%25.4%22.3%-
Median (5 companies)31.8%32.2%37.0%33.8%19.4%
Thorpe(F.W.) ($TFW)43.8%44.0%46.8%45.5%44.1%

Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Zytronic ($ZYT)25.6%28.8%23.7%20.6%-
Dewhurst ($DWHA)13.4%13.6%14.2%14.6%-
Gooch & Housego ($GHH)17.3%17.3%14.1%13.4%-
Univision Engineering ($UVEL)3.7%9.8%13.5%12.9%7.1%
Lpa Group ($LPA)9.3%11.6%9.9%2.8%-
Median (6 companies)8.3%9.8%13.8%13.2%7.1%
Thorpe(F.W.) ($TFW)22.5%21.3%22.0%22.2%19.1%

Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dewhurst ($DWHA)1.9%1.8%2.1%9.3%-
Gooch & Housego ($GHH)11.3%5.2%4.7%4.5%-
Zytronic ($ZYT)1.8%2.1%1.2%2.5%-
Lpa Group ($LPA)6.0%7.3%1.8%2.0%-
Univision Engineering ($UVEL)0.7%0.5%0.7%0.9%0.4%
Median (6 companies)1.7%1.6%1.3%2.3%0.4%
Thorpe(F.W.) ($TFW)2.9%5.1%5.5%6.2%6.2%

Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Univision Engineering ($UVEL)2.1%7.8%12.0%25.7%5.9%
Dewhurst ($DWHA)24.6%24.1%18.9%14.1%-
Zytronic ($ZYT)18.1%20.9%15.1%11.1%-
Gooch & Housego ($GHH)10.8%12.1%8.3%5.7%-
Lpa Group ($LPA)13.4%15.9%13.8%-1.2%-
Median (6 companies)9.4%13.4%14.4%8.4%5.9%
Thorpe(F.W.) ($TFW)18.5%19.0%18.1%16.3%12.2%

Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Lpa Group ($LPA)1.3x1.1x0.7x4.5x-
Gooch & Housego ($GHH)-0.8x-0.8x0.6x0.8x-
Univision Engineering ($UVEL)-7.6x-2.5x-1.3x-1.0x-0.0x
Dewhurst ($DWHA)-2.6x-2.5x-1.2x-2.1x-
Zytronic ($ZYT)-2.2x-2.1x-2.8x-3.2x-
Median (5 companies)0.4x-0.5x-1.0x-1.0x-0.0x
Thorpe(F.W.) ($TFW)-0.9x-1.1x-1.2x-1.3x-2.0x