Andrews Sykes

07 August 2024
By Maynard Paton

FY 2023 results summary for Andrews Sykes (ASY):

• A “robust” FY performance, which delivered a record £23m profit through “careful cost management” and positive sales momentum within a number of European countries.

• UK air-conditioning revenue declined 14% to £8m following lower summer temperatures, leaving the domestic market’s progress to again be dictated by pump hire — up 2% to register a sixth consecutive FY improvement.

• Closing the French subsidiary, curtailing Middle Eastern losses and reducing the wider workforce by 13% were among the decisive actions that helped the group margin achieve a new 29% high.

• The very respectable accounts showcased net cash at £20m, capex requirements of just £3m, a 34% return on equity and a “fully de-risked” pension scheme.

• A possible 13-14x P/E does not appear outrageous, with the restricted free float, weather-sensitive operations and absence of obvious economies of scale counterbalanced perhaps by bid-target potential. I continue to hold.

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26 April 2024
By Maynard Paton

H1 2023 results summary for Andrews Sykes (ASY):

• A bumper £25m special dividend was the clear highlight of this record H1, which reported net cash reaching £39m after revenue increased 2% and profit gained 14%.

• Progress was underpinned mostly by ASY’s European depots, where revenue climbed 17% and earlier restructuring led to “significantly reduced” losses in France. 

• The “de-risking” of the pension scheme was a welcome surprise and, alongside a very intriguing executive appointment, could be interpreted as preparing the company for a potential bidder.

• The accounts remain very respectable, with the H1 margin at a super 25%, cash generation helped by tight stock management and bank debt kept at zero.

• A possible 13-14x P/E does not appear outrageously expensive, although the limited free float, weather-sensitive operations and mixed H2 outlook might restrict any re-rating. I continue to hold.

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19 April 2024
By Maynard Paton

FY 2022 results summary for Andrews Sykes (ASY):

• A record FY performance, with revenue up 10% and profit up 8% buoyed mainly by greater demand for water pumps rather than the scramble for air conditioners during the 40-degree summer.

• Bolstered by strong Italian, Dutch and Belgian progress and defying problems in France, European revenue climbed 24% and represented a record 31% of the group’s top line during H2.

• A £2m write-down of unpaid customer invoices appeared to draw a line under the group’s problematic Middle Eastern division.

• Revenue per employee reached a new £151k high although hire revenue at 1.07x the cost of hire equipment indicated no real improvement to fleet productivity.

• The accounts remain very favourable, showcasing net cash of £37m, a 26% return on equity and a 20%-or-more operating margin for 20 consecutive years. I continue to hold.

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30 April 2023
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• A satisfactory performance, with H1 revenue reaching a new £38m high, H1 profit gaining 8% and the welcome declaration of a £7m special dividend.

• Assisted by strong Italian progress, European revenue climbed 17% to represent 27% — a record proportion — of the total top line.

• A healthy 22% margin and favourable cash conversion lifting net cash to £34m left the accounts in good shape. 

• A bombshell delisting on AIM brings greater attention to ASY’s 90% family ownership and the associated ‘relationship agreement’ small-print.

• The 10% free float may explain why the shares yield a useful 4.7% despite the robust financials, upbeat company-blog commentary and potential further European expansion. I continue to hold.

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18 August 2022
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• An encouraging performance, with profit recovering 35% following the pandemic to almost match the record set during FY 2018.

• Additional reporting disclosures revealed ASY’s main UK Hire division enjoyed sales rebounding 17% and a wonderful 34% margin.

• European operations expanded to 27% of group revenue following very strong progress, although Middle Eastern woes included an extra £1m provision. 

• The books remain in good shape, with useful cash generation lifting net funds to £29m and perhaps increasing the possibility of another special dividend. 

• An estimated 13-14x P/E and near-5% yield hardly seem expensive given the appealing financials, potential for an FY 2022 heatwave bonanza and scope for further European expansion. I continue to hold.

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07 March 2022
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• Following the disappointing finish to FY 2020, a better-than-expected H1 performance with revenue and profit up 7% and 14% respectively.

• Progress was buoyed by ASY’s European operations, which witnessed sales rebound 29% to set a new divisional H1 record. 

• A restatement revealed previously undisclosed furlough income had represented 12% of H1 2020 profit.

• The books remain in good shape, with a robust 22% margin and net funds at a sizeable £22m, although extra pension contributions are still required.

• A possible P/E of 13.5 and yield of 5% hardly seem expensive for the appealing financials and potential of further European expansion. I continue to hold.

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25 May 2021
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• H2 revenue down 20% and H2 profit down 37% disappointingly confirmed a lower level of pandemic resilience than H1. 

• However, the main UK equipment-hire subsidiary apparently delivered a FY 2020 profit only “marginally below” that of FY 2019.  

• Commendable ‘going concern’ text revealed a “cautiously realistic” assumption of a “comparable” performance for FY 2021.

• The books remain healthy with robust margins, effective working-capital management and sizeable net cash, although the pension scheme is absorbing extra contributions. 

• A possible P/E of 16-17 and yield of 4% do not appear completely outrageous given the appealing financials and potential for further European expansion. I continue to hold.

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13 October 2020
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• “Resilient” half-year figures that showed revenue down 4% and profit up 2%. 

• No light was shed on how ASY could sustain its performance when 50% of UK employees were furloughed. 

• The statement confirmed bumper cash flow of £14m that prompted a special £10m dividend during the summer.

• The books remain healthy with high margins and net cash, although the pension scheme might require extra funds. 

• A possible P/E of 17 does not appear completely outrageous for a seemingly pandemic-resistant business. I continue to hold.

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16 June 2020
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• Creditable full-year figures that showed revenue down 2% and profit down 7% due to less extreme weather. 

• The decision to furlough 50% of UK staff feels odd given management talks of “resilient” trading, kept company depots open during lockdown and has declared a final dividend.

• A commendable cash flow projection raises pandemic-profitability questions but suggests extra funding is not needed.

• An impressive second half ensured the accounts remained healthy with high margins and an appealing return on equity.  

• A possible P/E of 12-14 and yield of 4.5% does not seem expensive if indeed ASY does “return to normal levels of trading” for 2021. I continue to hold.

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02 December 2019
By Maynard Paton

Results summary for Andrews Sykes (ASY):

• Revenue dropped 8% and operating profit dived 25% following lower demand for ASY’s heaters and boilers.

• European operations continue to represent almost a quarter of the business, with new depots opened recently in France.

• Accounts now affected by IFRS 16, although the fundamental attractions of decent margins (19%) and net cash (£20m) remain in place. 

• Outlook comments appeared encouraging, with the company blog suggesting busy demand for pumps to combat flooding.

• The underlying P/E could be 16 and the yield is 3.9%. I continue to hold.

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