FW Thorpe

01 February 2023
By Maynard Paton

Results summary for FW Thorpe (TFW):

• A record FY outcome (profit +29%) bolstered by the acquisition of Spanish firm Zemper that supported TFW’s 20th consecutive annual dividend increase.

• Progress at Thorlux was supported by impressive SmartScan sales (+49%), with the innovative lighting system reducing running costs for customers by as much as 62%.

• A positive Dutch performance has led to a reassuring non-exec appointment and an encouraging start within the electric-vehicle charging market.

• Net cash of £39m may arguably be only £9m following the subsequent purchase of TFW’s largest customer plus the eventual earn-out for Zemper.

• A possible 24x P/E seemingly reflects TFW’s healthy order book, savvy acquisition approach, distinguished operating history and growth opportunities beyond the UK and lighting. I continue to hold.

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01 August 2022
By Maynard Paton

Results summary for FW Thorpe (TFW):

• A record H1 performance bolstered by the acquisition of Spanish firm Zemper and complemented by another special dividend.

• Progress at Thorlux continues to be modest, but a new MD, an order book up 25% alongside growing demand for energy-efficient lighting support future optimism.

• Dutch profit was assisted by the absence of earn-out provisions, with new manufacturing facilities at Famostar underpinning “continued rapid sales growth“. 

• Net cash remained significant at £37m after extra stock investment suggested component shortages were no longer as severe as they once were.

• A P/E of 27 seems generous, but could reflect significant ‘ESG’ attractions as TFW showcases its environmental credentials to quoted companies scrambling for LED lighting. I continue to hold.

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14 December 2021
By Maynard Paton

Results summary for FW Thorpe (TFW):

• A remarkable recovery following a factory fire ensured a satisfactory FY 2021, which included a record H2 and a special payout to complement the 19th consecutive annual dividend lift.

• Customers seeking “tried and tested” manufactures alongside ongoing demand for SmartScan counterbalanced component shortages, the pandemic and Brexit.

• £27m spent on new acquisitions has underlined TFW’s expansion ambitions and signals a firm desire to earn greater returns on the group’s £76m cash hoard. 

• The accounts remains in good shape, although the record 47% gross margin may be short lived if supply difficulties and rising costs continue. 

• A P/E of 30 feels generous, but might reflect operational reliability, a positive ‘buy and build’ strategy, significant ‘ESG’ attractions and/or potential growth beyond lighting systems. I continue to hold.

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23 March 2021
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Resilient” figures that showed both profit and dividend up 2% despite the pandemic, Brexit and a factory fire.

• Management’s previously gloomy tone has improved and the second half is now expected to witness a “steady” performance.

• Expectations seem pinned on TFW’s Dutch divisions, where profit gained a remarkable 15% and progress generally within the group has been positive.

• The cash hoard improved further to a record £65m, but the group margin still languishes below the healthy 18%-plus level of the past.

• A P/E of 22-29 feels generous, although might reflect TFW’s operational reliability, opportunities for market-share gains and/or potential growth beyond lighting systems. I continue to hold.

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23 October 2020
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Creditable” figures that revealed second-half profit sliding 17% due to the lockdown.

• A 2% final dividend lift, cash reserves of £63m plus the commendable funding of furloughed staff did not imply imminent financial difficulties.  

• The SmartScan light-monitoring system provides exciting potential, with sales up 18% to represent 23% of total revenue. 

• Talk of a “global recession” and a “downturn in orders” suggests trading during 2021 will be challenging.

• A P/E of 21-25 seems generous but may reflect the ‘pandemic-proof’ balance sheet, SmartScan growth and/or resilient profit history. I continue to hold.

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18 May 2020
By Maynard Paton

Results summary for FW Thorpe (TFW):

• Acceptable 7-9% first-half growth, although profitability has essentially stalled for the last 2-3 years as the LED mini-boom subsides.

• A 2% dividend lift, net cash and investments of £47m, a “strong” order book plus an outstanding response to government assistance do not imply immediate Covid-19 problems.

• However, trading is not perfect, as margins at the largest division continue to decline while overseas cross-selling progress remains slow and small. 

• The SmartScan light-monitoring system could be a ‘hidden gem’, with sales up 50% last year to represent 20% of total revenue.

• A P/E of 22-25 feels warm, but may reflect the ‘pandemic-proof’ balance sheet, SmartScan potential and/or resilient profit history. I continue to hold.

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18 October 2019
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Ongoing economic uncertainty” caused by Brexit led to flat sales and lower profit. 

• Talk of a “healthy order book” provides hope that trading won’t deteriorate into 2020. 

• Comments concerning new products imply slowing LED growth and a plucky move into non-lighting applications.

• Accounts boast enormous £57m cash hoard that could be used for acquisitions — or (fingers crossed) further special dividends.

• Underlying P/E of 19 seems optimistic given recent progress. I continue to hold.

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29 March 2019
By Maynard Paton

Results verdict on FW Thorpe (TFW):

• Lower revenue and profit due to “challenging trading conditions” caused perhaps by the collapse of Carillion.

• The statement’s highlight was management talk of orders having returned to “record levels”.

• Fresh product developments continue and include “radical” new range of workplace lighting.

• Accounts showcase huge £53m cash pile while dividend on course for 17th consecutive annual increase. 

• Underlying P/E of 21 seems optimistic given recent progress. I continue to hold.

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21 September 2018
By Maynard Paton

Update on FW Thorpe (TFW).

Event: Preliminary results for the twelve months to 30 June 2018 published 20 September 2018.

Summary: The specialist lighting manufacturer delivered its fifth consecutive year of record results, although describing an underlying 2% profit advance as “excellent” overplayed the performance somewhat. Still, the figures were a touch better than I had expected and showcased all the usual financial attractions — decent margins, vast surplus cash and robust reinvestment returns. Sales of some new high-tech products apparently “rocketed”, too. That said, TFW suffered mixed divisional performances while the share-price rating remains rich. I continue to hold.

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16 March 2018
By Maynard Paton

Update on FW Thorpe (TFW).

Event: Interim results for the six months to 31 December 2017 published 15 March 2018

Summary: These first-half figures actually set new H1 records, but they also confirmed TFW’s good run of double-digit profit growth will pause during 2018. Pressure on prices for tunnel lighting was cited as one reason for the pedestrian performance. Should revenue and profit continue to plateau, the elevated share price — rated at 22x my earnings guess — may be at risk of a de-rating. Still, the lighting specialist remains a very respectable business, and continues to be led by directors that think long term. I continue to hold.

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