FW Thorpe

18 February 2025
By Maynard Paton

FY 2024 results summary for FW Thorpe (TFW):

• A 1% revenue decline was countered by a 9% profit advance, with H2 profit improving a remarkable 17% to help raise the ordinary dividend 5% and extend the run of annual payout advances to 22 years.

• TFW’s gross margin improving to 49% through “impressive” stock procurement led to some welcome operating margins, including 20% for Thorlux, 23% for Lightronics/Famostar and 19% for Zemper’s H2, although profitability at the group’s Other subsidiaries remains poor.

• Very satisfactory cash flow supported cash finishing £18m higher at £53m, which triggered the third special dividend in four years and almost certainly enhances the likelihood of further acquisition activity.  

• The slimmed-down board with its M&A expertise may wish to consider the success of acquisition specialist Halma, which assesses its ‘capital allocation’ through return on total invested capital and includes the KPI as an LTIP measure.

• The 15x P/E is the lowest rating for ten years, and seems more influenced by TFW’s subdued near-term prospects and modest LTIP targets rather than the group’s distinguished operating history and longer-term demand for energy-saving lighting. I continue to hold.

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30 August 2024
By Maynard Paton

H1 2024 results summary for FW Thorpe (TFW):

• A 5% dividend advance was the highlight of this rather subdued H1, as revenue gained 1% and profit fell 2% after customers apparently finished (very) early for Christmas.

• Divisional performances were extremely mixed, with Dutch profit up a super 25%, Thorlux’s profit sinking a disappointing 8%, Zemper’s profit still to show its full potential and Ratio’s losses becoming even larger.

• The accounts remain in good shape, showing an acceptable 15% group margin, healthy net cash of £29m and a very welcome stock reduction, although Ratio has (probably) required extra funding and the pension scheme may one day follow suit.

• The roles of chief executive and finance director have been combined, which alongside a slimmed-down board raises concerns about executive technical expertise, a concentration of leadership power and future M&A that may not be adequately challenged.

• A possible 20x P/E seemingly reflects TFW’s distinguished operating history, future “synergy initiatives” and continual demand for energy-saving lighting rather than the group’s modest near-term prospects, doubts about the re-jigged board and the risk of an aggressive acquisition strategy. I continue to hold.

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11 February 2024
By Maynard Paton

FY 2023 results summary for FW Thorpe (TFW):

• A record FY performance bolstered by acquisitions that showed total revenue up 23%, adjusted profit up 16% and the ordinary dividend lifted for the 21st consecutive year.

• Largest division Thorlux continued to fare well, expanding by almost 30% helped by SchahlLED acquired at a possible 5x Ebitda.  

• Mixed progress was experienced elsewhere, with Dutch profit down 8%, Zemper yet to show its full potential and the EV-charging joint venture going from profit to loss.

• Despite acquisition payments of £19m, very respectable cash conversion left cash only £6m lower at a very useful £35m — a figure that required justification to ‘some shareholders’. 

• A possible 20x P/E seemingly reflects TFW’s distinguished operating history and the persistent demand for energy-saving lighting rather than doubts about the significant acquisition expense and near-term prospect of subdued trading. I continue to hold.

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15 August 2023
By Maynard Paton

H1 2023 results summary for FW Thorpe (TFW):

• A record H1 performance bolstered by acquisitions of Zemper and SchahlLED that showed total revenue up 29% and adjusted profit up 34%.

• Thorlux and SchahlLED combined well, with adjusted Thorlux profit up 57% after supply problems eased and the launch of a new SmartScan system.

• Mixed progress was delivered elsewhere, as Dutch profit fell 8% and Zemper not obviously living up to what could be an eventual £37m purchase price. 

• Net cash of £18m was the lowest for 16 years and no longer covers the anticipated earn-outs for Zemper (£12m) and SchahlLED (£7m).

• A possible 20x P/E seemingly reflects TFW’s distinguished operating history and the persistent demand for energy-saving lighting rather than any doubts about the hefty acquisition expense and the uncertain wider economy. I continue to hold.

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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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