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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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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