Epwin Share Discussion Threads

[davebowler] 20/1/2022 08:53

Zeus-
Epwin has confirmed that FY21 finished strongly with revenue materially ahead and profitability marginally ahead of consensus expectations of £12.8m. ZC estimates for PBT increase to £13.2m (prev. £12.9m) and expect the previous consensus of £12.8m to increase by c. 5%. Revenue expectations of £312.1m were materially below the c. £330m that Epwin will report. We change FY21 expectations to reflect today’s trading statement and update revenue assumptions for FY22 and FY23. However, it should be stressed that the change to outer years is preliminary and we expect to refine estimates at the time of the FY21 results. The strong cash performance is reflected across the forecast period in reduced net debt estimates with a net debt/EBITDA multiple of less than 0.5x. End market demand has been exceptionally strong, particularly in the RMI market, and when combined with price increases and bolt on acquisitions has led to a 37% increase in revenue, importantly this is up 17% on FY19. FY21 has proved to be a strong recovery year for Epwin with revenue forecasts increasing by 44% since they we re-introduced in late 2020. On FY22 estimates the shares trade on 10.7x earnings and yield 4.7% with the support of a clean balance sheet.

§ Strength of recovery through 2021 much stronger than expected: Trading performance during the year has improved with FY21 revenue growth 17% ahead of FY19. In H1 it was 13% ahead highlighting the strength of demand into the second half of the year. This has been driven by the RMI market and consumer demand. Commercial markets have been slower to recover but recent signs suggest these are getting back to pre-pandemic levels. This should prove an added stimulus during FY22. However, the business has faced extensive headwinds including Covid related costs, supply chain issues and material uplifts in demand causing raw material price inflation. This has resulted in operating margins remaining below historic norms. Over the medium term, the operational gearing a normalisation of margin will bring, could offer further material upside to earnings.

§ Changes to forecasts: FY21 estimates are updated for the information provided in today’s trading update. Revenue increases 5.7% to £330.0m (prev. £312.1m) and adj PBT increases 2% to £13.2m (prev. £12.9m). The pre IFRS 16 net debt position of £9.0m is materially better than the £13.4m forecast. The improvement flows through into forecast years and the business, all things being equal, should be net cash by FY23. Revenue estimates in FY22 are increased by 4% but are conservatively in line with FY21 actuals. This assumption will be reviewed at the time of the FY21 results. Profit estimates are also left unchanged reflecting a conservative approach as cost input pressures continue to be felt (detail on forecasts can be found on page 2). Trading has remained solid but being just two weeks of into the New Year it is difficult to extrapolate trends.

§ Valuation: Trading on 10.7x FY22 earnings, Epwin continues to offer significant value. FY22 will see normalised trading with profitability increasing 30% to £17.2m. Operating margin remains depressed and any improvement over and above the 130bps currently forecast should see earnings upgrades. The yield of 4.7% is well supported by a balance sheet that is carrying low levels of gearing, less than 0.5x net debt/EBITDA, and will be net cash in FY23

[mattboxy] 20/1/2022 07:58

Trading update The Group is pleased to report that trading remained strong through to the end of the year, with revenues for FY 2021 expected to be approximately £330m, up by 37% compared to 2020 and 17% compared to 2019. This has been driven by a combination of the ongoing strength of demand in the RMI market, price increases and recent bolt-on acquisitions. The Group has continued to successfully navigate its way through the sector-wide operational, inflationary and supply chain pressures caused by the ongoing impact of Covid-19 and heightened demand levels. Accordingly, the Group now expects to report adjusted profit before tax for FY 2021 modestly ahead of current expectations1, subject to audit. Cash generation remained strong in the second half of the year, with covenant net debt (pre-IFRS 16) as at 31 December 2021 significantly reduced to approximately £9m (2020: £18.5m; 2019: £16.4m), better than the Board's expectations. This was achieved despite the Group completing several bolt-on acquisitions during the year, totalling £5.3m, including one acquisition in the second half of the year. Year-end leverage was less than 0.5 x adjusted EBITDA. Current trading Trading in the first two weeks of 2022 has remained strong and has been in line with the Board's expectations. The Board continues to monitor the development of the Covid-19 pandemic whilst managing the impact of absences across the workforce during the early part of 2022.

[mattboxy] 15/9/2021 08:01

Looks like things are still going well

[mattboxy] 15/9/2021 08:00

Epwin Group Plc Half year results for the six months to 30 June 2021 Strong trading continues, actively managing cost pressures Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors, announces its half year results for the six months to 30 June 2021 ("H1 2021"). Financial highlights£mH1 2021 H1 2020 H1 2019Revenue157.893.3140.0Underlying operating profit/(loss) 19.4(1.8)9.4Underlying operating margin6.0%-6.7%Adjusted profit/(loss) before tax 17.1(4.1)7.3Profit/(loss) before taxAdjusted EPS 1Basic EPS6.64.06p3.72p(4.8)(2.24)p(2.73)p6.74.20p3.78pDividend per share1.75p-1.75pCovenant net debt(15.8)(21.3)(29.2)Covenant net debt to adjusted EBITDA0.6x1.4x1.1xNet debt (including IFRS 16: Leases)(92.1)(81.7)(88.4)Underlying operating cash conversion 2158.5%-156.4% (1) Stated before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.(2) Underlying operating cash conversion is pre-tax operating cash flow as a percentage of underlying operating profit. Financial headlines· Strong trading performance, despite pandemic operational challenges:o High RMI demand continued into H1 2021o Revenues 69% ahead of 2020 and 13% up on the same period in 2019o Underlying operating profit of £9.4 million recovered to 2019 level· Financial position remains strong:o Covenant net debt reduced to £15.8 million (HY20: £21.3 million; FY20: £18.5 million); 0.6x adjusted EBITDAo Includes cost of £4.6 million on acquisitions in H1 2021o Significant headroom on banking facilities, in excess of £60 million at the half year end· Interim dividend of 1.75 pence per share declared Operational and strategic headlines· Health and safety remains a priority· Continued strategic progress:o Site consolidation and rationalisation programme:§ Construction completed on new Telford distribution and finishing facility, with final payment of £5.2 million received during H1 2021§ Full relocation of inventories to the new facility in 2022 after exceptionally high demand levels in 2021o Value enhancing acquisitions - SBS acquired in January 2021 and PBS in June 2021:§ Both well-established regional independent distributors of plastic building products, increasing access to the Group's product offer§ Adds 12 trade counters in Cumbria, Northumberland, Southern Scotland and Norfolko New product development:§ Aluminium window profile and PVC decking sales building encouraging momentum· Ongoing development of ESG framework and sustainability agenda Current Trading and Outlook· Trading in line with analysts' forecasts increased at the July 2021 trading update· Strong demand from customers serving the RMI market, which represents around 70% of historic Group revenues, is expected to continue for the foreseeable future· Continue to actively manage ongoing supply chains and logistics pressures:o PVC raw materials in particular impacted, exacerbated by supplier plant issues restricting availability and driving up the price of resino Steps have been, and continue to be, taken to recover these costs in the market in an equitable mannero Labour availability and wage inflation presenting some challenges· Medium and long-term drivers for the RMI market remain positive· Further potential bolt-on M&A opportunities continue to emerge· Well positioned as operating conditions improve and pent-up demand takes effect Jon Bednall, Chief Executive Officer, said:"I would again like to recognise and thank all of our people for their continued effort and hard work during the ongoing pandemic disruption.Our trading performance during the first half has been encouraging and we have continued to make good strategic progress. This has been underpinned by ongoing strong demand from our key RMI markets, together with proactive management of raw material cost inflation and supply chain issues.We are optimistic for trading prospects in the second half and expect to make further gains in market share, whilst continuing to manage the challenges that the pandemic presents. Looking further ahead, we remain confident that we can take advantage of future opportunities, supported by the positive medium and long-term drivers for the Group's products."

[davebowler] 28/7/2021 10:17

Zeus;
Further strong upgrades as demand more than offsets cost input pressures
Since Epwin reintroduced guidance back into the market in September 2020 demand has consistently exceeded expectations. This has continued in H1 FY21 with today’s statement indicating that profit before tax for the current will be materially ahead of current expectations. The strength of trading in the first seven months of the year lead to an 11% upgrade in revenue and a 17% increase in profitability to £12.9m (prev. £11.0m). Raw material and cost input pressures lead to more conservative increases to FY22 and FY23 profitability. However, this could prove conservative should cost inflation subside later this year and the price increases and surcharges implemented to mitigate cost input pressures come through. The shares trade on 14.8x current year earnings and yield 3.4%. The business has a strong balance sheet with less than 0.5x net debt to pre IFRS 16 EBITDA.

§ Third upgrade since guidance reintroduced in Q3 2020: In H1 21, revenue is 13% ahead of that achieved in H1 19 at £157.8m. Since ZC estimates were reintroduced in September last year FY21 forecasts have been increased three times. This has taken revenue expectations from £239.7m to today’s new estimate of £312.1m. This shows 30% growth yoy but, more importantly, a 10.6% uplift on the £282.1m achieved in FY19. Profit forecasts have increased 65% over the same time with the new ZC estimate for FY21 of £12.9m. Net debt also improves on higher assumed profitability, falling from £15.5m to £13.4m. Detail of the changes to forecasts can be seen on page 2.

§ Recovery in demand continues at pace: The strength of demand continues to come from private sector RMI as consumers increase spending on home improvements. The double-digit level of growth on FY19 experienced by Epwin in H1 is in line with peers across the UK building products space suggesting it is at least maintaining market share, we suspect that it is increasing share at the expense of smaller operators. Longer term, as the industry continues to consolidate and the major players have more control, this should improve the pricing dynamics of the extrusion industry.

§ Raw material costs and global shortages putting pressure on supply chains are proving a headwind: Despite the strong recovery in demand post Spring last year, there have been issues that have impacted and continue to impact the building product industry. Raw material prices have experienced material increases. Resin has been trading at all-time highs, materially above the prevailing price in FY19 and FY20, and the cost of items such as hardware has increased due to commodity and shipping costs increasing. These pressures could abate later in the year, but management has implemented price increases and surcharges to offset their impact. The extent of the impact can be seen from the fact that ZC FY21 revenue is now forecast to be materially higher than FY19 (+10%) but operating profit is c. 20% below as margin is 200bps lower.

§ Valuation: On FY21 earnings, Epwin is trading on sub 15.0x with the potential for further upgrades should demand remain strong and cost pressures abate. Recommencement of dividend payments also mean investors can look forward to a c. 3.4% yield in FY21 with the potential for it to grow as earnings continue to recover.

[kramch] 28/7/2021 09:28

Strong H1 trading, up 13% on 2019, results should be materially ahead of .. expectations .. subject to any supplier constraints.

And we should be seeing the benefits from their new facilities coming through.

Gripe; can they say what market exoectations are, it's no secret, but you have to go and look it up.

K.

[deadly] 28/7/2021 09:19

"......the Board now expects adjusted profit before tax for the full year to be materially ahead of its previous expectations.

[sphere25] 25/5/2021 15:12

Almost sounds like EPWN are abit more bullish than at the full year results last month. Granted companies don't say as much in the AGM update's, but it sounds like the pricing power is there on the back of cost pressures, which bodes well for the near term.

The market isn't keen on moving either way on that update with the price absolutely flat. That could be a sign the market is content with this multiple around the 10 mark and bouncing around at these levels. I guess we wait and see if anything happens in the days and weeks ahead to see if the market is confident enough to expand the multiple.

I'd still have a stop in place just in case there was wider market plunge. This market has allowed us to be lax with our stops, you can almost give enormous leeway on proper company trades almost knowing that they will come back up if they wobble.

It won't be like that in the future, where moves down will continue down and it will cause a much greater challenge with possible capitulation losses being incurred rather than having more sensible stops in play. The importance of stops will definitely come more to the fore, but at the moment the US continually gets bought up to hold support levels.

It bends but never breaks, and whilst that keeps happening, the long trades and positions will continue to work.

All imo
DYOR

[sphere25] 22/4/2021 09:55

There have been buyers in size here at 100-102p mopping up the sells to allow the price to form at least a consolidatory base near recent highs.

Just edging higher at the moment and about to test a breakout. The market demand here is suggesting the EPWN 2022 multiple can expand beyond 10 so possibly 11-12? Too bullish to be up near 12?

I guess we'll find out.

When it is quiet like this, just need to be sure everyone is involved too. Sometimes there are wide spreads in the morning and the odd buy goes through well above what needs to be paid. You can also have the odd little move higher or some rogue order bidding higher suggesting the price is stronger than it is and then everyone gets involved and the price can come back down.

If it isn't moving too fast, good idea to check the previous day's spreads to see how they compare so as to not be paying more than needed. DMA is always there but not always easy to get filled in shares like EPWN so it does vary from share to share.

All imo
DYOR

[ga_dti] 20/4/2021 10:23

Listen to our exclusive analyst interview with Zeus Capital discussing their recent note ´2020 results in line; 2021 outlook: strong recovery´:

[sphere25] 16/4/2021 16:20

Taken a few here.

It looks well bid and some decent buying coming in with a large iceberg (blocks of 9450) cleared at 100p. If that is the major seller here done, then it could push on. We often see pops through psychological marks as sellers congregate there.

Price is trying to breakout and close above that key psychological 100p mark. Possible steady gap close to 115p if it can push on the back of the update. As per SFE post, the market is clearly looking forward to at least 2022 with the multiple falling to 10.

EPWN hasn't commanded a massive multiple, but some decent demand and an interesting chart so I'm in for a trade.

All imo
DYOR

[davebowler] 15/4/2021 08:52

Zeus-
RMI demand patterns remain strong leading to further increases to FY21 estimates
Today’s FY20 results are better than the guidance provided in the pre-close trading update (Dec 16th, 2020). The strong trading alluded to in that statement continued through the year end into Q1 2021. The better than expected trading leads to an upgrade to estimates in FY21, pre tax increases c. 12%, and new forecasts are introduced for FY22 and FY23.

The announcement that a final dividend will be paid for FY20 is welcome and signifies management’s intentions. ZC estimates factor in a resumption of the 50% pay-out ratio utilised prior to the impact of COVID-19. Despite the double-digit upgrade, forecasts assume an element of conservatism due to movement in raw material costs. The majority should prove short term but if inflation persists current estimates are discounting the current environment. On upgraded forecasts, the shares are trading on c. 16x FY21 earnings falling to 10.3x in FY22.

§ FY20 recovery picked up pace during H2: Back in September 2020 when ZC reintroduced FY20 estimates, H2 revenue was forecast to decline 5%. The actual performance was growth of 4% resulting in £241.0m for the year, a decline of c. 15% yoy. Adj. pre-tax profit of £5.0m was ahead of the £4.8m forecast, and materially better than the £2.6m number introduced in September. The change in consumer spending habits undoubtedly under pinned the strong performance. However, the speed of the recovery along with measures introduced to allow for safer working practices during the pandemic created cost headwinds. Without these the recovery in profitability would have been stronger.

§ Forecasts increase on the strength of demand: The strong demand seen in Q3 and Q4 last year has continued into Q1 of the current year with trading ahead of expectations. The c. 80% upgrade to profitability seen in December reflected operational gearing. Today’s increase is predicated on better trading with revenue increasing c. 9% to £282.0m (prev. £259.2m) and pre-tax profit up c. 12% to £11.0m. The only cloud on the horizon currently is raw material cost input pressures. Resin has been trading at all-time highs, materially above the prevailing price in FY19 and FY20, and the cost of things such as hardware has increased due to commodity and shipping costs increasing. These pressures are likely to abate during the year, without them today’s revenue increase would have resulted in an even larger impact to earnings.

§ Best in class execution during the pandemic: Epwin was early to formally reinstate guidance relative to peers in the building product sector, particularly with regards its intention to recommence dividend payments. This stemmed from the strong operational performance of the business during the first lockdown. It had low gearing going into lockdown, significant financing headroom and hasn’t needed a waiver on its covenants, let alone a rescue rights issue.

§ Valuation: On FY21 earnings, Epwin is trading on a recovery rating of c. 16.0x with the potential for further upgrades should the economic recovery continue in FY21. Recommencement of dividend payments also mean investors can look forward to a c. 3% yield in FY21 with the potential for it to grow as earnings continue to recover.

[dope007] 17/2/2021 11:00

Next statement could be a warning based on input prices if they don't get their prices up in the market

[dope007] 28/1/2021 09:42

Input prices are going through the roof

[davebowler] 28/1/2021 08:53

Zeus;
Positive trading continuing into FY21
Following on from the upgrades put through in mid-December, Epwin has confirmed that the FY20 outcome is in line with the increased forecasts. Revenue of c.£240m is 15% down yoy but importantly H2 experienced a positive performance of c.3% yoy. This is in stark contrast to the 33% decline in H1. Net debt is also in line at c. £18.0m, less than 0.7x EBITDA. The strong trading in the final months of FY20 has continued into the early weeks of FY21. ZC leave forecasts unchanged but welcome the fact that trading has continued to be strong into the New Year, despite further lockdowns in November, December, and January. The announcement of new supply arrangements offsetting raw material shortages is reassuring and further underpins confidence in the outlook.

The shares offer good value, trading on c. 9.0x normalised earnings, assuming no growth to profit achieved in FY19, and management has committed to recommencing the dividend at the time of the FY20 results in April.

In line with upgraded forecasts: The strong performance during the final months of the year lead to significant upgrades of c. 5% in revenue and 30% in operating profit for FY20. The previous revenue estimate assumed 5% decline in H2. The actual outcome was a positive 3%. The stronger finish to FY20 fed through into FY21 estimates with revenue increasing c.8% to £259.2m and operating profit up 17% to £13.9m. This remains substantially below the normalised level of £21.2m achieved in FY19.

Positive operational developments: The new Telford logistics and finishing facility was completed on time and budget in the year and was fully operational by the end of December. This will materially enhance operations moving forward. A small acquisition has also been announced this morning of a plastic distribution business. It has eight branches located in Cumbria and Southern Scotland. Total consideration is £3.8m and including synergies management estimate it has paid 4x EBITDA. Whilst small it is a positive step in expanding the distribution network.

Highly professional performance during FY20: Guidance was withdrawn during the early part of the pandemic but was reintroduced quickly relative to peers. This included the commitment to recommence dividend payments at the time of the FY20 results. Communication has been clear with regards the financial position of the business, it had conservative gearing going into lockdown meaning Epwin did not need to raise additional funds or ask lenders for covenant waivers.

Valuation: On FY21 earnings, Epwin is trading on a recovery rating of 16.0x with the potential for further upgrades should the economic recovery continue. Recommencement of dividend payments in FY20 also mean investors can look forward to it growing in line with earnings growth as we expect the 50% earnings pay-out ratio to be reintroduced from 2021.

[cordwainer] 05/1/2021 21:38

Keeping a watch here but recently picked up Brickability (BRCK) which seems a good value play with good growth potential.

[energeticbacker] 16/12/2020 16:00

If one likes the building materials sector this could be an interesting play, but Investor's Champion can think of more appealing opportunities, some of which can be found in their Portfolios and Bonkers Bargains features.

[18bt] 16/12/2020 07:25

Strong trading update and likely reinstatement of dividend. Lot's of evidence of the RMI sector being very strong including Travis Perkins this morning.

[dope007] 04/12/2020 09:01

Expensive up here

[dope007] 17/11/2020 14:11

Eurocell statement is being read across to Epwin

[farrugia] 17/11/2020 13:05

Finally moving. I have quite a bit of this. The home improvement trend should favour this kind of company.

[davebowler] 10/9/2020 09:25

Zeus;
Strong trading post lockdown and reintroduction of forecasts
Since the easing of lockdown restrictions, Epwin has seen stronger demand than had been expected. As a result, ZC reintroduces forecasts for FY20 and FY21 based on guidance provided by the Company. This includes a small dividend estimate of 1.0p for FY20 increasing to 2.2p in FY21, it is assumed the 50% pay-out ratio target is reintroduced. Despite seeing an almost 100% closure of the business, and therefore revenue, over an eight-week period, Epwin has not needed to raise additional equity or asked its lenders for covenant waivers. This is in stark contrast to many of its peers in the building product space and is testament to the strong financial management of the business. Our assumption that volumes will be 15% down in FY21, relative to FY19, looks conservative and puts the shares on a recovery rating of c. 17x with a dividend that will grow in line with earnings.

§ Strength of the business highlighted by management’s confidence to reinstate guidance: Epwin has dealt with the COVID-19 situation and the resulting lockdown professionally, managing the business in the best interests of shareholders. It had low gearing going into lockdown, significant financing headroom and hasn’t needed a waiver on its covenants, let alone a rescue rights issue. Since restrictions began to ease in late-May, consumer demand, both RMI and DIY, across the building product sector has been materially stronger than expected. For Epwin, this has meant +ve L4L revenue performance in both July and August. This improved visibility on trading aligned to the financial strength of the business is allowing the management team to reinstate guidance at an earlier stage than most peers in the sector.

§ ZC forecasts better than expected: Estimates are reinstated for the current year to December and FY21. In FY20, revenue is expected to be down 19% yoy at £228.3m (FY19: £282.1m) following a 33% decline in H1. We assume H2 is marginally down yoy, a conservative approach considering the positive performance in July and August. Operating profit of £6.8m for FY20 shows a recovery to c. £8.5m in H2, c. 65% of the level achieved in H219. A very good performance in the circumstances. Net debt will increase marginally at c. £20.0m falling from a peak of c. £30.0m in March. FY21 is predicated on conservative estimates, assuming volumes are in line with the average current forecasts from the CPA and Experian for private housing RMI to be down c. 15% in 2021 relative to 2019. This is conservative, not just in quantum of the fall in the market, but also no outperformance is assumed despite the new products Epwin has brought to market.

§ Valuation does not reflect recovery potential: On conservative FY21 earnings, Epwin is trading on a recovery rating of 17.0x and a pre IFRS 16 EV/EBITDA of 8.7x. In addition, estimates factor in a small but recovering dividend from FY20 with the shares yielding 2.9% in FY21. On normalised FY19 earnings Epwin trades on sub 8.0x.

[dope007] 25/8/2020 13:37

Profine expand capacity in the UK

hxxps://www.profine-group.com/en/news-and-media/#!/press-releases/profine-strengthens-its-position-in-the-uk-market-with-an-acquisition