Focusrite Share Discussion Threads

[alter ego] 19/11/2020 13:48

latest IC comment summary:

"But the company could welcome a return to normal for the music industry sooner rather than later. Despite its soaring sales, operating profit plunged nearly 40 per cent to £7.9m, largely due to a £10.2m writedown on its recently acquired live music equipment business, following a mass closure of concerts and festivals this year. Music fans won’t be jostling in front of the stage anytime soon, but with debts from the buyout now paid off it shouldn’t weigh Focusrite down much more until live concerts return. With plenty more positive signs for the company's other product lines we say buy at 928p."

[energeticbacker] 17/11/2020 15:50

Fabulous results covered in Investor's Champion's update. Pity about Martin Audio and big impairment taken on this, but looks in great shape nevertheless

[sf5] 21/10/2020 17:42

Anyone know of any reasons for the recent steady climb? Just breached 1,000p today. No holdings changes RNS'd since the 14 Sept results but presumably someone is steadily buying. Not complaining though......

[tomyumgoong] 30/9/2020 12:19

What are people's opinions for the actual EPS for 2020? Reading other posts I can see forward EPS figures for 2021 of 25p per share but what about this year?......any thoughts? Is 25p a share possible this year?

[energeticbacker] 14/9/2020 15:19

Focusrite has been a joy to follow since IPO and continues to offer significant growth potential.

Cash has continued to flow and net debt of £19.9m at the end of February has turned into net cash of £3m at the end of August, a terrific achievement.

More on the Investor's Champion website.

[alphabeta4] 14/9/2020 09:43

Agreed, all sorts of positives in that update. Main part of the business showing 23% organic? 50p a share cash generation in 6 months to take to a net cash position.

Overall using Sharecast these were £7.40 back on 13/2, forward eps (to 31/8/21) since gone to 25.1p from 22.7p prior to today's further 'ahead' update, now 7 months further down the line and done 50p cash generation. Got to be worth best part of £9 on that basis IMHO?

[tomyumgoong] 14/9/2020 07:40

Wow! Absolutely awesome! Focusrite are debt free within a year of two acquisitions now with £3m in cash in the bank.........they've paid off £19m since February......that's outstanding!I never expected that! I estimated that it would take about 2 years to be debt free at the time of the last acquisition......they've done it in 8 months.....absolutely fantastic!

[scepticalinvestor] 14/9/2020 06:55

yes, indeed

[alter ego] 14/9/2020 06:52

excellent trading update

[alphabeta4] 26/7/2020 10:41

Nice read across from G4M?

[semaj2000] 10/7/2020 10:20

Focusrite says revenue and earnings likely to surpass market expectations -

[capitalist] 10/7/2020 07:03

Nice trading results. Especially liked this bit: "Overall, revenue and profits for the Group are currently ahead of where the Board would expect them to be at this stage of the financial year and it is therefore likely that market expectations for the financial year ending 31 August 2020 will be exceeded."
Dividend up as well.

[rp19] 22/5/2020 19:45

Noticed the last few days that a reasonable number of focusrite and novation products are out of stock on the focusrite website. Hopefully they are able to restock quickly to meet the demand.

[rp19] 13/5/2020 18:56

Thanks for your thoughts. The video highlighted in post 393 is definitely worth a watch if you've not seen it. I think it is a high quality presentation and both the CEO and CFO come across really well. It is a shame the CFO is leaving at the end of the year. Previous RNS has said he is leaving to pursue a range of personal interests.

From the video it is apparent that 'live sound' only makes up part of the Martin Audio offer which is positive and they seem fairly confident that this will come back in time. It is likely that their 'installed sound' will also take a bit of a short term hit but perhaps not as much as I first feared. The next few months could be an opportune time for installations some venues given that they are likely to be closed/under utilised. As such, works can be undertaken with less disruption.

One thing I've picked up from social media is that their customer service appears excellent. As you say, if these people who are making these new product registrations are well looked after then they are likely to be repeat purchasers.

The reduction of net debt by £4m in 2 months is impressive.

[alphabeta4] 13/5/2020 15:15

Hi RP

Thanks for your message. Interesting to see your workings. Some general thoughts - I can see you're working off the Edison figures from 26/3. Sharecast forward figures are pretty similar so feels a good starting point.



Research Tree has all the Edison notes and doesn't have any new ones so guess it's safe to assume there are at least no new Edison notes.

On the revenue figures my workings were If H1 was £50m, there was a £2m delayed order, Martin Audio completion 29/12 so 4 months extra revenue £8.13m so £60.13m start for £111m for the year. If the forecast is £111.6m and they are saying existing business growth is more than mitigating Martin Audio then that looks a beat as things stand and seeing as we're already 2.5 months in they would have to go backwards somewhat to subsequently fall short.

On eps that looks more complicated. On face of it needs £7.3m net profit to hit 21.9p Edison having done £5.4m H1. I estimate Martin Audio 4 months will add £780k of profit to get to £6.18m if it just does what it was doing prior to this year as opposed to H1 performance. Question then is what's the margin for the delayed £2m order, if the existing gross margin then £920k there but assumes admin costs are fixed. Then would just be the revenue growth of the existing business to add on.

I think the main difference in our revenue approaches is that I'm working off a lower level of Martin Audio revenue growth but adding in the £2m for the delayed order. FWIW cash generation is normally c£0.8m a month so when they comment on net debt at 30/4 being £16m from £19.9m this would imply the delayed order has now been completed which gives me more confidence that it was a genuine delay and has now worked through.

IMHO overall looks pretty solid with conservative guidance. As a final cherry on top I don't think the market is taking into account that all these additional registrations are likely to lead to further sales in future so the forward eps calculations may turn out to be somewhat conservative as we adjust to the new normal and the return of live music.

[tomps2] 13/5/2020 09:18

TUNE interim results presentation to analysts, 12th May 2020, by CEO Tim Carroll & CFO Jeremy Wilson.

[rp19] 12/5/2020 19:52

Hi Alphabeta4, not sure if there has been a new broker note or not but the last I saw (26/03/20) had the following estimates for 2020 [2019 in brackets]:
Rev £111.6m [84.7]; Profit before tax 14.4m [13.8]; EPS 21.9p [21.4].
At the halfway stage we have revenue of 49.9m (45% of FY estimate), adjusted profit of 6.4m (44% of FY estimate) and adjusted EPS of 9.3p (42% of FY estimate). EPS of 21.9p at current price of £5.75 puts it on a PE of 26.3. Not cheap but is a classy company with a track record.

It is hard to tell if they will meet the above estimates. As you point out, they cite post period end revenue growth acceleration. They also say that a plausible downside assumption is a 30% drop in revenues over 6 months. Do you have any thoughts on this? Some non-scientific musings below.

In the two months Martin has been with the Group, revenue has been up 22% year on year within the period and 11% ahead of budget. This is impressive but I am expecting revenue growth to slow here as if their main market is live music events then I think demand will be subdued for some time. They have done £4.5m revenue in 2 months. Another 6 months of this would add £13.5m and bring the full year to £18m. I am not sure if this is likely. No science to this but lets say it does £13.5m for the full year. For arguments sake lets double both focusrite HY performance (38.4 x 2 = 76.8m) and Adam Audio (7 x 2 = 14m). This gets to FY revenue of 104.3m (13.5 + 76.8 + 14) and a 6.5% shortfall in revenue. To counter that, both the Adam and Martin businesses are higher margin businesses than the traditional focusrite business.

As I say no particular science to the above and would be useful to hear other views.

[alphabeta4] 12/5/2020 08:36

The Group is currently experiencing record levels of consumer registrations and customer demand, partially as a result of the COVID-19 restrictions on people's movement, and therefore revenue growth has accelerated since the half year end. This is evidenced by improvements in the Group's net debt position which had reduced by GBP4 million to GBP16 million at 30 April 2020.

Nice. This is right near the bottom of today's statement tucked in the going concern section. By my calculations they only needed £1m of extra revenue H2 to hit target (post adjusting for 6 months of Martin Audio vs 2 months in H1). Looks that the home market is more than compensating (similar story seen at G4M) but they are too cautious to say ahead of expectations. Wonder how many have picked up on this?

[nex777] 14/2/2020 08:01

I've held a position for a while, good time to come in.. I'd guess. Obviously as a holder I wonder when this 'shake out' will stop.

[alphabeta4] 13/2/2020 15:50

Took a position today. RSI and chart suggests a turn likely to be imminent IMHO. Nice to get the acquisition for free.

[ramridge] 19/12/2019 11:29

I think it is a good deal, but as the blogger above said, they need to consolidate now.
A few stats.
With a net debt of 25m, debt/ EBITA = 1.5 . more than acceptable
They have paid a EBITDA multiple of around 10 (stripping away the cash). Again very good, considering TUNE's EBITDA multiple is closer to 20.

The share price is close to a 12 month high which might explain the muted market reaction.

Just my view. Took a small position this morning

[tomyumgoong] 19/12/2019 10:49

Last week I was wondering whether a deal was in the making or not judging by the content of last weeks RNS.....it would appear so! After this latest acquisition Focusrite would be £25m in debt but looking at the last couple of year's profitability I think this could be paid off in 2-3 years which doesn't look too bad to me! I would hope they just reign it in now for a while and see how these acquisitions play out! I once worked for a company that made acquisition after acquisition..... the went bust quickly ! I don't want to see the same thing here!

[trader2] 19/12/2019 07:32

£39m acquisition to be funded with a bank loan and not a market offering. Makes you question why - a tad expensive perhaps? The acquisition of £39m generates an EBIT of £3m - so (crude maths) 13 years to break even.