Focusrite Share Discussion Threads

[tudes100] 27/4/2023 02:13

The results presentation has just dropped on the corporate website along with the analyst presentation which has some brief Q&A. Slide 7 of the presentation deck is worth reviewing for a more detailed understanding of the inventory issues.

Re EPS - its a tough call but given the commentary about increased costs due to promotional activity I'd say that a comparable decline in adjusted diluted EPS would put H2 at around 16.4p. FY EPS would then come in at 34.4p which would be my worst case scenario given the significant product launch slate scheduled for H2. Based on current share price the Co would then be trading on 13.4x which given the historic ROCE / cash conversion seems extremely good value to me. Prior to the covid bounce the Co was trading on 20-25x earnings.

[jolomo] 26/4/2023 13:07

RP19. Will be interested on any response received. Lack of retail presentations, use of 2 expensive & unfriendly brokers, poorly communicated results etc all need to be addressed. I do think Board need reminding that retail investors provide the daily liquidity.


My adjusted EBIT came in at £13.81m adding back acqusition costs & amortisaton of intangibles, but not the £0.4m restructuring charge. Prior to interims I had broker forecasts of fully adjusted EBIT of £34m & eps of 44.8p. Would expect at least 10% knocked off these after yesterday, & I still think risk will be on downside.

[rp19] 26/4/2023 10:07

Jolomo, I agree on the communication front - there is so little information available. I've emailed the company for the views on this, let's see if I hear anything back.

I was disappointed by the numbers. Although there are no forecasts out there, on March 14 2023 they said that HY 2023 profits "are in line with Board expectations and remain unchanged for the full-year supported by stronger gross margins". Then yesterday, operating profit was announced at £11.5m which is someway below the 2022 figure of £16.3m. I'm not suggesting that they ever said that this year's figure would match last year's (I accept wider challenging consumer environment)but was the Board's expectation really to fall significantly short of the 2022 figure? If so, this was not evident in any previous communications to me.

Given the above, hard to know what EPS we are going to get in H2. Is it realistic to double the adjusted H1 figure (18p) to get 36p for the FY? If so, the current share price is not on a demanding rating.

[tim1478] 26/4/2023 09:56

The quixotic but successful Beddard has just added to his virtual portfolio

[jolomo] 26/4/2023 09:33

I agree I don't think business is broken but maybe they could get you to write their updates. Issues re inventory, weak sell through were hardly unique to TUNE in the period so I don't understand why they were so shy in explaining this in greater clarity.
Would be interested if anyone has latest broker update. I think chance that could be as bad as 30p-36p this year on back of higher tax rate, although success of new products key. Not end of world considering share price decline.

[tudes100] 26/4/2023 09:22

Fair point I think, more clarity needed. I've seen the CEO present plenty of times over the last 3-4 yrs on webinars, results presentations, etc. He's a little slick for me and I'd say his communication style is unsurprisingly American in style - I don't think it helps much.
The inventory issues seem transient to me - they took the decision to sell (Focusrite, Novation) into their trade customers earlier for the Christmas season (some of this revenue fell into H222) to ensure retailers had enough stock given all the supply chain issues. Consumer sell through was weaker than they hoped during Xmas (softer macro) and they've then had to promote harder to clear this stock through as well as discount older stock that is being superseded by new products being launched in H223. It's not ideal and has clearly impacted performance YTD but it doesn't suggest to me that there is any fundamental issue with their brands or product range. They quoted external product registrations over Nov/Dec being +21% vs the same period in 2019 which doesn't suggest to me that this is a company going backwards.
Worth remembering that the share price at the end of Feb 2020 pre-covid (end of H120) was 550p & the market cap was approx 330m vs current share price 485p, market cap 290m. In H120 the Co made 50m rev's & 9.3p adj diluted EPS vs 86m, 18p EPS in yesterday's results.

[jolomo] 26/4/2023 07:55

Biggest issue I had with results was the wording of the release. Trading was always going to be tough in H1 but the failure to put numbers to an outlook & general vagueness raises concerns. Are the management deliberately trying to obscure poor performance or are they just poor communicators? Are they such poor communicators with their own staff? Neither option is great. Lack of retail friendly broker doesn't aid matters either.

[tudes100] 26/4/2023 06:50

Market share is referenced in the results, they believe they maintained share in a tougher market. They mention North America market being down approx 8% vs prior yr which puts their performance into context.
Have seen some commentary about the results that seems to confuse sell in with sell through.

[spann_703] 25/4/2023 20:06

Whichever way you choose to look at it, this is a good business run down by poor liquidity and short-term investor sentiment. It will rise again.

[epicwarlock] 25/4/2023 16:43

It would be helpful to understand their market share and whether that has deteriorated in key segments.

[2nddegree] 25/4/2023 13:49

Disappointing, I’ve cut my losses. Was hoping for something a bit more neutral at least. I think the end of year will be better so will be watching as I think the business sound.

[epicwarlock] 25/4/2023 11:00

Any thoughts on the results today? Would be good to have some guidance on the Focusrite brand, as it's so material to results overall

[tim1478] 12/1/2023 11:08

Beddard a buy and hold investor with an unusual but successful approach has given Focusrite full marks on his in house system.

hxxps://www.ii.co.uk/analysis-commentary/richard-beddard-supplier-prince-and-van-halen-gets-top-marks-me-ii526508

[ozzietom] 12/1/2023 07:37

Berenberg initiates coverage with a Buy rating and a price target of 1100p. That's a 40%+ rise from where it is today. If only. Unfortunately this seems to be out of favour at the moment, with very little interest. I still like it and like the management and quality of products, so believe it will do well in the long run, but the opportunity cost is getting higher.

[alter ego] 20/12/2022 09:16

Nice acquisition today. Expected to be earnings enhancing in current year.

"....pleased to announce the acquisition of Sonnox Limited ("Sonnox"), a leading designer of audio processing software plug-ins for professional audio engineers."

"Based near Oxford, Sonnox is a well-established and acclaimed brand in the global audio industry. Its range of innovative, high quality, award-winning processing software is used in a wide range of audio applications including mixing for music production, live sound, broadcast, TV & Film, and even scientific and forensics projects."

[rp19] 18/12/2022 22:05

Interesting to hear alternative views. Sales at Scarlett have dropped but are materially above pre pandemic levels. I think the acquisitions are about extending reach/depth. Performance at ADAM Audio has been disappointing but Martin Audio has done well. I personally quite like how they break down/comment on the various business segments.

[liquidtyler] 18/12/2022 15:41

Sold all my holdings. Focusrite had been in my 'worry' category for a while; the recent results and management commentary was the final nail in the coffin. Results generally on the whole were quite poor in my view, best selling product the Scarlett saw declining sales, free cashflow was negative this year. Additional acquisitions were made without any description of how they fitted within the overall strategy. Management blamed the poor performance on a plethora of external factors such as Ukraine, Inflation, plus some others which they thought would probably sound good to mention like Geopolitics... clearly looking to hide their own incompetence.

[rp19] 18/12/2022 14:24

Final results released on 08/12/2022 revealed FY 2022 EPS of 42.5p at the basic level and 52p at the adjusted/diluted level which I think is a good performance in current conditions. Also outline that first quarter trading for FY 2023 "has finished in line with our expectations". Does anyone know if there are any published expectations in the market?

[rp19] 28/10/2022 20:13

Full year results are due in about a month's time. The September trading update provided a 'slightly below board's expectations' warning without any further numerical detail. I'm hoping they are still able to hit EPS around the 40p level (which would put it on a PE of around 17) and await outlook commentary with interest.

[ironstorm] 27/4/2022 22:24

Very positive statement in a return to more normal conditions. Hockey stick for this years results. So not without risk. But then they are a class act.

[tmfmayn] 27/3/2022 17:52

[SharePad] Screening For My Next Long-Term Winner: FOCUSRITE #TUNE

"A board led by two hands-on industry veterans makes a refreshing change from the accountants that so often take charge of public companies"

[ironstorm] 11/3/2022 07:53

This is a great company, they keep turning it on. Fall in price recently is well over done. I hope therefore we can see a strong rebound.

[sf5] 10/3/2022 22:47

This sounds quite a complementary acquisition Not sure why it wasn't announced in the morning trading update.