Renold Share Discussion Threads

[pireric] 18/2/2023 20:56

For what it's worth, Finncap are forecasting materially negative free cash flow for the fiscal year to March 2023, with £9m on working capital consumption, a bump up to £3.5m of cash interest, £3.8m of cash tax and £8.8m of capex all driving factors

Like for like versus +£8.5m of FCF last year, I reckon their FY23 forecast is close to -£6m

Eric

[wigwammer] 18/2/2023 18:27

Fair point pireric... 6.8x 2022a, and we can expect better this year judging by positive interim surprise.... It's cheap. No illusions.

[pireric] 18/2/2023 13:34

Proper free cash flow calculation should be

£19.3m Op cash flow
+ 0.2 disposals of PPE
- 4.1 acquisition of PPE
- 1.2 acquisition of intangibles
- 4.2 lease repayments
- 1.5 finance costs

= £8.5m

Eric

[wigwammer] 18/2/2023 13:27

Last year RNO generated £19.3m of operating cash flow, net of tax and net of a £4.8m pension charge. It spent around £6m on capex, and £2m interest, leaving net free cash flow at £11.3m or a valuation multiple of 5.1x. Where's the illusion?

[wigwammer] 18/2/2023 13:12

With respect, that is one of the most amateur pieces of research I have ever seen. Of course the pension benefits are in large part paid by selling the pension assets. What else do they think the assets are there for?... the point is the liabilities also fall by a commensurate amount ... To repeat - a pension deficit is not the same as debt and should not be simply lumped into an EV calculation.... "Those annual figures also showed scheme assets of £150m delivering member benefits of £11m, of which £1m had to be raised by selling investments. The concern now is how the same benefits of £11m will be supported, given November’s interims disclosed the market value of the scheme’s assets had slid to £119m. Extra cash flow could have to be taken to fund greater contributions to prevent further assets being sold to pay the pensions."

[wigwammer] 08/2/2023 10:43

The pension deficit is not the same as debt. Far longer term, cheaper, and the conditions attached are far more flexible, given the trustees typically recognise the value to the scheme of keeping the business a going concern. I suspect there is substantial opportunity for gains by recognising the consensus tendency to lump the deficit into an enterprise value calculation however.

[this_is_me] 08/2/2023 09:24

Where did you get that figure for pension liability and how up to date is it?

At the last triennial pension valuation the technical provisions deficit of the UK scheme, which is how the trustees and regulator view the scheme, was only GBP9.1m.

It is a lot more complicated than that, of course, since eg. the company has overseas pension schemes in different legal systems.

[74tom] 08/2/2023 09:05

Re. the P/E multiple here, it's rather irrelevant when a company has a pension liability that is almost equal to the current market cap (£61.1m) + net debt of £34m as per the interims.

The effective enterprise value is therefore £63m + £61m + £34m = £158m, so it's trading at about 5.3x adjusted EBITDA. They paid 7.6x adjusted EBITDA for YUK, so yes it's trading at a discount to that, but that makes sense given the pension cost drag.

Out of interest I just looked at BAE Systems defined benefit pension financials & they have a surplus of £1.5b, with scheme investments comfortably covering liabilities. RNO always look to have had a significant deficit, and once in that position it's clearly very difficult (and expensive) to rectify.

[prokartace] 08/2/2023 08:50

deanowls, I believe the pensions deficit is under control and declining fast. The fact that interest rates have risen will have a benecificiary effect on the fund.

[this_is_me] 08/2/2023 07:58

Last year's results showed growth and growth has continued this year yet the P/E is still going to be around 5, if not lower, at current share prices.

Seriously undervalued.

[hardupfedup] 08/2/2023 07:49

always nice -- above expections

[jaf111] 08/2/2023 07:06

Underlying operating profit to be in excess of market expectations…..
Excellent!!!

[deanowls] 08/2/2023 06:40

What are the thoughts around the pensio. Deficit though?

[hardupfedup] 07/2/2023 11:23

pro --- exactly my feelings

[prokartace] 07/2/2023 09:30

This share is now massively undervalued. Nothing but good news coming from the company but the share price has been totally unable to make a sustained rise. It is worth more than double the current price and that would still leave it on a single digit PER. If you consider the progress in improving margins and cutting costs over the last 5 years . I don't think institutional investors have noticed. 2018 the company had revenues of £191 million and a loss of £2.2 million. 2022 similar revenue of 195 mil and net profit of £10.2 mil
The outlook should show growth in revenue and profit. Order book including the new contract should be up over 10% this year, so in spite of inflation this company is growing

[interceptor2] 17/1/2023 08:47

Nice contract win announcement

They don't often RNS contract news, but in the last Interim report they did highlight the strong order book which was at record highs, will be interesting to see if this has progressed in the next update.

[ynot68] 06/1/2023 18:01

Any idea when TU due? Small holder and a bit bored now.

[jailbird] 13/12/2022 14:57

A few clouds he is concerned about it seems .Sounds like a robot , reading of a script

[retsius] 17/11/2022 10:33

excellent finds. Ka and ga!

[ga_dti] 17/11/2022 10:13

Latest CEO interview talking through the results for the six month period ended 30 September 2022 -