Tclarke Share Discussion Threads

[rimau1] 15/3/2024 17:34

Small Caps Live gives a pretty damning verdict (apologies Rivaldo usually posts smallcap live updates so this is likely a duplicate). 3 key points. 1. EPS is on a downward trajectory; 2. executive pay at 6m is excessive in the context of profits of 7m; 3. thin margins and slower trade payables mean they are only a couple of onerous contracts away from being in serious trouble.

[brad_k] 15/3/2024 15:59

Whilst they have doubled revenues since March 2021 they have only increased the share price by < 20%. In fact the share price was 110p back in March 2019.
Perhaps they could express their growth goals in terms of EPS so as to align the boards interests a little more with shareholders.

[owenski] 15/3/2024 13:35

They've been involved with data centres and higher technical engineering delivery for some time. Over two years ago I listened to a webcast of this and they were saying then that this would lead to improved blended margins above 3%.

This doesn't seem to be happening.

[muckshifter] 15/3/2024 11:08

The margins in electrical contracting have always seemed to me to be about the same as those in civil engineering contracting which I worked in for decades.

The reason behind my optimism about Clarke's future performance (and I'm not normally optimistic) might be partly explained by the following:-
Their resilience in extremely tough times was well demonstrated about ten years ago, when several severe industry wide factors, and one unique to Clarke, really tested them.

Changing suppliers and subcontractors in the middle of a job, as explained in the November T/U is a huge step which shows real determination to keep to a deadline. It also shows real expertise in running contracts from the top to the bottom of the organisation. In the same T/U they revealed that they had settled accounts quickly and early on some contracts where presumably they were not confident of their client's solvency, which no doubt reduced their income for the year, but was, imo, a wise move.

Thinking this morning about the contracts I ran, or priced and ran, or did major subcontracts on, a few stood out as exceptionally profitable. The five contracts which first spring to mind as highly and exceptionally profitable fell into two categories. Two were projects where on time completion was of such paramount importance that the client would throw money at you for overcoming programme impediments, such as unexpected ground conditions or major design changes, as they were encountered. The others were projects where as the contractor I understood such matters as the soil conditions far better at time of tender than the multiple design engineers and consultants involved over a prolongued period before issue of tenders.

The worldwide race to build data centres strikes me as fitting the first category, where timely completion no matter what, is likely to be well rewarded, and the "clever building" stuff at which Clarke are clearly very accomplished seems to me to fit the second category. Both these categories of work are burgeoning in Clarke's order book. So my expectation is that the run of the mill work, which is still a substantial but reducing proportion of the workload, will continue to average out at or around the 3% margin, but the margins on the two categories mentioned earlier in this paragraph will considerably exceed the norm and drag up the average to well in excess of 3%.

Hope so anyway!

[rivaldo] 15/3/2024 11:02

I'd also add that the type of work CTO are now more and more involved with - particularly "smart" buildings, perhaps data centres too - surely bring higher margins as these are much more technically demanding and specialist.

[igoe104] 15/3/2024 08:56

Even if they have a bad year and only managed 2% margins, that's still a big jump in profits nearly 28%. Plus 19 million cash, and a very low market cap.

So even a bad year, the figures will look decent. If they have a good year, and surpass that 600 million revenue they could be close to hitting 20 million profits..

[wjccghcc] 15/3/2024 08:17

True igoe, but how confident are you they're going to get to that margin given their history?

[owenski] 15/3/2024 08:17

The cash position includes the 10m fund raise, so not a great compare to juxtapose it with last year's cash position.

Clarke's is a decent enough business, but the problem is it's a low margin business, and low margins can and do evaporate at times, there is no wriggle room as there would be with a business generating >10% GM.

Chasing revenue whilst not having control over margin isn't attractive and I didn't read anything to see how they'd be able to address that, in other words, however good their services are, they don't control the pricing power.

Equally, not a demanding valuation is it.

[igoe104] 15/3/2024 08:10

Even with margins of 3%, compared to the market cap and cash pile, if things go to plan with them revenues CTO will have a bumper year..

3% on 600 million revenue, nearly doubles profits...

[wjccghcc] 15/3/2024 08:05

Agree. They're all about the growth in revenues and order book but there doesn't seem much emphasis on how they're going to improve the margin sustainably beyond the "our target is 3%".

[muckshifter] 15/3/2024 07:46

These results pleased me. The actions that they took to deal with various contract problems, as reported in the trading update late last year, were particularly impressive, imo, and if I was a client or potential client with a major project and very significant cost implications for any missed completion deadline, it would put TClarke at the top of my tender list.

[rivaldo] 15/3/2024 07:34

The market should ideally have already priced in the reduction in PBT.

But the overall health of the company looks terrific, with the order book up 70% to a whopping £943m and a positive forward outlook. The move into data centres has been a huge success and should continue to thrive.

Net cash at £19.3m compares nicely to the £67m m/cap.

Cabendish have left their forecast for 2024 unchanged at 24.1p EPS

They have a 197p price target.

[igoe104] 15/3/2024 07:12

A very mixed bag of results, which we knew about from the trading Update in November, on a positive note, the forward looking statement looks very good especially if the margins move back to 3%..

Dividend increased by 10%, Cash substantiallly up mainly to fund raise...

[mortimer7] 14/3/2024 16:22

Results tomorrow 15th March

[kneecaps2] 09/3/2024 08:10

There was a trade yesterday of 7739 @ 130 at 1635 so 130 was a real price Dr Bio.

[janeann] 09/3/2024 07:34

The offer at 16.26 was 128.5 andbid 127 .......the day before I could have bought at 120

[dr biotech] 08/3/2024 22:47

130 isn’t a real price. Bid is 121, mid is 124.

[janeann] 08/3/2024 19:04

Very strange drop and recovery in the last couple of days.........

[igoe104] 08/3/2024 08:14

Prelims results are any day now. So hopefully a leg up again soon...

[thorpematt] 08/3/2024 08:02

Well the last note I have on EBIT was for adjust EBIT forecast £9m

So that coupled with the order book is not so bad as the chart would have indicated I think?

With the cash position I think YE can be manipulated but neverthelss is good.
(The I in EBIT will help us know the true picture - since this effectvely measures the average cost of debt for the year).

[igoe104] 07/3/2024 15:20

A couple of medium size sells on very little volume, looks to have caused the fall back..

[kneecaps2] 07/3/2024 15:08

Why are they so weak this afternoon?

[igoe104] 07/3/2024 08:26

Looks like CTO are gearing up for lots of growth in the south.

[rivaldo] 06/3/2024 14:59

This dated yesterday just reinforces my view that CTO really are a top quality company always looking to the future, whatever your views on cyclicality etc:



"TClarke Climate Solutions team leads major decarbonisation project with Exeter University

One of TClarke’s successful in-house startups, Climate Solutions leads critical decarbonisation projects in public and private sectors generating substantial revenue. Director Gary Tidball explains:

The present time is the perfect opportunity for us to utilise our engineering skills. Companies in all areas of the UK economy are required to move away from using fossil fuels and switch to low-carbon energy sources and more efficient energy systems. This is a complex engineering task that demands specialised skills, integrated teams, and expertise. Fortunately, we possess all these qualities and can deliver successful outcomes.

Recently, Climate Solutions completed the Bio-Science project at Exeter University with Willmott Dixon (pictured). The client from the University stated, “I do want to say that it has been a long time since I have seen such a quality M&E installation.”

This project is part of a broader decarbonisation project across the entire University Campus. Climate Solutions is also working on another project at Cornwall House, where they are removing two large commercial gas boilers and replacing them with a cascade heat pump system. The existing boilers serve the heating/hot water services and a swimming pool, so our challenge is to keep all these systems online while transitioning to the new heat pumps.

The Climate Solutions Team supports all the Group offices across the UK and is currently working with Oxford on projects at Portsmouth and Bournemouth Hospital and will be working with Bristol at Guys Marsh Prison and with Derby and Peterborough on various projects and also with London and the Design and Build Team."