Ultimate Products Share Discussion Threads

[edmonda] 15/4/2024 11:15

Video recording now available - Investor Presentation (Interim Results) - April 2024

Management of Ultimate Products conducted a live Investor Presentation following Interim Results (for the period to 31 Jan 2024).

Andrew Gossage (CEO) & Chris Dent (CFO) ran viewers through the financial and operational highlights of the period, which included stable profits (EBITDA) and a marked reduction in bank debt. The company also discussed trading in line with market expectations, its intention to buy back up to 10% of its shares, and the ongoing productivity drive through focus on continuous improvement, including the automation of hundreds of tasks across the business. The team also answered investor questions in a wide-ranging Q&A session.

The full video has been divided into chapters as below:
0:00:03 Beginning
0:00:35 Introduction to Ultimate Products
0:03:00 Highlights of the period (Financial & Operational)
0:05:35 Strategy
0:17:01 Financial review
0:28:00 Summary & Outlook
0:31:42 Questions & Answers

Link to full video:

[dr biotech] 10/4/2024 12:24

I'm not normally in favour of buybacks, but given debt here is under control and assuming they can't find any obvious targets I don't think it will be a bad thing.

The trading volume is minimal - even yesterday on results day barely there was only a handful of trades. Perhaps a buyback will increase this, narrow the spread and actually boost the share price as its a tight market.


Probably won't though.

[mpage] 10/4/2024 12:11

On buybacks. There are, of course, other reasons, the main one being to mop up the otherwise diluting effect of issuing new shares as part of the rejigged management incentive plan (p.53 of 2023 Annual Report).

IF the total number of shares (following incentive payouts) can be reduced then less cash £££s are required to boost the dividend per share. In the past year Aviva has made a virtue out of this by promising to grow by mid single digits, the cash amount allocated to divs rather than the (weaker) promise to grow the dividend by mid-single digits. Aviva has become a much more focused business under Amanda Blanc.

IF any of the posters in this thread work in Corporate Governance then it would be interesting to hear their views on the re-jigged Incentive Plan at ULTP.

Anyone wants to see the personal targets set for FY2023 for the crucial three (Showman, Gossage & Dent) can read them on p.65 of the 2023 Annual Report.

[thorpematt] 10/4/2024 11:41

Skin in the game. All OK as far as I can tell here in that regard.

What we have here essentially is a very cash-generative company.

It sends about 50% of that back to shareholders in divis. To add to that it will be buying back stock and as far as i can assertain reducing the shares in issue - thus you get the big divi BUT the company reduces the cash outflow in the paying thereof.

Now, added to that IF there are opportunities to buy good brands to cross sell and enhance sales thereof, the cash can be deployed there, so as not to stress the balance sheet.

Much of this does hinge on the performance of the management, not least those as discussed. In my estimation thus far, they have done good....so I am postive that shareholder returns are real and should continue to be so.

As ever with listed companies, trust in management is a very real concern. Here I have seen nothing to concern me but always a watching brief is wise IMO.

[epo001] 10/4/2024 10:38

Noted, thanks for the clarification. "I looked it up on the web" turns out to be as authoritative as asking a random stranger.

[mpage] 09/4/2024 16:55

Re: concentrated ownership by the crucial three. Apologies, I should have cited my source - a RNS issued shortly after the HI results this morning. You can read it here:

hxxxs://www.investegate.co.uk/announcement/rns/ultimate-products--ultp/general-meeting-and-proposed-share-buyback/8127613

I only mentioned the outside possibility of being mugged by insiders because this is precisely what happened a year ago with Kape Technologies. Founder/Owner made offer at small premium - bought out all who sold into spike. Rinse and repeat. Think it was something you could get away with if co. registered in the IOM.

Frankly, I think the owners/founder just want to buy back some shares and this is a hoop to be jumped through. It also helps get the debt : equity level closer to newly desire levels and slightly reduces the cost of capital (because there will be a greater proportion of debt relative to equity, upon completion). But that is secondary to getting money out.

As long as they stick to a payout ratio of around 50% net profits I'm happy enough to hold.

But if it should later turn out that they gear up the balance sheet and then find a reason to pay a large special dividend this would be a red flag for me. I'm old enough to remember what happened to New Star Asset Management when it did this.

[epo001] 09/4/2024 15:20

#16: According to market screener 30% is held by two individuals, the founder and CEO; the other big shareholders down to 1.5% or so are all institutions. So 2 key people hold 30%

[dr biotech] 09/4/2024 15:18

Three key people own 41.23% of the ordinary shares. After the buyback they will own 48.44%.

I'm not sure how you calculated that - assuming they buy and cancel 10% of the shares that would be 45.8% - but its a fair point. Even now they could probably do what they want.


This does seem overlooked. Price as been 145-154 for pretty much 6 months - just have to be patient and take the dividend.

[mpage] 09/4/2024 12:50

Looking for negatives:

Three key people own 41.23% of the ordinary shares. After the buyback they will own 48.44%. I suppose one risk is that if there is a spell of poor trading they might try to take the company private and it would be all but impossible to stop them.

Market cap of this consumer cyclical is small: c. £131m - UK small caps are ignored.


The German economy may well be in recession - but that won't last forever.

Positives:
Founder still active in growing the business, highly cash generative, attractive return on capital at c. 22%, commitment to dividends, steadily increasing margins, attractive valuation, potential for growth in Europe.

[deanowls] 09/4/2024 09:45

Would’ve liked more detail around Europe and a bit more detail on the outlook statement.

[dr biotech] 09/4/2024 07:30

No surprises as it’s in line with the TU. Seems a very solid if unspectacular company, currently just under a PE of 10. Not expensive. I’m not a fan of buybacks but seems sensible at this moderate rating.

[edmonda] 09/4/2024 07:12

"Balancing sales growth with cash flow generation" (Interim Results)

Stable profits (EBITDA) and a marked reduction in bank debt were key features of Ultimate Products’ (‘UP’) interim results, released today. The company also announced its intention to buy back up to 10% of its shares. FY2024 full year results are expected to match current market expectations.

With revenue expansion likely to resume in H2 2024, and continue into FY2025, we argue that UP is more than capable of generating sales growth and free cash flow simultaneously.

Underlying 6% sales growth, a robust portfolio of six Premier Brands, the ability consistently to convert profits into cash and the prospect of a buyback programme support our view that UP’s shares merit a valuation significantly in excess of current levels. With a keen eye on relative valuation, we base our unchanged 250p fair value on 1.3x EV/sales, 10.3x EV/EBITDA and 14.7x P/E ratio. At this share price the dividend yield would still be 3.4% - i.e. in line with peers.

New research report here:

[edmonda] 13/2/2024 08:07

"Cash generation drives shareholder value" - new research report available here:

Ultimate Products’ (UP) sales fell by 4% in the first six months of FY2024, with the likelihood of a broadly flat full year. But the company’s FY2024 profit expectations - and our own EBITDA forecasts - remain unchanged as improved gross margins should offset lower sales.

UP’s first half sales setback was caused by 3 important temporary effects. First, the company lapped an unusually strong period a year earlier when demand for air fryers was at a peak. Second, supermarket overstocking has taken longer to dissipate than might be expected. Third, UP was negatively affected by disruptions to global supply chains related to conflict in the Red Sea. In contrast, the gross margin outlook is significantly more positive as the uplift to gross margins achieved in the second half of FY2023 appears likely to be retained in FY2024. We increase our gross margin expectations in FY2024 from 25.5% to 26.6%.

Some idea of buyback potential is available from today’s trading update. The company targets long-term net debt/EBITDA at 1.0x. If our expectations for end-FY2024 net debt of £8.0m are met and £21.6m EBITDA are met, the implied headroom for share buy-backs would be of the order of £13m to £14m – equivalent to around 10% of the company’s current market cap.

With positive news on the scope for buybacks in our view offsetting lower than expected sales revenue in FY2024 we maintain fair value of 250p for the shares.

[dan_the_epic] 13/2/2024 07:19

bit disappointing revenue was down. Mentions of air fryer demand softer some channel destocking and recent supply chain problems again

small buybacks possible no change to expectations

probably ends the day down a bit

[deanowls] 28/12/2023 11:45

Thanks for the info Viking. Your posts will be missed.

[blondviking] 28/12/2023 10:28

Whilst I think this is a sound stock I am taking profits now, and investing in us where there are better returns. Good luck to all in 2024

[kingfisher13] 27/11/2023 14:29

I have read the annual report and listened to the webinar the other week, as well as monitoring this stock for quite a few years.
It seems to me that given the head winds they have encountered this last year and yet gone on to deliver improved profits, things are looking very good for the next few years. They will no doubt improve their sales as customers start to restock, their Paris showroom will start to deliver new customers and Petra is looking promising in Germany. On top of that they are seeing improved internet sales which should continue and their running costs should continue to fall as AI and robotics continue to be rolled out and their vast array of solar panels will not only reduce their energy costs, but also start to deliver income when they start to export their electricity to the grid shortly. All looking good and well managed.

[aishah] 16/11/2023 13:57

Steep rebound in share price since results. Above 200d SMA recently and decent yield over 5%.

[edmonda] 07/11/2023 15:40

FY Results - Investor Presentation video (November 2023)

Link is here:

Simon Showman (CEO), Andrew Gossage (Managing Director) and Chris Dent (CFO) of Ultimate Products ran investors through highlights of their Full Year Results for the period to 31st July 2023, which saw an 8% increase in revenue and +11% in gross profit, achieved with no overall price inflation.

Management provided a detailed financial overview and discussed the new European showroom in Paris as a catalyst for European expansion. The presenting team also answered a wide range of questions from the viewing audience.

The full video has been divided into chapters for ease of viewing, as below:
0:00:00 Beginning, team introduction
0:00:21 Highlights of FY23 period
0:02:24 Strategy
0:11:06 Financials
0:21:48 Summary & Outlook
0:23:38 Questions & Answers

[melloteam] 02/11/2023 21:12

Just to let shareholders and prospective investors know that Ultimate Products will be one of the companies presenting at MelloLondon.

The event will take place at the Clayton Conference Centre, Chiswick on Wednesday 29th and Thursday 30th November, where you can expect over 700 investors, 50 Aim listed companies and 10 or so Trusts and Funds.

Tickets are still available and if you would like one at half price then enter the code MMTADVFN50.

For more information, visit

[dr biotech] 02/11/2023 16:47

Hopefully the start of a rerating - PE of 12+ wouldn't be unreasonable. Perhaps the market in general had decided that interest rates have peaked for this cycle.

[morkandmindy] 02/11/2023 09:07

Some hefty buys coming in. Looking good :)

[aishah] 31/10/2023 17:19

Analyst at Stockopedia likes the update:

"These results are in line with expectations and the outlook for FY July 2024 is also currently in line. At about 8x earnings, with modest debt, I remain positive on this stock. It owns a few decent household brands and seemingly hasn’t put a foot wrong in recent years."

[dr biotech] 31/10/2023 16:12

Welcome to the Ultimate products thread. Please keep it on topic when possible.

Owner of Petra, Salter, Beldray and other brands. Coming to a middle isle near you..

For historical BB posts see here