Ultimate Products Share Discussion Threads

[deanowls] 03/9/2024 08:14

Great, can I sell you some Vimto and would you like a kettle to boil it in, heres Jose who can arrange the finance of the deal. 😂

[edmonda] 03/9/2024 07:49

"New Board appointments support growth potential"

Strong relations with UK retailers and the potential to build on European expansion are important components of the value proposition and growth case for Ultimate Products plc.

The owner of the Beldray and Salter brands today announced two important Board appointments that are consistent with those objectives. As a brand manager with clearly prioritised distribution channels, we retain our 200p Fair Value for UP’s shares.

UP is to appoint two new Non-Executive Directors, both of which have pertinent experience and strong track records, to its Board with effect from 28th October this year. Andrew Milne, the current CEO of diversified and international soft drinks group Nichols plc, and José Carlos González-Hurtado, who holds Senior Advisor roles at global private equity firm Advent International and Roland Berger, an international management consultancy. We view these appointments positively.

Today’s announcement is consistent with UP’s growth strategy, which is driven by a twin commitment to its brands and distribution channels.

We reiterate the case for a 200p fair value, at which the company’s FY2025 EV/EBITDA would be 8.9x and its prospective P/E ratio an undemanding 13.8x.

Link to note:

[edmonda] 14/8/2024 07:48

UP says sales + EBITDA are in line with market expectations, with cautious optimism for the future. Versus peer consumer goods companies Equity Dev still think their rating is too low and keep a 200p Fair Value/share.

Read, hear summary of new ED research note below:

[deanowls] 13/6/2024 09:02

16.4 PE has it digitized the mops?

[edmonda] 13/6/2024 08:55

Beldray re-brand – Ultimate Products has “got this!”

New research note:

Ultimate Products hosted a Capital Markets presentation at the Exclusively Housewares Exhibition in London on Tuesday this week, where the company showcased its re-brand for Beldray®, having engaged in a similar process for Salter at the same event in 2023. Regarding trading, despite some sales and profit disruption so far in FY2024, we continue to expect above trend organic growth in FY2025. We retain our 200p fair value for the shares.

UP’s Brand Director Tracy Carroll presented key features of the Beldray (est 1872) re-brand. The overarching message was one of “collaboration” between UP and the product user with the simple tagline – “between us we’ve got this.” The company not only looks to have beautiful, affordable products for every home but also to inject humour into the experience of household chores such as laundry and cleaning. The Beldray – be beldray® - re-brand appears well positioned to achieve this.

As a company which owns increasingly powerful consumer brands, UP’s valuation relative to peers continues to look attractive. The company’s yield is above its peers and the prospect of ongoing share buybacks should also be supportive, in our view. We retain our view that fair value for the shares is 200p and base this on 1.2x EV/sales,10.2 EV/EBITDA and a 16.4x P/E. Moreover, the dividend yield at 3.1% would be superior to peers even with a 200p share price.

[edmonda] 15/5/2024 14:20

Q3 Trading Update - Investor presentation video

Ultimate Products hosted an Investor Presentation for retail investors following the company's recent Trading Update for the period from 1 Feb to 30 Apr 2024.

Andrew Gossage (CEO) highlighted how trading has been impacted by a slowdown in near-term sales from landed stocks, typically at higher gross margins, reflecting the broader slowdown seen in retail sales to consumers. Updated expectations for FY24 have now been communicated, but management outlined reasons for confidence in the Group's prospects for FY25.

There was also a detailed Q&A session with numerous questions having been submitted by viewers.

Link to video:

[mpage] 11/5/2024 15:31

@Gnomes3: That's right, timing is an advantage to the major (and minor)long-term shareholders assuming it is not being done simply to cancel out new shares issued to staff. As for prospective buyers on the open market, the buyback prog will reduce liquidity and therefore widen dealing spreads. If management has its eye on a trade sale or taking Ultimate private,(one day) then this is not a material consideration.

FWIW, I added to my position around 8:30am on the day of the announcement as, at the time, the drop (to 135p)seemed overdone for a 7% y-o-y drop in revs to Q3.Only time will tell if this was a good call or not.

That said, we have to take the 7% fall in y-o-y revs on trust because I can't find any figs for Q3 revenues last year. Besides sales, revenues can also be boosted by increasing prices - something that was not done in FY23 but might happen in Q4. Management need to hit EBITDA of £20m to get a portion of their bonus.

[gnome3] 11/5/2024 01:51

I don't really see how the timing of the buy-back announcement disadvantages shareholders. If they'd started the buy-backs before the profit warning, likely more people would have been drawn into the stock on the back of increased momentum and would be sitting on a short term loss. Having the buy-back funds available now, gives some support to the share price and provides liquidity to those that now want to exit.

[mpage] 10/5/2024 17:03

The deterioration in just four weeks is concerning - if genuinely unexpected. To be even handed, Spring in the UK was very wet and sales volumes generally have been weak. However, given that just three people hold much of the equity, it does smack of a cunning plan - or at least an attempt to make lemonade when given lemons. We can be sure that today's announcement was definitely timed to coincide with the buyback, not least because they would have had to sounded out Equity Development to ensure there was a suitable slot available at short notice to calm the horses.

Today's volume was around 2.146m shares trades, perhaps worth c. £3m. That's 3x the expected amount that ULTP expected to spend (per quarter) on the buybacks. The first £1m trance runs to 31 July which is the financial year end.

Keep an eye on this management team.

First buyback rns may well be out by Monday.

[deanowls] 10/5/2024 14:07

It’s the European opportunity that I want to know about. Uk will move up and down but the opportunity lies elsewhere.

[shanklin] 10/5/2024 13:46

In operational terms, IMHO ULTP are very strong. They need to be given the curve balls that are a feature of their operating environment.

[dr biotech] 10/5/2024 13:37

I can’t help but think the two are related. Get the bad news out before they waste 20% of the buyback. I’ll see what they have to say next week.

I want to hear

1] when were they aware of poor trading in Q3 (and determined it would continue into Q4)
2] how confident are they 25 will be better?


I’ve done ok with these and they are one of my larger holdings. Any sort of warning tends to last with a lower rating for some time.

[shanklin] 10/5/2024 13:24

Jonals

Companies should be updating the market when they conclude that the forecasts in the market need revision. ULTP did this last July when their net debt expectations improved considerably from their previous expectations.

I appreciate ULTP don’t usually provide a Q3 TS. But they have chosen to do so this year. It seems to me that they will probably have known Q3 was poor at the time of the H1 results (2 months and one week into Q3) but chose to keep them a secret.

Today they have dumped them into the market, extrapolating Q4 to be similarly poor. No surprise perhaps that they are initiating their share buyback today, on the day when they have given their share price a good kicking.

[fegger] 10/5/2024 11:45

Nothing wrong with a good profit (always sell on profit warnings)so have sold out and will potentially buy back in when situation clearer. Not delighted to have a different picture in early April and one month later a profit warning.

[jonals] 10/5/2024 11:10

Shanklin, that's a touch harsh. They don't give quarterly updates, so this could be an early H2 update. Not sure it's a false market.

[tsmith2] 10/5/2024 10:33

good opportunity to take a position?

[dr biotech] 10/5/2024 08:21

Well they’ve announced an investor meet so at least they are going to front up to it. Guess that will be the first question

[shanklin] 10/5/2024 08:12

The sales dip is unfortunate. But the H1 results were only announced 1 month ago, over 2 months into Q3 when ULTP must have already known Q3 trading was weak.

So why didn't they address this then? Instead IMHO there's been a false market in their shares for the last month

[edmonda] 10/5/2024 07:23

"Near term disruption, but growth case remains strong"

Ultimate Products announces today that sales revenue fell by 7% in its FY2024 third quarter and is anticipated to remain in negative territory in Q4. As a result, the company believes that EBITDA will now be in the range of £17.5m to £18.5m compared with a current market consensus figure of £21.5m. Given the 17% cut in current year EBITDA expectations it seems prudent to adjust our fair value / share figure by a similar amount. So, we reduce it by 20% from 250p to 200p.

However, current sales setbacks look likely to prove temporary. The company clearly states its confidence in the group’s prospects for FY2025 as a whole.

UP’s core franchise values and investor attractions remain intact despite recent disruption. The company generates around two thirds of sales from the Beldray and Salter brands and continues to work on the improved messaging around these two important homewares goods names. Additionally, the business is structured as attractively capital light, due to outsourced manufacturing with positive implications for return on net equity and free cash flow.

Link to research note:

[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.