Pinned straw:
PWH released their FY23 results a few days ago, from their presentation:
I thought the result was pretty solid after a fairly disappointing 1H FY23. This year has been a year of investment in the business with the acquisition of several businesses to increase their footprint into Europe. The increase in net assets and lease liabilities reflects this.
Whilst 1H FY23 saw net margins fall below 15% as a result of this increase in spending and also the increased cost of raw materials. 2H FY23 saw a return to increased profitability with net margins improving to back above 20% again.
Management themselves have mentioned that with the increased investment, they will be able to support further growth with current capacity at their new site in Rugby (UK) only being 50% utilised at present.
Once again there was strong growth in emerging technologies with Aerospace and Defence now making up 9% of total revenue. This table below shows their Revenue by Customer Market.
Still lots of projects in the pipeline and interestingly as an F1 fan, I saw that they had secured the contracts for multiple teams for FY26. This is interesting as this is around the time that several major teams will be entering/re-entering the F1 scene. I believe given the growth of F1 in North America, there will likely be more than 10 teams on the grid, thus providing more teams for PWH to work with.
Will update my valuation shortly. Whilst the business seems to be back on track, shares are still quite expensive, and growth would need to continue into the future to support the current price.
Disc: Held IRL and on Strawman.
hainc
@BoredSaint Thanks for the analysis! Great insight into the Motorsports segment of the business.
In the earnings call on 18-Aug, Kees mentioned that there is quite a bit of growth for Motorsports with emerging tech and advanced cooling parts increasing, especially micro matrix. I don't know much about F1 so if you could shine some light on the application of "micro matrix" to Motorsports, that would be great!
Also, if I may, I find the central themes in the earnings call are around the a) the push on automation (which helps increase the efficiency and revenue per headcount) and b) the potential of Aerospace and Defense (A&D) becoming the main driver for the growth in both top and bottom line.
A&D: very healthy segment. We witnessed a strong growth 48% in 2023 but Kees said that we are just "scratching the surface".
the majority of the pipeline is in the U.S hence they've been spending a reasonably substantial capex over there with new furnaces, with short-term pipeline increase has been the cold plates for radar system. Another interesting market is electric lift vehicles (eVTOL) with, according to Kees, a bit of money being spent on building eVTOL and PWR is dealing with 4 of the leading companies in the space.
Some of the programs are entering pre-production and at least four programs will turn into production in FY24-25
And of course, they are aiming for 20% NPAT margin (small R&D needed but margins per part are very high)
Look forward to your response.