Temple and Websters results were not flattering today and reflective of the advantage they experienced due to covid as well as the tightening environment we have all seen.

The results also highlight the seasonal nature in which they operate, furniture and homewares B2C and B2B as well as entry to home improvement.

In the conference call the leadership referenced the shift to value for consumers and away shift away from discretionary spending in the July to Dec half.

Revenue was 12% down for the December half to 207m from 235m.

NPAT fell from 7.2m LY to 3.87mill TY or 46% lower.

EPS also fell to 3.15c from 6c LY.

Customer count was also down for the half which the leadership explained that it was vital they have profitable customers not customers whom are incentivised to spend via more sales and marketing.

Positive to see the business pivot to control costs across their segments including marketing whose costs fell 23% or 7.6mill to 24.4mill for the half.

Inventory also fell to 25.7mill or 3% compared to last year.

Focus on maintaining EBITDA margins between 3-5% for the 2023 was a call out.

For a growth play TPW has seen its SP trimmed by 25% so far today.

At $3.70 market capitalisation is around $450mill or 1.2x sales but the earnings contraction see's the EPS for FY 2023 likely to come in at 6-7c, equating to PE of 52x.

That's no discount.

Can see some downside SP movement as a consequence but with no debt and 102m of cash will be riding the period out and look ahead to more prosperous times beyond 2023.

TPW Half-Yearly-Report-and-Accounts.pdf

Disc Held in RL outside my top ten position

Solid Result for T&W for the half

Numbers are strong with revenue growth of 46% for the half and current trading up over 20% to date.

Rock solid balance sheet with no debt and 105.5mill in cash

Good control of expenses seeing ebitda margins 5.1% versus guidance of 2-4%

Like the move into other categories of Trade and Home improvement in terms of growing the revenue line.

Currently both categories are 7% and 4% of revenue but growing at 46% and 95% respectively.

The home improvement is particularly interesting with the development of furniture package options for builders. Feels like a niche play and one that could see some nice margins flow.

AI looks like a real strength of the business and is reflective of the moves in the different categories.

Overall the active customers are over 900k and revenue per customer increased for the half.

T&W through the drop shipping (74% of revenue ) method don't appear to have been significantly exposed / impacted significantly to the logistics challenges in terms of timing's and cost increases.

Credit to the business model and quality of the management especially comparative to the likes of Kogan.

This has been and will continue to be a long term hold fro me in real life .

Topped up at sub $8 recently .

Keen on further insights .....