FY21 results reflected the fruits of Mpac’s strategic initiatives, underpinned by growth in the US and the One Mpac integration process. EBITDA (adj.) grew +42%YoY to £11.2m, which was ahead of our outlook of £10.3m. Order intake crossed the £100m mark for the first time.
- An important lead indicator for future performance, Group order intake grew 41%YoY to £117.9m (FY20: £83.9m) - surpassing the £100m mark for the first time - with a closing order book of £78.4m, +41%YoY (FY20: £55.5m).
- FY21 revenue grew 13%YoY to £94.3m (ED estimate: £97.5m) led by 36%YoY growth in the Americas to £63.3m, (67% of total), and 16%YoY growth in Group Original Equipment (OE) revenue to £74.1m, 79% of total.
- EBITDA (adjusted) grew 42%YoY to £11.2m, 9% ahead of our estimate (£10.3m), with an 9.3% margin, 131bp above our outlook.
- Profit before tax (adjusted) was £8.6m, +37%YoY (H1 20: £2.8m), whilst underlying EPS (adjusted, basic) was 39.7p/share (FY20: 31.6p).
We see FY21 cashflow management as impressive given the challenging circumstances of the year, i.e. the impact of COVID-19 on demand and operating conditions, followed by the impact of the recovery from COVID-19 restrictions on supply chains and energy prices. Backed by underlying profitability and sound working capital management, including inventory build, the period-end cash balance was £14.5m, net £13.6m, compared to £11.2m in H1, net £10.3m.
Performance highlights and medium-term strategy. The contribution of strong demand from the Americas, where the US alone contributed 60% of revenue, is clear, with demand from Europe (18% of total) an additional driver to order intake. The group opened its US headquarters and showcase facility in Q3. Mpac Switchback in the US continued to trade strongly, ahead of management expectations. Cashflow management provides tangible evidence of the improvements in operational efficiency resulting from the One Mpac initiative, for example in global ERP, unified engineering, CRM and project management. This carefully planned initiative should remain important in the light of industry-wide challenges of supply chain pressure or components and materials costs. The clean energy diversification with FREYR Battery, for prototype volume production of lithium-ion battery cells, remains on track for completion of the initial development line in Q4 22.
Outlook: continued progress in profitability and cashflow management. As a harbinger of future growth, an order book exceeding £100m underpins our outlook to FY24, albeit mindful of uncertainties arising around European security and continued pressure on energy prices. Our outlook:
- FY22E: revenue of £105.0m, +11.3%YoY, EBITDA (adj.) of £11.6m, +3.8%YoY (unchanged).
- FY23E: revenue of £112.5.0m, +7.1%YoY, EBITDA (adj.) of £12.5m, +7.3%YoY (unchanged).
- FY24E: revenue of £122.2m, +8.7%YoY, EBITDA (adj.) of £13.4m, +7.4%YoY.
Mpac aims for double-digit top line growth over the medium-term, focusing on the healthcare and food & beverage sectors – both areas of robust demand - and an EBIT profitability target of 10%. The Group continues to appraise acquisition opportunities where there is potential to broaden solutions on offer and customer base.
Our outlook places Mpac on a prospective FY23 EV/EBITDA of 8.6x and PE of 11.3x; for FY24, 8.0x and 10.6x respectively. Our fair value for Mpac shares remains 660p.
