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Summary
- Spirent Communications declared the interim dividend of 2.17 cents per share for H1 FY2020.
- Spirent Communication's total order intake increased by 6 percent year on year in H1 FY2020.
- Marshalls received an additional credit facility of £90 million in April 2020.
- Marshalls expects that the completion of the restructuring programme would support future growth opportunities.
SPT is a telecommunications stock, whereas MSLH is an industrials stock. Based on 1-year performance, both SPT and MSLH were up by about 78.82 percent and 7.93 percent, respectively (as on 7 August 2020 after the market closed). Let's study the recent financial and operational updates of the two companies.
Spirent Communications PLC (LON:SPT) – Confident over demand of 5G solutions
Spirent Communications PLC is a UK based Group that provides the solution for networks and devices. The Group also offers services in 5G, cybersecurity and service & assurance. Spirent categorizes the business under three segments that includes Networks & Security, Lifecycle Service Assurance and Connected Devices. Spirent is included in the FTSE 250 index.
H1 FY2020 results (ended 30 June 2020) as reported on 6 August 2020
(Source: Group Website)
The total order intake increased by 6 percent year on year to USD 232.1 million in H1 FY20. The Group reported revenue of USD 233.7 million in H1 FY20, which was up by 7 percent year on year from USD 217.4 million in H1 FY19. The revenue was supported by the robust development of 400G Ethernet test solutions and 5G orders. The gross margin improved to 73.4 percent in H1 FY20 from 72.0 percent in H1 FY19. In H1 FY20, the Group reported an adjusted operating profit and profit before tax of USD 39.5 million and USD 36.0 million, respectively. The Group declared the interim dividend of 2.17 cents per share for H1 FY20. As on 30 June 2020, Spirent had cash of USD 221.4 million. Networks & Security contributed 61 percent to the Group revenue and generated USD 142.0 million in H1 FY20. Lifecycle Service Assurance and Connected Devices reported revenue of USD 58.5 million and USD 33.2 million, respectively. On the geographical basis, the Americas generated revenue of USD 119.9 million, whereas the Asia Pacific and Europe, Middle East & Africa generated revenue of USD 90.3 million and USD 23.5 million, respectively. The Group delayed some of the discretionary expense, and it has moved it to H2 FY20. The supply chain of the Group was steady, and it did not face any challenges in customer shipments. During the reported period, the Group signed more than 250 deals related to 5G services. It collaborated with Rakuten Mobile of Japan and China Telecom for 5G network equipment.
Share Price Performance Analysis
1-Year Chart as on August-7-2020, after the market closed (Source: EODHD/Others, Thomson Reuters)
Spirent Communications PLC stock closed at GBX 304.00 (as on 7 August 2020). Stock 52-week High and Low were GBX 306.00 and GBX 146.81, respectively. The Group had a market capitalization of £1.87 billion.
Business Outlook
Spirent's business performance was upbeat in Q1 FY20; however, it was impacted due to the pandemic in Q2 FY20. The business activity started to recover from June 2020. The Group expects the business performance to be resilient in H2 FY20. The Group remains confident about the liquidity headroom and operational delivery. FY20 capital expenditure is expected to be in the range of USD 11-12 million. The Group is confident and optimistic about the 5G solution and expects the demand to grow.
Marshalls PLC (LON:MSLH) – Business activity improved in June 2020
Marshalls PLC is a UK based group that engaged in the business of landscape, driveway and garden products. The end market of the Group includes Public sector & Commercial, UK domestic and International, and it classifies the business under Landscape products, Emerging UK business and International. Marshalls is included in the FTSE 250 index.
Half-year trading update (ended 30 June 2020) as reported on 16 July 2020
In H1 FY20, the revenue was £210.5 million, which decreased by 25 percent year on year from £280.1 million a year ago. In H1 FY20, the business activity was subdued although it started to improve in June 2020, and it was up by 2 percent year on year in June FY20 as compared to the same period last year, whereas in April FY20 the revenue was down by 66 percent year on year. The sales to the domestic end-market improved in June 2020, and the installers order book was of 12.4 weeks as on 30 June 2020 that was 9.7 weeks in February 2020. The infrastructure sales in the Public sector and Commercial end market was strong. As on 30 June 2020, Marshalls had net debt of £53.9 million, and it had a debt facility of £255 million. As on 14 April 2020, Marshalls received an additional debt facility of £30 million each from NatWest, Lloyds and HSBC bank with a total additional facility of £90 million. The Group underwent a restructuring process that includes a few site closures. The cost of the restructuring programme would be included in H1 FY20.
FY2019 Annual results (ended 31 December 2019) as reported on 8 April 2020
(Source: Group Website)
The Group reported revenue of £541.8 million in FY19 that was £491.0 million in FY18. The revenue grew at a CAGR of 9 percent between FY14 and FY19. The operating profit was £72.6 million, and profit before tax was £70.1 million. In FY19, the profit after tax was £58.1 million. The return on capital employed improved from 21.9 percent in FY18 to 23.7 percent in FY19. As on 31 December 2019, Marshalls had net debt of £37.4 million. In FY19, the Group paid a total dividend of 18.35 pence per share. Public sector and Commercial end market generated revenue of £371.2 million, whereas UK Domestic and International generated revenue of £143.7 million and £26.9 million, respectively. As classified by area, in FY19, Landscape products generated revenue of £413.1 million, and Others revenue was £128.7 million.
Share Price Performance Analysis
1-Year Chart as on August-7-2020, after the market closed (Source: EODHD/Others, Thomson Reuters)
Marshalls PLC stock closed at GBX 653.50 (as on 7 August 2020). Stock 52-week High and Low were GBX 876.00 and GBX 505.00, respectively. The Group had a market capitalization of £1.31 billion.
Business Outlook
Marshalls highlighted that the current economic situation remains volatile; however, the recent business activity was better than the expectation. The completion of the restructuring programme and access to a new loan facility would increase the liquidity headroom. The Group has suspended future guidance and expects that it would be able to assess the full-year business performance after business activity in July and August.
