Filta Group FY19 trading update

Filta Group (FLTA) provides cleaning services to commercial kitchens in North America, the UK and, mainland Europe. The company reported that EBITDA for 2H19 would be similar to 1H19 and thus below our expectations. The cost-saving benefits of the Watbio acquisition are still taking longer than expected. Revenue continues to be on track and some extra investment has been made in UK sales staff to maximise the revenue opportunities. We cut our EBITDA expectations for 2019 from £4.2m to £3.3m. Our 2020 expectations are unaltered.

  • Forecast changes: We have cut our FY19E EBITDA from £4.2m to £3.3m and left FY20E unchanged at £5.25m. The cut to EPS – FY19E 0.1p (from 5.1p) is more substantial due to operational and financial gearing and a proportionately higher tax charge. The cuts do not reflect any weakening in the business prospects, which we still see as very attractive.
  • Outlook: We downgraded our forecasts in September because the Watbio acquisition cost savings were taking longer than expected so this latest announcement is disappointing. However, management remains very confident regarding the external prospects for the business and that it will have resolved the internal restructuring issues so as to have no negative impact on FY20.
  • Valuation: Filta has no directly comparable companies. We have used a DCF to derive a value range of 217p to 283p per share, using a 10% discount rate and a mid-term (2021-25) growth rate of between 6% and 12%. Our central estimate is 260p. No account is taken of future added-value acquisitions.
  • Risks: In addition to normal commercial risks, Filta is dependent on the behaviour of its franchisees, which it cannot control but can help to influence by means of thorough training. The risks in the Watbio acquisition would seem to be fully understood but any future deals will inevitably involve managing some unknowns.
  • Investment summary: Filta is an attractive business, in our view, combining the capital-light franchise model in North America and Europe with company-owned operations in the UK. With only a tiny proportion of the market currently served and with little or no competition, we see potential for years of profitable growth ahead.

DOWNLOAD THE FULL REPORT

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
Twitter
LinkedIn
Hardman & Co

More articles like this

Filta Group Holdings plc

Fryer management benefits the booming grocery store business

Supermarket deli business is hot, hot, hot. In data reported by Supermarket News, deli-prepared food sales totaled $31.3 billion for the 12-month period ending August 27, 2022. These statistics reflect a 9.3% year-over-year growth and a 19.2%

Filta Group Holdings plc

4 ways to reduce labor costs in restaurants

To figure out ways to save on restaurant labor costs, you must have an accurate picture of where and how you’re spending. Is a large portion going to the front of the house or back of

Filta Group Holdings plc

Where there’s fat, there’s brass

Investors like well-run franchise businesses as they can scale quickly with no need for significant capital investment, but it’s crucial that management can recruit franchisees who will deliver that growth. Franchise business Filta Group has a track record

Filta Group Holdings plc

FiltaFOG Cyclone

The FiltaFOG Cyclone is a market-leading grease recovery unit (sometimes referred to as a grease trap), delivering ultra-high quality of Fats, Oil and Grease (FOG) retention whilst using significantly less energy than traditional GRUs. An award-winning

Filta Group Holdings plc

Franchise Brands predicts forecast-beating revenues

Franchise Brands now anticipates annual revenues and profits will outstrip forecasts following healthy performances from its two largest businesses. The AIM-listed company said kitchen services provider Filta had performed very strongly across North America, while commercial

Filta Group Holdings plc

6 ways to boost restaurant employee morale

Trying to retain employees is becoming more and more difficult for restaurant operators. According to the National Restaurant Association, “restaurant employees at the end of 2021 were down 1 million from pre-pandemic levels.” But while industry-wide employee

Filta Group Holdings plc

Filta helps during Hurricane Ian clean up

This past summer, we shared how some of our Franchise Owners across the country help out in their community, living out the Filta motto of “Do the Right Thing.” Today, we want to keep the good vibes rolling

Filta Group Holdings plc

Filta shortlisted for supplier of the year

Environmental kitchen specialist Filta Group has been shortlisted in the category Supplier of the Year- Sustainability at Catering Insight Awards 2022. The award highlights those catering equipment  suppliers that are championing environmental product development and energy

Filta Group Holdings plc

Case study: Le Manoir aux Quat’ Saisons

Le Manoir aux Quat’ Saisons in Oxfordshire is a prestigious hotel where gastronomy, gardens and culture come alive in stunning surroundings. It’s part of the Belmond hotels and resorts that operates 49 hotels, trains, and river

Filta Group Holdings plc

Amusement parks go green with Filta

When Filta launched its Franchise system in the U.S. in 2002, large commercial kitchens inside stadiums, universities, restaurants, and corporate employee cafeterias were the standard client base, but just recently amusement parks have been high on

Filta Group Holdings plc

It’s a Dirty Job…and Filta Wants to Do it

Corn dogs. Churros. And French fries, of course! Fried food is a delicious part of a visit to any theme park. Cooking all that food requires oil and fryers. The used oil has to be removed

Filta Group Holdings plc

Are you managing your fats/oils/grease obligations

With greater scrutiny on FOG (Fats, Oils and Grease) management and the ongoing threat of fines for non-compliance, it has never been more important to specify to correct FOG solutions in your kitchen. nstalling Grease Recovery

Filta Group Holdings plc

What is Fryer Management?

Deep fryers are a crucial piece of equipment in every commercial kitchen but they’re also messy, unpleasant, and dangerous to maintain. Each year the food service industry experiences about 12,000 burns, according to the Burn Foundation. Cooks,