Worth looking into more details

Hi,

I am surprised that there are not more comments regarding Beacon Lighting on HC.

Despite an earning decrease both in FY 23 and H1 24, BLX has a good profile of a company :
- with significant potential of growth (cf potential number of stores and expansion with trade customers),
- high margins (gross margin of 69.4 % and EBITDA margin of 28.1 %)
- and good level of cash flow/free cash flow during H1 24 (cash flow from operation increased by 100 % yoy during H1 24, despite - 4 % for EBITDA, due in particular to the decrease of its inventory).
If we annualise these H1 results, the company has a free cash flow yield* of 6 %, quite decent level for a company with such a potential of growth.

They had quite a unique profile of flat sales/gross margin** increase during H1 24.
This is due to the success of their strategy to focus more on trade customers (now 30 % to 35 % of sales). Trade sales increased by 23 %, fully offsetting the decrease of sales with retail customers.
The only reason for the 4 % EBITDA decrease was the 6 % operating expense increase, due to inflation, marketing costs for trade customers and costs of opening new stores (4 new stores during H1 24, for a total of 123 stores).

* free cash flow after lease
** better gross margin due to decrease of freight rates and price decrease by their suppliers