i agree with the above. This was a stellar 1Q result!The topline...

i agree with the above. This was a stellar 1Q result!

The topline was impressive but had already been flagged in the previous trading update with July and part-Aug trading broadcasted so it was more or less in line with my estimate. The surprise was the margin improvement and cash flow generation even when the Masks segment (higher margin) contribution in 1Q dropped from 27% to 14%.Gross margin improved to 43.7% vs 38% YoY and 41.5% QoQ.

The other upside was the containment of Opex which came in at $21.1m down vs $16.5m YoY but down from $22.8m last qtr even with all this growth in revenues. All this propelled cash EBITDA to $28.4m vs $3.7m last year and $8.4m last qtr. The first time it achieved double-digit in one qtr since i've looked at their financials from 2017 and provides a strong base for the rest of FY21.

The CFO showed her cost discipline by not over-investing in promotional activities during the quarter, as there would have been no incremental benefit to margins. The company now has $85m of cash in the bank, which they can now deploy in this qtr on various promotions and additional headcount personnel during the holiday seasons.

For what it's worth, Goldman Sachs upgraded their TP from $5.20 to $6.35 yesterday.