Beacon Lighting share price opens lower despite record sales

Beacon Lighting share price could be on watch following a record sales result in FY20. Its earnings could exceeded analyst expectations.

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The Beacon Lighting Group Ltd (ASX: BLX) share price is falling lower this morning following release of the company's FY20 results. At the time of writing, the Beacon Lighting share price has fallen 1.5% to $1.32 after closing yesterday's session at $1.34.

FY20 Results

The group had a strong financial year with revenue from ordinary activities increasing 2.6% to $252.2 million in FY20. Underlying sales increased 8% to $250.9 million. International sales increased 22.9% to $8.5 million.

Additionally, net profit after tax increased 38.5% to $22.2 million in FY20 from $16.04 million in FY19. Underlying net profit after tax increased 16.8% to $19.1 million. 

Earnings before interest, taxation, depreciation and amortisation (EBITDA) was up 111% to $62.53 million from $29.64 million in FY19. 

Beacon Lighting said stores experienced significant growth in sales as its customers were spending more time working, educating and completing projects at home. Additionally, company store comparative sales increased 7.2% based on a 52 week comparative basis. 

Online sales showed pleasing growth of 50.6% to $16.2 million with significant qrowth in Q4.

Earnings per share was 10.11 cents in FY20 up from 7.37 earnings per share in the prior corresponding period. This exceeded analyst expectations of 8.8 cents per share.

Gross margin was impacted by exchange rate volatility. As a result, gross margin in FY20 was down 63.9% in FY20 compared to 64.0% in FY19.

The company had a strong net operating cash flow generated by strong sales, margins and decline in inventory. This was supported by the sale of the distribution centre in Parkinson Queensland, debt reduction, two acquisitions and the Masson manufacturing factory in Epping, Victoria. 

The group declared a dividend of 2.4 cents per share. The annual dividend for FY20 is 5 cents per share up from 4.55 cents in FY19.

What's next for the Beacon Lighting share price?

Beacon Lighting will continue to target growth in Australia and around the world by keeping up to date with the latest lighting technologies, opening new stores and introducing new product ranges. It remains encouraged by the continued support from all stakeholders. However, the group remains cautious regarding the high level of uncertainty globally because of the coronavirus pandemic.

Stage 4 restrictions are applying to its 28 Melbourne metropolitan stores and stage 3 restrictions are applying to 4 regional stores. Despite the restrictions, customers are still able to shop online with home delivery or click and collect. Regional stores remain open during this time but are subject to safety measures.

Beacon Lighting didn't apply for the JobKeeper program. Having said that, the group advises significant uncertainties remain as to whether current sales trends will continue. Strong Q4 sales have continued into the start of FY21. 

The Beacon Lighting share price has increased 207% since its March lows and is 10.9% higher in year-to-date trading.

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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