PWR share price up 6% on record revenue and profit for FY22

Despite the challenges of COVID-19, PWR scored a record profit and has raised its dividend by 36%.

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Key points

  • PWR Holdings has reported record revenue and profit in its FY22 full-year results
  • Shareholders are happy with the PWR share price, up 6.5% at the time of writing 
  • The auto parts design and production company is sharing the spoils with investors, raising its dividend by 36% in FY22 

The PWR Holdings Ltd (ASX: PWH) share price is up 6.4% after the company reported record revenue and profit in its FY22 full-year results.

The auto parts design and production company released its annual report after the market close yesterday.

The PWR share price opened at $9.07 today, well up on its previous closing price of $8.80. The shares reached an intraday high of $9.44 this morning and are trading at $9.35 at the time of writing.

PWR share price spikes on record results

The key metrics of the FY22 report are as follows:

  • Revenue of $101,072,000, up 27.6% on the prior corresponding period (pcp)
  • EBITDA of $35,747,000, up 23.4% pcp
  • Net profit after tax (NPAT) $20,843,000, up 24.1% pcp
  • Operating cash flow $23,522,000, down 25% pcp
  • Earnings per share (EPS) of 20.79 cents, up 24% pcp
  • Final dividend of 8.5 cents full franked
  • Total dividends for FY22 of 12 cents per share, up 36.4%
  • Full-year dividend payout ratio of 58% of NPAT (dividend policy 40% to 60% of NPAT).

What else happened in FY22?

The company said its record profit was driven by revenue growth across all key markets and geographies. In particular, there was significant growth in third-party sales in the United Kingdom, Australia, and the United States at 35.9%, 34.1%, and 17.9%, respectively.

PWR said a 25.8% increase in organic growth and the favourable Aussie dollar also helped boost NPAT.

Revenue in the emerging technologies segment grew by 123.8% and now represents 19% of company revenue. This includes growth in the aerospace and defence market of 56% to $7.1 million.

A 65% revenue increase in the automotive original equipment manufacturer (OEM) segment occurred as "planned programs commenced production and new programs were secured".

The new programs included Aston Martin, Valkyrie, and Rimac Nevera, according to the report.

What did management say?

PWR chair Teresa Handicott said:

PWR has delivered a strong performance in FY22. During the year, PWR increased inventories of raw materials in response to global supply chain challenges to ensure continuity of supply, reducing the EBITDA to operating cash conversion ratio.

Despite this, PWR has maintained its strong balance sheet with $21.5 million in cash at 30 June 2022 …

Founding shareholder and managing director Kees Weel said:

The benefits of our investments made in FY21 and FY22 in people, capital equipment and factory
capacity have enabled us to capitalise on growth opportunities and together with our AS9100
aerospace and defence quality and NADCAP certifications, position us well for the future.

The continued growth in Automotive OEM and emerging technology programs, together with
motorsports returning to normal racing schedules, has resulted in improved financial performance.

What's next?

In its annual presentation, PWR notes its strategies for dealing with supply chain shortages and increasing inflation, including increasing its sale prices "where possible".

The company said:

We have increased forward orders and inventory of raw materials to ensure continuity of supply, reducing cash from operating activities.

We have increased finished goods inventory for key programs and are warehousing these finished goods in the United Kingdom to reduce the shipping distance for the final delivery to the customer, reducing the risk of freight delays.

Increasing inflation as the global economies recover from COVID-19 and in response to the war in Ukraine will continue to put pressure on wage rates, raw material costs, supply chain costs, and other expenses.

PWR share price snapshot

Over the year to date, the PWR share price has declined by about 8%. This is a far better outcome than that recorded by the company's home sector. The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) has fallen 15.7% in 2022 as investors worry about how rising inflation and interest rates will impact consumer spending.

Over the past month, the PWR share price has rebounded strongly by 25% as the broader market lifts.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PWR Holdings Limited. The Motley Fool Australia has positions in and has recommended PWR Holdings Limited. 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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