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I like companies that operate quietly in a well-defined niche, don’t catch a lot of headlines, operate efficiently, provide an important service, fill a vital need, and pay a handsome dividend. Latchways (LSE:LTC) is that kind of company.
The share price of LTC was up by what some would call “a modest 2.41%” today. But 2.41% is really only modest when a stock is already trading above 1,000. At least that’s how my dictionary defines it. LTC’s share price was up 25.00 to 1,062.50 by mid-afternoon, having drawn back after having reached 1,074 at 12:45 pm. Like most companies, Latchways tanked in 2008-2009 when it bottomed out at 400.00 on 02 January 09. By 05 July 2011 it had reached 1,365.00, if only for a moment. Despite normal ups and downs, the stock has remained above 935.00 during the ensuing two years.
LTC shares received a boost today once it released its preliminary results for their fiscal year ending 31 March 2013. The company, which provides safety solutions and fall protection for people working at heights, – whether horizontal, vertical, overhead, or on an incline – reported a record 10% increase in pre-tax profits to £10.9 million. Revenue for the second half of the year overshadowed first half results by 34%, driving record full-year revenue of £42.4 million. Earnings per share increased from 66.04 in 2012 to 70.32, an increase of 6.5%.
The final dividend was announced at 25.00 pps, bringing the total dividends per share on the fiscal year to 36.00, up from 32.73 pps for the full year in 2012. Aside from special dividends, LTC has increased shareholder dividends steadily since 1998, when it paid out 6.70 for the year. The report emphasized that, “The board remains committed to maintaining a progressive dividend policy whilst ensuring that the group retains sufficient funds to make ongoing investments without recourse to banks or shareholders.” You don’t hear that much these days!
The company’s cash position increased by £2.1 million to £10.5 million. The company has continued to maintain a debt load of at-or-under 20% with 19.65%. Of its £8 million debt, only £820,000 is long-term. With a PE ratio of 15.11, one could hardly say that LTC’s stock is overvalued.
Latchway’s strategic plan appears to be organic (through product development) and geographic expansion, according to company Chairman, Paul Hearson, who said, “Some of the strongest growth was achieved with our more recent product developments and in the newest geographical markets.” He added that “Our focus remains on building our team to address the changing global nature of the fall protection market,” and that “Innovation remains at the heart of our business.” The point was made again, when the report noted that “very poor conditions in the UK and European construction sectors . . . has reinforced our ambition to seek growth opportunities with new products and new markets.”
With all the bad news and financial turmoil in the world, Latchways truly provides a breath of fresh air for investors. It is a company that is clearly succeeding with a business plan built on solid financial, operational, and marketing fundamentals. I sure have enjoyed learning about LTC. I’m having a hard time figuring out why I should not invest in it. How about you?
