Updated Thoughts on Flyover Stock Companies, 2nd Edition
Updated Thoughts on Flyover Stock Companies, 2nd Edition
A round-up of recent Flyover Stocks news
As the list of Flyover Stocks company profiles increases, providing a quarterly update on each becomes more challenging. My approach is to only highlight companies with material news or useful read-through commentaries.
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In April, Howdens Joinery issued a trading update and shared that U.K. same-depot sales were up 0.5% (up 4% excluding the additional week) and international same-depot sales down 2.5% (-0.1%). While these aren't optically strong numbers, they are better than the prior year's report, which had lapped double-digit comps. This is an admirable result, given the jump in interest rates over the last two years.
Howdens is also aggressively expanding its depot count (30 in the U.K.) along with existing store refurbishments (85 in the U.K.). The store refurbishments alongside planned price increases could boost same depot sales in the next year.
The big question for Howdens remains the international operations. At the 2023 results presentation in February, CEO Andrew Livingston noted that depot managers in France and Belgium have not had as much time or experience in developing local trade relationships. This is partly due to Howdens implementing its city-based strategy in the region in 2019 after a number of “experimental” strategies failed in the region.
Manager development is a top priority in France and Belgium in 2024. It’s common for business-to-business relationships in new markets to take more time than business-to-consumer relationships and it will also take time for Howdens’ depot network in the region to become sufficiently dense to unlock cost-saving efficiencies.
Worthington Enterprises recently announced a double corporate action with Norway-based Hexagon Composites that illustrates thoughtful stewardship of shareholder capital.
Part One of the deal is acquiring Hexagon Ragasco, a division of Hexagon Composites, which makes pressurized cylinders using lightweight composite materials. Composite cylinders are a tiny fraction of the pressurized cylinder market today, but they have a number of benefits including lighter weight, transparent view of the gas levels, and higher durability.
It’s good to see Worthington not digging in its heels on steel cylinders when composites may be a more practical solution in the next decade. See the video below for more information on composite cylinders.
Part Two is selling 49% of its Sustainable Energy Solutions business into a JV with Hexagon Composites who will also have a 49% interest.