Disinfection products supplier Tristel (LON: TSTL) beat expectations in the year to June 2024. There were initial revenues from the US, but they will take time to build up.
Sales grew in nearly every market, with small dips in Australasia and China. A price increase in the UK, combined with higher volumes, helped hospital medical device decontamination jump 38%. The main growth in sales is in the UK and Europe.
In the year to June 2024, revenues improved from £36m to £41.9m, while pre-tax profit rose from £6.2m to £8.2m. There was a reallocation of costs from overheads to cost of sales, so this affected comparatives. The total dividend was raised 29% to 13.52p/share.
There was a £130,000 contribution from royalties on sales of ultrasound disinfection products in the US. It is still early days in the process of recruiting new hospital clients, but distributor Parker has strong relationships in this area.
Management is hopeful that FDA approval for Tristel’s ophthalmology disinfectant will be received by the end of the year. Then the decisions on how the product will be distributed will be made. It is unlikely to contribute to this financial year and there is nothing in the forecasts.
Tristel is expecting European regulatory approval for additional Cache surface disinfectant products, and this should accelerate their growth, which has lagged the rest of the business. This is a lower margin business, but scale could improve them.
The balance sheet remains strong with net cash of £8.8m. Cavendish has raised its 2024-25 pre-tax profit forecast from £7.4m to £8.5m. A dividend of 14.87p/share is estimated. Pre-tax profit could increase to £10.5m in 2025-26, as North American revenues improve – even without a contribution from the ophthalmology product.
New chief executive Matt Sassone has only been in the job a few weeks. He is still reviewing strategy, and he has significant experience in the increasingly important North American market.
The share price dipped 1.9% to 387.5p. That is 22 times prospective earnings with a forecast yield of just under 4%. The high multiple reflects the track record and the potential for revenues from North America.