Global exit from the corona crisis and fears of a recession are two factors that have cut the price of a stock Mitronics About 40% from the beginning of the year until the end of last week. However, the manufacturer of robots for cleaning pools controlled by Kibbutz Jezreel (56%) is still considered a great stock market success story.
Even after the sharp decline in the stock in recent months, those who invested in it three years ago are still recording a respectable return of more than double their money. Mitronics Traded at a value of more than NIS 5 billion, which gives the kibbutz’s holdings in the company a value of close to NIS 3 billion.
The negative trend in the stock comes precisely after Mitronics recorded a sharp growth in revenue in the last two years, in which the corona spread around the world, as people shut themselves in homes and therefore invested more in building and maintaining private pools.
The combination of ending the epidemic and returning to routine around the world, with no closures locking people in homes, along with fears that the global economy is on the brink of recession, seems to have toppled the stock since last November, when the company stood at more than NIS 9 billion. Today, close to NIS 4 billion has been written off.
“Gain great expertise in online marketing”
Despite the negative sentiment in the stock market, Mitronics continues to advance its business plans, and last Thursday announced the acquisition of a company in the US, after several years in which it did not make such a deal. million dollar. In response, Mitronics shares soared by about 6%.
In the transaction, Mitronics acquires 70% of ECCXI, which owns a group of companies under the trade name “Backyard”. This is a private company founded in 2010 by Michael and Chris Hoffman, a father and son “who have extensive experience in the pool industry”, who will hold a stake in the pool after the transaction (30%). The proceeds from the transaction may grow to an additional $ 4.5 million, contingent upon the Company’s performance in the current year and next.
Backyard operates from the city of Dallas, Texas, and is primarily engaged in online sales of complementary products to the world of private pools, through stores on Amazon, eBay, Wal-Mart and others. In addition, it sells robots for cleaning swimming pools, which account for 58% of its revenue. Backyard purchases the robots mainly from PoolCorp, which serves as Mitronics’ main distributor in the United States. Backyard has other distribution centers in the states of Florida, Pennsylvania and Utah.
The data attached by Mitronics to the announcement of the acquisition shows that Bakiard ended the first quarter of 2022 with sales of $ 18.8 million, and recorded EBIT (profit before interest and taxes) of $ 223,000. The data for the corresponding quarter were not provided, but the company ended last year with double-digit revenue growth – to $ 102.3 million, an increase of 25% from the previous year, and with 100% growth in EBIT which amounted to $ 5 million.
Sharon Goldenberg, CEO of Mitronics, says that in recent years Bacquard has focused on selling pool products in online marketplaces in the US, especially on the Amazon website, where they have gained great expertise. Mitronics works shoulder to shoulder with Chris and Michael Hoffman. About 5 years. The acquisition will advance us in the world of digital marketing. “
The robot segment for private pools is growing
Mitronics’ presentation to the capital market shows that the number of robots for cleaning private pools in the world grew by 23% last year to 5.4 million units. The other methods of cleaning pools have eroded. Sales of robots for cleaning private pools accounted for 91% of the company’s revenue in the first quarter. These Mitronics robots accounted for 48% of the global market in 2021, with the main competitors being New Florida (25%) and Winnie (14%).
The latest acquisition is intended to boost Mitronics’ sales and help meet its growth plan. The market estimates that after the positive effect of the corona has faded, Mitronics is expected to converge In the coming years To a growth rate in revenue that would be more reminiscent of its growth rate from 2012 to 2020. At that time, revenue grew annually at an average rate of 17% -18%.
For now, in the first quarter of the year Mitronics still recorded rapid growth. Revenues increased by 36% compared to the corresponding quarter to NIS 570 million. Operating profit increased by 27% to NIS 143 million, and the bottom line is that the net profit attributed to shareholders climbed by 29% and amounted to NIS 112 million. The company also showed a sharp increase in the order backlog, of 68% within a year to NIS 636 million.
Mitronics management has raised its revenue forecast for the current year. At the end of the first quarter, the company expects to record an 18% to 22% increase in revenue in shekel terms, compared to the expected 17% increase published by the company in the 2021 summary.
Less corona data, more weather effects on demand
However, it seems that investors’ concerns, as expressed in the stock’s decline, have something to base it on. For the new CEO, Goldenberg, with the results of the first quarter, also published an estimate of a moderation in the company’s performance later on. “On the one hand, demand levels in the industry have remained high, both for new pools and equipment for pools, but unlike the last two years, a trend of recurring weather effects on consumption rates can be identified.”
He now says that “at the principle level the pool market seems to be returning to the standard levels of the corona eve. In this world sales are more seasonal, i.e. whether hot or not hot.
Goldenberg replaced the previous CEO, Eyal Trier, last November, who just on his departure left the Mitronics share at an all-time high, before losing tens of percent of the campaign.