GUD Holdings (ASX:GUD) listed on the ASX in 1962. The business has never fit neatly into a classification as it has undergone multiple transformations throughout its life. In 2010, 44% of EBIT came from the consumer products division. This included the electrical appliances brand Sunbeam and Oates cleaning products. 28% of EBIT was from the automotive division and 25% from Davey Water Products. The remainder was from the security division. Prior to that they even owned Victa Mowers.
Today, GUD is a pure play automotive parts and accessories business having sold the Davey Water Products business last year to complete the transition from conglomerate to pure play. Initially, this has led to a substantial uptick in margins and returns.
Over the last 18 months, the Quality score has gone from 67 to 97. The underlying factors contributing to this include:
The Health score has gone from 3 to 8
Return on equity has doubled from 6% to 12%
Operating margin has gone from 10.6% to 16.4%
Turning to the Bankruptcy risk, the Z-score was previously in the distress zone, but has now moved into the cautious zone. It is held back by the low proportion of liquid assets and the low level of sales compared to assets. They have been paying down debt at a rapid rate, and in the first half of FY24 they reduced their borrowings by $70 million. The debt to equity ratio is now under 50% (including leases).
The total assets includes a high proportion, 64%, of intangible assets, both goodwill and identifiable intangible assets such as brands and customer relationships, reflecting the high level of acquisitions over recent years.
In January 2022 they acquired Melbourne based Auto Pacific Group (APG) which led to revenue almost doubling in size.
For reporting purposes they divide their operations into two segments, automotive and APG. Automotive includes spare parts, products and accessories for the automotive aftermarket. Some of the businesses in this segment include:
Auto Electrical, Lighting, and Power Management
Brown and Watson International (BWI) Australia
Projecta
GEL in NZ
Vision X
Rindab – European lighting specialist acquired in Nov. Will become part of BWI UK.
Powertrain
Ryco
Wesfil
IMG
EVs
…
