Recently promoted to the FTSE-250

I have topped up today in anticipation of a trading update after the weekend.

Previously burdened by a longrunning pensions deficit on three fronts - agreement on all three of which was reached last month. The cost of the settlement was published, so should already be in the price which looks poised to break up past 78p about now?

Website: www.coats.com

In its recovery, the share price has trebled in the last year, taking it back up to where it last was 10 years ago. (Note - I haven't checked what restructuring has taken place along the way).

Directors purchases in the past year:

Dec.Date Type Director Pos No. of Shares
02/03/2017 BUY Simon Boddie FD 100,000
01/03/2017 BUY Rajiv Sharma ED 200,000
22/12/2016 BUY Nicholas Bull NED 150,000
22/12/2016 BUY Ruth Anderson NED 100,000
03/03/2016 BUY Paul Forman CEO 500,000

Coats is the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market. At home in some 60 countries, Coats employs 19,000 people across six continents. Revenues in 2016 were US$1.5bn.
Providing products and services to the apparel and footwear industries; applying innovative techniques to develop high technology Performance Materials threads and yarns in areas such as automotive, composites and fibre optics. Headquartered in the UK, listed company on the London Stock Exchange.

More than 450 million pairs of shoes are made every year using Coats’ thread
More than 100 million car airbags are made using Coats’ Performance Materials thread every year. Our Red Heart knitting and crochet yarn brand has been named ‘America’s Most Recommended’ by the Women’s Choice Award for three years running. Our flame retardant Performance Materials threads can withstand temperatures as high as 1,000 degrees Celsius. Coats is the second largest supplier of zips to global brands.

I would welcome comments and observations please.

COATS GROUP INTERIMS WEAVE MOSTLY ENCOURAGING PICTURE

Oliver Haill Sharecast | 31 Jul, 2017 09:29 - Updated: 09:29

In its first set of results since weaving its way back the FTSE 350, industrial threads and yarns maker Coats Group reported 38% growth in earnings and hiked its dividend 7%.
Coats, which was founded in Paisley in the 18th century before becoming a founding member of the FT 30 index in 1935 and was once the third largest company in the world, posted interim results showing $740m of sales, up 4% year-on-year or 5% at constant exchange rates as solid growth from the industrial division more than offset a decline at the much smaller US-focused crafts business.
Growth remained strong in Europe and Asia, with a return to growth in the US consumer durables markets, the 7% growth in the industrial division same from 5% growth from market share gains at apparel and footwear, and 18% from performance materials' geographic expansion plus bolt-on acquisitions.
Crafts sales declined 8%, largely due to the disruption caused by the tornado strike at the main Crafts distribution centre in Georgia, USA in January.
Boosted by acquisitions, adjusted operating profit increased 14% to $89m, with industrial adjusted operating profit increasing 11% as margins widened by 50 basis points to 13.6% due to volume growth, productivity and procurement improvements, and continued cost control which more than offset continued pricing pressure and structural inflation in the markets in which we operate.
Adjusted earnings per share surged 38% to 3.06 cents, with an extra benefit from a reduction in the effective tax rate and mark-to-market foreign exchange gains. At the underlying level EPS grew 19%.
After generating $109m adjusted free cash flow in the last 12 months but with second half capital expenditure to increase to $30-40m to represent a full year spend of $50-60m, the board declared an interim dividend of 0.44 US cents per share, up 7%.
Coats, which as Coats Limited became a subsidiary of the Guinness Peat Group in 2004 and was taken private in 2005 before being re-floated in London as Coats Group in 2015, made onto the FTSE 250 index in June's index reshuffle.
Despite inconsistent levels of demand from clothing retailers and continued weakness of the North American market, chief executive Rajiv Sharma said the year was going well as the company continued to increase market share in the apparel and footwear segment, which he attributed to a "customer-led approach to innovation, digital solutions and corporate social responsibility".
"We continue to leverage our global footprint and customer base in our Performance Materials business, develop new product solutions for our customers, and see a good contribution from our Gotex business which was acquired in 2016."
He said strong cash generation was allowing it to pay a dividend and still increase investment in the existing asset base in the second half of the year.
"We will look to build on the strong first half of the year, and expect to deliver performance in line with management's expectations for the full year. This is expected to be achieved through our initiatives to deliver market share gains and productivity improvements, maintaining a tight control of our cost base, whilst investing in our growth opportunities."
Monday saw Coats shares, which have more than tripled since the start of last year, retreated a touch from recent highs, sitting down 1.5% at 77.8p.

2017 Full Year results

Highlights
· Revenue growth of 4% to $1,510 million; driven by Apparel and Footwear (up 5%) and Performance Materials (up 12%), with some offset due to a weak performance in North America Crafts.

· Adjusted operating profit up 11% to $174 million (reported $167 million, up 9%); Group operating margin up 70bps to 11.5%.

· Adjusted EPS up 30% to 6.4 cents (reported EPS of 5.8 cents, up 35%) as a result of higher operating profits, a further reduction in effective tax rate and a reduction in finance costs.

· Adjusted free cash flow growth of 12% to $87 million; which includes a $10 million year-on-year increase in capital spend predominantly in H2, as anticipated.

· Settlement concluded with all three UK pension schemes and Pension Regulator investigations now ceased with $348 million of parent Group cash paid to the schemes during the year.

· Launch of Connecting for Growth programme supporting the next phase of Coats' growth; expected to deliver $15 million net annualised operating cost savings.

· Completed the Performance Materials acquisition of Patrick Yarn Mill in December 2017.

· Successful $225 million debut US Private Placement issue, alongside refinancing of existing bank debt facilities, providing diversification of sources and maturity of debt.

· Full year dividend per share increase of 15% to 1.44c per share.

Commenting on Coats Full Year 2017 results Rajiv Sharma, Group Chief Executive, said:

'Coats delivered a strong performance in 2017. Momentum in Industrial continued throughout the year in key Apparel and Footwear markets, where we continued to take share, and we saw double-digit growth in hi-tech end-uses in Performance Materials. This was partly offset by North America Crafts where market conditions remained weak. In an environment of rising input costs, we were able to grow our operating margins, through realising price increases, productivity and procurement gains, as well as tight control of our cost base. Following this strong performance in 2017 we have announced a full year dividend per share of 1.44 cents, which represents a 15% year-on-year increase.

'Through our continued strong financial delivery and investment in growth initiatives we have built a solid base for the future. However, the markets in which we operate are constantly changing. Our customers require an increased emphasis on speed, quality, value, innovation and corporate responsibility. To accelerate our transition from the industrial to the digital age, we launched the Connecting for Growth transformation programme, which will support our next phase of growth. We expect this programme to deliver increased productivity, with targeted net annualised operating cost savings of $15 million by 2020.

'To further support our strategy delivery, we completed the Performance Materials acquisition of Patrick Yarn Mill, which extends our existing competencies and innovation capabilities. As with our previous acquisitions of Gotex, Fast React and GSD, we look forward to leveraging Coats' unrivalled geographic footprint, breadth of global customer relationships and strong corporate brand to support Patrick Yarn Mill's expansion.

Surprised nobody seems to be following this, could be a 2019 winner!

Recent technical Indicators suggest COA as a strong buy.

Bullish bottom Triangle/Bottom Wedge generated 31 Dec 2018 suggests a target price of 96.00 - 99.00

All in all, looking like a strong candidate for 2019!