Future reports 154% EBITDA growth in 2018 and 47.6% Revenue growth

23 Nov 2018 • About Future ($FUTR) • By InTwits

Future reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:

Future motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -6.0% for the sames years
Future has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
The company has potentially unprofitable business model: ROIC is 3.8%
It operates with medium-size leverage: Net Debt/EBITDA is 1.3x while industry average is -1.9x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue surged on 47.6%. Revenue decline was slowing down on average by 18.8 pp per annum in FY2014-FY2018. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.4 pp from 6.2% to 10.6% in FY2018.

Gross Margin increased on 4.2 pp from 40.2% to 44.4% in FY2018. Gross Margin followed a growing trend at 5.0 pp per annum in FY2014-FY2018. SG&A as a % of Revenue increased slightly on 0.64 pp from 27.1% to 27.8% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue bottomed in FY2016 at 22.9% and was growing since that time.

Net Income margin showed almost no change in FY2018.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 0.96% in FY2018. The company's CAPEX/Revenue increased slightly on 0.63 pp from 0.33% in FY2015 to 0.96% in FY2018. It's average CAPEX/Revenue for the last three years was 0.67%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 0.33% and was growing since that time.

Return on investment

The company operates at low ROIC (3.8%) and ROE (2.5%). ROIC increased on 2.3 pp from 1.5% to 3.8% in FY2018. ROE decreased slightly on 1.4 pp from 3.9% to 2.5% in FY2018.

Leverage (Debt)

Debt level is 1.3x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 1.9x to 1.3x in FY2018. Debt jumped on 20.4% while cash dropped on 36.6%.

Future has short term refinancing risk: cash is only 75.3% of short term debt.

Financial and operational results

FY ended 30 Nov -0001

Future ($FUTR) key annual financial indicators

mln. £	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	66.0	59.8	59.0	84.4	124.6	47.6%
Gross Profit	15.4	19.2	21.8	33.9	55.3	63.1%
SG&A	25.7	15.6	13.5	22.9	34.6	51.1%
EBITDA	-31.3	1.1	-11.8	5.2	13.2	153.8%
Net Income	-33.9	-1.3	-14.2	1.6	2.9	81.3%
Balance Sheet
Cash	7.5	2.5	2.9	10.1	6.4	-36.6%
Short Term Debt	0.0	4.3	2.3	3.2	8.5	165.6%
Long Term Debt	0.0	0.0	0.1	16.9	15.7	-7.1%
Cash flow
Capex	0.4	0.2	0.2	0.6	1.2	100.0%
Ratios
Revenue growth	-20.1%	-9.4%	-1.3%	43.1%	47.6%
EBITDA growth	-1,590.5%	-103.5%	-1,172.7%	-144.1%	153.8%

Gross Margin	23.3%	32.1%	36.9%	40.2%	44.4%	4.2%
EBITDA Margin	-47.4%	1.8%	-20.0%	6.2%	10.6%	4.4%
SG&A, % of revenue	38.9%	26.1%	22.9%	27.1%	27.8%	0.6%
Net Income Margin	-51.4%	-2.2%	-24.1%	1.9%	2.3%	0.4%
CAPEX, % of revenue	0.6%	0.3%	0.3%	0.7%	1.0%	0.3%

ROIC	-60.8%	-4.8%	-48.0%	1.5%	3.8%	2.3%
ROE	-67.8%	-4.1%	-54.0%	3.9%	2.5%	-1.4%
Net Debt/EBITDA		1.6x		1.9x	1.3x	-0.6x

Peers in Media

Below you can find Future benchmarking vs. other companies in Media industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Marimedia Ltd ($MARI)	45.7%	20.1%	66.0%	67.6%
Grupo Clarin Sa ($GCLA)	39.8%	-57.9%	37.2%	24.4%
Jaywing ($JWNG)		26.6%	6.5%	23.8%	6.7%
Tla Worldwide ($TLA)	6.3%	130.0%	10.6%	23.4%
Dcd Media ($DCD)	-21.2%	14.5%	-22.7%	19.1%
Median (24 companies)	1.2%	1.7%	4.0%	2.7%	9.5%
Future ($FUTR)		-9.4%	-1.3%	43.1%	47.6%

Top companies by Gross margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Porta Communications ($PTCM)	83.4%	79.0%	80.1%	84.9%
Jaywing ($JWNG)	81.0%	89.0%	88.4%	80.8%	77.2%
Tla Worldwide ($TLA)	99.9%	78.8%	75.5%	68.1%
Spaceandpeople ($SAL)	62.2%	58.8%	57.2%	66.1%
Reed Elsevier ($REL)	65.3%	64.3%	63.9%	64.2%
Median (22 companies)	44.0%	42.2%	41.9%	40.1%	40.7%
Future ($FUTR)	23.3%	32.1%	36.9%	40.2%	44.4%

Top companies by EBITDA margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Haynes Publishing Group ($HYNS)	38.8%	33.5%	15.4%	35.0%	36.8%
Reed Elsevier ($REL)	32.7%	32.7%	33.9%	34.4%
Nahl Group ($NAH)	28.8%	29.5%	34.9%	27.4%
Uls Technology ($ULS)	16.7%	21.1%	19.8%	21.2%	13.8%
Spaceandpeople ($SAL)	10.5%	11.2%	1.6%	17.2%
Median (24 companies)	14.8%	12.5%	7.0%	6.6%	8.8%
Future ($FUTR)	-47.4%	1.8%	-20.0%	6.2%	10.6%

Top companies by CAPEX/Revenue, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Trader Media East ($TME)	3.8%	2.3%		47.5%
Dods(Group ($DODS)	0.6%	0.4%	0.6%	12.7%	1.3%
Grupo Clarin Sa ($GCLA)	12.8%	1.6%	2.7%	2.7%
Naspers ($NPSN)		4.0%	3.1%	2.5%	2.0%
Ite Group ($ITE)	1.7%	1.3%	1.8%	2.1%
Median (24 companies)	1.6%	1.1%	0.7%	0.9%	1.3%
Future ($FUTR)	0.6%	0.3%	0.3%	0.7%	1.0%

Top companies by ROIC, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Uls Technology ($ULS)	44.1%	39.6%	39.3%	31.3%	19.1%
Independent News & Media ($INM)	29.6%	65.1%	118.5%	24.4%
Marimedia Ltd ($MARI)	39.0%	6.4%	39.6%	23.9%
Reed Elsevier ($REL)	21.0%	21.4%	21.4%	21.4%
Nahl Group ($NAH)	31.5%	26.0%	23.0%	17.3%
Median (26 companies)	8.2%	7.6%	2.6%	-0.2%	1.7%
Future ($FUTR)	-60.8%	-4.8%	-48.0%	1.5%	3.8%

Top companies by Net Debt / EBITDA


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Ite Group ($ITE)	0.3x	1.4x	6.3x	7.3x
Porta Communications ($PTCM)	3.4x	2.7x		5.0x
Quarto Group Inc ($QRT)	1.4x	1.1x	1.8x	3.9x
Reed Elsevier ($REL)	1.9x	1.9x	2.2x	2.0x
Jaywing ($JWNG)	3.3x	1.9x	1.6x	1.6x	3.8x
Median (17 companies)	0.9x	1.1x	0.1x	0.5x	-0.2x
Future ($FUTR)		1.6x		1.9x	1.3x

Future stock price chart

Future financials

mln.	FY2010	FY2011	FY2012

Revenue	151.5	141.7	123.5
EBITDA	11.700	-14.100	5.800
Net income	5.500	-19.300	0.200
CAPEX	0.800	1.200	0.500
Debt	20.700	24.300	22.600
Cash	13.300	12.500	8.500

About Future

Future plc, together with its subsidiaries, publishes consumer magazines, apps, and Websites in the areas of technology, games and films, music, photography, and creative in the United Kingdom, the United States, and Australia. The company operates consumer technology Websites, including TechRadar.com; T3.com; Gizmodo.co.uk; and Lifehacker.co.uk., as well as MacLife, MaximumPC, and TechRadar Pro supported by print and digital magazines, including MacFormat; Linux Format; PCFormat; Windows: Help & Advice; and T3 magazine brand names, as well as conducts T3 Gadget Awards. It also provides games media under the GamesRadar, PC Gamer, Edge, Gamesmaster, Kotaku, Official PlayStation magazine, and Official Xbox magazine brands. In addition, the company offers film magazines and online content under the brands Total Film and SFX; and music portfolio, including MusicRadar, Guitarist, Computer Music, and Rhythm brands. Further, it provides photography magazines under the brands Digital Camera, NPhoto, and Photo Plus; and creative portfolio to Web designers, developers, graphic designers, and 3D artists through Creative Bloq, magazines Net, Computer Arts, 3D World, and Imagine FX brands. Future plc was founded in 1985 and is based in Bath, the United Kingdom.