Ite Group Net Debt / EBITDA jumped on 5.3x from 7.3x to 12.7x in 2018 and Debt jumped on 81.3%
04 Dec 2018 • About Ite Group (
$ITE) • By InTwits
Ite Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 3.7% in FY2018, 4.5% in FY2017, 7.0% in FY2016, 27.3% in FY2015, 27.7% in FY2014
- Ite Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 0.8%.
- CAPEX is quite volatile: £1m in FY2018, £3m in FY2017, £1m in FY2016, £0m in FY2015, £1m in FY2014
- The company has unprofitable business model: ROIC is -2.9%
- It operates with high leverage: Net Debt/EBITDA is 12.7x while industry average is -1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ite Group's Revenue jumped on 15.1%. During the last 5 years Revenue growth bottomed in FY2015 at -22.3% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 11.9 pp from -3.7% to 8.2% in FY2018. EBITDA Margin stuck to a declining trend at -7.1 pp per annum in FY2014-FY2018.
Gross Margin showed almost no change in FY2018. Gross Margin declined at -2.2 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 0.85 pp from 45.6% to 44.8% in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2016 at 49.9% and was declining since that time.
Net Income margin increased slightly on 0.81 pp from -5.4% to -4.6% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2016 at -6.9% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Ite Group's CAPEX/Revenue was 2.4% in FY2018. CAPEX/Revenue increased slightly on 1.1 pp from 1.3% in FY2015 to 2.4% in FY2018. It's average level of CAPEX/Revenue for the last three years was 2.1%. The company invested a big chunk of EBITDA (65.1%) to CAPEX to fuel its growth. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 1.3% and was growing since that time.
Ite Group has spent £296m on M&A in FY2018 which accounts for 168% of revenue.
Return on investment
The company operates at negative ROIC (-2.9%) and ROE (-4.4%). ROIC increased on 2.5 pp from -5.3% to -2.9% in FY2018. ROE increased on 7.5 pp from -11.9% to -4.4% in FY2018. ROIC declined at -7.2 pp per annum in the last 5 years. During the last 5 years ROE bottomed in FY2016 at -12.1% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 12.7x and Debt / EBITDA is 20.3x. Net Debt / EBITDA surged on 5.3x from 7.3x to 12.7x in FY2018. Debt surged on 81.3% while cash surged on 113%. Net Debt/EBITDA grew at 3.1x per annum in the last 5 years.
The company has no short term refinancing risk: short term debt is zero.
Average interest expence charged on company's debt was 2.9% in FY2018.
The company paid £11 despite negative Net Income of £-8 in FY2018.
Management team
The company's CEO Mark Samuel Shashoua is a founder and has spent 3 years with the company. CEO total compensation was £1,191,000 in FY2018 which included £464,000 salary and £680,000 annual bonus. The company's CFO Andrew William Beach has spent 3 years with the company.
The company has 1,559 employees. Average revenue per employee in FY2018 was £112,681.
Financial and operational results
FY ended 30 Sep 2018
Ite Group ($ITE) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 174.8 | 135.8 | 134.4 | 152.6 | 175.7 | 15.1% |
| Gross Profit | 80.8 | 62.2 | 58.6 | 59.4 | 68.0 | 14.6% |
| SG&A | 28.0 | 26.9 | 67.0 | 69.6 | 78.7 | 13.0% |
| EBITDA | 48.4 | 37.1 | 9.4 | 6.8 | 6.5 | -3.8% |
| EBIT | | | | | -9.8 | |
| Interest expence | | | | | 3.9 | |
| Tax | | | | | 3.0 | |
| Net Income | 33.9 | 26.2 | -9.3 | -8.2 | -8.1 | |
| Stock Based Compensation | | | | | 0.5 | |
Balance Sheet
|
|---|
| Cash | 28.1 | 17.3 | 15.5 | 23.3 | 49.6 | 112.9% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 42.9 | 69.6 | 74.6 | 73.0 | 132.3 | 81.3% |
Cash flow
|
|---|
| Capex | 2.9 | 1.7 | 2.4 | 3.1 | 4.3 | 35.7% |
| Dividends | | | | | 11.0 | |
| Acquisitions | | | | | 295.9 | |
Ratios
|
|---|
| Revenue growth | -9.1% | -22.3% | -1.0% | 13.5% | 15.1% | |
| EBITDA growth | -17.1% | -23.5% | -74.8% | -27.4% | -3.8% | |
|
|---|
| Gross Margin | 46.2% | 45.8% | 43.6% | 38.9% | 38.7% | -0.2% |
| EBITDA Margin | 27.7% | 27.3% | 7.0% | 4.5% | 3.7% | -0.7% |
| EBIT Margin | | | | | -5.6% |
| SG&A, % of revenue | 16.0% | 19.8% | 49.9% | 45.6% | 44.8% | -0.8% |
| SBC, % of revenue | | | | | 0.3% |
| Net Income Margin | 19.4% | 19.3% | -6.9% | -5.4% | -4.6% | 0.8% |
| CAPEX, % of revenue | 1.7% | 1.3% | 1.8% | 2.1% | 2.4% | 0.4% |
|
|---|
| ROIC | 23.7% | 13.4% | -4.4% | -5.3% | -2.9% | 2.5% |
| ROE | 32.4% | 27.9% | -12.1% | -11.9% | -4.4% | 7.5% |
| Net Debt/EBITDA | 0.3x | 1.4x | 6.3x | 7.3x | 12.7x | 5.3x |
| Interest expence / Average debt | | | | | 2.9% | |
People
|
|---|
| Employees | | | | | 1,559 | |
| Revenue/Employee, th. £ | | | | | 113 | |
Peers in Media
Below we provide Ite Group benchmarking against other companies in Media industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Marimedia Ltd ($MARI) | 45.7% | 20.1% | 66.0% | 67.6% | |
| Future ($FUTR) | | -9.4% | -1.3% | 43.1% | 47.6% |
| Grupo Clarin Sa ($GCLA) | 39.8% | -57.9% | 37.2% | 24.4% | |
| Jaywing ($JWNG) | | 26.6% | 6.5% | 23.8% | 6.7% |
| Tla Worldwide ($TLA) | 6.3% | 130.0% | 10.6% | 23.4% | |
| |
|---|
| Median (24 companies) | 1.2% | 1.7% | 4.0% | 2.7% | 9.5% |
|---|
| Ite Group ($ITE) | | -22.3% | -1.0% | 13.5% | 15.1% |
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 ($REL) | 65.3% | 64.3% | 63.9% | 64.2% | |
| |
|---|
| Median (22 companies) | 43.7% | 41.2% | 38.5% | 40.7% | 42.5% |
|---|
| Ite Group ($ITE) | 46.2% | 45.8% | 43.6% | 38.9% | 38.7% |
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 ($SAL) | 10.5% | 11.2% | 1.6% | 17.2% | |
| |
|---|
| Median (24 companies) | 12.9% | 11.2% | 7.0% | 6.8% | 8.8% |
|---|
| Ite Group ($ITE) | 27.7% | 27.3% | 7.0% | 4.5% | 3.7% |
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% |
| Jaywing ($JWNG) | 1.5% | 1.3% | 1.3% | 1.8% | 1.8% |
| |
|---|
| Median (24 companies) | 1.5% | 1.1% | 0.7% | 0.8% | 1.3% |
|---|
| Ite Group ($ITE) | 1.7% | 1.3% | 1.8% | 2.1% | 2.4% |
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 ($NAH) | 31.5% | 26.0% | 23.0% | 17.3% | |
| |
|---|
| Median (26 companies) | 7.8% | 6.7% | 2.6% | 0.8% | 3.3% |
|---|
| Ite Group ($ITE) | 23.7% | 13.4% | -4.4% | -5.3% | -2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Porta Communications ($PTCM) | 3.4x | 2.7x | | 5.0x | |
| Quarto Group Inc ($QRT) | 1.4x | 1.1x | 1.8x | 3.9x | |
| Reed Elsevier ($REL) | 1.9x | 1.9x | 2.2x | 2.0x | |
| Future ($FUTR) | | 1.6x | | 1.9x | 1.3x |
| Jaywing ($JWNG) | 3.3x | 1.9x | 1.6x | 1.6x | 3.8x |
| |
|---|
| Median (17 companies) | 1.0x | 1.1x | -0.1x | 0.5x | -0.1x |
|---|
| Ite Group ($ITE) | 0.3x | 1.4x | 6.3x | 7.3x | 12.7x |
