Ite Group EBITDA surged on 450% and Revenue jumped on 25.6%
18 Dec 2019 • About Ite Group (
$ITE) • By InTwits
Ite Group reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 16.3% in FY2019, 3.7% in FY2018, 4.5% in FY2017, 7.0% in FY2016, 27.3% in FY2015
- Ite Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 0.7%.
- CAPEX is quite volatile: £1m in FY2019, £1m in FY2018, £3m in FY2017, £1m in FY2016, £0m in FY2015
- In the last 5 years the company invested considerably less than D&A: £15m vs. £43m. In FY2019 this situation was still the same: CAPEX was 4 while D&A was 27
- The company has potentially unprofitable business model: ROIC is 1.8%
- It operates with high leverage: Net Debt/EBITDA is 3.1x while industry average is -2.0x
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 25.6%. Revenue decline was slowing down on average by 11.2 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 12.6 pp from 3.7% to 16.3% in FY2019. During the last 5 years EBITDA Margin bottomed in FY2018 at 3.7%.
Gross Margin increased slightly on 0.87 pp from 38.7% to 39.6% in FY2019. During FY2015-FY2019 Gross Margin bottomed in FY2018 at 38.7%. SG&A as a % of Revenue decreased on 8.8 pp from 44.8% to 36.0% in FY2019. During FY2015-FY2019 SG&A as a % of Revenue topped in FY2016 at 49.9% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2019.
Net Income margin increased on 6.0 pp from -4.6% to 1.4% in FY2019. During FY2015-FY2019 Net Income margin bottomed in FY2016 at -6.9% and was growing since that time. The efficient tax rate was 59.3% in FY2019.
Investments (CAPEX, working capital and M&A)
In FY2019 Ite Group had CAPEX/Revenue of 1.7%. Ite Group's CAPEX/Revenue showed almost no change from FY2016 to FY2019. It's average CAPEX/Revenue for the last three years was 2.1%. During the last 5 years CAPEX as a % of Revenue topped in FY2018 at 2.4%.
Ite Group has spent £32m on M&A in FY2019 which accounts for 14.5% of revenue.
Return on investment
The company operates at low ROIC (1.8%) and ROE (1.0%). ROIC increased on 4.7 pp from -2.9% to 1.8% in FY2019. ROE increased on 5.4 pp from -4.4% to 1.0% in FY2019. During FY2015-FY2019 ROIC bottomed in FY2017 at -5.3% and was growing since that time. During FY2015-FY2019 ROE bottomed in FY2016 at -12.1% and was growing since that time.
Leverage (Debt)
Debt level is 3.1x Net Debt / EBITDA and 4.0x Debt / EBITDA. Net Debt / EBITDA dropped on 9.6x from 12.7x to 3.1x in FY2019. Debt increased on 9.3% while cash dropped on 33.5%. During FY2015-FY2019 Net Debt/EBITDA topped in FY2018 at 12.7x.
Ite Group has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.4x. Ite Group has no short term refinancing risk: cash is higher than short term debt (188.7%).
Average interest expence paid by the company was 4.4% in FY2019.
Valuation and dividends
The company's trades at EV/EBITDA 21.8x and P/E 213.0x.
The company paid 444.7% of Net Income as dividends in FY2019.
Management team
Mark Samuel Shashoua is a Ite Group's CEO. Mark Samuel Shashoua is a founder and has spent 3 years with the company. CEO total compensation was £823,000 in FY2019 which included £477,000 salary and £298,000 annual bonus. Ite Group's CFO is Andrew William Beach. Andrew William Beach has 3 years tenure at the company.
At the end of financial year the company had 1,300 employees. The number of employees dropped on 16.6%. Average revenue per employee in FY2019 was £169,787 and it surged on 50.7%.
Financial and operational results
FY ended 30 Sep 2019
Ite Group ($ITE) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 135.8 | 134.4 | 152.6 | 175.7 | 220.7 | 25.6% |
| Gross Profit | 62.2 | 58.6 | 59.4 | 68.0 | 87.4 | 28.5% |
| SG&A | 26.9 | 67.0 | 69.6 | 78.7 | 79.4 | 0.9% |
| EBITDA | 37.1 | 9.4 | 6.8 | 6.5 | 35.9 | 450.4% |
| EBIT | | | | -9.8 | 8.9 | |
| Interest expence | | | | 3.9 | 6.4 | 64.0% |
| Tax | | | | 3.0 | 4.6 | 51.7% |
| Net Income | 26.2 | -9.3 | -8.2 | -8.1 | 3.1 | |
| Stock Based Compensation | | | | 0.5 | 0.1 | -87.3% |
Balance Sheet
|
|---|
| Cash | 17.3 | 15.5 | 23.3 | 49.6 | 33.0 | -33.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 17.5 | |
| Long Term Debt | 69.6 | 74.6 | 73.0 | 132.3 | 127.2 | -3.9% |
Cash flow
|
|---|
| Capex | 1.7 | 2.4 | 3.1 | 4.3 | 3.8 | -11.2% |
| Dividends | | | | 11.0 | 14.0 | 27.3% |
| Acquisitions | | | | 295.9 | 32.0 | -89.2% |
Ratios
|
|---|
| Revenue growth | -22.3% | -1.0% | 13.5% | 15.1% | 25.6% | |
| EBITDA growth | -23.5% | -74.8% | -27.4% | -3.8% | 450.4% | |
|
|---|
| Gross Margin | 45.8% | 43.6% | 38.9% | 38.7% | 39.6% | 0.9% |
| EBITDA Margin | 27.3% | 7.0% | 4.5% | 3.7% | 16.3% | 12.6% |
| EBIT Margin | | | | -5.6% | 4.0% | 9.6% |
| SG&A, % of revenue | 19.8% | 49.9% | 45.6% | 44.8% | 36.0% | -8.8% |
| SBC, % of revenue | | | | 0.3% | 0.0% | -0.3% |
| Net Income Margin | 19.3% | -6.9% | -5.4% | -4.6% | 1.4% | 6.0% |
| CAPEX, % of revenue | 1.3% | 1.8% | 2.1% | 2.4% | 1.7% | -0.7% |
|
|---|
| ROIC | 13.4% | -4.4% | -5.3% | -2.9% | 1.8% | 4.7% |
| ROE | 27.9% | -12.1% | -11.9% | -4.4% | 1.0% | 5.4% |
| Net Debt/EBITDA | 1.4x | 6.3x | 7.3x | 12.7x | 3.1x | -9.6x |
| Interest coverage ratio (ICR) | | | | | 1.4x |
| Interest expence / Average debt | | | | 3.8% | 4.4% | 0.6% |
People
|
|---|
| Employees | | | | 1,559 | 1,300 | -16.6% |
| Revenue/Employee, th. £ | | | | 113 | 170 | 50.7% |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Future ($FUTR) | -9.4% | -1.3% | 43.1% | 47.6% | |
| Uls Technology ($ULS) | -1.0% | 28.0% | 7.8% | 37.8% | |
| Haynes Publishing Group ($HYNS) | -11.0% | -1.4% | 15.8% | 13.5% | |
| Ten Alps ($TAL) | | 25.5% | -12.7% | 9.8% | |
| Naspers ($NPSN) | 6.7% | -9.7% | 2.8% | 9.2% | |
| |
|---|
| Median (10 companies) | 1.5% | 4.0% | 2.7% | 8.0% | -0.3% |
|---|
| Ite Group ($ITE) | | -1.0% | 13.5% | 15.1% | 25.6% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Brainjuicer Group ($BJU) | 80.4% | 82.1% | | 82.5% | |
| Jaywing ($JWNG) | 89.0% | 88.4% | 80.8% | 77.2% | |
| Reed Elsevier ($REL) | 64.3% | 63.9% | 64.2% | 64.7% | |
| Haynes Publishing Group ($HYNS) | 60.2% | 53.6% | 56.4% | 59.6% | |
| Future ($FUTR) | 32.1% | 36.9% | 40.2% | 44.4% | |
| |
|---|
| Median (9 companies) | 41.2% | 38.5% | 40.7% | 44.4% | |
|---|
| Ite Group ($ITE) | 45.8% | 43.6% | 38.9% | 38.7% | 39.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Haynes Publishing Group ($HYNS) | 33.5% | 15.4% | 35.0% | 36.8% | |
| Reed Elsevier ($REL) | 32.7% | 33.9% | 34.4% | 34.5% | |
| Uls Technology ($ULS) | 21.1% | 19.8% | 21.2% | 13.8% | |
| Dods(Group ($DODS) | 0.6% | 12.3% | 15.9% | 12.3% | |
| Future ($FUTR) | 1.8% | -20.0% | 6.2% | 10.6% | |
| |
|---|
| Median (11 companies) | 11.2% | 7.0% | 6.8% | 8.8% | 10.1% |
|---|
| Ite Group ($ITE) | 27.3% | 7.0% | 4.5% | 3.7% | 16.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Daily Mail & General Trust ($DMGT) | 1.6% | 1.4% | 1.3% | 20.0% | 1.2% |
| Naspers ($NPSN) | 4.0% | 3.1% | 2.5% | 2.0% | |
| Jaywing ($JWNG) | 1.3% | 1.3% | 1.8% | 1.8% | |
| Haynes Publishing Group ($HYNS) | 1.6% | 1.0% | 1.4% | 1.5% | |
| Dods(Group ($DODS) | 0.4% | 0.6% | 12.7% | 1.3% | |
| |
|---|
| Median (11 companies) | 1.1% | 0.7% | 0.8% | 1.0% | 1.2% |
|---|
| Ite Group ($ITE) | 1.3% | 1.8% | 2.1% | 2.4% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Brainjuicer Group ($BJU) | 58.5% | 72.5% | 0.0% | 24.7% | |
| Reed Elsevier ($REL) | 21.4% | 21.4% | 21.4% | 21.0% | |
| Uls Technology ($ULS) | 39.6% | 39.3% | 31.3% | 19.1% | |
| Haynes Publishing Group ($HYNS) | 9.4% | -8.0% | 14.5% | 18.2% | |
| Dods(Group ($DODS) | -12.1% | 4.4% | 7.1% | 4.5% | |
| |
|---|
| Median (13 companies) | 6.7% | 2.6% | 0.8% | 3.3% | 6.2% |
|---|
| Ite Group ($ITE) | 13.4% | -4.4% | -5.3% | -2.9% | 1.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Jaywing ($JWNG) | 1.9x | 1.6x | 1.6x | 3.8x | |
| Reed Elsevier ($REL) | 1.9x | 2.2x | 2.0x | 2.4x | |
| Future ($FUTR) | 1.6x | | 1.9x | 1.3x | |
| Uls Technology ($ULS) | -0.4x | -0.7x | 0.7x | 0.4x | |
| Ten Alps ($TAL) | | -0.7x | 0.3x | 0.2x | |
| |
|---|
| Median (10 companies) | 1.1x | -0.1x | 0.5x | 0.0x | -0.6x |
|---|
| Ite Group ($ITE) | 1.4x | 6.3x | 7.3x | 12.7x | 3.1x |
