GlaxoSmithKline EBITDA surged on 34.2% and EBITDA Margin increased on 5.4 pp from 24.1% to 29.5%
05 Feb 2020 • About GlaxoSmithKline (
$GSK) • By InTwits
GlaxoSmithKline reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 29.5% in FY2019, 24.1% in FY2018, 20.6% in FY2017, 15.9% in FY2016, 50.2% in FY2015
- GlaxoSmithKline has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 8.5%
- CAPEX is quite volatile: £19m in FY2019, £18m in FY2018, £10m in FY2017, £21m in FY2016, £5m in FY2015
- The company has highly profitable business model: ROIC is 18.0%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is 1.1x
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 increased on 9.5%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 161 pp from 50.2% to -111% in FY2019. During the last 5 years EBITDA Margin bottomed in FY2016 at 15.9% and was growing since that time.
Gross Margin decreased slightly on 1.9 pp from 66.8% to 64.9% in FY2019. SG&A as a % of Revenue increased slightly on 1.6 pp from 32.2% to 33.8% in FY2019. During the last 5 years SG&A as a % of Revenue bottomed in FY2017 at 32.0% and was growing since that time.
Net Income margin increased on 2.0 pp from 11.8% to 13.8% in FY2019. During FY2015-FY2019 Net Income margin bottomed in FY2016 at 3.3% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2019 GlaxoSmithKline had CAPEX/Revenue of 3.7%. CAPEX/Revenue decreased slightly on 1.8 pp from 5.5% in FY2016 to 3.7% in FY2019. It's average level of CAPEX/Revenue for the last three years was 4.4%. CAPEX as a % of Revenue stuck to a declining trend at -0.52 pp per annum in FY2015-FY2019.
Return on investment
The company operates at high and attractive ROE (56.8%) while ROIC is a bit lower (18.0%). ROIC decreased on 5.3 pp from 23.3% to 18.0% in FY2019.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 3.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 3.0x to 2.6x in FY2019. Debt jumped on 17.1% while cash jumped on 21.5%.
GlaxoSmithKline has short term refinancing risk: cash is only 68.0% of short term debt.
Valuation and dividends
GlaxoSmithKline's trades at EV/EBITDA 11.1x and P/E 18.2x.
Management team
Emma Walmsley is a the company's CEO. Emma Walmsley is a founder and has spent 2 years with the company. The company's CFO Iain James Mackay has spent 0 years with the company.
Financial and operational results
FY ended 30 Nov -0001
GlaxoSmithKline ($GSK) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 23,923 | 27,889 | 30,186 | 30,821 | 33,754 | 9.5% |
| Gross Profit | 15,070 | 18,599 | 19,844 | 20,580 | 21,891 | 6.4% |
| SG&A | 9,185 | 9,313 | 9,672 | 9,915 | 11,402 | 15.0% |
| EBITDA | 11,999 | 4,425 | 6,224 | 7,420 | 9,957 | 34.2% |
| Net Income | 8,422 | 912 | 1,532 | 3,623 | 4,645 | 28.2% |
Balance Sheet
|
|---|
| Cash | 5,830 | 4,897 | 3,833 | 3,874 | 4,707 | 21.5% |
| Short Term Debt | 1,308 | 4,129 | 2,825 | 5,793 | 6,918 | 19.4% |
| Long Term Debt | 15,324 | 14,661 | 14,264 | 20,271 | 23,590 | 16.4% |
Cash flow
|
|---|
| Capex | 1,380 | 1,543 | 1,545 | 1,344 | 1,265 | -5.9% |
Ratios
|
|---|
| Revenue growth | 4.0% | 16.6% | 8.2% | 2.1% | 9.5% | |
| EBITDA growth | 137.0% | -63.1% | 40.7% | 19.2% | 34.2% | |
|
|---|
| Gross Margin | 63.0% | 66.7% | 65.7% | 66.8% | 64.9% | -1.9% |
| EBITDA Margin | 50.2% | 15.9% | 20.6% | 24.1% | 29.5% | 5.4% |
| SG&A, % of revenue | 38.4% | 33.4% | 32.0% | 32.2% | 33.8% | 1.6% |
| Net Income Margin | 35.2% | 3.3% | 5.1% | 11.8% | 13.8% | 2.0% |
| CAPEX, % of revenue | 5.8% | 5.5% | 5.1% | 4.4% | 3.7% | -0.6% |
|
|---|
| ROIC | 42.9% | 10.9% | 20.2% | 23.3% | 18.0% | -5.3% |
| ROE | 179.6% | 29.2% | | | 56.8% | |
| Net Debt/EBITDA | 0.9x | 3.1x | 2.1x | 3.0x | 2.6x | -0.4x |
Peers in Pharmaceuticals & Biotechnology
Below we provide GlaxoSmithKline benchmarking against other companies in Pharmaceuticals & Biotechnology 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 |
|---|
| C4X Discovery Hldg ($C4XD) | | -10.6% | -48.7% | 4,839.9% | |
| Evocutis ($EVO) | 57.3% | 51.2% | 54.5% | 37.6% | |
| Ixico ($IXI) | | 4.9% | 25.8% | 31.2% | 40.2% |
| Benchmark Hldgs ($BMK) | | 147.5% | 28.2% | 8.1% | -15.9% |
| Pfizer Inc ($PFZ) | | 8.1% | -0.5% | 2.1% | -3.5% |
| |
|---|
| Median (7 companies) | 4.8% | 7.2% | 10.2% | 8.1% | -3.5% |
|---|
| GlaxoSmithKline ($GSK) | | 16.6% | 8.2% | 2.1% | 9.5% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Indivior ($INDV) | 90.4% | 89.9% | 90.5% | 87.3% | |
| Pfizer Inc ($PFZ) | 80.3% | 76.7% | 78.6% | 79.0% | 80.3% |
| Astrazeneca ($AZN) | 81.2% | 82.1% | 80.8% | 77.7% | |
| Ixico ($IXI) | | 48.6% | 56.5% | 58.8% | 65.4% |
| Benchmark Hldgs ($BMK) | 36.4% | 46.5% | 44.5% | 48.9% | |
| |
|---|
| Median (5 companies) | 44.9% | 47.7% | 49.1% | 77.7% | 72.8% |
|---|
| GlaxoSmithKline ($GSK) | 63.0% | 66.7% | 65.7% | 66.8% | 64.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Evocutis ($EVO) | 35.4% | 38.6% | 45.2% | 43.9% | |
| Pfizer Inc ($PFZ) | 34.8% | 33.6% | 37.9% | 38.0% | |
| Indivior ($INDV) | 37.3% | 15.4% | 18.8% | 33.0% | |
| Astrazeneca ($AZN) | 28.3% | 32.5% | 29.9% | 32.8% | |
| Benchmark Hldgs ($BMK) | -9.4% | -5.1% | 11.1% | 10.7% | |
| |
|---|
| Median (7 companies) | 21.9% | 15.4% | 16.6% | 32.8% | 6.7% |
|---|
| GlaxoSmithKline ($GSK) | 50.2% | 15.9% | 20.6% | 24.1% | 29.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Benchmark Hldgs ($BMK) | 31.8% | 17.1% | 23.4% | 16.6% | |
| Evocutis ($EVO) | 6.3% | 18.2% | 5.8% | 7.3% | |
| Astrazeneca ($AZN) | 5.4% | 6.3% | 5.9% | 4.7% | |
| Pfizer Inc ($PFZ) | 2.9% | 3.5% | 3.7% | 3.8% | |
| Ixico ($IXI) | | 0.7% | 1.2% | 1.4% | 2.9% |
| |
|---|
| Median (7 companies) | 5.3% | 4.6% | 4.8% | 3.8% | 2.9% |
|---|
| GlaxoSmithKline ($GSK) | 5.8% | 5.5% | 5.1% | 4.4% | 3.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Indivior ($INDV) | 172.1% | 85.9% | 107.2% | 110.6% | |
| Evocutis ($EVO) | 62.4% | 59.8% | 70.1% | 53.2% | |
| Pfizer Inc ($PFZ) | 9.1% | 9.2% | 10.9% | 12.3% | |
| Astrazeneca ($AZN) | 11.8% | 13.7% | 9.7% | 9.5% | |
| Benchmark Hldgs ($BMK) | -12.4% | -7.8% | -1.7% | -1.8% | |
| |
|---|
| Median (7 companies) | 12.8% | 9.2% | 10.3% | 9.5% | -87.3% |
|---|
| GlaxoSmithKline ($GSK) | 42.9% | 10.9% | 20.2% | 23.3% | 18.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Benchmark Hldgs ($BMK) | | | 1.5x | 3.4x | |
| Pfizer Inc ($PFZ) | 2.1x | 2.2x | 2.1x | 2.0x | |
| Astrazeneca ($AZN) | 1.3x | 1.6x | 2.2x | 2.0x | |
| Evocutis ($EVO) | -0.7x | -0.4x | -0.5x | -0.7x | |
| Indivior ($INDV) | 0.4x | -1.0x | -1.8x | -2.1x | |
| |
|---|
| Median (5 companies) | 0.7x | 0.3x | 1.5x | 2.0x | -14.4x |
|---|
| GlaxoSmithKline ($GSK) | 0.9x | 3.1x | 2.1x | 3.0x | 2.6x |
