Reed Elsevier reports 6.2% EBITDA growth in 2019 and 5.1% Revenue growth
13 Feb 2020 • About Reed Elsevier (
$REL) • By InTwits
Reed Elsevier reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Reed Elsevier has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has highly profitable business model: ROIC is 21.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.3x 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 increased on 5.1%. EBITDA Margin showed almost no change in FY2019. EBITDA Margin grew at 0.48 pp per annum in FY2015-FY2019.
Gross Margin showed almost no change in FY2019. During the last 5 years Gross Margin bottomed in FY2016 at 63.9% and was growing since that time. SG&A as a % of Revenue showed almost no change in FY2019.
Net Income margin showed almost no change in FY2019.
Investments (CAPEX, working capital and M&A)
Reed Elsevier's CAPEX/Revenue was 0.60% in FY2019. The company's CAPEX/Revenue showed almost no change from FY2016 to FY2019. It's average CAPEX/Revenue for the last three years was 0.68%.
Return on investment
The company operates at high and attractive ROIC (21.6%) and ROE (67.0%). ROIC increased slightly on 0.57 pp from 21.0% to 21.6% in FY2019. ROE increased on 5.4 pp from 61.5% to 67.0% in FY2019. During FY2015-FY2019 ROIC bottomed in FY2018 at 21.0%.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 2.3x. Net Debt / EBITDA dropped on 0.1x from 2.4x to 2.3x in FY2019. Debt increased slightly on 0.77% while cash surged on 21.1%.
Reed Elsevier has short term refinancing risk: cash is only 6.7% of short term debt.
Valuation and dividends
Reed Elsevier's trades at EV/EBITDA 16.9x and P/E 26.6x.
Management team
Reed Elsevier's CEO is Erik Nils Engstrom. Erik Nils Engstrom is a founder and has 4 years tenure with the company. Reed Elsevier's CFO is Nicholas Luff "Nick". Nicholas Luff "Nick" has 4 years tenure at the company.
Financial and operational results
FY ended 30 Nov -0001
Reed Elsevier ($REL) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 5,971 | 6,889 | 7,341 | 7,492 | 7,874 | 5.1% |
| Gross Profit | 3,842 | 4,401 | 4,713 | 4,848 | 5,119 | 5.6% |
| SG&A | 2,409 | 2,730 | 2,845 | 2,916 | 3,059 | 4.9% |
| EBITDA | 1,953 | 2,338 | 2,524 | 2,583 | 2,743 | 6.2% |
| Net Income | 1,008 | 1,150 | 1,648 | 1,422 | 1,505 | 5.8% |
Balance Sheet
|
|---|
| Cash | 122 | 162 | 111 | 114 | 138 | 21.1% |
| Short Term Debt | 624 | 1,169 | 762 | 1,392 | 2,060 | 48.0% |
| Long Term Debt | 3,278 | 4,087 | 4,491 | 4,973 | 4,354 | -12.4% |
Cash flow
|
|---|
| Capex | 65 | 51 | 51 | 56 | 47 | -16.1% |
Ratios
|
|---|
| Revenue growth | 3.4% | 15.4% | 6.6% | 2.1% | 5.1% | |
| EBITDA growth | 3.6% | 19.7% | 8.0% | 2.3% | 6.2% | |
|
|---|
| Gross Margin | 64.3% | 63.9% | 64.2% | 64.7% | 65.0% | 0.3% |
| EBITDA Margin | 32.7% | 33.9% | 34.4% | 34.5% | 34.8% | 0.4% |
| SG&A, % of revenue | 40.3% | 39.6% | 38.8% | 38.9% | 38.8% | -0.1% |
| Net Income Margin | 16.9% | 16.7% | 22.4% | 19.0% | 19.1% | 0.1% |
| CAPEX, % of revenue | 1.1% | 0.7% | 0.7% | 0.7% | 0.6% | -0.2% |
|
|---|
| ROIC | 21.4% | 21.4% | 21.4% | 21.0% | 21.6% | 0.6% |
| ROE | 24.4% | 52.1% | 72.2% | 61.5% | 67.0% | 5.4% |
| Net Debt/EBITDA | 1.9x | 2.2x | 2.0x | 2.4x | 2.3x | -0.1x |
Peers in Media
Below you can find Reed Elsevier 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 | 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% | |
| Ite Group ($ITE) | | -1.0% | 13.5% | 15.1% | 25.6% |
| Haynes Publishing Group ($HYNS) | -11.0% | -1.4% | 15.8% | 13.5% | |
| Ten Alps ($TAL) | | 25.5% | -12.7% | 9.8% | |
| |
|---|
| Median (10 companies) | 1.5% | 3.4% | 2.7% | 9.5% | 0.0% |
|---|
| Reed Elsevier ($REL) | | 15.4% | 6.6% | 2.1% | 5.1% |
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% | |
| Haynes Publishing Group ($HYNS) | 60.2% | 53.6% | 56.4% | 59.6% | |
| Future ($FUTR) | 32.1% | 36.9% | 40.2% | 44.4% | |
| Uls Technology ($ULS) | 37.4% | 41.9% | 42.5% | 40.7% | |
| |
|---|
| Median (9 companies) | 41.2% | 38.5% | 39.5% | 40.7% | 39.6% |
|---|
| Reed Elsevier ($REL) | 64.3% | 63.9% | 64.2% | 64.7% | 65.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Haynes Publishing Group ($HYNS) | 33.5% | 15.4% | 35.0% | 36.8% | |
| Uls Technology ($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% | |
| Brainjuicer Group ($BJU) | 19.9% | 21.4% | | 8.8% | |
| |
|---|
| Median (11 companies) | 11.2% | 7.0% | 6.0% | 8.2% | 10.1% |
|---|
| Reed Elsevier ($REL) | 32.7% | 33.9% | 34.4% | 34.5% | 34.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Daily Mail & General Trust ($DMGT) | 1.6% | 1.4% | 1.3% | 20.0% | 1.2% |
| Ite Group ($ITE) | 1.3% | 1.8% | 2.1% | 2.4% | 1.7% |
| Naspers ($NPSN) | 4.0% | 3.1% | 2.5% | 2.0% | |
| Jaywing ($JWNG) | 1.3% | 1.3% | 1.8% | 1.8% | |
| Haynes Publishing Group ($HYNS) | 1.6% | 1.0% | 1.4% | 1.5% | |
| |
|---|
| Median (11 companies) | 1.1% | 0.7% | 0.9% | 1.3% | 1.2% |
|---|
| Reed Elsevier ($REL) | 1.1% | 0.7% | 0.7% | 0.7% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Brainjuicer Group ($BJU) | 58.5% | 72.5% | 0.0% | 24.7% | |
| Uls Technology ($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% | |
| Future ($FUTR) | -4.8% | -48.0% | 1.5% | 3.8% | |
| |
|---|
| Median (13 companies) | 6.7% | 1.4% | -0.2% | 1.3% | 1.8% |
|---|
| Reed Elsevier ($REL) | 21.4% | 21.4% | 21.4% | 21.0% | 21.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Ite Group ($ITE) | 1.4x | 6.3x | 7.3x | 12.7x | 3.1x |
| Jaywing ($JWNG) | 1.9x | 1.6x | 1.6x | 3.8x | |
| Future ($FUTR) | 1.6x | | 1.9x | 1.3x | |
| Uls Technology ($ULS) | -0.4x | -0.7x | 0.7x | 0.4x | |
| Ten Alps ($TAL) | | -0.7x | 0.3x | 0.2x | |
| |
|---|
| Median (10 companies) | 1.1x | -0.1x | 0.5x | 0.0x | 1.2x |
|---|
| Reed Elsevier ($REL) | 1.9x | 2.2x | 2.0x | 2.4x | 2.3x |
