4imprint Group — Growth and cash generation amid uncertainty

4imprint Group (LSE: FOUR)

Last close As at 20/01/2025

GBP49.75

−105.00 (−2.07%)

Market capitalisation

GBP1,432m

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Research: TMT

4imprint Group — Growth and cash generation amid uncertainty

4imprint’s year-end trading update shows FY24 revenues up 3%, in line with our model and slightly ahead of forecast US GDP growth. A improved margin uplift means a PBT figure of $153m, against our previous $150m forecast. The year-end net cash position (lease debt only) is well ahead at $148m, against our projected $134m and the $137m disclosed at end October. This is post the $20m spent earlier in FY24 expanding the group’s Oshkosh distribution centre and indicates a good working capital performance towards the year-end. 4imprint’s distribution policy is to return excess cash to shareholders and a special dividend was previously paid in 2023. FY24 results are set for 12 March.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

Media

FY24 trading update

21 January 2025

Price 5,080.00p
Market cap £1,451m

US$1.23:£1

Net cash as at 31 December 2024 (lease debt only)

$148.0m

Shares in issue

28.2m
Code FOUR
Primary exchange LSE
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs 5.6 (0.8) 14.3
52-week high/low 6,641.5p 4,300.9p

Business description

4imprint Group is a leading direct marketer of promotional products in the United States, Canada, the UK and Ireland. In FY23, 98% of revenues were generated in the US and Canada.

Next events

FY24 results

12 March 2025

Analyst

Fiona Orford-Williams
+44 (0)20 3077 5700

4imprint Group is a research client of Edison Investment Research Limited

Note: PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. DPS excludes special dividends.

Year end Revenue ($m) PBT ($m) EPS ($) DPS ($) P/E (x) Yield (%)
12/22 1,140.3 103.7 2.86 1.60 21.9 2.6
12/23 1,326.5 140.7 3.78 2.15 16.5 3.4
12/24e 1,370.0 153.0 4.15 2.40 15.0 3.8
12/25e 1,430.0 158.0 4.23 2.55 14.8 4.1
12/26e 1,500.0 167.4 4.44 2.70 14.0 4.3

Good performance in challenging conditions

Total order count and average order value were both ahead by 2% over the year, in line with the end-October 2024 update. There was no further deterioration in new customer orders in the last two months of the year (-9% on prior year), with orders from existing customers a tad softer at +5% from +6%, with this still good progress testament to the quality of the customers acquired. The overall impact is for group FY24 revenue growth of 3.3%, ahead of forecast US GDP progress of 2.8%. The improvement in margins reflects the greater agility the group has within its marketing mix, with brand promotion a key element, as described in our December outlook note. We have edged ahead our profit expectations for FY25 and FY26 as we carry those margin improvements forward, lifting PBT forecasts from $156m to $158m and from $165m to $167m, respectively.

Strong dividend uplift potential

A year-end net cash balance of $148m is well ahead of the $134m we had previously modelled. Management’s capital allocation priorities are headed by investing in organic growth initiatives, followed by regular dividend payments. Beyond that are issues relating to residual legacy pension funding (effectively resolved) and M&A opportunities (limited), then other shareholder distributions. A special dividend was paid out in June 2023.

Valuation: Well below the level indicated by DCF

The share price is 24% off its April 2024 peak, but the valuation remains ahead of the marketing services sector. 4imprint has historically traded at a higher premium, reflecting its quality of earnings, attractive cash conversion and distribution policies. A discounted cash flow (WACC of 9%, terminal growth of 3%, as before) generates an implied value of £60.25, down 2% on the £62.49 calculated in December due to the currency translation impact, well ahead of the current share price.

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