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IG Design Group’s FY25 results were in line with prior guidance, though recent newsflow and investor sentiment have been dominated by the strategic divestment of the loss-making DG Americas (DGA) division, announced in May. This rapid response to a host of untenable pressures, with tariff uncertainty marking the tipping point, protects shareholders from further downside risk, and leaves a simpler group structure; in effect the more profitable and cash-generative DG International (DGI) division. The group has reinstated guidance, with the sales growth and operating margin parameters reflected across our three-year forecast horizon.
IG Design Group plc
Having divested the US business, along with the associated risk/uncertainty, IGR’s continuing business is more stable, predictable, efficient and requires less seasonal funding, per the recent refi. However, reinstated guidance indicates it is not higher margin in the near term as it faces pricing/margin/freight pressures and a temporary loss of scale economies. There is scope for this guidance to prove overly cautious, but today’s update means the starting point is lower.
The divestment of DG Americas has left the Group with a less complex, more profitable, and cash-generative DG International business, underpinned by a clean and robust balance sheet with $40m in net cash. However, the near-term outlook for DG International remains challenging, as the company faces subdued end-consumer demand, heightened price competition, and adverse tariff impacts, leading to an anticipated 3-7% decline in FY’26E sales and a reduction in adjusted operating margin to 3-4% from 7% in the prior year. While management targets medium-term annual sales growth of 0-5% and operating margins of 4-5%, visibility on achieving these objectives is currently limited. The Group is still searching for a new CEO and dividends have been put under review. In our view, clear evidence of both growth and margin expansion, together with greater clarity on capital allocation, will be necessary to drive further share price upside. Accordingly, we move the shares to HOLD (from under review) with a target price of 75p.
IG Design Group has announced the disposal of its US subsidiary, DG Americas (DGA), to a special purpose vehicle set up by Hilco Capital. The nominal $1 sale price represents a clean break ahead of the peak seasonal working capital with no ongoing recourse to the group, but with the upside optionality of 75% of any post sale (relevant) proceeds. We regard this as a timely and elegant exit from a business buffeted by many external factors, not least the evolving tariff situation. In the face of increasing profit and cash pressures, this protects shareholders from further downside risk.
IG Design has published its post-close trading update for the year ended 31 March 2025. The outturn is in line with guidance given in its January trading update, with the year-end net cash balance of $84m comfortably surpassing our expectations. Of far greater significance and interest to shareholders is the news that the group is considering all strategic options with regard to its DG Americas (DGA) division. This includes a potential exit of the division, focusing the group activities and growth potential on the more profitable and reliable DG International (DGI) division. An update might even precede the group’s prelims currently scheduled for late June.
In what has to be extreme challenges, the RNS exemplifies a balanced and pragmatic approach to some very difficult situations. The exposure to tariffs and the consequential impact to the group is significant. For this reason, it is near impossible to come to an indicative valuation but exiting the DG Americas business is now very much on the cards. It is unclear what this would involve and how much cash would have to stay in that business and then remain in the group. Trading in DG international remains solid and here there are growth avenues. In FY24 DG International generated $300m of sales and $32m of EBIT. For now, we pull our recommendation and TP until greater clarity on future direction of the group. PanLib forecasts are also old and out of date following the news of a possible exit of DG Americas. The company may provide guidance in June but news on the future of DG Americas is at the top of the agenda which could come before the year end results.
IG Design has continued to face tough trading conditions in competitive retail markets, most notably in – though not confined to – its DG Americas (DGA) division. This has been compounded by the group’s fourth largest customer in the US filing a second time for Chapter 11 (going into administration) with adverse implications for the group’s current year results, arising from weaker sales combined with likely stock write-offs and provisions. The group is now guiding to a broadly breakeven outturn at the adjusted PBT level. This will have a knock-on effect on cash generation, and the group will not meet its previous aspiration to return adjusted operating margin to the proforma pre-pandemic level of at least 4.5% in FY25E.
If investors were not aware of just how tough the retail backdrop is, then IG Design is at the coal face seeing the outcome of this. Poor trading, low visibility, key customers moving into protective arrangement or bankruptcy procedures and lower forward order book impact forecasts. Guidance beyond FY25 has been pulled and PBT for FY25 is now for break-even from $32m. Group is expected to remain with cash on the B/S but c.40% lower than we had previously expected. This is clearly a very disappointing outcome and as such we move to a HOLD until we get greater clarity in late April.
There is little by the way of new information in the results with recent updates flagging the key headline numbers. Focus moves onto the one-off impacts in H1 that will unwind in H2 and the additional efficiency work that flows through in H2 – leaving FY numbers unchanged. The shares have been poor performers which is understandable given the downgrades this year, but momentum has been arrested and we highlight the numerous catalysts that drive PBT in H2. While we may have to wait a bit for revenue growth to resume, the margin trajectory remains on course and the B/S is now in a fundamentally strong position. At <2x EBITDA and <8x PE the shares are very cheap for a c.5% PBT margin business.
IG Design has delivered a decline in its H1 results, reflecting the difficult market and consumer trends previously announced. The combined impact of market softness and credit risk management on revenue evolution has been exacerbated by operating cost headwinds, most notably in all freight costs. These could not, however, be fully mitigated by the benefits from the ongoing strategic initiatives at DG Americas (DGA) and further overhead cost savings. A combination of factors should deliver a profitable H2, with the group on track to deliver on its aspiration to return adjusted operating margin to the proforma pre-pandemic level of at least 4.5% in FY25E.
This update is in line and no changes required to consensus or our forecasts. However, working through the H2 vs H1 revenues and profit flow is key to underpin confidence in the outlook. We know the group should deliver $13m of PBT in H1 (down 62% yoy) and this implies H2’25 PBT of $19m (vs a loss of -$8.8m LY) = our FY’25 PBT of $32.6m. We estimate that around 75% to 80% of the H2 profit is accounted for by operational cost savings and efficiency work done in H1 – so the swing in the second half PBT is all but done and majorly de-risked in our view. This means company guidance that they can exceed proforma pre-pandemic adj. operating margins of 4.5% in FY25 is achievable and fair in our view. On the B/S, the group is cash positive at the end of H1 with $7.4m of cash vs net debt of $15.1m in the prior year. The shares are trading c.8.8x FY25 PE but an EV/EBITDA of 2x – which is crazy low for a business that has significantly changed its prospects, is now profitable throughout the year, is fundamentally cash flow generative in H1 when it never used to be and continues to execute its change strategy well despite what has been a challenging backdrop. BUY
IG Design has published a post close H1 trading update for the six months ending 30 September. Full-year guidance for FY25E remains unchanged from that provided in last month’s AGM trading update. Group revenue for H1 FY25E has declined around 11%, a slight improvement on the five-month figure, driven by persisting adverse trends in DG Americas (DGA). Cash generation has remained strong, with the group delivering a positive average cash balance for the period. The group expects the combination of continued business simplification, efficiency measures and cost savings initiatives to deliver a profit in H2 FY25E, compared with a loss in H2 FY24.
IG Design Group has published an AGM trading update for the five months ending 31 August, with an updated outlook for FY25E. The group expects to continue to make progress with its transformation plans, with cash generation remaining strong, and DG International’s (DGI) performance also remaining strong, led by growth in Continental Europe. The same trends that adversely impacted DG America’s (DGA) FY24 revenue are now expected to persist longer than anticipated and have resulted in a decline of around 14% in the period. While this will hold back financial performance versus earlier expectations, the group still expects to achieve FY25E adjusted profit growth of at least 20% compared with FY24 and to achieve its stated operating margin of 4.5%.
When IGR reported in June it was positive on its ongoing strategic roadmap for profits and FCF but measured on the backdrop. Its ability to withstand economic/operational challenges has clearly improved and EBIT margin is still expected to exceed 4.5%, but persistent challenges in the US have impacted sales. This reduces EPS growth with a c14% downgrade. A shallower near-term growth trajectory already looks to have been priced in though, after a 2 month sell-off and cash generation has been strong. On the basis the transformation is still yielding results, a hard landing can be avoided in the US, and IGR’s cash position is the strongest for 10 years (possibly ever), our target price has been reduced 16% to 198p meaning we stay at buy.
IG Design has published an AGM trading update this morning, updating its outlook for FY’25E. The company has seen challenges in the Americas division continue with revenues down -14% in the first five months of FY’25E (and -13% at the group level) as retail customers continued to be tighter in their buying, while IG Design has actively managed its credit risk to certain customers. This has led to the Group lowering its FY’25E revenue guidance to a c.-5% yoy decline (vs. consensus at +3%). At a 13% contribution margin, one would expect this to result in a c. $8.5m hit to profits, but the group is guiding to a less than 10% cut to consensus adj. PBT estimate of $36m. This suggests very strong progress on operational cost savings, which have mitigated the impact by c. $6m and implies the Group remains well on track to exceed proforma pre-pandemic adj. operating margins of 4.5% in FY25 (we now forecast 4.9%). We cut our forecasts to reflect the new guidance and also lower FY’26-27E estimates by c. 20% to reflect slower growth in Americas and slower margin progress and lower our TP to 295p (from 345p).
IG Design’s FY24 results confirmed another year of significant progress in the second year of its three-year turnaround journey, notwithstanding ongoing macroeconomic challenges. The scene is now set for a transition to top-line revenue growth supporting further leverage of profitability and margins. This move is embodied in the relaunch of the group’s purpose, vision and mission statements, to support execution of the growth strategy launched in the year.
FY24 results provide confidence that the turnaround is progressing well and with the group pivoting towards sustainable growth, the investment case enters a new phase. The B/S is rock solid with c.$95m of net cash, profits could exceed peak FY19 this year and with sustainable revenue growth now firmly a target; means dividends could be a feature in FY25E. Many reasons to be confident: (1) The order book is running at 69% (of budget) vs 62% at the same point LY, (2) Many self-help measures + cost efficiencies will drive FY25 margins and (3) A consumer recovery is not needed to hit numbers. Even though the shares have done well of late; they are cheap.
As the group enters its next stage of recovery, we see the return of growth accompanied by continued margin expansion. The plan leverages the group’s key strengths whilst minimising the inefficiencies inherited from the old strategy. We are only two years in, and the next three years should see the business leverage its market leading scale and share. We see ROCE starting to rise as profit builds. Cash is already ahead of expectations, so surplus returns to shareholders could be the surprise over the next 12 months. Even though the shares have performed well recently, we still see c.100% upside as the shares are not discounting any future value creation beyond FY’24E in the current equity value. BUY
IG Design Group’s trading update for the year ended 31 March 2024 has exceeded market expectations in terms of both profitability and, most significantly, cash generation. The FY24 results confirm the progress the group has made on its strategic journey to simplify the business and improve operational efficiency. Notwithstanding ongoing uncertainty on the economic backdrop and consumer expenditure, the group remains confident of delivering its target of returning to its pre-Covid adjusted operating margin level (4.5%) for the year ending 31 March 2025 (FY25E).
IG Design Group delivered a 27% increase in adjusted PBT to $34.8m for H1 FY24 (to 30 September) with a significant reduction in net debt to $15.1m, as signposted in last month’s trading update. The adjusted operating profit margin was some 270bps higher at 8.6% (vs 5.9% in H1 FY23), the highest achieved since H1 FY20 ahead of the CSS acquisition. Management has provided more details on the key attributes and initiatives for its new growth-focused strategy. The group is on track to return to pre-Covid adjusted operating margins, aspiring to a 5% level in FY25E compared with FY20’s pro forma 4.5% (including CSS on a FY basis), rising to over 6% in FY27E on a $900m revenue aspiration.
IG Design Group has delivered substantial growth for the H1 trading period (to 30 September) in terms of key profit measures and margins, together with strong cash flow and net debt reduction, both of which exceeded management expectations. These achievements have been attained despite lower sales compared to H1 FY23, with the adjusted operating profit margin in H1 FY24E therefore set to surpass last year’s 5.9%. As such, the overall results clearly show the ongoing benefits of the group’s strategic initiatives to simplify the business and increase operational efficiency. The board believes FY24E full-year trading results remain in line with its expectations.
IG Design’s FY23 results delivered a welcome return to underlying profitability as headlined in its April trading update. The group’s planning now shifts from turnaround to a growth-focused strategy beyond its initial aim of recovering pre-pandemic operating margins. IG Design has strengthened its central and DG Americas teams to support this strategy, with experienced hires boasting strong commercial credentials.
IG Design has announced a successful and favourable outcome to the refinancing of its lending facilities. The new arrangement replaces the previous revolving credit facility (RCF) agreement from 2019, which was subsequently renegotiated in 2022. The new three-year facility is for $125m through an Asset Backed Lending (ABL) structure. This flexes in line with the group’s US receivables and provides ample headroom to finance the key working capital needs over the duration of the facility. In a world of rising central bank interest rates, the lower quantum of the facility coupled with the lower margin than the previous facility should help manage the direct finance charges associated with the facility, as well as provide savings in non-utilisation fees.
IG Design (IGD) has announced the appointment of its new Group Chief Financial Officer (CFO). The group had indicated in its April pre-close trading statement that it was well-advanced in the search for a new CFO, expecting it to be completed shortly. The incoming CFO is Rohan Cummings. He joins from Devro Limited, formally Devro plc, which was listed on the London Stock Exchange until its recent takeover by Dutch company SARIA Nederland BV. His appointment will be effective from 3 July 2023, taking on the role from the Group CEO and CFO, Paul Bal.
IG Design Group’s post-close trading update on FY23 to 31 March reveals outperformance in terms of profitability and cash against market expectations. Compared with upgraded guidance to a small adjusted profit before tax for FY23 at the time of the interims, management anticipates a figure of $9m (cf Progressive forecast of $1.9m). Year-end cash of $50m represents around a 66% increase on FY22’s closing position.
IG Design Group has delivered a strong set of interim results, as guided in October’s trading update, with adjusted PBT up 35% to $27.4m on a reported basis (+42% on a constant currency basis). This was driven by accelerated ordering of seasonal goods by retailer customers keen to de-risk their supply chains, alongside catch-up pricing and product engineering, which has delivered some gross margin recovery. While cautious on the outlook given continuing economic uncertainties, the Board has upgraded FY23E guidance to a small adjusted profit before tax (PBT).
IG Design Group has reported strong trading across both divisions for the H1 period ended 30 September. The primary driver is that the group’s retailer customers have brought forward their seasonal ordering to pre-empt a repeat of the supply chain challenges and disruptions that occurred in the run-up to Christmas 2021. The result of this reweighting towards H1 will be a significant improvement over last year’s difficult H1 period. As such, and mindful of the ongoing challenges of a difficult economic backdrop, there is no change to the Board’s expectations for FY23E’s full-year trading outturn. Our FY23E forecast is thus unchanged at this stage.
IG Design’s FY22 results reflect both a challenging cost environment and the group’s unwavering service commitment to its customers, with the former unable to be recouped and the latter incurring significant incremental costs. The priority now turns to building a more robust business model.
IG Design Group’s post-close trading update for FY22 showed a strong 10% like-for-like group sales increase to $963m, with the International business up 15% and the Americas business up 7%. The group has guided to a fullyear adjusted operating margin of 0.5%, ahead of its previous breakeven guidance at this level in its nine-month trading update in January, and a small adjusted loss before tax. The reversal of a deferred tax asset will, however, result in adjusted post-tax loss and EPS being significantly below market expectations. Work has started on restoring the US division’s financial performance, with more detail to follow in the prelims (28 June).
IG Design Group’s trading update for the nine months to 31 December 2021 reports a continuation of contrasting recent trends, with robust demand offset by supply chain delays and operating cost pressures in an inflationary environment. The latter pressures have indeed intensified over the Q3 trading period, such that the group has seen a 460bps year-on-year (yoy) decrease in its cumulative nine-month operating profit margin to 4%. With lower craft sales and continuing cost headwinds expected in Q4, the group is guiding to an FY22E breakeven result at the adjusted operating profit level, with no final dividend to be paid. With the external challenges and uncertainties expected to continue into FY23E, the group believes it is too early to provide firm guidance with regard to FY23E at this stage.
IG Design Group’s interim results reflect a challenging trading period despite strong underlying demand. Group revenue rose by 11% year on year (yoy) but was below group expectations due to global supply chain disruptions. Compounded by strong cost headwinds and inflationary pressures, this has had an adverse impact on profitability, notwithstanding the group’s strong cost control and cash management. The group is actively mitigating these pressures in conjunction with its customers. Customer service levels remain high, garnering positive feedback and awards from core customers, boding well for longer-term prospects beyond the shorter-term choppy waters.
IG Design Group has issued a trading update for the first six months of FY22E. Sales rose by 11% on a like-for-like (LFL) basis but were below the Group’s expectations. The operating cost pressures outlined in the August trading update – inflation in sea freight, raw materials and labour costs, together with global supply chain disruption – have continued unabated. Despite the Group’s best efforts to mitigate these factors, H1 operating margins have been adversely affected. With the cost pressures likely to continue across FY22E and into FY23E, the Group has stated FY22E operating margins are likely to be some 175-225bps lower than last year.
The positive start to FY22E outlined at the June prelims has continued with the Group reporting strong LFL sales growth of 25% for the first four months to 31 July. Cash generation and management remain strong with net debt of $5m at end July, compared with net debt of $29m last year. This welcome news is tempered however by operating cost headwinds, most notably sea freight and other ongoing adverse effects of Covid on global supply chains. The combination of revenue momentum and cost mitigation translates into earnings to date being in line with expectations. Our forecasts are unchanged, with the full year outlook however now more finely balanced.
IG Design Group delivered another year of profit growth, at both adjusted and reported levels, despite the vicissitudes of the coronavirus pandemic. Net cash at the period end rose by 46% to $76.5m, with the Group’s unerring focus on cash management translating into average leverage of 0.0x (from 0.9x in FY20). The total dividend for the year was maintained at 8.75p, reflecting this robust cash generation. The Group has unveiled both its new Growth Plan and its Design Group Sustainability Framework. Combined these give ambitious financial targets to be delivered in a sustainable way.
…to deliver full year outturn in line with expectations
Outlook remains in line with market expectations
IG Design Group delivered H1 adjusted operating profit and adjusted PBT increases of 13% and 16% to $32.4m and $30.2m respectively, ahead of prudent market expectations for the full FY21E financial year. This robust H1 performance, accompanied by an intensified focus on cash management - which saw average leverage reducing to 0.2x from 1.1x last year – has enabled the group to declare an unchanged interim dividend of 3.0p. We have subsequently raised our FY21E PBT and dividend forecasts, though our H2 forecasts continue to reflect a cautious view across the peak trading period given ongoing uncertainties arising from the Covid-19 backdrop.
IG Design Group’s H1 trading update for the six month period to 30 September has delivered both top and bottom line performance ahead of management expectations, driven by a strong recovery in Q2. Group revenues rose by 40% including the CSS acquisition. Excluding CSS, sales were just 8.3% down, having been down 11.7% on an LFL basis in Q1. Customer orders now exceed 80% of full year revenue forecasts. This robust sales performance has been accompanied by significant deleverage with period end net debt of $23.2m, compared with $106.1m last year. CSS is now fully integrated and focussed on delivering sales opportunities, with cost synergies ahead of schedule. While H1 performance suggests forecast risk is weighted to the upside, management prudently highlights caution on the FY21E outturn given the continuing Covid backdrop and associated risks, hence our unchanged forecasts at this stage.
IG Design Group has delivered another year of strong revenue growth (+10%), together with the transformational acquisition of the US company CSS. Adjusted profit before tax and diluted EPS were slightly down year-onyear but would have been ahead and in line with market expectations, adding back the adverse impact of Covid-19. A final dividend of 5.75p sees the full year figure up 3%. While the group has made a commendably strong start against its Covid-19 adjusted forecasts, the full year outturn for FY21E (and our view of a bounce back in FY22E) will nonetheless be adversely impacted by the ongoing changes brought about by Covid-19.
While uncertainty clouds the shape of future revenue growth, the Group has undertaken prudent and decisive measures to conserve cash, which - together with access to bank facilities in excess of £220m – provide a strong balance sheet to manage and weather the current challenges. The Board therefore remains confident it can navigate through these choppy waters.
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IG Design Group has delivered a strong set of interim results, in line with the guidance given in its August and October trading updates. Reported revenue and adjusted operating both rose by 21% in the period, along with a further reduction in net debt. The interim dividend has been raised as a consequence by 20%. The group is making good progress on mitigating both the US-China trade tariff headwinds and ongoing Brexit uncertainties. Combined with good visibility on its forward order book into peak season, the group remains on track to meet full year market expectations.
Following its positive end-August trading statement, IG Design Group’s H1 update to end September confirms it has achieved double digit year-on-year growth in both revenue and operating profit. Cash generation has remained strong and year-end average leverage is expected to reduce to 1.1x from the prior year figure of 1.3x. With high levels of orders going into H2 and a strong pipeline of commercial initiatives, operational efficiency gains and acquisition opportunities underpinning future development, the group is on track both to deliver FY20E market expectations and to position it strongly for further growth in FY21E. Our forecasts are therefore unchanged ahead of the interim results.
Design Group’s trading update confirms continued progress across its three strategic drivers with both revenue and profit showing strong year on year growth. This positive momentum reflects a combination of underlying organic growth and the full year effect of the Impact acquisition in the US last August, along with its successful integration with existing operations. Order book and production volumes are both ahead of last year and in line with company expectations. Our forecasts remain unchanged at this stage, albeit with potential upside to FY21E from a successful cross selling initiative with a US retailer.
Design Group has delivered another record year of revenue and profits, beating our forecasts, aided by the strategically transformative acquisition of Impact Innovations Inc in the US. Group revenues advanced 37% including very strong underlying organic growth of 9.8%. Adjusted operating profit rose 41% to £32.6m, ahead of our forecast, with a 20bps increase in adjusted operating margin to 7.3%. With adjusted EPS rising 33% to 29.3p, the 50% increase in final dividend, ahead of our forecast 33% rise, delivers a full year dividend increase of 42% to 8.5p. With its well-defined strategy and clear route map to deliver its shareholder commitments, Design Group is well positioned to increase market share and mitigate external challenges.
By leveraging its innovation and efficiency in manufacturing and sourcing, maintaining strong customer relationships, successfully integrating acquisitions and continuing strong financial management, Design Group is expecting to deliver 9.8% organic sales growth with a 37% annual increase in sales. Margin expansion is expected to continue and impressive cash conversion has driven average gearing below 1.3x EBITDA.
With a geographically well diversified portfolio, strong customer relationships, manufacturing and sourcing expertise and successful integration of acquisitions, Design Group has delivered 9% like-forlike sales growth for the nine months to 31st December 2018. It is on track to meet current market expectations and deliver greater than 20% fully diluted EPS growth for the full year.
IG Design has released its FY19E interims results, which demonstrates a stellar performance ahead of expectations. Revenue grew 23% YoY to £205.2m, benefitting from both organic growth and the Impact acquisition in the US (c£33.0m contribution). Underlying profits increased 71% YoY to £19.0m with margins expanding due to product mix, increased scale and operational efficiencies. We upgrade our FY19E EPS by 4% to 27.0p. The stock trades on a blended CY19E forward EV/Adj EBITDA of 9.5x, which we assess offer investors considerable value for this high-quality compounding business. Buy.
Design Group have announced Interim Results for H1 FY2019E. There was strong growth in both revenues (23%) and underlying operating profit (71%), driven by organic sales growth, the contribution from the newly acquired Impact Innovations in the US and margin expansion across all geographic segments. Net debt of £100m was in line with expectations and average gearing of 1.3x adjusted EBITDA continued to be comfortably below targets. Management have indicated that this strong progress will continue into H2 so we increase our EPS forecast from 25.9p to 27p for FY2019E and retain our forecast of 31.5p for FY2020E.
IG Design has announced a trading update for H1/19E, guiding to performance being in-line with strong market expectations. The group is expected to deliver record H1 revenues, with all regions contributing to the growth performance. Highlights for the period include numerous strategic actions by management, with the acquisition of Impact Innovations in the US being significant in transforming the group's growth profile. Management guides to good visibility in the order book, with strong momentum going into H2/19E. IG Design's fundamentals remain fully intact, and given the recent retracement in share price along with the broader market, we assess the current price levels (FY20E EV/Adj EBITDA of c7.8x) to be a great buying opportunity for investors. Buy.
Ahead of a more detailed update next month, IG Design Group have issued a trading statement covering the six months to 30 September. The Group announced a positive performance across all geographies and business segments with advances in both revenue growth and margin expansion. There is good forward visibility in the order book and the Group expects the strong performance in H1 to be carried forward into the remainder of 2019E. The recently acquired Impact Innovations is also performing well, with integration already having begun and progressing in line with targets. Management expects all regions to achieve year on year revenue and margin growth for the full year. We have left our forecasts for 2019E and 2020E unchanged, although there is potential upside from earlier than expected delivery of acquisition synergies at Impact.
IG Design has announced the conditional acquisition of Impact Innovations Inc, in the USA funded by the first tranche of a two part £50.0m placing. A successful acquisition of Impact is expected to make IG Design the largest consumer Gift Packaging business in the world, doubling IG Design's US revenue. IG Design intends to buy 100% of Impact on a debt-free/cash-free basis for £56.5m, on a EV/EBITDA of 4.9x. We upgrade our forecasts, with our FY20E adjusted EPS increasing 15% to 31.4p. Buy.
IG Design (“Design Group”) have announced that they will acquire Impact Innovations Inc in the US. This is a strategically transformative deal which will create considerable operational and procurement cost savings as well as offering the potential for cross-selling existing IG product to Impact’s customer base and vice-versa. It also gives the combined business a presence and scale in the US which would justify further investment, both organic and as a consolidator of a fragmented regional market. At an acquisition multiple of 4.9x 2017 EBITDA compared to Design Group’s 12.4x, the deal also demonstrates management’s ability to identify good quality, strategic assets and execute their acquisition at an attractive price.
IG Design Group have today announced final results for FY2018. All the financials were in line with our expectations with fully diluted and adjusted EPS of 21.8p. The final dividend of 4.0p is 0.5p higher than our forecast. The Group continued with its strategy of growth through organic product and market diversification, combined with strategic M&A. This fuelled underlying revenue growth of 5.8% and EBIT margin expansion to 7.0%. The Group’s strong market position combined with a target adjusted EBIT margin of 8% and a more advantageous effective tax rate of 24% (from 28.3%), has led us to upgrade our forecast EPS to 25.0p from 23.6p for FY2019E and to 27.3p from 25.5p for FY2020E. We also increase our dividend forecast to 7.25p from 6.5p for FY2019E and 8.5p from 7.5p for FY2020E.
IG Design Group (IGR) released its annual results for March 18, exceeding our expectations owing to strong growth across all regions. We upgrade our forecasts to reflect the positive trading in the current financial year, and continued double-digit growth. Furthermore, we release new FY20E forecasts, maintaining our Buy recommendation to reflect IGR’s next phase of double-digit growth underpinned by high cash generation.
IG Design Group continues to provide the desirable combination of top-line growth, margin expansion and cash generation. It pursues new categories and distribution channels and tightly controls costs in order to generate maximum returns. The Q4 trading statement confirms that the business is progressing in line with current management expectations and delivering on prior commitments in terms of investment, integration synergies from M&A, reduction in average gearing and organisational improvements.
IG Design Group plc (“DG”) has released a trading update indicating that 2018E is in line with expectations - thereby implying impressive YoY revenue and adjusted operating profit growth of +5% and +24% respectively. There has been a corresponding improvement in reported gross margin (21.2% 2018E) as operational efficiencies and the synergistic benefits of recent M&A activity continue to substantiate. Following upgrades to adjusted EPS at the time of the Q3/18 trading update (2018E +7.5%, 2019E +4%), our headline 2018/9E forecasts remain unchanged.
IG Design Group plc (“Design Group”) has announced the sale of property in Hirwaun, Wales. The property, which was used as warehousing, has been sold to a power company that has exercised a previously granted option to purchase. The cash proceeds of the transaction amount to £2.5m, payable on completion and will result in a £1.1m-£1.3m exceptional gain in Q4 of FY2018.
IG Design Group plc. (“Design Group”) has issued its trading update for Q3 and the crucial Christmas period. Trading has been strong with margin improvement across all geographies. Previously announced initiatives are all progressing as expected and the Group is confident that it will exceed market expectations for FY18 and continue to mitigate against any cost head-winds. Additionally, proposed tax changes in the US should result in an uplift to EPS forecasts from 2019, although this is not included in our forecast. We raise our EPS forecast to 21.5p (up 7%) for FY18 and to 23.6p (up 4.5%) for FY19.
IG Design Group plc (“DG”) has released a Q3/18 update indicating that both gross and adj EBITDA margins are ahead of expectations – we upgrade 2018/19E adj DEPS accordingly. A continuation of the strong performance reported H1/18A, all core geographies remain on track to achieve strong YoY revenue and adj PBT growth, with DG having traded well throughout the Christmas period. The inherent growth potential of the Group’s geographically diverse market positioning (both organic and M&A-led) continues to be underscored by a strong balance sheet. DG’s commitment to a progressive dividend policy (5.5p, 2018E) provides investors with an increasingly attractive combination of growth and income. The recent softening in the share price offers an ideal entry point. BUY.
IG Design Group plc. (“Design Group”), is an industry leading, global retail supplier. It operates in four main categories: Celebrations, which includes gift wrap, cards, crackers and bags; Stationery and Creative Play, Gifting and Not-For-Sale Consumables. It is differentiated by its concept of end-to-end design which takes a whole-process engineering approach from building customer relationships, through sourcing and manufacturing to delivery. It pays meticulous attention to customer requirements, making considered investment in manufacturing capacity, sourcing expertise and achieving incremental cost reduction gains which protect margins in the face of cost pressures. It is focused and entrepreneurial in its search for new revenue streams in adjacent product categories. Strong first half-performance sees management confident of meeting or exceeding full-year expectations.
IG Design Group (DG) has reported another strong set of interim results with H1/18A reported revenues and adj EPS up 14% YoY to £166.5m and 10.9p respectively – reflective of the positive impact of both the Group’s investment in design-led manufacturing technologies and pursuit of earnings-enhancing M&A. With a full order book and with each operating segment continuing to trade profitably, the inherent organic growth potential of the Group’s geographically diverse market positioning continues to underpin our forecast convictions – our market forecast for both 2018E and 2019E remains unchanged. BUY.
Edison Investment Research is terminating coverage on IG Design Group (IGR). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
IG Design is extending its position in the Australian greeting card market with the acquisition of Biscay Greetings, through its joint venture, Artwrap. Along with Artwrap’s previously-announced new major contract coming through, IG Design now has a wide product range and a strong market presence, particularly in the value sector. The deal (not yet reflected in our forecast) is set to complete after the key Christmas trading period. The full benefit will be felt in FY19, when we expect it to be earnings’ enhancing. Last month’s trading update showed good sales momentum into FY18, with the forecast growth and cash generation supporting the valuation.
IG Design Group announced that it has signed a contract to acquire the trade and certain assets of Biscay Greetings Pty (Biscay), a leading greetings card and paper products business based in Australia, via its JV. This acquisition is complementary to the existing Design Group Australia business, providing an opportunity for even greater customer engagement and accelerating the crossselling opportunities throughout the region. With the acquisition due to complete January 2018, Biscay should be earnings enhancing to the Group from 2019E onwards. We upgrade 2019E accordingly. BUY.
IG Design continues to deliver impressive growth. Its Q1 trading update shows momentum carrying into the new financial year and the group on track to meet (and possibly exceed) our FY18 target. Initiatives to stimulate organic growth and further benefits of last year’s US acquisition are driving progress, with the stronger balance sheet also giving potential for further acquisitions. The share price has performed well over the last year and the valuation is underpinned by the strong cash generation.
IG Design Group has issued a Q1/18 update, indicating that trading is in line with expectations – we thereby reinforce our 2018/9E guidance. The Group continues to benefit from a well-diversified product range and broad geographic spread. With a cohort of blue chip customers and an unconstrained balance sheet, we take the opportunity to reiterate our assertion that the Group is well placed to capitalise on its dominant market positioning and thereby deliver further shareholder upside with respect to both organic and acquisitive growth opportunities. BUY.
Another strong set of results from IG Design Group show the positive impact of its strategy of investment and innovation in design and delivery. Last year’s acquisition of Lang in the US has added product and customers, while the European operations are gaining additional benefit from the growth of their clients. A particularly strong cash performance has moved the balance sheet cash positive at the year-end, well ahead of schedule. The dividend has been raised from 2.5p in FY16 to a proposed 4.5p, with further rises on the cards underpinned by our raised FY18 and new FY19 estimates.
IG Design Group (the Group) has released a very strong set of preliminary results for 2017 with record levels of reported Group revenue (£311.0m), double digit EPS growth (38%) and underlying gross margin up 230 bps to 20.6%. The Group continues to benefit from a diverse product range and broad geographic spread. It also has a plethora of blue chip customers and an unconstrained balance sheet. We believe that the Group is now extremely well placed to capitalise on its dominant market position and thereby deliver further upside with respect to both organic and M&A driven growth opportunities. BUY.
IG Design has had a very good second half trading and has issued a year-end update indicating that numbers will exceed market estimates. We have lifted our FY17 and FY18 numbers by 8-10% at the pre-tax and EPS levels, following an 11% uplift to earnings with the interims. Particularly notable is the comment on strong cash flow, with the group reaching its target of average leverage less than 2.5x EBITDA two years ahead of plan. With the earnings and cash flow momentum, strong balance sheet and progressive dividend, there is good potential for further share price upside.
IG Design Group has released an update for the year to March revealing that performance has been significantly ahead of expectations. Revenues have hit record levels, breaking the £300m mark, whilst the business has also outperformed in terms of margins and cash generation. The Group benefits from a broad geographic spread and diverse range of products, thereby limiting downside risk from the tightening UK consumer environment and providing substantial scope for further growth. With an unconstrained balance sheet, IG Design is in a strong position to maintain this momentum with investment in the current business and strategic acquisitions. BUY.
IG Design (IGR) has announced the acquisition of Lang Companies for $3.6m in cash. The deal is earnings neutral in FY17e but accretive in FY18e as the synergistic benefits start to flow. Lang has a complementary product range in stationery and giftware and some strong sports-based licences. It also has a design-led culture that should mesh well with IGR’s US operations, which have been gaining momentum. The share price has started to grasp the changing proposition, but has yet to fully reflect it.
IG Design (formerly International Greetings) has delivered a strong set of results, with constant currency revenue growth of 4.4%. There are gains at both gross and operating margin level, while net debt has reduced by more than expected. The new branding emphasises that IGR is more than an efficient, commodity business and that its skillsets can be leveraged across adjacent categories. The US opportunity is by far the largest and the new local management team is making a strong start. The share price has started to grasp the changing proposition, but has yet to fully reflect it.
The year-end trading update indicates that International greetings (IGR) ended FY16 strongly in all its geographic regions, with good momentum into the new financial year. FY16 earnings per share will be at least 13.0p (Edison forecast: 12.1p). Cash performance was also well ahead, with deleveraging comfortably outperforming our modelled outcome, which showed an end-March net debt figure of £26m. The full year dividend is to be recommended at 2.5p (our forecast: 2.0p). FY16 numbers and FY17 estimates will be revised up on publication of the full year numbers at end June, underlining the strong value in the shares at current levels.
International Greetings’ (IGR) Q3 trading update shows that the key Christmas sales period has gone to plan and that the group is on track to meet market forecasts for the year to end March. The regaining of positive momentum in the US is particularly encouraging, with the new management expanding horizons with exports into Canada, Mexico and Brazil. The share price has performed well over recent months and the valuation is now a fairer reflection of progress to date and the prospects for continuing growth.
International Greetings (IGR) has delivered a good set of interims, notable particularly for the improving US performance and further progress in bringing down debt. The order book underpins expected growth for the remainder of the financial year and is on track for FY17. The group’s investment in its manufacturing facilities is delivering targeted production efficiencies and bolstering its positioning as a leader in compliant supply-chain. Following strong performance over the last few months, the share price is now reflecting the underlying improvements being made.
IGR’s pre-close update confirms that trading is as expected in the run up to the key Christmas sell-through period. With a ‘solid’ order book and good progress in new and key accounts in the US, momentum is well established to drive the top line, despite dull underlying markets. Further investment in manufacturing efficiency is delivering the anticipated returns and gives a clear differentiator for retailers concerned with supply-chain compliance. The share price is recognising some of the achievement to date, but not necessarily the ongoing opportunities.
International Greetings has delivered strong growth in earnings, ended its financial year with net debt below previous estimates and returned to the dividend list a year ahead of earlier expectations. While underlying markets provide little stimulus, there remains plenty of scope for the group to grow its top line through increase in market share, particularly in the large US market, leveraging its highly efficient manufacturing production and strengths in global sourcing. The share price is now recognising some of the achievement to date, but not necessarily the ongoing opportunities.
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