Future plc: Highly Successful Buy-and-Build Strategy in Media and Publishing

Markus Matuszek of M17 Capital Management presented his investment thesis on Future plc (UK: FUTR) at European Investing Summit 2021. Markus also discussed his framework for finding “buy and build” champions.

Thesis summary:

Future plc publishes content for a variety of verticals, such as technology, games, TV and entertainment, women’s lifestyle, real life, music, creative and photography, sports, home interest, and B2B sectors in the U.S. and the UK.

Future’s business model is to create and optimize revenue streams in digital ads, e-commerce, paid content, ticket sales, and media sales, both through organic growth as well as through acquiring and integrating content and companies. At the beginning of the company in 1985, the company focused exclusively on magazines, books and similar content – yet thanks to its business model, the group is pushing the business mix toward media and, as a consequence, toward higher margins (media represents about 68% of total revenue, at ~85% gross margin, while magazine has only ~60% gross margin). In addition, management has been successful at lowering overhead and indirect costs.

Future’s buy-and-build strategy has produced a revenue growth CAGR of 55% over the last five years, with cash flow growing 126% annually over the same period – resulting in a CAGR of 92% in adjusted diluted EPS. Future’s conservative leverage of 1.2x EBITDA leaves ample room to continue its M&A growth path and to support its operational plans for top and bottom-line improvement.

Despite all these successes, the market seems to question Future’s capability to continue its strategy – a view that is not substantiated. Markus estimates that Future’s recent share price is ~25% below its near-term value and could reach GBP 120-150 per share by 2025.

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About the instructor:

Markus Matuszek is an investor and entrepreneur. He is the founder, Managing Partner and Chief Investment Officer of M17 Capital Management, who invests into long/short value positions as well as private opportunities, biased towards European ideas. Prior to that he ran asset management and advisory firm Hermes Capital Management as well as he was a managing partner at Gabelli & Partners. He has been investing in listed securities, private companies and real estate over 18 years with a solid track record. Earlier in his career, Markus was a senior advisor / interim manager with extensive advisory and hands-on work in strategy, restructuring, organizational change, corporate finance and risk management, M&A advisory, private equity, real estate and investment management in Western Europe, Eastern Europe and the US. He started his professional career with McKinsey & Company. His education includes a M.A. in finance, accounting and controlling from the University of St. Gallen (Switzerland), a master degree from CEMS and dual MBAs from Columbia Business School and London Business School (with honors). Furthermore, he studied at the Warsaw School of Economics and University of Geneva and received several merit-based fellows and scholarships. He is also a CFA charterholder and a jury member for the CFA Institute’s Research Challenge in Switzerland as well as for EMEA.

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