4imprint is the leading direct marketer of promotional products in the US, Canada, the UK and Ireland. In FY18, 97% of revenues were generated in the US and Canada.
4imprint’s pre-close update indicated trading in the later weeks of the full year continued strong, with FY19 results set to be at the higher end of the market forecast range. Revenue (+17%) was slightly above our estimate, which we raised by $10m at the November trading update. The $41.0m net cash at the year end was also a little ahead of our forecast of $39.5m. We have initiated FY21 forecasts, which show the group exceeding management’s $1bn revenue target a year earlier than originally anticipated. The large scale of the addressable market leaves plenty of opportunity for growth, with potential for further share price appreciation.
Industry body PPAI estimates the value of the US promotional products distribution market at US$23bn. 4imprint is the largest distributor in this large and diverse market, yet has market share of around 3%. Q319 sales for the market were up 4.3%, slightly down on the +5.4% reported for Q219 and the 4.9% for FY18. The industry seems to have tackled the potential disruption from US-China tariffs effectively, although those set to be introduced in December did not take effect. Promotional products remain an attractive marketing medium for businesses for both external marketing purposes and internal motivational programmes.