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Discounted Cash Flow Model (TEMPLATE)

This document presents a discounted cash flow (DCF) analysis to value a company. It makes projections for unlevered free cash flow over 11 years. It then uses two DCF methods - an EBITDA multiple method and a perpetuity growth method - to calculate enterprise and equity values ranging from $700-850 million and $19-25 per share, depending on the discount rate and terminal assumptions used. Sensitivity tables show how the valuation results change based on variations in the weighted average cost of capital and terminal multiples or growth rates.

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Ignacio de Diego
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53 views

Discounted Cash Flow Model (TEMPLATE)

This document presents a discounted cash flow (DCF) analysis to value a company. It makes projections for unlevered free cash flow over 11 years. It then uses two DCF methods - an EBITDA multiple method and a perpetuity growth method - to calculate enterprise and equity values ranging from $700-850 million and $19-25 per share, depending on the discount rate and terminal assumptions used. Sensitivity tables show how the valuation results change based on variations in the weighted average cost of capital and terminal multiples or growth rates.

Uploaded by

Ignacio de Diego
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Discounted Cash Flow (DCF) Analysis

($ in millions, except per share data)


3 Quarters
Today Ending Projected Fiscal Years Ending September 30,
12/31/12 9/30/13 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fractional years per period (0.75)% (1.00)% (1.00)% (1.00)% (1.00)% (1.00)% (1.00)% (1.00)% (1.00)% (1.00)%
Cumulative fractional years from close (0.75)% (1.75)% (2.75)% (3.75)% (4.75)% (5.75)% (6.75)% (7.75)% (8.75)% (9.75)%

Assumptions
Net debt ($25.6)%
Fully diluted shares outstanding (35.159)%
Tax rate (35.0%)

Unlevered Free Cash Flow (UFCF)


EBITDA ($94.9)% ($155.9)% ($160.1)% ($161.3)% ($162.4)% ($163.6)% ($164.8)% ($166.0)% ($167.2)% ($168.5)%

EBITA ($82.7)% ($139.7)% ($143.9)% ($144.9)% ($145.9)% ($147.0)% ($148.1)% ($150.7)% ($152.4)% ($153.4)%
( – ) Taxes ((28.9)% ((48.9)% ((50.4)% ((50.7)% ((51.1)% ((51.4)% ((51.8)% ((52.8)% ((53.3)% ((53.7)%
Unlevered net income (53.8)% (90.8)% (93.5)% (94.2)% (94.9)% (95.5)% (96.2)% (98.0)% (99.0)% (99.7)%
( + ) Depreciation (12.2)% (16.2)% (16.2)% (16.4)% (16.5)% (16.6)% (16.8)% (15.3)% (14.9)% (15.0)%
( – ) Capital expenditures ((12.8)% ((18.0)% ((19.0)% ((19.2)% ((19.3)% ((19.5)% ((19.7)% ((19.9)% ((20.0)% ((20.2)%
( – ) Change in working capital (2.0)% ((3.8)% ((1.3)% ((0.4)% ((0.4)% ((0.4)% ((0.4)% ((0.4)% ((0.4)% ((0.4)%
( – ) Change in deferred taxes (–)% (–)% (–)% (–)% (–)% (–)% (–)% (–)% (–)% (–)%
Unlevered free cash flow (–)% ($55.1)% ($85.2)% ($89.5)% ($91.0)% ($91.6)% ($92.2)% ($92.9)% ($93.0)% ($93.4)% ($94.1)%

DCF Valuation – XNPV Method


( + ) Terminal cash flow (5.0x terminal multiple) ($812.2)%
Total cash flow – EBITDA multiple method (–)% ($55.1)% ($85.2)% ($89.5)% ($91.0)% ($903.8)%

DCF valuation (XNPV) – EBITDA multiple method ($773.1)%


Check that XNPV yields same result as formulas below (–)%

( + ) Terminal cash flow (0.5% terminal growth) ($800.5)%


Total cash flow – perpetuity growth method (–)% ($55.1)% ($85.2)% ($89.5)% ($91.0)% ($892.1)%

DCF valuation (XNPV) – perpetuity growth method ($766.3)%


Check that XNPV yields same result as formulas below (–)%

DCF Sensitivity – EBITDA Multiple Method


NOTE: Enterprise value can be computed more simply using TABLEs sensitizing the XNPV result to the WACC and terminal multiple, but TABLEs were purposefully avoided to illustrate how this sensitivity
can be performed without TABLEs, which are slow to calculate.

Enterprise Value Equity Value


Terminal EBITDA Multiple Terminal EBITDA Multiple
(4.5x)) (5.0x)) (5.5x)) (4.5x)) (5.0x)) (5.5x))
Discount 11.0%) ($751.7)% ($801.2)% ($850.6)% ($726.1)% ($775.6)% ($825.0)%
Rate 12.0%) ($725.7)% ($773.1)% ($820.5)% ($700.1)% ($747.5)% ($794.9)%
(WACC) 13.0%) ($700.9)% ($746.3)% ($791.8)% ($675.3)% ($720.7)% ($766.2)%

Implied Perpetuity Growth Rate Value Per Share


Terminal EBITDA Multiple Terminal EBITDA Multiple
(4.5x)) (5.0x)) (5.5x)) (4.5x)) (5.0x)) (5.5x))
Discount 11.0%) (1.4%) (0.3%) (0.7%) ($20.65)% ($22.06)% ($23.47)%
Rate 12.0%) (0.5%) (0.6%) (1.6%) ($19.91)% ($21.26)% ($22.61)%
(WACC) 13.0%) (0.4%) (1.5%) (2.5%) ($19.21)% ($20.50)% ($21.79)%

DCF Sensitivity – Perpetuity Growth Method


NOTE: Enterprise value can be computed more simply using TABLEs sensitizing the XNPV result to the WACC and terminal growth rate, but TABLEs were purposefully avoided to illustrate how this sensitivity
can be performed without TABLEs, which are slow to calculate.

Enterprise Value Equity Value


Terminal Perpetuity Growth Rate Terminal Perpetuity Growth Rate
(–)% (0.5%) (1.0%) (–)% (0.5%) (1.0%)
Discount 11.0%) ($813.7)% ($840.5)% ($870.0)% ($788.1)% ($814.9)% ($844.4)%
Rate 12.0%) ($744.6)% ($766.3)% ($789.9)% ($719.0)% ($740.7)% ($764.4)%
(WACC) 13.0%) ($686.1)% ($704.0)% ($723.3)% ($660.5)% ($678.4)% ($697.7)%

Implied Terminal EBITDA Multiple Value Per Share


Terminal Perpetuity Growth Rate Terminal Perpetuity Growth Rate
(–)% (0.5%) (1.0%) (–)% (0.5%) (1.0%)
Discount 11.0%) (5.1x))' (5.4x))' (5.7x))' ($22.42)% ($23.18)% ($24.02)%
Rate 12.0%) (4.7x))' (4.9x))' (5.2x))' ($20.45)% ($21.07)% ($21.74)%
(WACC) 13.0%) (4.3x))' (4.5x))' (4.7x))' ($18.79)% ($19.29)% ($19.84)%

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