Discounted Cash Flow (DCF) Analysis Unlevered

Elanco Animal Health Incorporated (ELAN)

$11.28

+0.03 (+0.27%)

All numbers are in Millions, Currency in USD

Stock DCF: 7.89 | 11.28 | overvalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	3,066.80	3,071	3,273.30	4,765	4,418	4,915.18	5,468.31	6,083.68	6,768.30	7,529.97
Revenue (%)
EBITDA	640	543	461.40	853	886	890.65	990.88	1,102.38	1,226.44	1,364.46
EBITDA (%)
EBIT	344	228.50	-55.50	137	204	240.40	267.45	297.55	331.03	368.28
EBIT (%)
Depreciation	296	314.50	516.90	716	682	650.25	723.43	804.84	895.41	996.17
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	474.80	334	494.70	638	345	616.06	685.39	762.52	848.33	943.80
Total Cash (%)
Account Receivables	709.40	889.90	1,076.70	1,028	1,002	1,270.64	1,413.63	1,572.71	1,749.69	1,946.60
Account Receivables (%)
Inventories	1,004.10	1,050.70	1,578.10	1,373	1,538	1,757.59	1,955.38	2,175.43	2,420.24	2,692.60
Inventories (%)
Accounts Payable	205.20	222.60	501	418	390	460.50	512.32	569.98	634.12	705.48
Accounts Payable (%)
Capital Expenditure	-134.50	-197.40	-310.90	-197	-184	-281.25	-312.90	-348.12	-387.29	-430.88
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 11.28
Beta	1.008
Diluted Shares Outstanding	488.30
Cost of Debt
Tax Rate	-12.12
After-tax Cost of Debt	4.13%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.301
Total Debt	5,836
Total Equity	5,508.02
Total Capital	11,344.02
Debt Weighting	51.45
Equity Weighting	48.55
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	3,066.80	3,071	3,273.30	4,765	4,418	4,915.18	5,468.31	6,083.68	6,768.30	7,529.97
EBITDA	640	543	461.40	853	886	890.65	990.88	1,102.38	1,226.44	1,364.46
EBIT	344	228.50	-55.50	137	204	240.40	267.45	297.55	331.03	368.28
Tax Rate	24.19%	13.17%	16.65%	16.75%	-12.12%	11.73%	11.73%	11.73%	11.73%	11.73%
EBIAT	260.79	198.40	-46.26	114.05	228.73	212.20	236.08	262.65	292.20	325.09
Depreciation	296	314.50	516.90	716	682	650.25	723.43	804.84	895.41	996.17
Accounts Receivable	-	-180.50	-186.80	48.70	26	-268.64	-142.99	-159.08	-176.98	-196.90
Inventories	-	-46.60	-527.40	205.10	-165	-219.59	-197.79	-220.05	-244.81	-272.36
Accounts Payable	-	17.40	278.40	-83	-28	70.50	51.82	57.65	64.14	71.36
Capital Expenditure	-134.50	-197.40	-310.90	-197	-184	-281.25	-312.90	-348.12	-387.29	-430.88
UFCF	422.29	105.80	-276.06	803.85	559.73	163.47	357.64	397.89	442.67	492.48
WACC
PV UFCF						153.29	314.49	328.10	342.29	357.10
SUM PV UFCF										1,495.28

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.64
Free cash flow (t + 1)	502.33
Terminal Value	10,826.14
Present Value of Terminal Value	7,850.06

Intrinsic Value

Enterprise Value	9,345.34
Net Debt	5,491
Equity Value	3,854.34
Shares Outstanding	488.30
Equity Value Per Share	7.89