PR Newswire
TORONTO, May 11, 2016
Affirms 2016 Guidance for Positive Free Cash Flow & Stable EBITDA
Incremental Transformation Gains Targeted for 2016
TORONTO, May 11, 2016 /PRNewswire/ - Mood Media Corporation ("Mood Media," "Mood" or "the Company") (TSX:MM), the global leader in elevating Customer Experiences, today reported results for its first quarter of 2016 and provided an update on the Company's progress executing against its strategic and operational plans.
Recent Highlights
"Our first quarter revenues and EBITDA for our core business and BIS met expectations. While we missed expectations at Technomedia, we have swiftly implemented unit enhancements that should be effective in supporting their year," said Steve Richards, President and CEO of Mood Media. "Mood achieved $5.7 million in positive free cash flow in the quarter, and we continue to expect to deliver positive free cash flow in 2016."
"Importantly, transformation and investment activities are generating great benefits and have materially reduced the rate of decline in recurring revenues to just 1% year over year in our North American business, compared with a decline of 3.5% in the same period of the prior year. International recurring revenues are moving along a similar trajectory. Local sales are benefitting from our new Inside Sales group, Premier sales just recorded their best 6 month performance since Mood was put together in 2012, and the combination of improving recurring revenue trends and growth in equipment and labor revenues in International indicates that we should continue to build momentum as the year progresses. We have enhanced Mood revenue growth initiatives via the efforts of our newly appointed leaders in Global Marketing, Global System Sales and Premier Account Sales, to further advance our revenue actions."
"We are gaining traction with our leading set of Customer Experience solutions, encompassing sight, sound, scent, social and systems across a wide range of distribution platforms that fit the precise needs of our clients. We exceed demanding client requirements ranging from the most sophisticated global brands to local businesses. We believe that Mood provides unmatched support for our solutions, whether they are delivered via IP, streaming, satellite or physical media to hundreds of thousands of locations, anywhere, anyhow and anytime. Through our transformation, we have introduced new interactive audio, visual, mobile and interactive solutions, and we are building upon our significant advantages through relentless, continuous innovations."
"Overall, the transformation of Mood is progressing along our planned pathways and is expected to gain revenue strength throughout 2016. Although there is still work to accomplish, Mood is well on its way to delivering its enhanced potential through incremental gains expected in sales, marketing and integration in the future," Richards concluded.
First Quarter 2016 Financial Results
The Company reported first quarter 2016 revenues of $111.3 million and EBITDA of $21.8 million compared with revenues of $114.3 million and EBITDA of $24.1 million in the prior year's quarter. First quarter revenues declined by 2.6% or $2.9 million relative to prior year, with $0.9 million attributable to the negative impact of foreign exchange translation and $2.0 million related to reduced underlying revenues. The decline in underlying revenues was related primarily to lower rendering of services revenues associated with reduced installation activity and to a lesser extent to lower recurring revenues. The Company's recurring revenue trend has progressively improved over the last several quarters and in Q1 2016 recurring revenues declined by 2.0% year-over-year, including a decline of just 1.0% in its North America In-Store Media segment, compared with a decline of 3.5% year-over-year in the prior year's first quarter. The Company is experiencing improving trends in its Local and Premier segments and is increasing partnership revenues.
The Company's reported cost of sales decreased by $2.3 million to $52.0 million in the first quarter from $54.2 million in the same quarter of the prior year. Foreign exchange rates contributed $0.4 million to the reduction in cost of sales. The remainder of the reduction is attributable to reduced equipment costs in North America & Technomedia resulting from lower equipment and installation activity.
The Company's reported operating expenses were $37.6 million, for an increase of $1.7 million relative to the prior year's first quarter. Foreign exchange movements represented $0.9 million of the increase, which was driven in two parts. Firstly the translation of foreign exchange rates lowered operating expenses by $0.4 million. Secondly, the Company recorded a one-time non-cash foreign exchange gain of $1.3 million in the prior year's quarter which had the effect of reducing operating expenses in that time period. Underlying operating expenses rose by $0.8 million (2.2%) relative to the prior year's quarter, driven primarily by increases at Technomedia & BIS.
Mood's EBITDA in the first quarter declined by $2.3 million relative to the prior year, of which $1.4 million is attributable to foreign exchange and $0.9 million, is related to underlying operations. Asset disposals did not impact the EBITDA trajectory in the first quarter.
Other Expenses totaled $6.1 million in the first quarter of 2016 compared with $0.9 million in the prior year's quarter. Other Expenses in the first quarter consisted of $2.1 million in severance and integration expenses related to the Company's global synergy program, $0.2 million in transaction-related expenses and a $3.7 million loss on sale of its French speaker manufacturing business which was completed on March 30, 2016. Much of the loss was attributable to the intangible assets allocated to the sale.
Net loss per share in Q1 2016 was ($0.05) compared with a net loss per share of ($0.15) in the prior year's quarter. The major influences on net loss in the first quarter include the negative impact of foreign exchange which resulted in a $1.4 million reduction to EBITDA, a $6.6 million foreign exchange gain on financing transactions compared with a $19.0 million loss in Q1 2015 which contributed to reducing loss before taxes, higher other expense in the current quarter driven primarily by the loss on sale of the speaker manufacturing business and higher finance costs resulting from non-cash IFRS adjustments to the fair value of financial instruments.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS | ||||||
Unaudited | ||||||
| | | | |||
In thousands of US dollars, except per share information and weighted average number of shares | ||||||
| | | | |||
| Three months ended | | Three months ended | |||
Revenue | $111,335 | | $114,255 | |||
Expenses | | | | |||
| Cost of sales | 51,963 | | 54,244 | ||
| Operating expenses | 37,552 | | 35,891 | ||
| Depreciation and amortization | 16,567 | | 16,749 | ||
| Share-based compensation | 28 | | 216 | ||
| Other expenses | 6,064 | | 897 | ||
| Foreign exchange (gain) loss on financing transactions | (6,611) | | 19,003 | ||
| Finance costs, net | 15,845 | | 14,080 | ||
Loss for the period before income taxes | (10,073) | | (26,825) | |||
| | | | |||
Income tax (recovery) charge | (642) | | 146 | |||
Loss for the period | (9,431) | | (26,971) | |||
| | | | |||
Net loss attributable to: | | | | |||
Owners of the parent | (9,428) | | (26,968) | |||
Non-controlling interests | (3) | | (3) | |||
| $(9,431) | | $(26,971) | |||
| | | | |||
Net loss per share attributable to shareholders | | | | |||
Basic and diluted | $(0.05) | | $(0.15) | |||
Weighted average number of shares outstanding – basic | 183,810 | | 180,099 | |||
Weighted average number of shares outstanding – diluted | 186,712 | | 180,099 | |||
| | | | |||
Loss for the period | $(9,431) | | $(26,971) | |||
| | | | |||
Items that may be reclassified subsequently to the loss for the period: | | | | |||
| | Exchange loss on translation of foreign operations | (2,534) | | (3,292) | |
Other comprehensive loss for the period, net of tax | (2,534) | | (3,292) | |||
Total comprehensive loss for the period, net of tax | (11,965) | | (23,679) | |||
| | | | |||
Comprehensive loss attributable to: | | | | |||
| Owners of the parent | (11,962) | | (23,676) | ||
| Non-controlling interests | (3) | | (3) | ||
| $(11,965) | | $(23,679) |
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