Successfully Grew EBITDA Year-Over-Year and Sequentially
On Track to Deliver Significant Enhancement in Underlying Free Cash Flow in 2015 and to Grow EBITDA
Raises Expectation for 2015/16 Wave Cost Savings to Greater Than $7 Million, While Supporting Growth Initiatives
Recently Announced the Conclusion of its $50 Million Foreign Subsidiary Debt Issuance
TORONTO, Wednesday, August 12, 2015 – Mood Media Corporation (“Mood Media,” “Mood” or “the Company”) (ISIN: CA61534J1057) (TSX:MM), the world’s largest integrated provider of in-store customer experience solutions, today reported results for the second quarter of 2015 and provided an update on the Company’s progress executing against its strategic and operational plans.
- Q2 EBITDA rose by 2% relative to last year, and rose by 10% on an underlying basis (excluding foreign exchange impact and asset disposals).
- Underlying revenues rose by 6% year over year in Q2 (excluding FX movements and asset disposals).
- All business units recorded improvements in EBITDA relative to the prior year driven by improved underlying revenues, generation of incremental synergies and efficiencies benefiting costs; catch-up of delayed project revenues at Technomedia and BIS with strengthened revenues given committed sales pipeline backlogs.
- The Company has broadened its global transformation, integration and consolidation initiatives to include 2016 activities. In total, Mood’s 2015/16 initiatives are expected to deliver more than $7M in annualized savings, above its original estimates for initiatives identified and begun in 2015.
- Mood maintains its guidance for a significant improvement in underlying free cash flow generation with a greater than $20 million improvement in 2015 relative to 2014 (excluding asset dispositions). EBITDA is expected to rise moderately relative to 2014 while free cash flow generation in 2015 is anticipated to be slightly less than break even, with further free cash flow improvements expected in 2016.
- Mood recently announced the successful closing of its issuance of $50 million of 10% Senior Unsecured Notes of Mood Media Group S.A., the net proceeds from which will be used to repay Mood Media’s outstanding 10% Convertible Debentures at maturity.
“The transformation of Mood is well underway and is evident in Mood’s mid-single digit revenue growth and 10% EBITDA growth in the quarter on an underlying basis”, said Steve Richards President and CEO of Mood Media. “These achievements represent significantly improved trends relative to where the business was even a year ago. Overall we’re pleased with Mood’s second quarter results and they are in line with our expectations, despite the headwind from foreign exchange translation that obscures the significantly improved operating performance of the business in Mood’s reported financials.”
In the second quarter, all four Mood business units grew EBITDA on an underlying basis and three of four grew revenues on an underlying basis. In Mood’s North American recurring business, our local sales rebuild is advancing steadily and producing expected gains in terms of improved local gross gain performance, while enhancing Mood’s selling efforts and advancing partnerships. In our International division, strong visual gains and a continuing growing sales backlog are producing improved revenues and EBITDA. At Technomedia and BIS, we delivered the upside to revenues and EBITDA as anticipated in the quarter, and as previously outlined. We achieved further gains with our integration, consolidation and efficiency programs, and have broadened the scope of our earlier Wave 4 programs. We are increasing our expectation for cost savings to at least $7 million for delivery in 2015 and 2016, via Wave 4+.”
“We are pleased to announce the closing of our US$50 million foreign subsidiary debt arrangement. The proceeds of the new notes enable us to address the maturity of Mood’s outstanding convertible debentures later this year, and opens up runway with no pending debt maturities to fully execute our strategic plan, drive growth and enhance shareholder value,” continued Mr. Richards.
Second Quarter Financial Results
The Company reported Q2 revenues of $117.7 million and EBITDA of $24.5 million. Reported revenues in Q2 declined by $2.2 million relative to the prior year with underlying revenues growing by $7.7 million, or 6% year over year. Mood’s underlying revenue growth was more than offset by $8.8 million of negative impact from foreign exchange translation related to the devaluation of the Euro relative to the U.S. dollar and $1.1 million from asset disposals. Mood’s reported rendering of services revenues declined by $1.9 million relative to the prior year with foreign exchange and asset disposals contributing $4.5 million and $1.1 million, respectively, to the decline. Underlying rendering of services revenues rose by $3.7 million, or 4.5%. Mood’s sale of goods revenues remained stable in Q2 relative to the prior year, despite a $4.1 million offset related to foreign exchange. Underlying sale of goods revenues rose by $4.0 million or 11% relative to the prior year’s quarter. In the second quarter, the average Euro / USD exchange rate used to translate its Euro results was $1.106 compared with $1.371 in the same period of the prior year.
The Company’s total expenses declined by $2.7 million in Q2 relative to the prior year and rose by $5.2 million on an underlying basis with operating expenses declining by 5% on an underlying basis, reflecting continued gains from its integration and synergy activities, and underlying cost of sales increasing 14% year over year on double digit revenue growth in its International, Technomedia and BIS segments.
Mood’s EBITDA in Q2 rose by $0.5 million relative to the prior year with underlying gains of $2.4 million (10% year over year) being partially offset by a $1.5M impact from the adverse change in foreign exchange rates and $0.5 million related to its prior disposal of its Canada DMX accounts. All business units contributed to the improvement in underlying EBITDA in the quarter.