Mood Media Reports Full Year 2016 Financial and Operating Results Achieving Revenues of $465.3 Million and Adjusted EBITDA of $93.2 Million
Mood generates Positive Free Cash Flow of $2.8 Million in 2016, Achieving a $17.0 Million Improvement Relative to Prior Year
Mood Reports 10% Increase in Gross Site Additions and 12% Reduction in Churn Sites in 2016 to Achieve 671 Net Site Additions, Including 3,275 in the Fourth Quarter. 2016 Gross Site Additions Highest Level Since 2012.
Mood Underlying In-Store Media Revenues Rise 2% Relative to Prior Year, Given Improvements in Recurring Revenues and Growth in Equipment and Labor Revenues
TORONTO, Thursday, March 9, 2017 – Mood Media Corporation (“Mood Media,” “Mood” or the “Company”) (TSX:MM), the global leader in elevating Customer Experiences, today reported its 2016 results and provided an update on the Company’s progress executing against its strategic and operational plans.
- Mood reported revenues of $465.3 million in 2016, down 2.1% relative to the prior year. Underlying revenues, which exclude the effect of foreign exchange translation and asset divestitures, declined by $3.5 million on a year-over-year basis, or 0.7%. In the Company’s In- Store Media segments, underlying revenues rose by 1.7% relative to prior year while at BIS underlying revenues rose by 1.9%. However, declines at Technomedia more than offset the gains made in these areas. Similarly, in the fourth quarter In-Store Media and BIS revenues increased, while declines at Technomedia more than offset those gains.
- Consistent with its 2016 guidance, the Company achieved free cash flow of $2.8 million in 2016, posting a $17.0 million improvement from free cash flow of -$14.3 million in 2015. This increase was driven by improvements in net cash flows from operating activities, reduced capital expenditures and reduced financing and leasing costs.
- Mood’s key performance indicators show increasing traction from gains in sales and operating performance. The Company reported net site additions of 671 in 2016 (compared with a decline of 9,986 sites in 2015 vs. 2014), including 3,275 in the fourth quarter. In total, the Company grew its number of gross site additions by 9.8% in 2016 relative to the prior year with gains made in both its audio and visual segments and in both its North American and international business units. In 2016, the Company recorded its highest number of gross site additions since 2012 and had its best performance in a number of years with large-client gains, having signed three new 1,500+ site clients in 2016.
- Growth in the site base was also generated by substantially lower churn in 2016 with the number of churn sites declining by 12.2% relative to prior year. The Company’s monthly churn rate was 0.8% in the fourth quarter of 2016 compared with 0.9% in the fourth quarter of 2015. The Company attributes the improvement to results from sales and operating activities. ARPU in the fourth quarter was $40.78, a reduction of 3.5% relative to prior year. Excluding the impact of foreign exchange, fourth quarter ARPU declined by 2.3% relative to prior year.
- Mood Adjusted EBITDA was $93.2 million in 2016 and $24.2 million in the fourth quarter compared with $24.0 million in the prior year’s fourth quarter. On an underlying basis, excluding the effect of foreign exchange translation and asset disposals, 2016 Adjusted EBITDA declined by $4.0 million relative to prior year. In the fourth quarter of 2016, underlying EBITDA rose by $0.4 million relative to the same period in the prior year. The Company believes that the decline in 2016 underlying EBITDA is primarily related to reductions in large jobs systems sales at Technomedia, investments in sales and marketing, higher sales commissions, the slight reduction in underlying recurring In-Store Media revenues, and the non-repetition of certain prior year gains.
- The Company’s 2016 global transformation, integration and consolidation initiatives were completed ahead of target with Mood delivering incremental annualized efficiencies of more than $5.0 million from Wave 5. This Wave 5 result is ahead of Management’s original $3.6 million expectation. The Company estimates that savings related to its Wave 6 activities in 2017 to be approximately $6.0 million, compared with its original estimate of $3.0 million, raising the total annualized transformation savings delivered since the program began in the fourth quarter of 2013 to more than $33.0 million.
- In 2017, Mood expects free cash flow will be positive and Adjusted EBITDA to be stable relative to 2016. Mood expects continued positive momentum in North America In-Store Media recurring revenue trends with improved new sales and reduced churn driven by sales investments made in 2016 in the areas of Premier sales, Systems sales, Local inside sales & marketing. Similarly, International In-Store Media is expected to show positive momentum in recurring revenues. Offsetting some of the recurring revenue gains will be increased investments in sales, partnerships and content expansion, as well as a delay in equipment & labor revenues due to an international Auto chain client. BIS is estimated to record moderate EBITDA growth in 2017 and Technomedia EBITDA is estimated to gain ground from its performance in 2016.“Furthermore, we are ahead of plan regarding 2016 Wave 5 initiatives and now expect annualized savings of more than $5 million and we have increased our expectation for 2017 Wave 6 plans to $6.0 million, from $3.0 million previously. The upsized Wave 5 and 6 reductions will raise to $33.0 million the total savings from our integration and synergy program since its inception in 2013.“Importantly, improved sales performance combined with strong ongoing contributions from our integration programs enabled Mood to achieve positive free cash flow generation in 2016 of $2.8 million. For 2017, we project another year of positive free cash flow as we advance our plan to make Mood the recognized global leader in elevating Customer Experiences.“Mood’s transformation is achieving the important milestones along its trajectory to positive growth in recurring revenues, improved margins and continued generation of free cash flow. Our global efficiency gains have been encouraging, and we believe those efficiencies coupled with new sales momentum and enhanced operating performance put us on track to further our gains in the future,” concluded Mr. Richards.
“Our 2016 results clearly show that Mood’s client-facing activities are gaining strength on the foundation of improved operational performance and successful sales investments and initiatives”, said Steve Richards, Mood’s President and Chief Executive Officer. “As a result, we finished 2016 with strong site momentum, adding 3,275 net new sites in the fourth quarter alone, driven both by improved gross site additions and improved churn rates. In fact, in 2016, we added more 1,500+ site clients than in any period since Mood was combined in 2012. Noticeably, leading brands see the value of Mood solutions and are coming to us in greater numbers and for broader Sound, Sight and Social/Mobile solutions.
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2016 Q4 Earnings Press Release 2017.03.09 FINAL