TORONTO, Wednesday, November 9, 2016 – Mood Media Corporation (“Mood Media,” “Mood” or “the Company”) (TSX:MM), the global leader in elevating Customer Experiences, today reported results for its third quarter of 2016 and provided an update on the Company’s progress executing against its strategic and operational plans.
- In the third quarter of 2016, Mood reported revenues of $113.9 million, down 3.6% relative to the prior year’s third quarter. Underlying revenues declined by $2.6 million on a year-over-year basis. Of this decline, $3.6 million is related to Technomedia with the In-Store Media & BIS groups collectively growing revenues relative to prior year. Recurring revenues of $60.4 million remained essentially stable, down 0.3% year over year on an underlying basis
- Third quarter free cash flow was $9.8 million versus -$6.4 million in the prior period, representing a positive variance of $16.1million on a year over year basis. Mood continues to expect to generate positive free cash flow in 2016.
- North American In-Store Media operations recorded 2.6% revenue growth in the third quarter relative to prior year driven by a 0.5% increase in recurring revenues and 16% growth in equipment revenues.
- Mood has progressively improved the momentum in its recurring revenues via investments in sales, marketing and operating efficiencies. The impact of these investments has erased the mid single digit declines in the business in 2014 and prior periods and achieved virtual stability as of Sept. 30, 2016, a key milestone to growth in recurring revenues in future periods.
- Mood’s key performance indicators show increasing traction from gains in sales and operating performance. Net site additions in the third quarter were 1,696 sites. Growth in the site base was driven by improved gross site additions in the third quarter and year to date, which rose by 2% and 10%, respectively, relative to the same periods of the prior year.
- The improvement in net activations was also generated by substantially lower churn in the third quarter, at 0.8% per month vs 1.0% in the prior year’s period, attributable to improved results from sales and operating activities. ARPU in the third quarter was $41.81, a reduction of only 1.1% relative to prior year. In the third quarter of 2016, Mood recorded its best third quarter gross addition performance since 2012.
- Mood Adjusted EBITDA in the third quarter was $22.3 million compared with $25.8 million in the prior year’s quarter. On an underlying basis, excluding the effect for foreign exchange translation and asset disposals, Adjusted EBITDA declined by $3.4 million relative to prior year. Management believes the decline is primarily related to reductions in large jobs systems sales atTechnomedia and a decline in North America installation and service margins in the third quarter.
- The Company’s 2016 global transformation, integration and consolidation initiatives are on target, with Mood delivering incremental annualized efficiencies of more than $4.5 million from Wave 5. This Wave 5
- Mood is reiterating 2016 guidance for FCF to be positive in 2016; Adjusted EBITDA will be slightly down for the year vs. previous 2016 guidance of flat Adjusted EBITDA performance.
- FCF on a year to date basis is ahead of Mood’s original expectation driven by improved working capital efficiencies, while capex is trending to the low end of Mood’s guidance range of $28-$30 million, which represents a 25%-30% decline relative to prior year. Management anticipates that 2 these factors will enable Mood to meet its original FCF expectation despite lower Adjusted EBITDA guidance.
- Mood expects fourth quarter 2016 Adjusted EBITDA to increase relative to Q3 as the fourth quarter typically exhibits the highest seasonal demand for store refurbishments & site installations.