MONTREAL, QUEBEC--(Marketwired - Aug. 3, 2016) -
First Quarter Highlights
- Revenues increased 23.4% to $24.5 million
- Recurring revenues of $21.4 million or 87.2% of total revenues, an increase of 24.1%
- Net income increased to $2.0 million or $0.04 per share (diluted) compared to a net loss of $1.8 million or
($0.05) per share (diluted) last year
- Adjusted EBITDA increased 10.2% to $7.9 million
- Adjusted Net income up 8.9% to $5.2 million or $0.10 per share (diluted) compared to last year
- Adjusted free cash flow of $5.9 million, an increase of 11.4%
- Increased quarterly dividend by 14% to $0.04 per share
Stingray Digital Group Inc. (TSX:RAY.A)(TSX:RAY.B) (the "Corporation"; "Stingray"), a leading business-to-business
multi-platform music and in-store media solutions provider, today announced its financial results for the first quarter ended
June 30, 2016.
| Financial Highlights |
Quarters ended June 30, |
|
| (in thousands of dollars, except per share data) |
2016 |
2015 |
|
% |
|
| Revenues |
24,547 |
19,895 |
|
23.4 |
|
| Recurring revenues |
21,401 |
17,243 |
|
24.1 |
|
| Adjusted EBITDA(1) |
7,881 |
7,151 |
|
10.2 |
|
| Net income (loss) |
2,044 |
(1,777 |
) |
- |
|
| |
Per share - diluted ($) |
0.04 |
(0.05 |
) |
- |
|
| Adjusted Net income(2) |
5,207 |
4,783 |
|
8.9 |
|
| |
Per share - diluted ($) |
0.10 |
0.12 |
|
(16.7 |
) |
| Cash flow from operating activities |
2,722 |
4,109 |
|
(33.5 |
) |
| Adjusted free cash flow(3) |
5,861 |
5,260 |
|
11.4 |
|
| |
|
|
|
|
|
| (1) |
Adjusted EBITDA is a non-IFRS measure and is defined as net income before net finance expenses, change in
fair value of investments, income taxes, depreciation, amortization and write-off, share-based compensation, restricted and
deferred share unit expenses, initial public offering ("IPO") expenses and CRTC tangible benefits and acquisition,
restructuring and other various costs. |
| (2) |
Adjusted Net income is a non-IFRS measure and is defined as net income before amortization of intangible
assets, share-based compensation, change in fair value of investment, IPO expenses and CRTC tangible benefits, acquisition,
restructuring and other various costs, net of related income taxes. |
| (3) |
Adjusted free cash flow is a non-IFRS measure and is defined as cash flow from operating activities less
capital expenditures for property and equipment and separately acquired intangible assets, net change in non-cash working
capital items, IPO expenses and CRTC tangible benefits and acquisition, restructuring and other various costs, net of
related income taxes. |
"We started fiscal 2017 on a solid note with revenues increasing by 23.4% and Adjusted EBITDA by 10.2%. The revenue increase
reflects organic growth and acquisitions in international markets, which now represent 42.7% of total revenues. As synergies from
recent acquisitions are fully realized over coming quarters via cross-selling opportunities and cost reductions, we anticipate
that our Adjusted EBITDA margin will gradually improve, excluding the potential impact of future acquisitions," said Eric Boyko,
President, CEO and co-founder of Stingray.
"The pipeline of acquisition opportunities remains significant and we expect to maintain the pace of our acquisition program
in the current fiscal year. In the past 12 months, we have completed acquisitions which have significantly diversified and
enhanced our portfolio of digital audio, video services and live concerts. Furthermore, acquisitions have also allowed us to
establish a solid footprint in Asia. By 2020, our goal is for international revenues to reach 70% of total revenues".
"The music industry remains in flux but we strongly believe that we have a sustainable and profitable business model. The
launch of our free mobile application combined with more than 2000 Vibe channels available in Canada, Latin America and the
Netherlands have attracted a growing and younger audience to Stingray Music. We are proud to report that the Stingray Music
Mobile App has reached 1 million downloads, doubling its user base in only one year," concluded Mr. Boyko.
First Quarter Results
The Corporation generated revenues of $24.5 million in the first quarter of 2017, an increase of 23.4% compared with revenues
of $19.9 million a year ago. The increase was primarily due to the acquisitions of iConcerts, Brava Group, Digital Media
Distribution ("DMD") and Nümédia combined with Commercial music growth in Canada.
Recurring revenues were up 24.1% to $21.4 million in the first quarter of 2017 over the same period last year and remained at
87.2% of total revenues for the quarter. International revenues again posted solid growth and represented 42.7% of total
revenues, up from 33.7% last year.
Music Broadcasting revenues increased 26.7% to $17.9 million, mainly due to the acquisitions of iConcerts, Brava Group and
DMD, and new contracts signed in Latin America and the Middle East. Commercial Music revenues rose 15.3% to $6.7 million, mainly
as a result of music and digital signage recurring revenues and the acquisition of Nümédia, which included additional
non-recurring revenues related to equipment sales.
Adjusted EBITDA for the first quarter of 2017 increased to $7.9 million or 32.1% of revenues, compared to $7.2 million or
35.9% of revenues a year earlier. The 10.2% increase in adjusted EBITDA was primarily due to the acquisitions realized in Fiscal
2016, which were accretive, offset by higher general and administrative expenses related to the Corporation's international
expansion. The decrease in EBITDA margin was mainly related to costs comprised in recent acquisitions from which future synergies
are expected.
For the first quarter, the Corporation reported a net income of $2.0 million, or $0.04 per share (diluted), compared to a net
loss of $1.8 million, or ($0.05) per share (diluted) for the same period last year. The increase was mainly due to one-time IPO
expenses and CRTC tangible benefits expenses incurred in Q1 2016, and higher Q1 2017 operating results, offset by a change in
fair value of investments and higher income taxes.
Adjusted net income increased 8.9% to $5.2 million, or $0.10 per share (diluted), compared to $4.8 million, or $0.12 per
share (diluted) a year ago. The increase was primarily due to recent acquisitions, partially offset by higher income tax
expenses.
Cash flow from operating activities amounted to $2.7 million in the first quarter of 2017, versus $4.1 million a year
earlier. The decrease was mainly due to higher account receivables and the timing of payments of account payables. Adjusted free
cash flow for the three-month period ending June 30, 2016, increased to $5.9 million, compared to $5.3 million for the same
period a year ago.
As of June 30, 2016, the Corporation had cash and cash equivalents of $3.2 million and a revolving credit facility of $100.0
million, of which approximately $59.5 million was unused, allowing it to pursue strategic acquisitions and achieve its growth
objectives.
Declaration of Dividend
On August 2, 2016, the Corporation increased the quarterly dividend by 14% to $0.04 per subordinate voting share, variable
subordinate voting share and multiple voting share. The dividend will be payable on or around September 15, 2016, to holders of
subordinate voting shares, variable subordinate voting shares and multiple voting shares on record as of August 31, 2016.
The Corporation's dividend policy is at the discretion of the Board of Directors and may vary depending upon, among other
things, our available cash flow, results of operations, financial condition, business growth opportunities and other factors that
the Board of Directors may deem relevant.
The dividends paid are designated as "eligible" dividends for the purposes of the Income Tax Act (Canada) and any
corresponding provisions of provincial and territorial tax legislation.
Additional Business Highlights
In May 2016, the Corporation launched its Stingray Music Mobile App in the Netherlands. Furthermore, in July 2016, the
Stingray Music Mobile App has reached 1 million downloads, doubling its user base in only one year. Every week, users spend an
average of 5 hours listening to their favourite tracks and artists on the mobile app; an engagement far above industry
average.
In May and June 2016, the Corporation announced the renewal of important long-term contracts, including National Cable
Television Cooperative and the expansion of its distribution deal with Comcast.
On June 15, 2016, the Corporation acquired all of the issued and outstanding shares of Festival 4K B.V. for a total
consideration of EUR 1.9 million (CA$2.7 million). Available to more than 7 million subscribers currently under contract,
Festival 4K B.V. offers the leading 4K Ultra HD channel with an international customer base. Its diverse programming includes
hundreds of hours of shows and events recorded live. Pay-TV providers carrying the Festival 4K channel include VOO in Belgium,
Free in France, and Vodafone in Spain.
On June 21, 2016, the Corporation announced the acquisition of four of Bell Media's popular music video channels: MuchLoud,
MuchRetro, MuchVibe and Juicebox for a total consideration of $4.0 million. Following the completion of the acquisition, the four
channels will be reintroduced under the Stingray brand.
On July 7, 2016, the Corporation strengthened its presence in the pivotal Asia-Pacific region with the opening of regional
headquarters in Singapore. This launch follows the recent acquisition of iConcerts, a television channel with broad distribution
throughout Europe and Asia, and Digital Music Distribution PTY in Australia.
Annual Shareholders' Meeting
The Corporation will hold its annual shareholders' meeting on Wednesday, August 3, 2016, at 11:00 AM (ET) at the Belvedere of
the Montreal Science Centre located at 2, de la Commune Street West, in Montreal, Quebec.
Conference Call
The Corporation will hold a conference call to discuss these results on Wednesday, August 3, 2016, at 9:00 AM (ET). Interested
parties can join the call by dialing 647-788-4922 (Toronto) or
1-877-223-4471 (toll free). If you are unable to call at this time,
you may access a tape recording of the conference call by dialing 416-621-4642 (Toronto) or 1-800-585-8367 (toll free) followed by access code: 44372426. This tape
recording will be available until August 31, 2016.
About Stingray
Stingray (TSX:RAY.A)(TSX:RAY.B) is a leading business-to-business multi-platform music and in-store media
solutions provider operating on a global scale, reaching an estimated 400 million Pay-TV subscribers (or households) in 152
countries. Geared towards individuals and businesses alike, Stingray's products include the following leading digital music and
video services: Stingray Music, Stingray Concerts, Stingray Brava, Stingray Djazz, Stingray Music Videos, Stingray Lite TV,
Stingray Ambiance, Stingray Karaoke, Festival 4K, and iConcerts. Stingray also offers various business solutions, including music
and digital display-based solutions, through its Stingray Business division. Stingray is headquartered in Montreal and currently
has close to 300 employees worldwide, including in the United States, the United Kingdom, the Netherlands, Switzerland, France,
Israel, Australia and South Korea. Stingray was recognized in 2013 and 2014 as a finalist in the Top 50 of Deloitte's Technology
Fast 50™ list, and figures amongst PROFIT magazine's fastest-growing Canadian companies. In 2016, Stingray was awarded best IR
for an IPO at the IR Magazine Awards - Canada. For more information, please visit www.stingray.com
Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian securities
legislation. Such forward-looking information includes information with respect to Stingray's goals, beliefs, plans,
expectations, anticipations, estimates and intentions. Forward-looking information is identified by the use of terms and phrases
such as "may", "would", "should", "could", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe", and
"continue", or the negative of these terms and similar terminology, including references to assumptions. Please note, however,
that not all forward-looking information contains these terms and phrases. Forward-looking information is based upon a number of
assumptions and is subject to a number of risks and uncertainties, many of which are beyond Stingray's control. These risks and
uncertainties could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking
information. These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray's prospectus
dated May 26, 2015, which is available on SEDAR at www.sedar.com.
Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and
there can be no guarantee that the results or developments that Stingray anticipates will be realized or, even if substantially
realized, that they will have the expected consequences or effects on Stingray's business, financial condition or results of
operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is
provided as of the date hereof, and Stingray does not undertake to update or amend such forward-looking information whether as a
result of new information, future events or otherwise, except as may be required by applicable law.
Non-IFRS Measures
The Corporation believes that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income, Adjusted Net income
per share, Adjusted free cash flow, Net debt including and excluding contingent considerations and Net debt to Adjusted EBITDA
are important measures in evaluating our performance. Each of these non-IFRS financial measures is not an earnings or cash flow
measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Our method of calculating such financial
measures may differ from the methods used by other issuers and, accordingly, our definition of these non-IFRS financial measures
may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS financial measures
should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to
cash flows from operating activities as measures of liquidity and cash flows.
Adjusted EBITDA and Adjusted Net income reconciliation to Net income
| (in thousands of Canadian dollars) |
Three-month period ended
June 30, 2016
Q1 2017 |
|
Three-month period ended
June 30, 2015
Q1 2016 |
|
Three-month period ended
March 31, 2016
Q4 2016 |
|
| Net income (loss) |
2,044 |
|
(1,777 |
) |
3,247 |
|
| Net finance expense |
648 |
|
866 |
|
836 |
|
| Change in fair value of investments |
91 |
|
(263 |
) |
1,113 |
|
| Income taxes |
412 |
|
(1,334 |
) |
(1,428 |
) |
| Depreciation of property and equipment and write-off |
574 |
|
455 |
|
594 |
|
| Amortization of intangibles |
3,187 |
|
3,223 |
|
2,624 |
|
| Stock-based compensation(1) |
290 |
|
221 |
|
390 |
|
| Restricted and deferred share unit |
326 |
|
175 |
|
319 |
|
| IPO expenses and CRTC tangible benefits |
- |
|
5,495 |
|
21 |
|
| Acquisition, restructuring and other various costs |
309 |
|
90 |
|
503 |
|
| Adjusted EBITDA |
7,881 |
|
7,151 |
|
8,219 |
|
| Net finance expense |
(648 |
) |
(866 |
) |
(836 |
) |
| Income taxes |
(412 |
) |
1,334 |
|
1,428 |
|
| Depreciation of property and equipment and write-off |
(574 |
) |
(455 |
) |
(594 |
) |
| Income taxes related to change in fair value of investments, share-based compensation, amortization of
intangible assets, IPO expenses and CRTC tangible benefits and acquisition, restructuring and other various costs |
(1,040 |
) |
(2,381 |
) |
(1,082 |
) |
| Adjusted Net income |
5,207 |
|
4,783 |
|
7,135 |
|
| Note: |
| (1) |
Stock-based compensation includes related employee benefits |
Adjusted free cash flow reconciliation to Cash flow from operating activities
| (in thousands of Canadian dollars) |
Three-month period ended
June 30, 2016
Q1 2017 |
|
Three-month period ended
June 30, 2015
Q1 2016 |
|
Three-month period ended
March 31, 2016
Q4 2016 |
|
| Cash flow from operating activities |
2,722 |
|
4,109 |
|
7,709 |
|
| Add / Less : |
|
|
|
|
|
|
| Capital expenditures |
(632 |
) |
(930 |
) |
(1,100 |
) |
| Net change in non-cash operating working capital items |
3,544 |
|
(3,479 |
) |
(718 |
) |
| Acquisition, restructuring and other various costs |
227 |
|
65 |
|
368 |
|
| IPO expenses and CRTC tangible benefits |
- |
|
5,495 |
|
21 |
|
| Adjusted free cash flow |
5,861 |
|
5,260 |
|
6,280 |
|
| |
|
|
|
|
|
|
Note to readers: Condensed interim consolidated financial statements and Management's Discussion & Analysis
of Operating Results and Financial Position are available on the Corporation's website at www.stingray.com and on SEDAR at www.sedar.com.