Successfully Implemented Wave 2 and 3 of Efficiency Gains of More Than $8M annualized, Achieving Targets as Established
Expects to Achieve Annualized Cost Savings of $4 to $5 Million from Incremental Synergy Activities in 2015 While Supporting Growth Initiatives
Establishes 2015 EBITDA and Free Cash Flow Expectations
TORONTO, March 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 fourth quarter and full year of 2014, provided an update on the Company’s progress executing against its strategic and operational plans and established 2015 EBITDA and free cash flow guidance.
Recent Highlights
- Mood achieved Q4 revenues of $127.1 million and EBITDA of $28.9 million.
- Strong EBITDA performance in Q4 with growth of 10% sequentially and 21% relative to the prior year; Mood’s best performance in the past eight quarters.
- All four Mood business units –North America, International, Technomedia and BIS –posted EBITDA gains in Q4 relative to the prior quarter, and three of four relative to last year.
- The Company successfully implemented Waves 2 and 3 of its global transformation, integration and consolidation activities, with expected benefits of nearly $9 million in annualized savings; Wave 4 annualized savings expected to reach at least $4 to $5 million in 2015.
- Mood forecasts positive free cash flow generation in 2015 and for EBITDA to rise moderately relative to 2014.
- Mood is on track to finalize a resolution for the refinancing of its convertible debentures in advance of their maturity, in October 2015.
“The enhancements to profitability from our comprehensive operational and efficiency program clearly showed through in our financial results in the fourth quarter and second half of the year as we expected and outlined earlier in 2014,” said Steve Richards, President and CEO of Mood Media. “We concluded our Wave 2 and 3 initiatives and are embarking upon Wave 4 with an expectation of a further $4 to $5 million in annualized savings to be produced in 2015. Beyond the numbers, the operational and efficiency program is fundamentally re-shaping the foundation of our operations and providing streamlined systems to enable growth. We are pleased with the revenue development initiatives we have implemented, including the launch of new solutions, more active cross-selling activities, local sales channel development and progress with new partners for distribution and solutions. ”
“The accumulation of our combined efforts to date is expected to enable positive free cash generation in 2015 through continued EBITDA growth, reduced transaction/restructuring disbursements, stable capital expenditures and cash taxes,” Richards continued.” We expect our positive free cash flow will reflect a reduction in our net debt balances in 2015 and will represent a significant positive milestone for Mood, which is derived from the efforts and achievements of our Team. Free Cash Flow (increase in net debt) for 2014 was negative $11.3m while we expect 2015 to be positive.”
“EBITDA is expected to grow moderately in 2015 from the $102.6 million we generated in 2014, even after including the negative effects of foreign exchange and asset disposals on reported EBITDA,” said Richards. “These effects represent $4 million of headwinds in 2015 via $3 million owing to lower Euro exchange rate relative to the U.S. dollar and an additional $1 million resulting from the sale of our DMX Canada accounts in mid-2014. Excluding the above-mentioned items, underlying EBITDA is expected to grow by mid-single digits. We expect our 2015 EBITDA results will show a similar quarterly seasonal pattern as 2014 with Q4 being the strongest quarter and the second half performance being stronger than the first half.”
“Our 2015 cash flow generation is expected to benefit from the significant efforts delivered in 2014 in terms of implementing our operational and efficiency program, retooling our management team and eliminating legacy items and their associated disbursements,” Richards stated. “Accordingly, we expect transaction and restructuring expenses will fall to the range of $5-$10 million in 2015, versus the $28 million recorded in 2014. Current efforts should cause cash disbursements associated with current and past accruals to decline from $18 million in 2014 to approximately $12 million in 2015.”
Fourth Quarter Financial Results
TThe Company reported Q4 revenues of $127.1 million and EBITDA of $28.9 million, both of which rose sequentially compared with Q3. Net loss per share from continuing operations was ($0.12) compared with a net loss per share of ($0.07) in the prior-year period and net loss per share of ($0.11) in Q3. The Company’s fourth quarter revenue and EBITDA performance was impacted by the sale of its Latin American and Canadian accounts as well as foreign exchange translation. Before adjusting for these disposals, the Company’s revenues were down 3.9% and EBITDA grew by 20.8% relative to the prior year. Adjusting for these items, the Company’s revenues would have increased by 1% and EBITDA would have improved by 27% on an underlying basis relative to the prior year. EBITDA performance was also aided by a $5.7 million reduction in operating expenses relative to the prior year, which was attributable primarily to the positive impact of its integration and synergy programs in its North American, International and head office operations.
Other expenses totaled $11.6 million in the quarter compared with $5.5 million in the prior year. Other expenses in the quarter was comprised primarily of transaction expenses and related to the amended Technomedia share purchase agreement and recognition of the earnout. Restructuring and integration expense related primarily to severance and integration expenses in Mood International.
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