RR Media Reports Revenues of $35.6 Million for the First Quarter 2016
1Q 2016 Revenues Increased 17% Year-Over-Year; GAAP EPS for 1Q 2016 of $0.07 per Diluted Share, Compared to $0.05 Per Diluted Share for 1Q 2015; Pending Merger With SES Platform Services Expected to Be Completed in Mid-2016
/EINPresswire.com/ -- AIRPORT CITY BUSINESS PARK, ISRAEL -- (Marketwired) -- 05/18/16 -- RR Media (NASDAQ: RRM), a leading provider of global digital media services to the broadcast and media industries, today announced financial results for the first quarter ended March 31, 2016.
On February 26, 2016, RR Media announced that it has agreed to be acquired by SES (EURONEXT PARIS: SESG) (LUXEM: SESG) and will merge its activities with SES Platform Services ("SES PS") to form a new world-leading provider of media solutions.
SES will acquire a 100% ownership of RR Media, paying $13.291 per share, or a 52% premium to the closing price of the Company's shares on February 25, 2016. This corresponds to an Enterprise Value of $242 million. The acquisition was overwhelmingly approved on April 12, 2016 at a special meeting of RR Media shareholders, and was previously approved by SES S.A. and RR Media's Boards of Directors. The acquisition is still subject to, among others, regulatory approvals, which are expected to be completed in the second or third quarter of 2016.
Once and assuming the transaction is completed, RR Media and SES PS will join forces to create a new, stand-alone world-leading media services provider. The new organisation will offer full continuity and enhanced service to SES PS and RR Media's existing customers.
First Quarter 2016 Highlights
- Agreed to be acquired by SES (EURONEXT PARIS: SESG) (LUXEM: SESG) and merge its activities with SES Platform Services ("SES PS")
- Renewed and upgraded contract with Fashion One television network, the premier international fashion, entertainment and lifestyle broadcaster
- Selected for Eutelsat's African satellite broadband initiative
- Appointed Mr. Ayal Shiran to Chairman of the Board of Directors
- Expanded European operations with appointment of David Treadway as the joint Managing Director for Europe
- As per the agreement with SES regarding its pending acquisition of RR Media:
- RR Media did not pay a dividend for the quarter ended March 31, 2016, and
- RR Media did not acquire any of its ordinary shares during the first quarter of 2016 through the previously-announced share repurchase program.
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(In
Thousands) Q1 2016 Q1 2015
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Content Content
Mgmt. & Mgmt. &
Distribution MSS Total Distribution MSS Total
Services Services
----------------------------------------------------------------------------
Revenues $32,627 $2,999 $35,626 $27,567 $2,963 $30,530
----------------------------------------------------------------------------
Gross profit $6,738 $359 $7,097 $6,876 $315 $7,191
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Gross margin 20.7% 12.0% 20.0% 24.9% 10.6% 23.6%
----------------------------------------------------------------------------
First Quarter Financial Results
Revenues for the first quarter of 2016 were $35.6 million, an increase of 16.7% compared with $30.5 million in the first quarter of 2015. Revenues for the first quarter of 2016 benefited from the ESS and Satlink Communications acquisitions.
The Company reported $32.6 million of Content Management and Distribution Services revenue, excluding non-core revenue from MSS, an increase of 18.1% from $27.6 million in the first quarter last year. The Company reported $3.0 million of Mobile Satellite Services ("MSS") revenue, which was relatively flat compared with the prior year period.
Gross profit for the first quarter of 2016 was $7.1 million compared to $7.2 million for the first quarter of 2015. Gross margin for the fourth quarter of 2015 was 20%, compared with 23.6% in the first quarter of 2015. Gross margin for Content Management and Distribution Services decreased to 20.7%, compared with 24.9% in the same period last year, as a result of the contributions of Satlink and ESS, which historically have lower gross margins.
Net income attributable to shareholders for the first quarter of 2016 was $1.2 million, or $0.07 per fully diluted share, compared to $0.9 million, or $0.05 per fully diluted share, for the same period of 2015, an increase of 33.3%.
Adjusted EBITDA for the first quarter of 2016 was $4.2 million compared to $3.6 million in the first quarter of 2015. Adjusted EBITDA for the first quarter of 2016 and 2015 excludes non-cash equity-based compensation charge, amortization of acquired intangible assets, acquisition related expenses and amortization of acquisition related prepaid compensation expenses, and include the impact of fluctuations in foreign currency exchange rates.
Cash, cash equivalents and marketable securities as of March 31, 2016 was $15.2 million, compared with $18.8 million as of December 31, 2015. This reduction in cash was mainly due to payment of dividend, repayment of bank loans, investment in fix and intangible assets and reduction in revenues in the quarter.
Backlog to be delivered in the next 12 months increased to $100 million, up from $76 million in the first quarter of 2015 and flat from $101 Million at the end of the fourth quarter of 2015. Total backlog is at $231 million.
Conference Call
In light of the pending merger with SES PS, RR Media will not host a conference call to discuss its first quarter 2016 results.
About RR Media
RR Media (NASDAQ: RRM) works in partnership with the world's leading media players to transform content into valuable media assets. RR Media's complete ecosystem of digital media services maximize the potential of media and entertainment content, covering four main areas: smart global content distribution network with an optimized combination of satellite, fiber and the Internet; content management and channel origination; sports, news & live events; and online video services. RR Media provides scalable, converged digital media services to more than 1,000 broadcasters, content owners, sports leagues and right holders. Every day, the company manages and delivers over 24,000 hours of broadcast content, over 4,000 hours of online video and VOD content and over 350 hours of premium sports and live events. The company delivers content to 95% of the world's population reaching viewers of multiplatform operators, VOD platforms, online video and direct-to-home services. Visit the company's website www.rrmedia.com.
Safe Harbor Statement
This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements about the expected completion of the proposed merger with SES and the timing thereof, the satisfaction or waiver of any conditions to the proposed merger, anticipated benefits, growth opportunities and other events relating to the proposed merger, and RR Media's plans, objectives and expectations for future operations, including its projected results of operations. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry as of the date of this press release. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) RR Media may not be able to satisfy all of the conditions to the closing of the proposed merger; (2) the proposed merger may involve unexpected costs, liabilities or delays; (3) RR Media's business may suffer as a result of uncertainty surrounding the proposed merger and diversion of management attention on transaction-related matters; (4) the outcome of any legal proceedings related to the proposed merger; (5) RR Media may be adversely affected by other economic, business, and/or competitive factors; (6) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (7) difficulties in recognizing benefits of the proposed merger; (8) the proposed merger may disrupt current plans and operations and raise difficulties for employee retention; (9) impact of the merger on relationships with customers, distributors and suppliers; (10) other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all; and (11) the potential requirement for RR Media to pay a termination fee in connection with its failure to consummate the merger. We undertake no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements, including the risks indicated in our filings with the Securities and Exchange Commission (SEC). For more details, please refer to our SEC filings and the amendments thereto, including our Annual Report on Form 20-F for the year ended December 31, 2015 and our Reports of Foreign Private Issuer on Form 6-K.
Interim Condensed Consolidated Statements of Income
---------------------------------------------------------------------------
In thousands, except share data
Three months ended Year ended
---------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Revenues
Content Mgmt. & distribution 32,627 27,567 128,093
services
Mobile satellite services 2,999 2,963 12,252
------------- ------------- -------------
Total revenues $ 35,626 $ 30,530 $ 140,345
Cost of revenues
Content Mgmt. & distribution 26,069 20,691 97,462
services
Mobile satellite services 2,460 2,648 10,719
------------- ------------- -------------
Total cost of revenues $ 28,529 $ 23,339 $ 108,181
------------- ------------- -------------
Gross profit 7,097 $ 7,191 $ 32,164
------------- ------------- -------------
Operating expenses
Sales and marketing 3,433 3,629 15,032
General and administrative 2,247 2,252 9,575
Other income (186) - (1,749)
------------- ------------- -------------
Total operating expenses $ 5,494 $ 5,881 $ 22,858
------------- ------------- -------------
Operating income 1,603 $ 1,310 $ 9,306
Financial expenses, net and
other (63) (109) (1,137)
------------- ------------- -------------
Income before taxes on
Income $ 1,540 $ 1,201 $ 8,169
Income taxes 295 289 383
------------- ------------- -------------
Net income 1,245 $ 912 7,786
============= ============= =============
Net loss (Profit) attributable (5) 14 22
to non- controlling interest
Net income attributable to 1,240 926 7,808
shareholders $ $ $
============= ============= =============
Earnings per ordinary share
attributable to shareholders
Basic earnings per share $ 0.07 $ 0.05 $ 0.45
============= ============= =============
Diluted earnings per share $ 0.07 $ 0.05 $ 0.44
============= ============= =============
Weighted average number of
shares used to compute
Basic earnings per share 17,454,166 17,392,072 17,401,264
============= ============= =============
Diluted earnings per share 18,152,823 17,657,516 17,711,095
============= ============= =============
Reconciliation of GAAP to Non-GAAP Financial Information
---------------------------------------------------------------------------
In thousands
Three months ended Year ended
---------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Reconciliation of GAAP Net
Income to Non-GAAP Net Income:
GAAP Net income attributable to 1,240 926 7,808
shareholders $ $
Adjustments to reconcile GAAP
net income
to non-GAAP net income:
Non-cash equity-based 121 175 686
compensation charge
Amortization of acquired 284 148 906
intangible assets
Acquisition related expenses - - 1,801
Amortization of acquisition
related prepaid
compensation expenses - 42 146
Capital Loss - - 35
Contingent consideration in
respect of acquisition (186) - (3,550)
Income tax effect of non-GAAP
adjustments (45) (58) (121)
------------- ------------- -------------
Non-GAAP net income 1,414 1,233 7,711
attributable to shareholders $ $ $
Three months ended Year ended
---------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Reconciliation of GAAP Operating
Income
to Non-GAAP operating income:
Operating income $ 1,603 $ 1,310 $ 9,306
Adjustments to reconcile GAAP
operating
income to Non-GAAP operating
income:
Non-cash equity-based
compensation charge 121 175 686
Amortization of acquired
intangible assets 284 148 906
Acquisition related expenses - - 1,801
Contingent consideration in
respect of acquisition (186) - (3,550)
Amortization of acquisition
related prepaid
compensation expenses - 42 146
------------- ------------- -------------
Non-GAAP Operating income $ 1,822 $ 1,675 $ 9,295
Reconciliation of GAAP to Non-GAAP Financial Information
----------------------------------------------------------------------------
In thousands
Three months ended Year ended
--------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Reconciliation of GAAP Operating
Income to EBITDA:
Operating income $ 1,603 $ 1,310 $ 9,306
Adjustments to reconcile GAAP
Operating
Income to EBITDA:
Non-cash equity-based compensation
charge 121 175 686
Depreciation and amortization 2,703 2,109 10,143
Cost of sales related changes in
fair value of
currency conversion derivatives - - -
Acquisition related expenses - - 1,801
Amortization of acquisition
related prepaid compensation
expenses - 42 146
------------- ------------- -------------
EBITDA $ 4,427 $ 3,636 $ 22,082
============= ============= =============
Three months ended Year ended
--------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (unaudited)
------------- ------------- -------------
Reconciliation of Non-GAAP
Operating Income to adjusted
EBITDA:
Non-GAAP Operating income $ 1,822 $ 1,675 $ 9,295
Adjustments to reconcile Non-GAAP
operating
income to Adjusted EBITDA:
Depreciation and amortization 2,419 1,961 9,237
------------- ------------- -------------
Adjusted EBITDA $ 4,241 $ 3,636 $ 18,532
------------- ------------- -------------
Interim Condensed Consolidated Statements of Income (Non-GAAP results)
----------------------------------------------------------------------------
In thousands, except share data
Three months ended Year ended
---------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Revenues
Content Mgmt. & distribution
services 32,627 27,567 128,093
Mobile satellite services 2,999 2,963 12,252
------------- ------------- -------------
Total revenues $ 35,626 $ 30,530 $ 140,345
Cost of revenues
Content Mgmt. & distribution
services 26,055 20,677 97,400
Mobile satellite services 2,460 2,648 10,719
------------- ------------- -------------
Cost of revenues $ 28,515 $ 23,324 $ 108,119
------------- ------------- -------------
Gross profit $ 7,111 $ 7,206 $ 32,226
------------- ------------- -------------
Operating expenses
Sales and marketing 3,126 3,405 13,861
General and administrative 2,163 2,126 9,070
------------- ------------- -------------
Total operating expenses $ 5,289 $ 5,531 $ 22,931
------------- ------------- -------------
Operating income $ 1,822 $ 1,675 $ 9,295
Financial expenses, net 63 109 1,102
------------- ------------- -------------
Income before taxes on
income $ 1,759 $ 1,566 $ 8,193
Income taxes 340 347 504
------------- ------------- -------------
Net income $ 1,419 $ 1,219 $ 7,689
------------- ------------- -------------
Net loss (Profit) attributable to
non- controlling interest (5) 14 22
Net income attributable to
shareholders 1,414 1,233 7,711
------------- ------------- -------------
Earnings per ordinary share
attributable to shareholders
Basic earnings per share 0.08 0.07 $ 0.44
============= ============= =============
Diluted earnings per share 0.08 0.07 $ 0.43
============= ============= =============
Weighted average number of shares
used to compute
Basic earnings per share 17,454,166 17,392,072 17,401,264
============= ============= =============
Diluted earnings per share 18,152,823 17,657,516 17,711,095
============= ============= =============
Interim Condensed Consolidated Balance Sheets
----------------------------------------------------------------------------
In thousands, except share data
March 31 March 31 December 31
2016 2015 2015
------------ ------------ ------------
(unaudited) (unaudited) (audited)
------------ ------------ ------------
Current assets
Cash and cash equivalents 15,176 10,517 18,762
Marketable securities and short term - 9,015 -
investments
Accounts receivable (net of provision
for doubtful accounts of
$4,583,$5,173 and $4,361 as of March
31, 2016, 2015 and December 31,
2015, respectively) 29,994 24,689 29,795
Other receivable 4,295 2,365 3,999
Deferred taxes 1,861 2,006 1,888
Prepaid expenses 4,193 2,730 3,831
------------ ------------ ------------
Total current assets 55,519 51,322 58,275
------------ ------------ ------------
Long-term prepaid expenses 2,545 2,489 2,535
Long-term land lease prepaid expenses 7,288 7,358 7,299
Assets held for employee severance 1,929 1,671 1,962
payments
Fixed assets, net 53,341 46,442 54,122
Goodwill 30,897 10,953 30,044
Intangible assets, net 9,491 5,143 9,616
------------ ------------ ------------
Total long term assets 105,491 74,056 105,578
------------ ------------ ------------
Total assets 161,010 125,378 163,853
------------ ------------ ------------
Interim Condensed Consolidated Balance Sheets (cont'd)
---------------------------------------------------------------------------
March 31 March 31 December 31
2016 2015 2015
------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------- ------------- -------------
Liabilities and shareholders'
equity
Current liabilities
Account payable:
Trade $ 29,896 $ 15,938 $ 30,584
Other 6,670 5,066 6,819
Current maturities of long term - 3,009
loan and short term credit 3,009
Deferred income 10,856 6,463 11,483
------------- ------------- -------------
Total current liabilities 50,431 27,467 51,895
------------- ------------- -------------
Long-term liabilities
Deferred income 7,637 7,846 8,151
Long term loans 9,750 - 10,500
Liabilities in respect of
employee severance payments
and others 3,235 2,291 3,419
Contingent consideration in 422
respect of acquisition 290 3,550
Deferred taxes 4,374 3,769 4,398
------------- ------------- -------------
Total long-term liabilities 25,286 17,456 26,890
------------- ------------- -------------
Total liabilities 75,717 44,923 78,785
------------- ------------- -------------
Shareholders' equity
Share capital
Ordinary share NIS 0.01 par
value each (27,000,000
authorized as of March 31,
2016, December 31, 2015 and
March 31, 2015. 17,594,188
shares issued and fully paid
as of and March 31, 2016,
17,401,131 issued and fully
paid as of December 31, 2015
and17,392,072 shares issued
and fully paid as of March 31,
2015) 41 40 41
Additional paid in capital 56,151 54,747 56,030
Retained earnings 30,351 27,109 30,338
Treasury stock (146) (146) (146)
Accumulated other comprehensive (992) (1,186) (1,078)
income (loss)
------------- ------------- -------------
Total shareholders' equity 85,405 80,564 85,185
------------- ------------- -------------
Non - controlling interest (112) (109) (117)
Total equity 85,293 80,455 85,068
Total liabilities and equity $ 161,010 $ 125,378 $ 163,853
============= ============= =============
Interim Condensed Consolidated Statements of Cash Flows
---------------------------------------------------------------------------
In thousands
Three months ended Year ended
-------------------------- -------------
March 31 March 31 December 31
2016 2015 2015
----------- ------------- -------------
(unaudited) (unaudited) (audited)
----------- ------------- -------------
Net income $ 1,245 $ 912 $ 7,786
Adjustments required to reconcile
net income to net cash provided
by operating activities 2,602 3,404 9,456
Changes in assets and liabilities (3,507) (2,289) 2,449
----------- ------------- -------------
Net cash provided by operating
activities 340 2,027 19,691
----------- ------------- -------------
Cash flows from investing
activities
Purchase of fixed assets and
intangible assets (2,215) (2,909) (9,831)
Acquisitions of subsidiaries, net
of cash acquired - - (20,726)
Other investing activities - 62 9,100
----------- ------------- -------------
Net cash used in investing
activities (2,215) (2,847) (21,457)
----------- ------------- -------------
Cash flows from financing
activities
Dividend paid (1,227) (1,217) (4,870)
Proceeds for long term loan - 15,000
Loan payment (750) - (1,500)
Bank net credit - (595)
----------- ------------- -------------
Net cash provided by (used
in)financing activities (1,977) (1,217) 8,035
----------- ------------- -------------
Translation adjustment on cash
and cash equivalents 266 (447) (508)
----------- ------------- -------------
Increase (decrease) in cash and
cash
Equivalents (3,586) (2,484) 5,761
Balance of cash and cash
equivalents at beginning of
period 18,762 13,001 13,001
----------- ------------- -------------
Balance of cash and cash
equivalents at end of period $ 15,176 $ 10,517 $ 18,762
----------- ------------- -------------
Company Contact:
Shmulik Koren
CFO
Tel: +972 3 928 0777
Email: Email Contact
Investor Contact:
KCSA Strategic Communications
Garth Russell / Elizabeth Barker
Tel: 212-896-1250 / 212-896-1203
Email: Email Contact
RR Media Ltd
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