Mood Media Establishes 2013 Financial Guidance

Provides Select Preliminary Financial Results for First Quarter of 2013

TORONTO, April 9, 2013 /PRNewswire/ - Mood Media Corporation (ISIN: CA61534J1057) (TSX: MM) (LSE AIM: MM) ("Mood Media" or the "Company") today announced financial guidance for 2013 and provided an update on progress to date regarding its previously announced operating and productivity program.

"Mood Media remains a strong and competitive business and our team is laser-focused on executing our strategy to build best-in-class solutions that will allow us to achieve organic growth, reduce expenses and deliver shareholder value," said Lorne Abony, Chairman and CEO of Mood Media.  "Through recent strategic acquisitions, we have built an asset base with outstanding services capabilities and a broad geographic footprint.  We have also created tremendous opportunities to cross-sell our services that we believe will generate robust revenue growth and significant cost savings synergies.

"We are encouraged by our progress in integrating these acquisitions and continue to believe that we are well positioned to deliver new and innovative services that will create compelling customer connections and sustainable improvements to our operating and financial results. We are also pleased with our ability to sustain momentum in our audio business consistent with positive trends that emerged in 2012.  While we are experiencing a longer-than-expected timeline to consolidate our operations as competition law considerations delayed our integration planning, at the same time we are seeing a slight decrease in capital expenditures, and significantly lower restructuring and transaction expenses.  We expect to realize approximately $7 million in synergies in 2013 that were executed in 2012.  While we may realize additional synergies by the end of 2013, we are taking a prudent and conservative approach to their implementation and the impact on our financial forecast," Abony continued.

Full Year 2013 Financial Outlook

For the full year 2013 ending December 31, 2013, the Company expects to report:

  • Revenue in the range of $545 million to $560 million;
  • Adjusted EBITDA in the range of $120 to $125 million; and
  • Approximately $7 million in synergies stemming from integration activities that were completed in 2012.

The Company's anticipated financial and operational performance has largely been impacted by the extended timeline for integration of acquisitions effected in 2012 as competition law considerations delayed integration planning.  These delays led to:

  • Slower than anticipated realization of the strategic and financial benefits of acquisitions, including headcount reduction and enhanced efficiencies; and
  • Delay in combining the product offerings of newly acquired companies with the existing product offerings of the Company and its subsidiaries.
  • Additionally, the Company expects to face continued headwinds in equipment sales and margins, similar to those experienced in the fourth quarter of 2012.

Charts detailing the EBITDA reconciliation between 2012 results and 2013 guidance, as well as between 2012 covenant EBITDA results and the outlook for 2013 covenant EBITDA are included at the end of this release.

In the Company's view there are no concerns regarding covenants or concerns with respect to any accounting matters. In addition, Mood Media reiterates that no covenant compliance or accounting concerns were identified in the Company's recent 2012 full year audit performed by Ernst and Young.  The Company maintains more than adequate liquidity with a $25 million undrawn revolving credit facility and $46 million in unrestricted cash on hand and its operations, which generate positive cash flow and are expected to continue to do so.

Preliminary First Quarter 2013 Results

The Company also reported select preliminary financial results for the first quarter of 2013, which are subject to change pending the expected full release of first quarter results on May 9, 2013:

  • Revenue is expected to be in the range of $125 million to $135 million; and
  • Adjusted EBITDA is expected to be in the range of $25 million to $27 million, before one-time costs.

The Company noted that its revenue and adjusted EBITDA guidance for the first quarter reflect seasonality pertaining to customer installations, which typically produce lower quarterly performance than is produced during the remainder of the fiscal year.

Continuing to Make Progress on Operating and Productivity Program

The Company continues to execute the operating and productivity plan announced on March 28, 2013. The successful execution of the plan, which focuses on enhancing efficiencies, flexibility and innovation, is expected to result in $15 million to $20 million in synergies from the integration of the Company's recent acquisitions. This customer-facing program is expected to produce streamlined operating capabilities through:

  • Consolidating network and IT infrastructure, which is expected to lead to accelerated product development and lower costs;
  • Improving sales effectiveness and efficiencies;
  • Leveraging the Company's greater economies of scale in procurement;
  • Consolidating certain back-office functions;
  • Integrating real estate holdings; and
  • Improving overall operating efficiency and effectiveness.

On April 4, 2013 the Board of Directors and senior management announced the initiation of a process to identify and consider a range of operational, financial and strategic alternatives to enhance shareholder value.  These alternatives could include, among other things, enhancing the Company's existing strategic plan, a strategic combination with a third party or a potential sale of the Company.

The Company stated that it was not currently in discussions with any particular party and that no decision has been made on the strategic alternatives process.  There can be no assurance that the Board's exploration of alternatives will result in any transaction being pursued, entered into or consummated. Mood Media does not intend to discuss or disclose developments with respect to this process until the Board has approved a definitive course of action.

About Mood Media Corporation
Mood Media Corporation (TSX:MM/ LSE AIM:MM), is one of the world's largest designers of in-store consumer experiences, including audio, visual, interactive, scent, voice and advertising solutions. Mood Media's solutions reach over 150 million consumers each day through 560,000 subscriber locations in over 40 countries throughout North America, Europe, Asia and Australia.

Mood Media Corporation's client base includes more than 850 U.S. and international brands in diverse market sectors that include: retail, from fashion to financial services; hospitality, from hotels to health spas; and food retail, including restaurants, bars, quick-serve and fast casual dining. Our marketing platforms include 77% of the top 100 retailers in the United States and 100% of the top 50 quick-serve and fast-casual restaurant companies.

Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including without limitation, expected growth, results of operations, performance, business prospects and strategic opportunities, including the consummation of a strategic transaction or other arrangement with Mood Media Entertainment. While Mood Media considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.  Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: the impact of general market, industry, credit and economic conditions, currency fluctuations as well as the risk factors identified in Mood Media's management discussion and analysis dated March 28, 2013 and Mood Media's annual information form dated March 28, 2013, both of which are available on www.sedar.com.  Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. In particular, and without limiting the generality of the foregoing, there can be no assurance that the board of directors will determine to pursue any particular operational, financial or strategic alternative, or should they determine to pursue such an alternative, whether same will result in any particular transaction being entered into or consummated, or the terms or results thereof.  All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Mood Media.  Forward-looking statements are given only as at the date hereof and Mood Media disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

Mood Media presents EBITDA information as a supplemental figure because management believes it provides useful information regarding operating performance. EBITDA is not a recognized measure under International Financial Reporting Standards ("IFRS"), does not have standardized meaning, and is unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or (loss) determined in accordance with IFRS as an indicator of the financial performance of Mood Media or as a measure of Mood Media's liquidity and cash flows.

2012 and 2013 adjusted EBITDA reconciliation

($ in millions)  
   
   
2012 Actual EBITDA from continuing operations  $111.7 
Adjustments for acquisitions (1)  13.5 
2012 Pro forma Adjusted EBITDA  $125.2 
   
Royalty settlement  (4.6)
2012 Pro Forma Adjusted EBITDA excl. settlement  $120.6 
   
Synergies realized in 2013 (2)  7.3 
Organic growth 5.0 - 10.0
Equipment margin compression (3) (10.0) - (15.0)
2013 Outlook $120.0 - $125.0
(1) Reflects pro forma effect of acquisitions that closed during the year as if they had closed on Jan. 1, 2012. 
(2) Represents cost synergies implemented in December 2012 / January 2013 that will result in savings in 2013.
(3) Reflects 10% decline in margins for three quarters, based on trends observed in Q4 2012.

 

($ in millions)    
  2012 2013
     
Adjusted EBITDA from continuing operations  $111.7 $120.0 - $125.0
Acquisition adjustments  13.5  - 
Discontinued operations (1)  (18.0)  - 
Restructuring costs  (3.0)  - 
     
Covenant Adjusted EBITDA  $104.2 $120.0 - $125.0
     
(1) Related to the loss from discontinued operations of Mood Entertainment.

 

 

SOURCE Mood Media Corporation



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