SOURCE: RR Media

RR Media

November 24, 2015 07:00 ET

RR Media Reports Record Revenues for the Third Quarter 2015

Record Revenues of $37.7 Million; Adjusted EBITDA of $5.1 Million for the Quarter

AIRPORT CITY BUSINESS PARK, ISRAEL--(Marketwired - Nov 24, 2015) - RR Media (NASDAQ: RRM), a leading provider of global digital media services to the broadcast and media industries, today announced financial results for the third quarter ended September 30, 2015.

Avi Cohen, CEO of RR Media, commented, "Since refocusing and a year ago rebranding our company, RR Media has been recognized by the market as a leading provider of advanced, innovative and scalable media services. As a result, we have delivered consistent growth and reported record revenues of $37.7 million for the third quarter of 2015. The next stage in our evolution is represented by the introduction of solaRR and solaRR Active, our open services platform we've built to virtualize our services. solaRR, which received broadbased customer interest at IBC2015, is an on premises and cloud-based hybrid platform that connects to all our infrastructure and technology and offers comprehensive, flexible, state-of-the-art, digital media services."

Operational Highlights for the Third Quarter 2015

  • Closed a significant delivery contract with the Ethiopian Broadcast Corporation for the next 3 years. RR Media will facilitate and provide direct access to one of the most reliable satellites on its smart global network covering the African continent
  • Renewed and upgraded the contract with Fashion One Television for content delivery to North America, South America, Europe, Middle East and Asia-Pacific of multiple channels. Services were upgraded to include linear streaming which gets delivered to major online video platforms such as Daily Motion and YouTube
  • Renewed NFL worldwide delivery contract of preseason, season, playoffs and the Superbowl for three more years
  • Showcased solaRR, RR Media's new open media service platform, at IBC2015
  • Expanded RR Media's VOD platform population services adding seven new multi-country & multi-regional VOD platform delivery options to the over 100 platforms currently served. These include: Google Play, BT Vision, Talk Talk's Blink Box TV, Amazon Prime Video, British Airways' on demand entertainment system and others
  • Secured a major new contract with a global shipping company for deployment and provision of Inmarsat's high-throughput connectivity services
    • Contract to generate approximately $25 million in revenue over the next 5 years

Financial Highlights for the Third Quarter 2015

  • Record revenues of $37.7 million, a 13.9% increase year-over-year
  • Gross margin of 22%, in line with Q3 2014
  • Gross margin of Content Management & Distribution reached 22.9%
    • Satlink and ESS expected to be accretive to margins in 2016, following completion of integration plans
  • GAAP net income of $0.18 and $0.17 per basic and diluted share respectively
  • Non-GAAP net income of $0.11 per basic and diluted share
  • Strong positive cash flows from operations of $5.0 million
  • Total cash and cash equivalents of $14.3 million as of September 30, 2015
  • Board declared a cash dividend of $0.07 per share, an aggregate amount of approximately $1.2 million, representing an annual dividend yield of 4.0%.
(In Thousands)   Q3 2015   Q3 2014
    Content
Mgmt. &
Distribution
Services
  MSS   Total   Content
Mgmt. &
Distribution
Services
  MSS   Total
Revenues   $ 34,435   $ 3,244   $ 37,679   $ 30,193   $ 2,877   $ 33,070
Gross profit   $ 7,874   $ 418   $ 8,292   $ 6,845   $ 412   $ 7,257
Gross margin   22.9%   12.9%   22.0%   22.7%   14.3%   21.9%

"We are constantly increasing the scale of our business and expanding our service capabilities organically and through acquisitions, including the acquisitions of ESS and Satlink earlier this year. The integration of ESS and Satlink is on track to be completed by the end of 2015, at which point we expect to see improved margins. We also achieved notable success in our non-core MSS segment, which won a major new contract to deploy high-throughput connectivity services to one of the world's largest shipping companies, through which we expect to generate approximately $25 million in revenue over the next five years," continued Mr. Cohen.

"As our company has evolved, our addressable market has expanded dramatically. We are currently working with a number of upper-tier customers, managing higher-volume orders and the broad distribution of their media content. One of our higher profile successes is our ongoing worldwide relationship with the NFL, which was recently extended for an additional three years. The success of these customer engagements opens up broader opportunities within their businesses and with other upper-tier companies that recognize the benefits our platform offers in terms of access to technology, increased distribution and cost savings," concluded Mr. Cohen.

Third Quarter 2015 Financial Results

Revenues for the third quarter of 2015 were $37.7 million, an increase of 13.9% compared with $33.1 million in the third quarter of 2014. Revenues for the third quarter of 2015 benefited from the recently acquired businesses, ESS and Satlink Communications, and from a major new contract with a global shipping company.

The Company reported $34.4 million of Content Management and Distribution Services revenue, excluding non-core revenue from MSS, an increase of 14% from $30.2 million in the third quarter last year. The Company reported $3.2 million of Mobile Satellite Services ("MSS") revenue, an increase of 12.8% from $2.9 million in the third quarter last year. This increase was mainly attributable to a new contract with a major shipping company estimated to contribute approximately $25 million over the next 5 years. The contract is for the deployment and provision of Inmarsat's high-throughput connectivity services across the customer's fleet of shipping vessels.

Gross profit for the third quarter of 2015 was $8.3 million compared to $7.3 million for the third quarter of 2014. Gross margin for the third quarter of 2015 remained relatively flat at 22% compared to the third quarter of 2014. Gross margin for Content Management and Distribution Services increased slightly to 22.9% compared to 22.7% for the same period last year, despite the contributions of Satlink and ESS, which historically have lower gross margins.

Net income for the third quarter of 2015 was $3.0 million, or $0.17 per fully diluted share, compared to $1.1 million, or $0.07 per fully diluted share, for the same period of 2014.

Adjusted EBITDA for the third quarter of 2015 was $5.1 million compared to $4.2 million in the third quarter of 2014. Adjusted EBITDA for the third quarter of 2015 and 2014 exclude non-cash equity-based compensation charge, amortization of acquired intangible assets, cost of sales related changes in fair value of currency conversion derivatives, acquisition related expenses and amortization of acquisition related prepaid compensation expenses, contingent consideration in respect of acquisition; and include the impact of fluctuations in foreign currency exchange rates.

Backlog to be delivered in the next 12 months as of September 30, 2015 increased to $104 million compared with $93 million in June 30, 2015. Total back log increased to $262 million mainly due to the major contract signed in the MSS segment.

Cash, cash equivalents and marketable securities as of September 30, 2015 was $14.3 million, compared with $22 million as of December 31, 2014. This reduction in cash reflects the acquisitions of Satlink Communications and ESS earlier in the year.

Full Year 2015 Guidance

    2015
Previous
Guidance
(in millions)
  2015
Updated
Guidance
(in millions)
  2016
(in millions)
Total Revenues   $140 - $148   $140 - $143   $161 - $171
Adjusted EBITDA   $17.6 - $20.4   $17.6 - $20.4   25-30% Growth

The Company is revising its full year 2015 guidance and now expects total revenues to be in the range of $140 million to $143 million and Adjusted EBITDA of $17.6 million to $20.4 million for 2015. The Company reiterated its 2016 guidance of $161 million to $171 million for 2016, and a year-over-year increase of 25% to 30% in Adjusted EBITDA for 2016. It is important to note that the results for the 2015 will benefit from the inclusion of the full seven month financial results for Satlink Communications and eight months of ESS, which were acquired earlier in the year.

Management continues to expect some level of variation in mix from quarter to quarter leading to some fluctuations in revenues and gross margin between quarters.

Quarterly Dividend

In accordance with the Company's dividend policy, the Board of Directors declared a cash dividend in the amount of $0.07 per ordinary share and in the aggregate amount of approximately $1.2 million, representing an annual dividend yield of 4.0%. The dividend is payable on December 23, 2015 to all of the Company's shareholders of record at the end of the trading day on NASDAQ on December 7, 2015.

Conference Call Information

Management will host a conference call to discuss the financial results at 9 a.m. ET and 4 p.m. IL today.

Details are as follows:

  • Dial-in number from within the United States: 1-888-510-1786
  • Dial-in number from Israel: 1 80 924 5906
  • Dial-in number from the UK: 0 800 404 7655
  • Dial-in number (other international): 1-719-325-2308
  • Conference ID: 678864

An archive of the call will be available from November 24, 2015 to December 1, 2015 by calling 1-877-870-5176 (United States) or 1-858-384-5517 (international). Please use pin number 678864 for the replay.

A live webcast will also be accessible at http://www.rrmedia.com/pages/financial-reports or http://public.viavid.com/player/index.php?id=117258.

About RR Media

RR Media (NASDAQ: RRM) works in partnership with the world's leading media providers 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 hundreds of broadcasters, content owners, sports leagues and right holders. The company manages and delivers more than 24,000 hours of broadcast content, more than 4,000 hours of online video and VOD content daily and more than 350 hours of premium sports and live events every day. 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 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. 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 including our Annual Report on Form 20-F for the year ended December 31, 2014 and our Current Reports on Form 6-K.

 
RR Media Ltd 
Interim Condensed Consolidated Statements of Income 
In thousands, except share data 
   
    Three months ended     Nine months ended  
    September
30
    September
30
    September
30
    September
30
 
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                         
Revenues                        
Content Mgmt. & distribution services     34,435       30,193       92,103       89,837  
Mobile satellite services     3,244       2,877       9,213       8,587  
Total revenues   $ 37,679     $ 33,070     $ 101,316     $ 98,424  
                                 
Cost of revenues                                
Content Mgmt. & distribution services     26,561       23,348       70,566       68,800  
Mobile satellite services     2,826       2,465       8,081       7,437  
Total cost of revenues   $ 29,387     $ 25,813     $ 78,647     $ 76,237  
                                 
Gross profit   $ 8,292     $ 7,257     $ 22,669     $ 22,187  
                                 
Operating expenses                                
                                 
Sales and marketing     3,875       3,384       11,269       9,658  
General and administrative     2,445       2,325       7,064       7,462  
Other expenses (income)     (2,050 )     -       (1,150 )     -  
                                 
Total operating expenses   $ 4,270     $ 5,709     $ 17,183     $ 17,120  
                                 
Operating income   $ 4,022     $ 1,548     $ 5,486     $ 5,067  
                                 
Financial income                                
(expenses), net     (641 )     9       (673 )     (361 )
                                 
Income before taxes on                                
Income   $ 3,381     $ 1,557     $ 4,813     $ 4,706  
                                 
Income taxes     355       413       654       1,208  
                                 
Net income   $ 3,026     $ 1,144     $ 4,159     $ 3,498  
                                 
Net loss attributable to non- controlling interest     (20 )     (24 )     (38 )     (141 )
Net income attributable to shareholders   $ 3,046     $ 1,168     $ 4,197     $ 3,639  
                                 
Earnings per ordinary share attributable to shareholders                                
Basic earnings per share   $ 0.18     $ 0.07     $ 0.24     $ 0.21  
                                 
Diluted earnings per share   $ 0.17     $ 0.07     $ 0.24     $ 0.21  
Weighted average number of shares used to compute                                
                                 
Basic earnings per share     17,395,670       17,381,517       17,393,134       17,358,213  
                                 
Diluted earnings per share     17,697,688       17,603,603       17,675,932       17,627,655  
                                 
 
RR Media Ltd 
Reconciliation of GAAP to Non-GAAP Financial Information 
In thousands 
 
    Three months ended
September 30
    Nine months ended
September 30
 
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Reconciliation of GAAP Net Income to Non-GAAP Net Income:                        
GAAP Net income attributable to shareholders   $ 3,046     $ 1,168     $ 4,197     $ 3,639  
Adjustments to reconcile GAAP net income                                
to non-GAAP net income:                                
Non-cash equity-based compensation charge     181       178       538       521  
Amortization of acquired intangible assets     334       152       684       516  
Changes in fair value of currency conversion derivatives     -       (265 )     -       (215 )
Acquisition related expenses     -       -       900       -  
Amortization of acquisition related prepaid                                
compensation expenses     42       42       126       126  
Contingent consideration in respect of acquisition     (2,050 )     -       (2,050 )     -  
Income tax effect of non-GAAP adjustments     438       13       68       (135 )
                                 
Non-GAAP net income attributable to shareholders   $ 1,991     $ 1,288     $ 4,463     $ 4,452  
                                 
                                 
                                 
    Three months ended
September 30
    Nine months ended
September 30
 
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Reconciliation of GAAP Operating Income                                
to Non-GAAP operating income:                                
Operating income   $ 4,022     $ 1,548     $ 5,486     $ 5,067  
Adjustments to reconcile GAAP operating                                
income to Non-GAAP operating income:                                
Non-cash equity-based compensation charge     181       178       538       521  
Amortization of acquired intangible assets     334       152       684       516  
Cost of sales related changes in fair value of                                
currency conversion derivatives     -       (35 )     -       (234 )
Acquisition related expenses     -       -       900       -  
Contingent consideration in respect of acquisition     (2,050 )     -       (2,050 )        
Amortization of acquisition related prepaid                                
compensation expenses     42       42       126       126  
                                 
Non-GAAP Operating income   $ 2,529     $ 1,885     $ 5,684     $ 5,996  
                                 
 
RR Media Ltd 
Reconciliation of GAAP to Non-GAAP Financial Information 
In thousands 
 
    Three months ended
September 30
    Nine months ended
September 30
 
    2015   2014     2015   2014  
    (unaudited)   (unaudited)     (unaudited)   (unaudited)  
Reconciliation of GAAP Operating Income to EBITDA:                    
                     
Operating income   $ 4,022   $ 1,548     $ 5,486   $ 5,067  
Adjustments to reconcile GAAP Operating                            
Income to EBITDA:                            
Non-cash equity-based compensation charge     181     178       538     521  
Depreciation and amortization     2,869     2,492       7,408     7,381  
Cost of sales related changes in fair value of                            
currency conversion derivatives     -     (35 )     -     (234 )
Acquisition related expenses     -     -       900     -  
Amortization of acquisition related prepaid compensation expenses     42     42       126     126  
                             
EBITDA   $ 7,114   $ 4,225     $ 14,458   $ 12,861  
                             
    Three months ended
September 30
    Nine months ended
September 30
 
    2015   2014     2015   2014  
    (unaudited)   (unaudited)     (unaudited)   (unaudited)  
Reconciliation of Non-GAAP Operating Income to adjusted EBITDA:                            
                             
Non-GAAP Operating income   $ 2,529   $ 1,885     $ 5,684   $ 5,996  
Adjustments to reconcile Non-GAAP operating                            
income to Adjusted EBITDA:                            
Depreciation and amortization     2,535     2,340       6,724     6,865  
                             
  Adjusted EBITDA   $ 5,064   $ 4,225     $ 12,408   $ 12,861  
                             
 
RR Media Ltd 
Interim Condensed Consolidated Statements of Income (Non-GAAP results) 
In thousands, except share data 
 
    Three months ended     Nine months ended  
    September
30
    September
30
    September
30
    September
30
 
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                         
Revenues                        
Content Mgmt. & distribution services     34,435       30,193       92,103       89,837  
Mobile satellite services     3,244       2,877       9,213       8,587  
Total revenues   $ 37,679     $ 33,070     $ 101,316     $ 98,424  
                                 
Cost of revenues                                
Content Mgmt. & distribution services     26,543       23,365       70,517       68,991  
Mobile satellite services     2,826       2,466       8,081       7,437  
Cost of revenues   $ 29,369     $ 25,831     $ 78,598     $ 76,428  
                                 
Gross profit   $ 8,310     $ 7,239     $ 22,718     $ 21,996  
                                 
Operating expenses                                
                                 
Sales and marketing     3,473       3,177       10,368       8,962  
General and administrative     2,308       2,177       6,666       7,038  
                                 
Total operating expenses   $ 5,781     $ 5,354     $ 17,034     $ 16,000  
                                 
Operating income   $ 2,529     $ 1,885     $ 5,684     $ 5,996  
                                 
Financial income                                
(expenses), net     (641 )     (219 )     (673 )     (342 )
                                 
Income before taxes on                                
income   $ 1,888     $ 1,666     $ 5,011     $ 5,654  
                                 
Income taxes     (83 )     402       586       1,343  
                                 
Net income   $ 1,971     $ 1,264     $ 4,425     $ 4,311  
                                 
Net loss attributable to non- controlling interest     (20 )     (24 )     (38 )     (141 )
Net income attributable to shareholders   $ 1,991     $ 1,288     $ 4,463     $ 4,452  
Earnings per ordinary share attributable to shareholders                                
Basic earnings per share   $ 0.11     $ 0.07     $ 0.26     $ 0.26  
                                 
Diluted earnings per share   $ 0.11     $ 0.07     $ 0.25     $ 0.25  
                                 
Weighted average number of shares used to compute                                
                                 
Basic earnings per share     17,395,670       17,381,517       17,393,134       17,358,213  
                                 
Diluted earnings per share     17,697,688       17,603,603       17,675,932       17,627,655  
                                 
 
RR Media Ltd
Interim Condensed Consolidated Balance Sheets
In thousands, except share data
 
    September
30
  September
30
  December
31
    2015   2014   2014
    (unaudited)   (unaudited)   (audited)
Current assets            
Cash and cash equivalents   $ 14,272   $ 14,333   $ 13,001
Marketable securities and short term investments     -     9,190     8,970
Accounts receivable (net of provision for doubtful accounts of $3,794, $6,938 and $5,323 as of September 30, 2015, 2014 and December 31, 2014, respectively)     33,429     23,611     23,457
Other receivable     3,533     1,624     2,343
Deferred taxes     2,335     2,580     2,038
Prepaid expenses     3,558     2,913     2,839
                   
Total current assets     57,127     54,251     52,648
                   
Long-term prepaid expenses     2,506     2,938     3,156
Long-term land lease prepaid expenses     7,323     7,416     7,380
Assets held for employee severance payments     1,967     2,070     1,892
Fixed assets, net     55,118     45,531     45,669
Goodwill     30,772     11,526     11,286
Intangible assets, net     8,963     5,891     5,528
                   
Total long term assets     106,649     75,327     74,911
                   
Total assets   $ 163,776   $ 129,623   $ 127,559
                   
 
RR Media Ltd 
Interim Condensed Consolidated Balance Sheets (cont'd) 
 
    September
30
    September
30
    December
31
 
    2015     2014     2014  
    (unaudited)     (unaudited)     (audited)  
Liabilities and shareholders' equity                  
                   
Current liabilities                  
Account payable:                  
  Trade   $ 31,472     $ 18,371     $ 18,414  
  Other     7,964       5,209       5,482  
Current maturities of long term loan and short term credit     3,480       -       -  
Deferred income     8,228       4,848       4,867  
                         
Total current liabilities     51,144       28,428       28,763  
                         
Long-term liabilities                        
Deferred income     7,813       9,075       7,714  
Long term loans     11,250       -       -  
Liabilities in respect of employee severance payments and others     3,445       2,807       2,993  
Contingent consideration in respect of acquisition     1,959       4,030       3,550  
Deferred taxes     4,884       4,288       3,702  
                         
Total long-term liabilities     29,351       20,200       17,959  
                         
Total liabilities     80,495       48,628       46,722  
                         
Shareholders' equity                        
Share capital                        
Ordinary share NIS 0.01 par value each (27,000,000 authorized as of September 30, 2015, 2014 and December 31, 2014. 17,399,939 shares issued and fully paid as of September 30, 2015, 17,396,735 shares issued and fully paid as of September 30, 2014, 17,392,072 shares issued and fully paid as of December 31, 2014)     41       41       40  
Additional paid in capital     55,880       54,399       54,572  
Retained earnings     27,945       27,107       27,400  
Treasury stock     (146 )     -       (146 )
Accumulated other comprehensive income (loss)     (306 )     (411 )     (934 )
                         
Total shareholders' equity     83,414       81,136       80,932  
                         
Non - controlling interest     (133 )     (141 )     (95 )
                         
Total equity     83,281       80,995       80,837  
                         
Total liabilities and equity   $ 163,776     $ 129,623     $ 127,559  
                         
 
RR Media Ltd 
Interim Condensed Consolidated Statements of Cash Flows 
In thousands 
 
    Three months ended September 30     Nine months ended September 30  
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                         
Net income   $ 3,026     $ 1,144     $ 4,159     $ 3,498  
                                 
Adjustments required to reconcile net income to net cash provided by operating activities     1,424       3,550       7,564       8,922  
                                 
Changes in assets and liabilities     593       (1,136 )     (1,380 )     (4,635 )
                                 
                                 
Net cash provided by operating activities     5,043       3,558       10,343       7,785  
                                 
Cash flows from investing activities                                
Purchase of fixed assets and intangible assets     (1,809 )     (1,969 )     (7,607 )     (6,206 )
Acquisitions of subsidiaries, net of cash acquired     -       -       (20,726 )     -  
Other investing activities     -       548       9,100       972  
Net cash used in investing activities     (1,809 )     (1,421 )     (19,233 )     (5,234 )
                                 
Cash flows from financing activities                                
Dividend paid     (1,217 )     (347 )     (3,652 )     (2,255 )
Proceeds for long term loan     -       -       15,000       -  
Loan payment     (750 )     -       (750 )     -  
Bank net credit     (124 )     -       (124 )     -  
Net cash used in financing activities     (2,091 )     (347 )     10,474       (2,255 )
                                 
                                 
Translation adjustment on cash and cash equivalents     (95 )     (155 )     (313 )     (128 )
                                 
Increase (decrease) in cash and cash                                
Equivalents     1,048       1,635       1,271       168  
                                 
Balance of cash and cash equivalents at beginning of period     13,224       12,698       13,001       14,165  
                                 
                                 
Balance of cash and cash equivalents at end of period   $ 14,272     $ 14,333     $ 14,272     $ 14,333  
                                 

Contact Information

  • 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