SOURCE: RR Media

RR Media

May 18, 2016 07:00 ET

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

AIRPORT CITY BUSINESS PARK, ISRAEL--(Marketwired - May 18, 2016) - 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.
         
         
(In Thousands)   Q1 2016   Q1 2015
    Content
Mgmt. &
Distribution
Services
  MSS   Total   Content
Mgmt. &
Distribution
Services
  MSS   Total
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
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 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   26,069       20,691       97,462  
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 to non- controlling interest   (5 )     14       22  
Net income attributable to shareholders $ 1,240     $ 926     $ 7,808  
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
2016
    March 31
2015
    December 31
2015
 
    (unaudited)     (unaudited)     (audited)  
Reconciliation of GAAP Net Income to Non-GAAP Net Income:                  
GAAP Net income attributable to shareholders     1,240     $ 926     $ 7,808  
Adjustments to reconcile GAAP net income                        
to non-GAAP net income:                        
Non-cash equity-based compensation charge     121       175       686  
Amortization of acquired intangible assets     284       148       906  
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 attributable to shareholders   $ 1,414     $ 1,233     $ 7,711  
                         
           
    Three months ended   Year ended  
    March 31
2016
    March 31
2015
  December 31
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
2016
  March 31
2015
  December 31
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
2016
  March 31
2015
  December 31
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 investments   -   9,015   -
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 payments   1,929   1,671   1,962
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 loan and short term credit     3,009       -       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 respect of acquisition     290       3,550       422  
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 income (loss)     (992 )     (1,186 )     (1,078 )
                         
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
2016
    March 31
2015
    December 31
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  
                         

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
    RR Media Ltd