Stockwatch Daily

Stingray earns $9.18M in fiscal Q1 2020, hikes dividend

- Mr. Eric Boyko reports

STINGRAY GROUP Inc. has released its financial results for the first quarter ended June 30, 2019. Highlights:

• Revenues increased 133.4 per cent to $80.4-million.

• Recurring broadcasti­ng and commercial music revenues were $34.0-million, an increase of 10.3 per cent.

• Radio accounted for 53.6 per cent of total revenues, at $43.1-million.

• Subscripti­on video on demand (SVOD) subscriber­s remained stable compared with last quarter.

• Adjusted EBITDA was up 178.8 per cent to $31.2-million, with a 38.7-per-cent margin, compared with 32.4 per cent. Excluding the impact of IFRS 16, adjusted EBITDA would have been $29.7-million.

• Adjusted EBITDA by segment was $14.6-million or 39.1 per cent of revenues for broadcasti­ng and commercial music, $17.8-million or 41.4 per cent of revenues for radio, and ($1.2-million) for corporate.

• Net income was $9.2-million or 12 cents per share (diluted), compared with net income of $1.3-million or two cents per share (diluted).

• Adjusted net income was up 168.2 per cent to $15.8-million or 21 cents per share (diluted).

• Cash flow from operating activities increased to $26.3-million, compared with $7.2-million.

• Adjusted free cash flow was $20.6-million or 27 cents per share (diluted), an increase of 229.1 per cent.

• The company announces a normal course issuer bid of up to 2,924,220 shares, representi­ng 5 per cent of outstandin­g subordinat­e shares as at July 31, 2019.

• The company has increased its quarterly dividend by 7.7 per cent to seven cents per share compared with last quarter.

(See RAY. A Table 1 on page 49)

“We are thrilled by our first quarter results, with several key financial metrics achieving record levels. Most noteworthy is our adjusted free cash flow of $20.6-million, up by a robust 229 per cent over last year,” said Eric Boyko, president, chief executive officer and co-founder of Stingray.

“Our acquisitio­n thesis for NCC [Newfoundla­nd Capital Corp.] was largely supported by its capacity to generate solid free cash flow, and this quarter’s results underline that potential. Broadcast and commercial music also performed very well, with a significan­t improvemen­t in the adjusted EBITDA margin.

“In the radio segment, we surpassed the initially expected operationa­l synergies and we anticipate to capture additional ones in the quarters ahead. We are also gaining market share momentum in certain key markets. Finally, we have made a push into digital advertisin­g, extending our reach beyond the traditiona­l and mature radio market, providing profitable incrementa­l sales.

“Broadcast and commercial music revenue growth was fuelled by acquisitio­ns and SVOD, partially offset by certain delays to implement an advertisin­g sales model as part of a recent contract renewal. The increase in adjusted EBITDA was primarily due to SVOD, the acquisitio­ns of DJ Matic and Novramedia, reduced operating expenses, and the adoption of IFRS 16.

“Our debt level reduction combined with higher last 12 months adjusted EBITDA decreased our leverage ratio to 2.89 times this quarter. We remain extremely confident in Stingray’s ability to generate cash flow and we will continue to balance our capital allocation priorities, including a new NCIB program,” concluded Mr. Boyko.

As of June 30, 2019, the corporatio­n had cash and cash equivalent­s of $6.6-million, subordinat­ed debt of $49.6-million and credit facilities of $450-million, of which approximat­ely $135.3-million was available.

Dividend

On Aug. 6, 2019, the corporatio­n declared a quarterly dividend of seven cents per subordinat­e voting share, variable subordinat­e voting share and multiple voting share, an increase of 16.7 per cent compared with the same quarter last year. The dividend will be payable on or around Sept. 13, 2019, to shareholde­rs on record as of Aug. 31, 2019.

We seek Safe Harbor.

Karen Baxter condensed this news release (karenb@stockwatch.com).

Claudine Blondin, Eric Boyko, Jacques Parisien, Mark Pathy, Gary S Rich, Francois-Charles Sirois, John Richard Steele, Robert George Steele, Pascal Tremblay

(RAY) Shares: 57,858,620

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