THIRD QUARTER- Net revenues increased
11% at actual rates and 5% at constant rates to US$ 119.4 million
-- Operating income increased 40% at actual rates and 35% at
constant rates to US$ 16.0 million -- OIBDA increased 30% at
actual rates and 24% at constant rates to US$ 25.1 million
-
NINE MONTHS- Net revenues increased
6% at actual and constant rates to US$ 378.1 million --
Operating income increased 20% at actual rates and 21% at constant
rates to US$ 72.2 million -- OIBDA increased 17% at actual
rates and 18% at constant rates to US$ 97.9 million -
Central European Media Enterprises Ltd. (“CME” or the “Company”)
(NASDAQ/Prague Stock Exchange - CETV) today announced financial
results for the three and nine months ended
September 30, 2017.
Following the previously announced sale of our Croatia and
Slovenia operations, these businesses are classified as held for
sale and presented as discontinued operations for all periods. The
discussion in this release relates to our continuing operations in
the four remaining operating segments.
Third quarter operational and financial highlights:
- TV advertising revenues increased 10%
at actual rates and 4% at constant rates.
- Carriage fees and subscription revenues
increased 20% at actual rates and 15% at constant rates.
- OIBDA increased 30% at actual rates and
24% at constant rates, resulting in OIBDA margin expansion to 21%
from 18%.
- The increase in OIBDA improved
operating income 40% at actual rates and 35% at constant
rates.
- Unlevered free cash flow for the nine
months ended September 30, 2017 increased 14%.
- Proceeds from the sale of our
operations in Croatia and Slovenia, which is expected to close by
the end of 2017 or early 2018, will be used to repay debt and this
is expected to decrease our current cost of borrowing by an
additional 150 basis points to 4.5%.
Michael Del Nin, Co-Chief Executive Officer, commented: "Our
strong momentum from the first half of 2017 continued through the
third quarter, positioning us very well as we head into the final
months of the year, and providing a very solid base as we look to
grow further in 2018. As a result of strong gains in OIBDA and
unlevered free cash flow, we are able to raise our guidance for the
full year, and with our net leverage ratio now below 6x, we will
see our average borrowing cost decline by 125 basis points to 6.0%,
its lowest level in eight years."
Christoph Mainusch, Co-Chief Executive Officer, added: "Our
operations posted very strong results through the summer,
culminating in one of the most successful launches to our fall
season and contributing to higher audience shares so far this year
in three out of four territories. We are investing in content
because audiences continue to demand high quality local
productions, but have mostly offset that with other savings to
improve profitability."
In this release we refer to several non-GAAP financial measures,
including OIBDA, OIBDA margin, free cash flow, unlevered free cash
flow and constant currency percentage movements. Please see
“Non-GAAP Financial Measures” below for additional information,
including definitions and reconciliations to US GAAP financial
measures.
Consolidated results for the three months ended
September 30, 2017 and September 30, 2016
were:
(US$ 000's, except per share data)
For the
Three MonthsEnded September 30, (unaudited)
2017 2016 % Actual
% Lfl (1) Net revenues $ 119,431 $
107,527 11.1% 4.8% Operating income 16,022 11,450 39.9% 34.8%
Operating margin 13.4% 10.6% 2.8 p.p. 3.0 p.p. OIBDA 25,145 19,324
30.1% 23.6% OIBDA margin 21.1% 18.0% 3.1 p.p. 3.2 p.p. Loss from
continuing operations (1,945) (11,769) 83.5% 84.5% Loss from
continuing operations per share - basic (0.03) (0.09) 66.7% 66.7%
Loss from continuing operations per share - diluted $ (0.03) $
(0.09) 66.7% 66.7%
Consolidated results for the nine months ended
September 30, 2017 and September 30, 2016
were:
(US$ 000's, except per share data) For the
Nine MonthsEnded September 30, (unaudited)
2017 2016 % Actual
% Lfl (1) Net revenues $ 378,058 $
356,147 6.2% 6.0% Operating income 72,199 60,071 20.2% 21.4%
Operating margin 19.1% 16.9% 2.2 p.p. 2.4 p.p. OIBDA 97,893 83,452
17.3% 17.8% OIBDA margin 25.9% 23.4% 2.5 p.p. 2.6 p.p. Income /
(loss) from continuing operations 17,338 (185,795) NM2 NM2 Income /
(loss) from continuing operations per share - basic 0.04 (1.31) NM2
NM2 Income / (loss) from continuing operations per share - diluted
$ 0.03 $ (1.31) NM2 NM2
(1)
% Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs. (2) Number is not meaningful.
Teleconference and Audio Webcast Details
CME will host a teleconference and audio webcast to discuss its
third quarter results on Tuesday, October 24, 2017 at 9 a.m.
New York time (2 p.m. London and 3 p.m. Prague time). The audio
webcast and teleconference will refer to presentation slides which
will be available on CME's website at www.cme.net prior to the
call.
To access the teleconference, U.S. and international callers may
dial +1-212-444-0412 ten minutes prior to the start time and
reference passcode 1335376. The conference call will also be audio
webcasted via www.cme.net. It can be heard on iPads, iPhones and a
range of devices supporting Android and Windows operating
systems.
A digital audio replay of the webcast will be available for two
weeks following the call at www.cme.net.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements. For all
forward-looking statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are inherently subject to risks and uncertainties, many
of which cannot be predicted with accuracy or are otherwise beyond
our control and some of which might not even be anticipated.
Forward-looking statements reflect our current views with respect
to future events and because our business is subject to such risks
and uncertainties, actual results, our strategic plan, our
financial position, results of operations and cash flows could
differ materially from those described in or contemplated by the
forward-looking statements.
Important factors that contribute to such risks include, but are
not limited to, those factors set forth under "Risk Factors” in our
Quarterly Report on Form 10-Q for the period ended
September 30, 2017 as well as the following: the expected
timing of the closing of the sale of our operations in Croatia and
Slovenia and the application of proceeds from it; changes in global
or regional economic conditions and Eurozone instability in our
markets; levels of television advertising spending and the rate of
development of the advertising markets in the countries in which we
operate; the extent to which our liquidity constraints and debt
service obligations restrict our business; our exposure to
additional tax liabilities as well as liabilities resulting from
regulatory or legal proceedings initiated against us; our ability
to refinance our existing indebtedness; our success in continuing
our initiatives to diversify and enhance our revenue streams; our
ability to make cost-effective investments in our television
businesses, including investments in programming; our ability to
develop and acquire necessary programming and attract audiences;
and changes in the political and regulatory environments where we
operate and in the application of relevant laws and
regulations.
The foregoing review of important factors should not be
construed as exhaustive. For a more detailed description of these
uncertainties and other factors, please see the "Risk Factors" and
“Forward-looking Statements” sections in CME's Quarterly Report on
Form 10-Q for the period ended September 30, 2017. We
undertake no obligation to publicly update or review any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
This press release should be read in conjunction with our
Quarterly Report on Form 10-Q for the period ended
September 30, 2017, which was filed with the Securities
and Exchange Commission on October 24, 2017.
We make available free of charge on our website at www.cme.net
our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to those reports as soon
as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange
Commission. Please note that we may announce material information
using SEC filings, press releases, public conference calls,
webcasts and posts to the Investors section of our website,
www.cme.net. In the future, we will continue to use these channels
to communicate important information about CME and our operations.
Information that we post on our website could be deemed material.
Therefore, we encourage investors, the media, our customers and
others interested in CME to review the information we post at
www.cme.net.
CME is a media and entertainment company continuing to operate
leading businesses in four Central and Eastern European markets
with an aggregate population of more than 40 million people. CME's
continuing operations broadcast 27 television channels in Bulgaria
(bTV, bTV Cinema, bTV Comedy, bTV Action, bTV Lady and Ring), the
Czech Republic (Nova, Nova 2, Nova Cinema, Nova Sport 1, Nova Sport
2, Nova International, Nova Action and Nova Gold), Romania (PRO TV,
PRO 2, PRO X, PRO GOLD, PRO CINEMA, PRO TV International, MTV
Romania, PRO TV Chisinau and PRO 2 MOLDOVA) and the Slovak Republic
(TV Markíza, Markíza International, Doma and Dajto). CME is traded
on the NASDAQ Global Select Market and the Prague Stock Exchange
under the ticker symbol “CETV”.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (US$
000's, except per share data) (unaudited)
For the Three Months Ended
September 30,
2017 2016 Net
revenues $ 119,431 $ 107,527
Operating expenses: Content costs 55,871 51,920 Other
operating costs 12,612 13,482 Depreciation of property, plant and
equipment 6,936 5,801 Amortization of broadcast licenses and other
intangibles 2,187 2,073
Cost of revenues
77,606 73,276 Selling, general and administrative
expenses 25,803 22,801
Operating income
16,022 11,450 Interest expense (18,352 ) (22,424 )
Loss on extinguishment of debt (101 ) — Non-operating income, net
3,643 350
Income / (loss) before tax
1,212 (10,624 ) Provision for income taxes
(3,157 ) (1,145 )
Loss from continuing operations
(1,945 ) (11,769 ) Loss from
discontinued operations, net of tax (5,988 ) (8,054 )
Net
loss (7,933 ) (19,823 ) Net loss
attributable to noncontrolling interests 188 196
Net loss attributable to CME Ltd. $ (7,745
) $ (19,627 ) PER SHARE
DATA: Net loss per share: Continuing operations — basic $ (0.03
) $ (0.09 ) Continuing operations — diluted (0.03 ) (0.09 )
Discontinued operations — basic (0.04 ) (0.05 ) Discontinued
operations — diluted (0.04 ) (0.05 ) Net loss attributable to CME
Ltd. - basic (0.07 ) (0.14 ) Net loss attributable to CME Ltd. -
diluted $ (0.07 ) $ (0.14 ) Weighted average common shares
used in computing per share amounts (000's): Basic 156,189 153,494
Diluted 156,189 153,494
CENTRAL EUROPEAN
MEDIA ENTERPRISES LTD. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (US$ 000's, except per share data)
(unaudited)
For the Nine Months Ended
September 30,
2017 2016 Net
revenues $ 378,058 $ 356,147
Operating expenses: Content costs 174,214 166,938 Other
operating costs 35,747 40,773 Depreciation of property, plant and
equipment 19,345 17,134 Amortization of broadcast licenses and
other intangibles 6,349 6,247
Cost of revenues
235,655 231,092 Selling, general and administrative
expenses 70,204 64,984
Operating income
72,199 60,071 Interest expense (54,773 ) (90,640 )
Loss on extinguishment of debt (101 ) (150,158 ) Non-operating
income, net 12,783 1,638
Income / (loss) before
tax 30,108 (179,089 ) Provision for income
taxes (12,770 ) (6,706 )
Income / (loss) from continuing
operations 17,338 (185,795 ) Loss from
discontinued operations, net of tax (8,747 ) (15,971 )
Net
income / (loss) 8,591 (201,766 ) Net loss
attributable to noncontrolling interests 534 387
Net income / (loss) attributable to CME Ltd. $
9,125 $ (201,379 ) PER
SHARE DATA: Net income / (loss) per share: Continuing
operations — basic $ 0.04 $ (1.31 ) Continuing operations — diluted
0.03 (1.31 ) Discontinued operations — basic (0.06 ) (0.11 )
Discontinued operations — diluted (0.06 ) (0.11 ) Net income /
(loss) attributable to CME Ltd. - basic (0.02 ) (1.42 ) Net income
/ (loss) attributable to CME Ltd. - diluted $ (0.02 ) $ (1.42 )
Weighted average common shares used in computing per share
amounts (000's): Basic 155,579 149,898 Diluted 233,761 149,898
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (US$
000's) (unaudited) September 30, 2017
December 31, 2016 ASSETS Cash and cash
equivalents $ 67,034 $ 40,606 Other current assets 221,113 238,574
Current assets held for sale 135,171 61,242
Total
current assets 423,318 340,422 Property, plant
and equipment, net 100,308 89,080 Goodwill and other intangible
assets, net 1,028,699 879,668 Other non-current assets 20,365
21,273 Non-current assets held for sale — 60,274
Total assets $ 1,572,690 $
1,390,717 LIABILITIES AND EQUITY
Accounts payable and accrued liabilities $ 157,322 $ 134,378
Current portion of long-term debt and other financing arrangements
2,425 1,228 Other current liabilities 23,535 8,467 Current
liabilities held for sale 32,246 27,492
Total
current liabilities 215,528 171,565 Long-term
debt and other financing arrangements 1,067,153 1,001,408 Other
non-current liabilities 87,230 67,963 Non-current liabilities held
for sale — 1,414
Total liabilities $
1,369,911 $ 1,242,350
Series B Convertible Redeemable Preferred Stock $ 262,115 $ 254,899
EQUITY Common Stock $ 11,590 $ 11,476 Additional
paid-in capital 1,905,449 1,910,244 Accumulated deficit (1,776,411
) (1,785,536 ) Accumulated other comprehensive loss (199,906 )
(243,988 )
Total CME Ltd. shareholders' deficit
(59,278 ) (107,804 ) Noncontrolling
interests (58 ) 1,272
Total deficit (59,336
) (106,532 ) Total liabilities and
equity $ 1,572,690 $
1,390,717
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (US$
000's) (unaudited) For the Nine
MonthsEnded September 30, 2017
2016 Net cash generated from continuing
operating activities $
90,638 $
56,972 Net cash used in continuing investing activities (16,250 )
(14,762 ) Net cash used in continuing financing activities (57,782
) (23,191 ) Net cash used in discontinued operations (62 ) (22,278
) Impact of exchange rate fluctuations on cash and cash equivalents
9,884 2,005
Net increase / (decrease) in cash and
cash equivalents $
26,428 $
(1,254 )
Supplemental disclosure of cash flow information: Cash paid
for interest (including mandatory cash-pay guarantee fees) $ 22,206
$ 38,317 Cash paid for guarantee fees that may be paid in kind
1,411 5,483 Cash paid for income taxes, net of refunds $ 12,380 $
234
Supplemental disclosure of non-cash financing
activities: Interest and related guarantee fees paid in kind $
14,733 $ 14,300 Accretion on Series B Convertible Redeemable
Preferred Stock $ 7,216 $ 11,314
Segment Data
We manage our business on a geographical basis, with four
reporting segments: Bulgaria, the Czech Republic, Romania and the
Slovak Republic. These segments reflect how CME Ltd.’s operating
performance is evaluated by our chief operating decision makers,
who we have identified as our co-Chief Executive Officers, how
operations are managed by segment managers, and the structure of
our internal financial reporting.
We evaluate our consolidated results and the performance of our
segments based on net revenues and OIBDA. Stock-based compensation
and certain other items are not allocated to our segments for
purposes of evaluating their performance and therefore are not
included in their respective OIBDA. Intersegment revenues and
profits have been eliminated in consolidation.
Below are tables showing our net revenues and OIBDA by segment
for the three and nine months ended September 30, 2017
and September 30, 2016:
(US$ 000's)
For the Three MonthsEnded September 30,
(unaudited) 2017 2016
% Actual % Lfl (1) Net
revenues Bulgaria $ 16,039 $ 13,789 16.3% 10.4% Czech Republic
42,681 39,031 9.4% (0.1)% Romania 40,469 36,970 9.5% 6.4% Slovak
Republic 20,384 17,864 14.1% 8.1% Intersegment revenues (142) (127)
NM (2) NM (2)
Total net revenues $ 119,431
$ 107,527 11.1% 4.8%
(US$ 000's) For the
Nine MonthsEnded September 30, (unaudited)
2017 2016 % Actual
% Lfl (1) Net revenues Bulgaria
$ 52,118 $ 50,103 4.0% 4.3% Czech Republic 135,526 128,558 5.4%
3.5% Romania 127,983 118,269 8.2% 9.7% Slovak Republic 63,348
59,466 6.5% 6.6% Intersegment revenues (917) (249) NM (2) NM (2)
Total net revenues $ 378,058 $
356,147 6.2% 6.0%
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs. (2) Number is not meaningful.
(US$ 000's)
For the Three MonthsEnded September 30,
(unaudited) 2017 2016
% Act % Lfl (1)
OIBDA Bulgaria $ 2,537 $ 1,943 30.6% 24.6% Czech Republic
12,618 13,180 (4.3)% (12.8)% Romania 15,496 12,606 22.9% 19.6%
Slovak Republic 2,944 (383) NM (2) NM (2) Elimination 10 6 NM (2)
NM (2)
Total Operating Segments 33,605 27,352
22.9% 15.9% Central (8,460) (8,028) (5.4)% 2.2%
Total OIBDA $ 25,145 $ 19,324
30.1% 23.6%
(US$ 000's) For the
Nine MonthsEnded September 30, (unaudited)
2017 2016 % Act
% Lfl (1) OIBDA Bulgaria $ 6,973
$ 8,966 (22.2)% (22.0)% Czech Republic 49,130 46,353 6.0% 3.7%
Romania 52,450 45,030 16.5% 18.3% Slovak Republic 11,339 5,168
119.4% 125.7% Elimination 27 9 NM (2) NM (2)
Total Operating
Segments 119,919 105,526 13.6%
13.6% Central (22,026) (22,074) 0.2% 2.0%
Total OIBDA
$ 97,893 $ 83,452 17.3%
17.8% (1) % Lfl
(like-for-like) variance reflects the impact of applying the
current period average exchange rates to the prior period revenues
and costs. (2) Number is not meaningful.
Non-GAAP Financial Measures
In this release we refer to several non-GAAP financial measures,
including OIBDA, OIBDA margin, free cash flow and unlevered free
cash flow. We believe that each of these metrics is useful to
investors for the reasons outlined below. Non-GAAP financial
measures may not be comparable to similar measures reported by
other companies. Non-GAAP financial measures should be
evaluated in conjunction with, and are not a substitute for, US
GAAP financial measures.
We evaluate our consolidated results and the performance of our
segments based on net revenues and OIBDA. We believe OIBDA is
useful to investors because it provides a meaningful representation
of our performance, as it excludes certain items that do not impact
either our cash flows or the operating results of our
operations. OIBDA and unlevered free cash flow are also used
as components in determining management bonuses.
OIBDA includes amortization and impairment of program rights and
is calculated as operating income / loss before depreciation,
amortization of intangible assets and impairments of assets and
certain unusual or infrequent items that are not considered by our
co-Chief Executive Officers when evaluating our performance.
Stock-based compensation and certain other items are not allocated
to our segments for purposes of evaluating their performance and
therefore are not included in their respective OIBDA. Our key
performance measure of the efficiency of our consolidated
operations and our segments is OIBDA margin. We define OIBDA margin
as the ratio of OIBDA to net revenues.
Following a repricing of our Guarantee Fees completed in March
2017, the proportion of interest and related Guarantee Fees on our
outstanding indebtedness that must be paid in cash has increased.
In addition to this obligation to pay more interest and related
Guarantee Fees in cash, we expect to use cash generated by the
business to pay certain Guarantee Fees that are payable in kind.
These cash payments are all reflected in free cash flow;
accordingly we believe unlevered free cash flow, defined as free
cash flow before cash payments for interest and Guarantee Fees,
best illustrates the cash generated by our operations when
comparing periods. We define free cash flow as net cash generated
from continuing operating activities less purchases of property,
plant and equipment, net of disposals of property, plant and
equipment and excluding the cash impact of certain unusual or
infrequent items that are not included in costs charged in arriving
at OIBDA because they are not considered by our co-Chief Executive
Officers when evaluating performance.
For additional information regarding our business segments, see
Item 1, Note 19, "Segment Data" in our Form 10-Q.
While our reporting currency is the dollar, our consolidated
revenues and costs are divided across a range of European
currencies and CME Ltd.’s function currency is the Euro. Given the
significant movement of the currencies in the markets in which we
operate against the dollar, we believe that it is useful to provide
percentage movements based on actual percentage movements (“%
Act”), which includes the effect of foreign exchange, as well as
like-for-like percentage movements (“% Lfl”). The like-for-like
percentage movement references reflect the impact of applying the
current period average exchange rates to the prior period revenues
and costs. Since the difference between like-for-like and actual
percentage movements is solely the impact of movements in foreign
exchange rates, our discussion in this release includes constant
currency percentage movements in order to highlight those factors
influencing operational performance. The incremental impact of
foreign exchange rates is presented in the tables accompanying such
analysis.
(US$ 000's)
For the Three MonthsEnded September 30, For
the Nine MonthsEnded September 30, (unaudited)
2017 2016 2017
2016 Operating income $ 16,022 $
11,450 $ 72,199 $ 60,071
Depreciation of property, plant and equipment 6,936 5,801 19,345
17,134 Amortization of intangible assets 2,187 2,073 6,349
6,247
Total OIBDA $ 25,145 $
19,324 $ 97,893 $
83,452
(US$ 000's) For the Nine Months Ended September
30, (unaudited) 2017 2016 Net
cash generated from continuing operating activities $
90,638 $ 56,972 Capital expenditures, net of
proceeds from disposals (16,250) (14,762)
Free cash flow
74,388 42,210 Cash paid for interest (including
mandatory cash-pay guarantee fees) 22,206 38,317 Cash paid for
guarantee fees that may be paid in kind 1,411 5,483
Unlevered
free cash flow $ 98,005 $ 86,010
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171023006585/en/
Central European Media EnterprisesMark Kobal, +420 242 465
576Head of Investor Relationsmark.kobal@cme.netwww.cme.net
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