Ascent Capital Group, Inc. (“Ascent” or the “Company”)
(Nasdaq:ASCMA) has reported results for the three months and full
year ended December 31, 2017. Ascent is a holding company that owns
MONI, one of the nation’s largest home security alarm monitoring
companies.
Headquartered in the Dallas Fort-Worth area,
MONI provides security alarm monitoring services to approximately
one million residential and commercial customers as of December 31,
2017. MONI’s long-term monitoring contracts provide high margin
recurring revenue that results in predictable and stable cash
flow.
Highlights:
- Ascent’s net revenue for the three and twelve months ended
December 31, 2017 totaled $133.5 million and $553.5 million,
respectively
- Ascent’s net loss for the three and twelve months ended
December 31, 2017 totaled $16.0 million and $107.6 million,
respectively. MONI’s net loss for the three and twelve months ended
December 31, 2017 totaled $14.6 million and $111.3 million,
respectively
- Ascent’s Adjusted EBITDA for the three and twelve months ended
December 31, 2017 totaled $72.9 million and $306.3 million,
respectively. MONI’s Adjusted EBITDA for the three and twelve
months ended December 31, 2017 totaled $73.8 million and $313.6
million, respectively
- On February 26, 2018 MONI announced an exclusive, long-term,
trademark licensing agreement with The Brink’s Company (NYSE:BCO),
which will result in a complete rebranding of MONI and LiveWatch as
BRINKS Home Security. The rebrand is expected to be completed in
the second quarter of 2018
- MONI launched its professional monitoring services
for the Nest Secure alarm system through its direct to
consumer channel on December 5, 2017, and through the Nest
Secure app on February 20, 2018
Ascent Chairman and Chief Executive Officer, Bill Fitzgerald
stated, “The MONI team continued to work hard toward its objective
of creating a broader, more diversified distribution platform in
2017, and building a solid foundation for a stronger, more
competitive organization in an evolving smart home security market.
I also believe that the recently announced rebranding to BRINKS
Home Security is a critical step in our continuing transition to
reach customers more effectively and I am confident that the work
being done today will create a more reliable path to improved
performance and long-term value to our shareholders.”
Jeffery Gardner, President and Chief Executive Officer of MONI
said, “2017 was a transformational year for the MONI business. In
addition to successfully launching and diversifying our
direct-to-consumer sales channel, we announced a meaningful new
partnership with Nest, drove tangible reductions in operating
expenses, and made solid progress stabilizing dealer
economics. Capping this off, we recently partnered with
Brinks to license the rights to the BRINKS Home Security brand
name, an iconic, 150 year old brand with national recognition and
broad consumer awareness. In a crowded smart home security market,
it is increasingly important to have a heavy-weight brand that
consumers nationwide can identify with and trust. Going to market
with the #2 nationally recognized name in home security will
provide us with a more dynamic growth profile and strengthens
MONI’s position as a leader in the smart-home security market.”
Results for the Three and Twelve Months
Ended December 31, 2017
For the three months ended December 31, 2017,
Ascent reported net revenue of $133.5 million, a decrease of 5.1%.
For the twelve months ended December 31, 2017, net revenue totaled
$553.5 million, a decrease of 3.0%. The reduction in revenue for
the three and twelve months ended December 31, 2017 is due to the
lower average number of subscribers in 2017 as a result of the
softness in the dealer channel and customer attrition. This
decrease was partially offset by an increase in average recurring
monthly revenue (“RMR”) per subscriber to $44.04 due to certain
price increases enacted during the past twelve months and, for the
twelve months ending, an increase in average RMR per new subscriber
acquired.
Ascent’s total cost of services for the three months ended
December 31, 2017 increased 1.1% to $29.4 million. For the twelve
months ended December 31, 2017 Ascent’s total costs of services
increased 3.4% to $119.2 million. The increase for the three and
twelve months ended December 31, 2017 is attributable to increased
field service costs due to a higher volume of retention jobs being
completed and an increase in expensed subscriber acquisition costs
(or "SAC") primarily as a result of the initiation of MONI’s direct
installation sales channel. Subscriber acquisition costs were
$3.4 million and $12.2 million for the three and twelve months
ended December 31, 2017, respectively as compared to $2.5 million
and $8.9 million for the three and twelve months ended December 31,
2016, respectively. Subscriber acquisition costs recognized in cost
of services include certain equipment costs and MONI labor
expenditures associated with the creation of new subscribers at
both MONI and LiveWatch.
Ascent’s selling, general & administrative ("SG&A")
costs for the three months ended December 31, 2017, increased 8.1%
to $31.1 million. SG&A costs for the twelve months ended
December 31, 2017, increased 33.4% to $167.9 million. The increase
in SG&A for the twelve months ended December 31, 2017 is
primarily attributable to a $28.0 million legal settlement
recognized in the second quarter of 2017 in relation to putative
class action litigation of alleged violation of telemarketing laws.
Contributing to the increase in SG&A costs in 2017 was a $7.2
million gain on the revaluation of a dealer liability related to
the Security Networks Acquisition that was recorded in 2016 with
only a similar gain of $1.4 million recorded in 2017. Other
increases are attributed to consulting fees incurred on strategic
company initiatives as well as the severance event and
transitioning executive leadership at MONI's Dallas, Texas
headquarters.
Subscriber acquisition costs in SG&A increased to $7.2
million and $28.2 million for the three and twelve months ended
December 31, 2017 as compared to $6.4 million and $20.4 million for
the three and twelve months ended December 31, 2016, primarily as a
result of increased direct-to-consumer sales activities at
MONI.
Ascent reported a net loss from continuing
operations for the three and twelve months ended December 31, 2017
of $16.0 million and $107.7 million, respectively, compared to net
loss from continuing operations of $18.8 million and $91.2 million
in the prior year periods.
MONI reported a net loss for the three and
twelve months ended December 31, 2017 of $14.6 million and $111.3
million, respectively, compared to a net loss of $16.6 million and
$76.3 million in the prior year periods.
Ascent’s Adjusted EBITDA decreased 11.4% to
$72.9 million for the three months ended December 31, 2017.
Ascent’s Adjusted EBITDA for the twelve months ended December 31,
2017 decreased 9.7% to $306.3 million. MONI’s Adjusted EBITDA
decreased 10.5% and 9.1% to $73.8 million and $313.6 million during
the three and twelve months ended December 31, 2017, respectively.
The decrease for the three and twelve months ended December 31,
2017 is primarily the result of lower revenues and an increase in
expensed subscriber acquisition costs, net of related revenue,
associated with an increase in MONI’s direct-to-consumer sales
activities. MONI's Adjusted EBITDA as a percentage of net
revenue for the three and twelve months ended December 31, 2017 was
55.2% and 56.7%, respectively, compared to 58.6% and 60.5% in the
prior year periods.
The expensed portion of subscriber acquisition costs, net of
related revenues for the three and twelve months ended December 31,
2017 totaled $9.4 million and $35.5 million, as compared to $7.5
million and $24.1 million in the three and twelve months ended
December 31, 2016.
For a reconciliation of net loss from continuing
operations to Adjusted EBITDA, please see the Appendix of this
release.
| |
Twelve Months Ended December 31, |
| |
2017 |
|
2016 |
| Beginning balance of
accounts |
1,046,791 |
|
|
1,089,535 |
|
| Accounts acquired |
95,786 |
|
|
125,292 |
|
| Accounts canceled |
(155,098 |
) |
|
(149,880 |
) |
| Canceled accounts
guaranteed by dealer and other adjustments (a) (b) |
(11,483 |
) |
|
(18,156 |
) |
| Ending balance of
accounts |
975,996 |
|
|
1,046,791 |
|
| Monthly weighted
average accounts |
1,016,798 |
|
|
1,069,901 |
|
| Attrition rate –
Unit |
15.3 |
% |
|
14.0 |
% |
| Attrition rate - RMR
(c) |
13.7 |
% |
|
12.3 |
% |
| Core Attrition (d) |
14.5 |
% |
|
13.5 |
% |
______________________
(a) Includes canceled accounts that are contractually guaranteed
to be refunded from holdback.(b) Includes an estimated 4,532 and
11,175 accounts included in our Radio Conversion Program that
primarily canceled in excess of their expected attrition for the
twelve months ending December 31, 2017 and 2016, respectively.(c)
The RMR of canceled accounts follows the same definition as
subscriber unit attrition as noted above. RMR attrition is
defined as the RMR of canceled accounts in a given period, adjusted
for the impact of price increases or decreases in that period,
divided by the weighted average of RMR for that period.(d) Core
Attrition reflects the long-term attrition characteristics of
MONI’s base by excluding the one-time bulk buy of 113,000 accounts
from Pinnacle Security in 2012 and 2013.
MONI’s core account portfolio unit attrition rate for the twelve
months ended December 31, 2017, which excludes attrition of the
Pinnacle Security accounts, was 14.5%, compared to 13.5% for the
twelve months ended December 31, 2016. An increase in the number of
subscriber accounts with five-year contracts reaching the end of
their initial contract term as well as a more aggressive price
increase strategy contributed to the increase in attrition in the
period. Overall unit attrition increased from 14.0% for the twelve
months ended December 31, 2016 to 15.3% for the twelve months ended
December 31, 2017. Overall attrition reflects the impact of
the Pinnacle Security bulk buys, where MONI purchased approximately
113,000 accounts from Pinnacle Security in 2012 and 2013, which are
now experiencing normal end-of-term attrition.
RMR attrition for the twelve months ended December 31, 2017
increased to 13.7% from 12.3% for the twelve months ended December
31, 2016, reflecting price decreases related to the Company’s
efforts to secure contract extensions from existing customers.
During the three months ended December 31, 2017
and 2016, MONI acquired 18,363 and 26,227 subscriber accounts,
respectively.
Ascent Liquidity and Capital
Resources
At December 31, 2017, on a consolidated basis,
Ascent had $116.4 million of cash, cash equivalents and marketable
securities. A portion of these assets may be used to decrease debt
obligations or fund stock repurchases, strategic acquisitions or
investment opportunities.
At December 31, 2017, the existing long-term
debt includes the principal balance of $1.8 billion under the MONI
Senior Notes, Credit Facility term loan, Credit Facility revolver
and Ascent’s Convertible Notes. The Convertible Notes have an
outstanding principal balance of $96.8 million as of December 31,
2017 and mature July 15, 2020. The Senior Notes have an outstanding
principal balance of $585.0 million as of December 31, 2017 and
mature on April 1, 2020. The Credit Facility term loan has an
outstanding principal balance of $1.1 billion as of December 31,
2017 and requires principal payments of approximately $2.8 million
per quarter with the remaining amount becoming due on September 30,
2022, except as described in the Company’s upcoming Form 10-K for
Fiscal 2017. As of December 31, 2017, the Credit Facility
revolver has an outstanding balance of $68.5 million and becomes
due on September 30, 2021, except as described in the Company’s
upcoming Form 10-K for Fiscal 2017.
Conference Call
Ascent will host a call today, Thursday, March
1, 2018 at 5:00 pm ET. To access the call please dial
(888) 462-5915 from the United States, or (760) 666-3831 from
outside the U.S. The conference call I.D. number is 4959546.
Participants should dial in 5 to 10 minutes before the scheduled
time and must be on a touch-tone telephone to ask questions.
A replay of the call can be accessed through
March 15, 2018 by dialing (800) 585-8367 from the U.S., or (404)
537-3406 from outside the U.S. The conference call I.D. number is
4959546.
This call will also be available as a live
webcast which can be accessed at Ascent’s Investor Relations
Website at http://ir.ascentcapitalgroupinc.com/index.cfm.
Forward Looking Statements
This press release includes certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
about business strategies, market potential and expansion, the
success of new products and services, the anticipated benefits from
our partnership with Nest and the rebranding to BRINKS Home
Security, account creation and related costs, subscriber attrition,
anticipated account generation at LiveWatch, future financial
prospects, and other matters that are not historical facts. These
forward-looking statements involve many risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by such statements, including, without
limitation, possible changes in market acceptance of our services,
technological innovations in the alarm monitoring industry,
competitive issues, continued access to capital on terms acceptable
to Ascent and/or MONI, our ability to capitalize on acquisition
opportunities, general market and economic conditions and changes
in law and government regulations. These forward-looking statements
speak only as of the date of this press release, and Ascent
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement contained
herein to reflect any change in Ascent's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based. Please refer to the publicly
filed documents of Ascent, including the most recent Forms 10-K and
10-Q for additional information about Ascent and about the risks
and uncertainties related to Ascent's business which may affect the
statements made in this press release.
About Ascent Capital Group,
Inc.
Ascent Capital Group, Inc., (NASDAQ:ASCMA) is a
holding company that owns 100 percent of its operating subsidiary,
MONI, and through MONI, LiveWatch Security, LLC. MONI,
headquartered in the Dallas Fort-Worth area, secures approximately
one million residential customers and commercial client accounts
with monitored home and business security system services. MONI is
supported by one of the nation’s largest networks of independent
Authorized Dealers, providing products and support to customers in
the U.S., Canada and Puerto Rico. LiveWatch Security, LLC ®,
is a Do-It-Yourself (“DIY”) home security firm, offering
professionally monitored security services through a
direct-to-consumer sales channel. For more information on Ascent,
see http://ascentcapitalgroupinc.com/.
ASCENT CAPITAL GROUP, INC. AND
SUBSIDIARIESConsolidated Balance
SheetsAmounts in thousands, except share
amounts
| |
December 31, 2017 |
|
December 31,2016 |
|
Assets |
|
|
|
| Current assets: |
|
|
|
| Cash and
cash equivalents |
$ |
10,465 |
|
|
$ |
12,319 |
|
|
Marketable securities, at fair value |
105,958 |
|
|
77,825 |
|
| Trade
receivables, net of allowance for doubtful accounts of $4,162 in
2017 and $3,043 in 2016 |
12,645 |
|
|
13,869 |
|
| Prepaid
and other current assets |
11,175 |
|
|
10,347 |
|
| Assets
held for sale |
— |
|
|
10,673 |
|
| Total
current assets |
140,243 |
|
|
125,033 |
|
| Property and equipment,
net of accumulated depreciation of $37,915 in 2017 and $29,071 in
2016 |
32,823 |
|
|
28,331 |
|
| Subscriber accounts,
net of accumulated amortization of $1,439,164 in 2017 and
$1,212,468 in 2016 |
1,302,028 |
|
|
1,386,760 |
|
| Dealer network and
other intangible assets, net of accumulated amortization of $42,806
in 2017 and $32,976 in 2016 |
6,994 |
|
|
16,824 |
|
| Goodwill |
563,549 |
|
|
563,549 |
|
| Other assets |
9,348 |
|
|
11,935 |
|
| Total
assets |
$ |
2,054,985 |
|
|
$ |
2,132,432 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
| Current
liabilities: |
|
|
|
| Accounts
payable |
$ |
11,092 |
|
|
$ |
11,516 |
|
| Accrued
payroll and related liabilities |
3,953 |
|
|
5,067 |
|
| Other
accrued liabilities |
52,329 |
|
|
34,970 |
|
| Deferred
revenue |
13,871 |
|
|
15,147 |
|
| Holdback
liability |
9,309 |
|
|
13,916 |
|
| Current
portion of long-term debt |
11,000 |
|
|
11,000 |
|
|
Liabilities of discontinued operations |
— |
|
|
3,500 |
|
| Total
current liabilities |
101,554 |
|
|
95,116 |
|
| Non-current
liabilities: |
|
|
|
| Long-term
debt |
1,778,044 |
|
|
1,754,233 |
|
| Long-term
holdback liability |
2,658 |
|
|
2,645 |
|
|
Derivative financial instruments |
13,491 |
|
|
16,948 |
|
| Deferred
income tax liability, net |
13,311 |
|
|
17,769 |
|
| Other
liabilities |
3,255 |
|
|
7,076 |
|
| Total
liabilities |
1,912,313 |
|
|
1,893,787 |
|
| Commitments and
contingencies |
|
|
|
| Stockholders’
equity: |
|
|
|
| Preferred stock, $0.01
par value. Authorized 5,000,000 shares; no shares issued |
— |
|
|
— |
|
| Series A common
stock, $.01 par value. Authorized 45,000,000 shares; issued and
outstanding 11,999,630 and 11,969,152 shares at December 31,
2017 and December 31, 2016, respectively |
120 |
|
|
120 |
|
| Series B common
stock, $.01 par value. Authorized 5,000,000 shares; issued and
outstanding 381,528 and 381,859 shares at December 31, 2017 and
December 31, 2016, respectively |
4 |
|
|
4 |
|
| Series C common
stock, $0.01 par value. Authorized 45,000,000 shares; no shares
issued |
— |
|
|
— |
|
| Additional paid-in
capital |
1,423,899 |
|
|
1,417,505 |
|
| Accumulated
deficit |
(1,277,118 |
) |
|
(1,169,559 |
) |
| Accumulated other
comprehensive loss, net |
(4,233 |
) |
|
(9,425 |
) |
| Total
stockholders’ equity |
142,672 |
|
|
238,645 |
|
| Total
liabilities and stockholders’ equity |
$ |
2,054,985 |
|
|
$ |
2,132,432 |
|
See accompanying notes to condensed consolidated
financial statements.
ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIESConsolidated Statements of Operations and Comprehensive Income (Loss)Amounts in thousands, except
shares and per share amounts
| |
Year Ended December 31, |
| |
2017 |
|
2016 |
|
2015 |
| Net revenue |
$ |
553,455 |
|
|
570,372 |
|
|
$ |
563,356 |
|
| Operating
expenses: |
|
|
|
|
|
| Cost of
services |
119,193 |
|
|
115,236 |
|
|
110,246 |
|
| Selling,
general and administrative, including stock-based and long-term
compensation |
167,887 |
|
|
125,892 |
|
|
121,418 |
|
| Radio
conversion costs |
450 |
|
|
18,422 |
|
|
14,369 |
|
|
Amortization of subscriber accounts, dealer network and other
intangible assets |
236,788 |
|
|
246,753 |
|
|
258,668 |
|
|
Depreciation |
8,844 |
|
|
8,435 |
|
|
10,444 |
|
| Gain on
disposal of operating assets |
(21,217 |
) |
|
— |
|
|
(1,156 |
) |
| |
511,945 |
|
|
514,738 |
|
|
513,989 |
|
| Operating
income |
41,510 |
|
|
55,634 |
|
|
49,367 |
|
| Other expense (income),
net: |
|
|
|
|
|
| Interest
income |
(2,446 |
) |
|
(2,282 |
) |
|
(2,904 |
) |
| Interest
expense |
152,257 |
|
|
132,269 |
|
|
123,743 |
|
|
Refinancing expense, net of gain on extinguishment of debt in
2015 |
— |
|
|
9,500 |
|
|
3,723 |
|
| Other
expense (income), net |
(242 |
) |
|
140 |
|
|
4,536 |
|
| |
149,569 |
|
|
139,627 |
|
|
129,098 |
|
| Loss from
continuing operations before income taxes |
(108,059 |
) |
|
(83,993 |
) |
|
(79,731 |
) |
| Income tax expense
(benefit) from continuing operations |
(408 |
) |
|
7,251 |
|
|
6,505 |
|
| Net loss
from continuing operations |
(107,651 |
) |
|
(91,244 |
) |
|
(86,236 |
) |
| Discontinued
operations: |
|
|
|
|
|
| Income
from discontinued operations, net of income tax of $0 |
92 |
|
|
— |
|
|
2,852 |
|
| Net
loss |
(107,559 |
) |
|
(91,244 |
) |
|
(83,384 |
) |
| Other comprehensive
income (loss): |
|
|
|
|
|
| Foreign
currency translation adjustments |
782 |
|
|
(1,032 |
) |
|
(293 |
) |
|
Unrealized holding gain on marketable securities, net |
2,828 |
|
|
1,956 |
|
|
904 |
|
|
Unrealized gain (loss) on derivative contracts, net |
1,582 |
|
|
4,589 |
|
|
(8,741 |
) |
| Total
other comprehensive income (loss), net of tax |
5,192 |
|
|
5,513 |
|
|
(8,130 |
) |
|
Comprehensive loss |
$ |
(102,367 |
) |
|
(85,731 |
) |
|
$ |
(91,514 |
) |
| |
|
|
|
|
|
| Basic and diluted
income (loss) per share: |
|
|
|
|
|
|
Continuing operations |
$ |
(8.83 |
) |
|
(7.44 |
) |
|
$ |
(6.66 |
) |
|
Discontinued operations |
0.01 |
|
|
— |
|
|
0.22 |
|
| Net
loss |
$ |
(8.82 |
) |
|
(7.44 |
) |
|
$ |
(6.44 |
) |
|
|
|
|
|
|
|
| Weighted
average Series A and Series B shares - basic and diluted |
12,195,530 |
|
|
12,256,895 |
|
|
12,947,215 |
|
| Total
issued and outstanding Series A and Series B shares at period
end |
12,381,158 |
|
|
12,351,011 |
|
|
12,683,607 |
|
See accompanying notes to condensed consolidated
financial statements.
ASCENT CAPITAL GROUP, INC. AND
SUBSIDIARIESConsolidated Statements of Cash
FlowsAmounts in thousands
| |
Year Ended December 31, |
| |
2017 |
|
2016 |
|
2015 |
| Cash flows from
operating activities: |
|
|
|
|
|
| Net
loss |
$ |
(107,559 |
) |
|
(91,244 |
) |
|
(83,384 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
| Income
from discontinued operations, net of income tax |
(92 |
) |
|
— |
|
|
(2,852 |
) |
|
Amortization of subscriber accounts, dealer network and other
intangible assets |
236,788 |
|
|
246,753 |
|
|
258,668 |
|
|
Depreciation |
8,844 |
|
|
8,435 |
|
|
10,444 |
|
|
Stock-based and long-term incentive compensation |
7,431 |
|
|
6,984 |
|
|
7,343 |
|
| Deferred
income tax expense (benefit) |
(4,474 |
) |
|
4,201 |
|
|
4,138 |
|
| Gain on
disposal of operating assets |
(21,217 |
) |
|
— |
|
|
(1,156 |
) |
| Legal
settlement reserve, net of cash payments |
23,000 |
|
|
— |
|
|
— |
|
|
Amortization of debt discount and deferred debt costs |
11,111 |
|
|
10,670 |
|
|
10,357 |
|
|
Refinancing expense, net of gain on extinguishment |
— |
|
|
9,500 |
|
|
3,725 |
|
|
Other-than-temporary impairment of marketable securities |
220 |
|
|
1,904 |
|
|
6,389 |
|
| Bad debt
expense |
11,014 |
|
|
10,785 |
|
|
9,735 |
|
| Other
non-cash activity, net |
(4,277 |
) |
|
(5,114 |
) |
|
4,426 |
|
| Changes
in assets and liabilities: |
|
|
|
|
|
| Trade
receivables |
(9,790 |
) |
|
(11,032 |
) |
|
(9,378 |
) |
| Prepaid
expenses and other assets |
(1,669 |
) |
|
325 |
|
|
(3,857 |
) |
|
Subscriber accounts - deferred contract costs |
(3,064 |
) |
|
(2,947 |
) |
|
(1,773 |
) |
| Payables
and other liabilities |
(6,361 |
) |
|
(317 |
) |
|
(4,096 |
) |
| Operating
activities from discontinued operations, net |
(3,408 |
) |
|
— |
|
|
(49 |
) |
| Net cash
provided by operating activities |
$ |
136,497 |
|
|
188,903 |
|
|
208,680 |
|
| Cash flows from
investing activities: |
|
|
|
|
|
| Capital
expenditures |
(14,393 |
) |
|
(9,180 |
) |
|
(12,431 |
) |
| Cost of
subscriber accounts acquired |
(142,909 |
) |
|
(201,381 |
) |
|
(266,558 |
) |
| Cash paid
for acquisition, net of cash acquired |
— |
|
|
— |
|
|
(56,778 |
) |
| Purchases
of marketable securities |
(26,634 |
) |
|
(5,036 |
) |
|
(26,934 |
) |
| Proceeds
from sale of marketable securities |
1,108 |
|
|
15,184 |
|
|
57,291 |
|
| Decrease
in restricted cash |
— |
|
|
55 |
|
|
(37 |
) |
| Proceeds
from the disposal of operating assets |
32,612 |
|
|
— |
|
|
20,175 |
|
| Net cash
used in investing activities |
$ |
(150,216 |
) |
|
(200,358 |
) |
|
(285,272 |
) |
| Cash flows from
financing activities: |
|
|
|
|
|
| Proceeds
from long-term debt |
187,950 |
|
|
1,280,700 |
|
|
778,000 |
|
| Payments
on long-term debt |
(175,250 |
) |
|
(1,238,059 |
) |
|
(671,183 |
) |
| Payments
of financing costs |
— |
|
|
(16,946 |
) |
|
(6,477 |
) |
| Value of
shares withheld for share-based compensation |
(835 |
) |
|
(358 |
) |
|
(795 |
) |
| Purchases
and retirement of common stock |
— |
|
|
(7,140 |
) |
|
(29,988 |
) |
| Net cash
provided by financing activities |
$ |
11,865 |
|
|
18,197 |
|
|
69,557 |
|
| Net
increase in cash and cash equivalents |
$ |
(1,854 |
) |
|
6,742 |
|
|
(7,035 |
) |
| Cash and cash
equivalents at beginning of period |
12,319 |
|
|
5,577 |
|
|
12,612 |
|
| Cash and cash
equivalents at end of period |
$ |
10,465 |
|
|
12,319 |
|
|
5,577 |
|
| Supplemental cash flow
information: |
|
|
|
|
|
| State
taxes paid, net |
$ |
2,713 |
|
|
2,645 |
|
|
3,245 |
|
| Interest
paid |
140,706 |
|
|
120,873 |
|
|
112,282 |
|
| Accrued
capital expenditures |
272 |
|
|
558 |
|
|
1,214 |
|
See accompanying notes to condensed consolidated
financial statements.
Adjusted EBITDA
We evaluate the performance of our operations based on financial
measures such as revenue and "Adjusted EBITDA." Adjusted EBITDA is
defined as net income (loss) before interest expense, interest
income, income taxes, depreciation, amortization (including the
amortization of subscriber accounts, dealer network and other
intangible assets), restructuring charges, stock-based
compensation, and other non-cash or non-recurring charges. Ascent
Capital believes that Adjusted EBITDA is an important indicator of
the operational strength and performance of its business, including
the business' ability to fund its ongoing acquisition of subscriber
accounts, its capital expenditures and to service its debt. In
addition, this measure is used by management to evaluate operating
results and perform analytical comparisons and identify strategies
to improve performance. Adjusted EBITDA is also a measure
that is customarily used by financial analysts to evaluate the
financial performance of companies in the security alarm monitoring
industry and is one of the financial measures, subject to certain
adjustments, by which MONI's covenants are calculated under the
agreements governing their debt obligations. Adjusted EBITDA
does not represent cash flow from operations as defined by
generally accepted accounting principles in the United States
("GAAP"), should not be construed as an alternative to net income
or loss and is indicative neither of our results of operations nor
of cash flows available to fund all of our cash needs. It is,
however, a measurement that Ascent Capital believes is useful to
investors in analyzing its operating performance.
Accordingly, Adjusted EBITDA should be considered in addition to,
but not as a substitute for, net income, cash flow provided by
operating activities and other measures of financial performance
prepared in accordance with GAAP. Adjusted EBITDA is a
non-GAAP financial measure. As companies often define
non-GAAP financial measures differently, Adjusted EBITDA as
calculated by Ascent Capital should not be compared to any
similarly titled measures reported by other companies.
The following table provides a reconciliation of Ascent's net
loss from continuing operations to total Adjusted EBITDA for the
periods indicated (amounts in thousands):
| |
Three Months Ended December 31, |
|
Year Ended December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net loss from
continuing operations |
$ |
(16,020 |
) |
|
(18,789 |
) |
|
(107,651 |
) |
|
(91,244 |
) |
| Amortization of
subscriber accounts, dealer network and other intangible
assets |
57,892 |
|
|
61,338 |
|
|
236,788 |
|
|
246,753 |
|
| Depreciation |
2,409 |
|
|
2,106 |
|
|
8,844 |
|
|
8,435 |
|
| Stock-based
compensation |
1,261 |
|
|
1,779 |
|
|
7,229 |
|
|
6,984 |
|
| Radio conversion
costs |
67 |
|
|
484 |
|
|
450 |
|
|
18,422 |
|
| Legal settlement
reserve |
— |
|
|
— |
|
|
28,000 |
|
|
— |
|
| Severance expense
(a) |
88 |
|
|
485 |
|
|
1,363 |
|
|
730 |
|
| LiveWatch acquisition
contingent bonus charges |
(1,557 |
) |
|
848 |
|
|
189 |
|
|
3,944 |
|
| Rebranding marketing
program |
— |
|
|
2,152 |
|
|
880 |
|
|
2,991 |
|
| Software implementation
/ integration |
— |
|
|
93 |
|
|
— |
|
|
511 |
|
| Integration /
implementation of company initiatives |
5 |
|
|
250 |
|
|
2,425 |
|
|
250 |
|
| Gain on revaluation of
acquisition dealer liabilities |
— |
|
|
(7,160 |
) |
|
(1,358 |
) |
|
(7,160 |
) |
| Impairment of
capitalized software |
— |
|
|
— |
|
|
713 |
|
|
— |
|
| Gain on disposal of
operating assets |
— |
|
|
— |
|
|
(21,217 |
) |
|
— |
|
| Refinancing expense,
net of gain on extinguishment of debt in 2015 |
— |
|
|
152 |
|
|
— |
|
|
9,500 |
|
| Other-than-temporary
impairment losses on marketable securities |
— |
|
|
— |
|
|
220 |
|
|
1,904 |
|
| Interest income |
(871 |
) |
|
(689 |
) |
|
(2,446 |
) |
|
(2,282 |
) |
| Interest expense |
38,246 |
|
|
37,464 |
|
|
152,257 |
|
|
132,269 |
|
| Income tax expense
(benefit) from continuing operations |
(8,649 |
) |
|
1,737 |
|
|
(408 |
) |
|
7,251 |
|
| Adjusted EBITDA |
$ |
72,871 |
|
|
82,250 |
|
|
306,278 |
|
|
339,258 |
|
| |
|
|
|
|
|
|
|
| Expensed subscriber
acquisition costs |
|
|
|
|
|
|
|
| Gross subscriber
acquisition |
$ |
10,554 |
|
|
8,893 |
|
|
40,312 |
|
|
29,367 |
|
| Revenue associated with
subscriber acquisition |
(1,158 |
) |
|
(1,426 |
) |
|
(4,852 |
) |
|
(5,310 |
) |
| Net
subscriber acquisition |
9,396 |
|
|
7,467 |
|
|
35,460 |
|
|
24,057 |
|
_____________________________
(a) Severance expense related to a reduction in headcount
event and transitioning executive leadership at MONI.
The following table provides a reconciliation of MONI’s net loss
to total Adjusted EBITDA for the periods indicated (amounts in
thousands):
| |
Three Months Ended December 31, |
|
Year Ended December 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net loss |
$ |
(14,642 |
) |
|
(16,586 |
) |
|
(111,295 |
) |
|
(76,307 |
) |
| Amortization of
subscriber accounts, dealer network and other intangible
assets |
57,892 |
|
|
61,338 |
|
|
236,788 |
|
|
246,753 |
|
| Depreciation |
2,403 |
|
|
2,076 |
|
|
8,818 |
|
|
8,160 |
|
| Stock-based
compensation |
222 |
|
|
727 |
|
|
2,981 |
|
|
2,598 |
|
| Radio conversion
costs |
67 |
|
|
484 |
|
|
450 |
|
|
18,422 |
|
| Legal settlement
reserve |
— |
|
|
— |
|
|
28,000 |
|
|
— |
|
| Severance expense
(a) |
88 |
|
|
485 |
|
|
1,363 |
|
|
730 |
|
| LiveWatch acquisition
contingent bonus charges |
(1,557 |
) |
|
848 |
|
|
189 |
|
|
3,944 |
|
| Rebranding marketing
program |
— |
|
|
2,152 |
|
|
880 |
|
|
2,991 |
|
| Software implementation
/ integration |
— |
|
|
93 |
|
|
— |
|
|
511 |
|
| Integration /
implementation of company initiatives |
5 |
|
|
250 |
|
|
2,425 |
|
|
250 |
|
| Gain on revaluation of
acquisition dealer liabilities |
— |
|
|
(7,160 |
) |
|
(1,358 |
) |
|
(7,160 |
) |
| Impairment of
capitalized software |
— |
|
|
— |
|
|
713 |
|
|
— |
|
| Refinancing
expense |
— |
|
|
152 |
|
|
— |
|
|
9,500 |
|
| Interest expense |
36,512 |
|
|
35,849 |
|
|
145,492 |
|
|
127,308 |
|
| Income tax expense
(benefit) |
(7,223 |
) |
|
1,686 |
|
|
(1,893 |
) |
|
7,148 |
|
| Adjusted EBITDA |
$ |
73,767 |
|
|
82,394 |
|
|
313,553 |
|
|
344,848 |
|
| |
|
|
|
|
|
|
|
| Expensed subscriber
acquisition costs |
|
|
|
|
|
|
|
| Gross subscriber
acquisition |
$ |
10,554 |
|
|
8,893 |
|
|
40,312 |
|
|
29,367 |
|
| Revenue associated with
subscriber acquisition |
(1,158 |
) |
|
(1,426 |
) |
|
(4,852 |
) |
|
(5,310 |
) |
| Net
subscriber acquisition |
9,396 |
|
|
7,467 |
|
|
35,460 |
|
|
24,057 |
|
_____________________________
(a) Severance expense related to a reduction in headcount
event and transitioning executive leadership at MONI.
Contact:Erica Bartsch Sloane
& Company212-446-1875ebartsch@sloanepr.com
Ascent Capital Grp. - Series A (NASDAQ:ASCMA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ascent Capital Grp. - Series A (NASDAQ:ASCMA)
Historical Stock Chart
From Apr 2023 to Apr 2024
