- Net revenues decreased 7% at actual rates
but increased 2% at constant rates to US$ 146.6 million -
- Operating income increased 12% at actual
rates and 23% at constant rates to US$ 27.6 million -
- OIBDA increased 8% at actual rates and 18%
at constant rates to US$ 38.1 million -
Central European Media Enterprises Ltd. (“CME” or the “Company”)
(NASDAQ/Prague Stock Exchange - CETV) today announced financial
results for the three months ended March 31, 2019.
Operational and financial highlights:
- TV advertising revenues decreased 10%
at actual rates and 2% at constant rates in the quarter. In the
first four months of 2019, which normalizes the phasing of spending
around Easter, TV ad revenues are estimated to have increased 3% at
constant rates compared to the same period in 2018.
- Carriage fees and subscription revenues
increased 4% at actual rates and 12% at constant rates in the first
quarter.
- Costs charged in arriving at OIBDA
decreased 11% at actual rates and 3% at constant rates.
- OIBDA margin increased by 360 basis
points to 26%.
- Cash generated from continuing
operating activities increased 34% at actual rates to US$ 96.0
million.
- Unlevered free cash flow increased 33%
at actual rates to US$ 94.7 million.
- CME repaid EUR 60 million of debt from
cash generated by the business, which together with the improvement
in our operations reduced our net leverage ratio to 3.0x at the end
of March from 3.5x at the start of the year.
Michael Del Nin, Co-Chief Executive Officer, commented: "The
year has gotten off to an outstanding start, exceeding our previous
expectations to such an extent that we are raising our guidance for
2019. With the highest Q1 margin in more than a decade, an 18%
improvement in like-for-like OIBDA, and a more than 30% surge in
unlevered free cash flow, these are among the best Q1 results in
the history of the company. Furthermore, they are bolstered by
around 20% growth in TV ad revenues in our two largest markets in
April, pushing year-to-date sales well into positive territory
after the first quarter was impacted by both sector taxes in
Romania and the phasing of spending related to the timing of Easter
this year."
Christoph Mainusch, Co-Chief Executive Officer, added: "With the
successful launch of the spring season during the first quarter,
our main channel in four countries increased year-to-date audience
share in both prime time and all day. Carriage fees have
transformed the predictability and profitability of several of our
businesses, with four segments now seeing margins of more than 25%
in Q1. Facing various headwinds in the quarter, we grew our TV ad
revenues in three segments, and we increased market share in four
of five countries."
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
March 31, 2019 and 2018 were:
(US$ 000's, except per share data) For the
Three Months Ended March 31,
(unaudited)
2019
2018
% Actual
% Lfl (1)
Net revenues $ 146,559 $ 156,709 (6.5)% 1.6% Operating income
27,637 24,581 12.4% 23.2% Operating margin 18.9 % 15.7 % 3.2 p.p.
3.3 p.p. OIBDA 38,057 35,324 7.7% 17.7% OIBDA margin 26.0 % 22.5 %
3.5 p.p. 3.6 p.p. Income from continuing operations 11,751 6,756
73.9% 96.6% Income from continuing operations per share - basic
0.03 0.02 86.9% 127.0% Income from continuing operations per share
- diluted $ 0.03 $ 0.01 144.8% 197.3% (1) % Lfl (like-for-like)
variance reflects the impact of applying the current period average
exchange rates to the prior period revenues and costs.
Teleconference and Audio Webcast Details
CME will host a teleconference and audio webcast to discuss its
first quarter results on Tuesday, April 30, 2019 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 +1-647-689-5402 ten minutes prior to the start time and
reference conference ID 2273725. 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
March 31, 2019 as well as the following: the effect of
changes in global and regional economic conditions; the impact of
ending the quantitative easing program implemented by the European
Central Bank; the economic, political and monetary impacts of
Brexit in our markets; the outcome of our strategic review and its
impact on our business; the impact of changes in local tax
legislation and the timing of public holidays on advertising
spending; levels of television advertising spending and the rate of
development of the advertising markets in the countries in which we
operate; our ability to refinance our existing indebtedness; the
extent to which our debt service obligations and covenants may
restrict our business; our exposure to additional tax liabilities
as well as liabilities resulting from regulatory or legal
proceedings initiated against us; 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 March 31, 2019. 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
March 31, 2019, which was filed with the Securities and
Exchange Commission on April 30, 2019.
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 operating leading
businesses in five Central and Eastern European markets with an
aggregate population of approximately 45 million people. CME's
operations broadcast 30 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 and PRO TV
Chisinau), the Slovak Republic (TV Markíza, Markíza International,
Doma and Dajto) and Slovenia (POP TV, Kanal A, Brio, Oto and Kino).
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 share and per share
data)
(unaudited)
For the Three Months Ended March 31,
2019
2018
Net revenues $ 146,559 $
156,709 Operating expenses: Content costs 70,360
78,460 Other operating costs 13,248 14,467 Depreciation of
property, plant and equipment 8,226 8,387 Amortization of broadcast
licenses and other intangibles 2,194 2,356
Cost of
revenues 94,028 103,670 Selling, general and
administrative expenses 24,894 28,458
Operating
income 27,637 24,581 Interest expense (8,242 )
(17,818 ) Other non-operating (expense) / income, net (3,097 )
4,208
Income before tax 16,298 10,971
Provision for income taxes (4,547 ) (4,215 )
Income from
continuing operations 11,751 6,756 Income from
discontinued operations, net of tax — 316
Net
income 11,751 7,072 Net loss attributable to
noncontrolling interests 7 178
Net income
attributable to CME Ltd. $ 11,758 $
7,250 PER SHARE DATA: Net income per
share: Continuing operations — basic $ 0.03 $ 0.02 Continuing
operations — diluted 0.03 0.01 Discontinued operations — basic —
0.00 Discontinued operations — diluted — 0.00 Attributable to CME
Ltd. — basic 0.03 0.02 Attributable to CME Ltd. — diluted $ 0.03 $
0.01 Weighted average common shares used in computing per
share amounts (000's): Basic 264,199 158,039 Diluted 265,211
241,905
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(US$ 000's)
(unaudited)
March 31, 2019 December 31, 2018
ASSETS Cash and cash equivalents $ 80,032 $ 62,031 Other
current assets 263,098 312,062
Total current
assets 343,130 374,093 Property, plant and
equipment, net 110,347 117,604 Goodwill and other intangible
assets, net 968,225 984,256 Other non-current assets 23,967
12,408
Total assets $ 1,445,669
$ 1,488,361 LIABILITIES AND
EQUITY Accounts payable and accrued liabilities $ 127,222 $
120,468 Current portion of long-term debt and other financing
arrangements 5,802 5,545 Other current liabilities 38,453
13,679
Total current liabilities 171,477
139,692 Long-term debt and other financing arrangements
700,694 782,685 Other non-current liabilities 81,526 67,293
Total liabilities $ 953,697
$ 989,670 Series B Convertible
Redeemable Preferred Stock $ 269,370 $ 269,370
EQUITY
Common Stock $ 20,262 $ 20,228 Additional paid-in capital 2,004,188
2,003,518 Accumulated deficit (1,566,318 ) (1,578,076 ) Accumulated
other comprehensive loss (235,961 ) (216,650 )
Total CME Ltd.
shareholders' equity 222,171 229,020
Noncontrolling interests 431 301
Total equity
222,602 229,321 Total liabilities
and equity $ 1,445,669 $
1,488,361
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(US$ 000's)
(unaudited)
For the Three MonthsEnded March
31,
2019
2018
Net cash generated from continuing operating activities $
96,009 $ 71,495 Net cash used in continuing investing activities
(4,359 ) (5,353 ) Net cash used in continuing financing activities
(71,736 ) (60,526 ) Net cash provided by discontinued operations —
9,554 Impact of exchange rate fluctuations on cash and cash
equivalents (1,913 ) 2,515
Net increase in cash and cash
equivalents $ 18,001 $
17,685 Supplemental disclosure of cash flow
information: Cash paid for interest (including guarantee fees)
$ 3,093 $ 4,883 Cash paid for income taxes, net of refunds $ 6,318
$ 4,120
Supplemental disclosure of non-cash financing
activities: Accretion on Series B Convertible Redeemable
Preferred Stock $ — $ 2,447
Segment Data
We manage our business on a geographical basis, with five
reporting segments: Bulgaria, the Czech Republic, Romania, the
Slovak Republic and Slovenia. 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. Intersegment revenues and
profits have been eliminated in consolidation.
Below are tables showing our net revenues and OIBDA by segment
for the three months ended March 31, 2019 and 2018:
(US$ 000's) For the Three Months
Ended March 31,
(unaudited)
2019
2018
% Actual
% Lfl (1)
Net revenues
Bulgaria $ 19,293 $ 19,433 (0.7 )% 6.9 % Czech Republic 50,316
51,534 (2.4 )% 6.4 % Romania 38,810 45,961 (15.6 )% (7.5 )% Slovak
Republic 21,332 22,953 (7.1 )% 0.1 % Slovenia 17,850 17,530 1.8 %
9.6 % Intersegment revenues (1,042 ) (702 ) NM (2) NM (2)
Total
net revenues $ 146,559 $
156,709 (6.5 )% 1.6 %
(US$ 000's) For the Three Months Ended March
31,
(unaudited)
2019
2018
% Act
% Lfl (1)
OIBDA
Bulgaria $ 6,121 $ 2,981 105.3 % 121.2 % Czech Republic 14,947
15,370 (2.8 )% 6.1 % Romania 17,533 18,893 (7.2 )% 1.7 % Slovak
Republic 1,729 1,103 56.8 % 71.5 % Slovenia 4,931 4,653 6.0 % 14.1
% Elimination 48 16 NM (2) NM (2)
Total Operating
Segments 45,309 43,016 5.3 %
14.9 % Corporate (7,252 ) (7,692 ) 5.7 % (2.2 )%
Total OIBDA $ 38,057 $
35,324 7.7 % 17.7 %
(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. 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 in March 2017 and
April 2018, we pay interest and related Guarantee Fees on our
outstanding indebtedness in cash. In addition to this obligation to
pay Guarantee Fees in cash, we expect to use cash generated by the
business to pay certain Guarantee Fees that were previously paid 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 Months Ended
March 31, (unaudited) 2019
2018 Operating income $ 27,637
$ 24,581 Depreciation of property, plant and
equipment 8,226 8,387 Amortization of intangible assets 2,194
2,356
Total OIBDA $ 38,057
$ 35,324 (US$ 000's)
For the Three Months Ended March 31, (unaudited)
2019 2018 Net cash generated from
continuing operating activities $ 96,009 $
71,495 Capital expenditures, net of proceeds from disposals
(4,359 ) (5,353 )
Free cash flow 91,650 66,142
Cash paid for interest (including mandatory cash-pay guarantee
fees) 3,093 4,883
Unlevered free cash flow from
continuing operating activities $ 94,743
$ 71,025
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190429005942/en/
For additional information, please visit www.cme.net or
contact:Mark KobalHead of Investor RelationsCentral European Media
Enterprises+420 242 465 576mark.kobal@cme.net
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