Ascent Capital Group, Inc. (“Ascent” or the “Company”)
(Nasdaq:ASCMA) has reported results for the three months ended
March 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 more than one
million residential and commercial customers as of March 31, 2017.
MONI’s long-term monitoring contracts provide high margin recurring
revenue that results in predictable and stable cash flow.
Highlights1:
- Ascent’s net revenue for the three months ended March 31, 2017
totaled $141.2 million and net loss for the three months ended
March 31, 2017 totaled $18.9 million
- Ascent's Pre-SAC Adjusted EBITDA, which adjusts for the
expensed portion of subscriber acquisition costs, for the three
months ended March 31, 2017 totaled $87.6 million
- MONI’s Pre-SAC Adjusted EBITDA for the three months ended March
31, 2017 totaled $89.9 million
- Launched MONI’s direct sales and installation sales channel in
the first quarter
Ascent Chairman and Chief Executive Officer,
Bill Fitzgerald stated, “Jeff and his team continue to make good
progress in advancing the business and driving operational
efficiencies across the MONI platform. I remain encouraged by
the work he and his team are doing and believe the steps he is
taking will serve to strengthen the business for the long
term.”
Jeffery Gardner, President and Chief Executive
Officer of MONI said, “We are off to a solid start in 2017,
executing against our key operational initiatives and laying the
groundwork for profitable growth. During the quarter, we
successfully launched our direct sales channel, an important first
step as we continue to diversify our distribution. Our commitment
to enabling the success of our dealers is also bearing fruit with
marketing generated leads increasing a solid 23% year-over-year.
Through the use of our predictive churn analytics we have also
doubled the number of touch points we have with at-risk customers,
helping us extend contracts for over 10,000 customers in the first
quarter. Finally, our LiveWatch business continues to scale nicely
with strong revenue and RMR growth. While there is still more work
ahead of us, I am pleased with our efforts and results to date and
believe we are well positioned for the future.”
_______________________1 Comparisons are year-over-year
unless otherwise specified.
Results for the Three Months Ended March
31, 2017
For the three months ended March 31, 2017,
Ascent reported net revenue of $141.2 million, a decrease of 1.4%.
The reduction in revenue for the three months ended March 31, 2017
is primarily due to the reduction in subscriber accounts at MONI on
a year over year basis, partially offset by an increase in average
recurring monthly revenue (“RMR”) per subscriber to $43.63 due to
certain price increases enacted during the past twelve months and
an increase in average RMR per new subscriber acquired.
Ascent’s total cost of services for the three
months ended March 31, 2017 increased 1.7% to $30.0 million. The
increase for the three months ended March 31, 2017 is attributable
to increased subscriber acquisition costs (or "SAC") primarily as a
result of the initiation of MONI’s direct sales channel.
Subscriber acquisition costs were $2.7 million for the three months
ended March 31, 2017 as compared to $2.3 million for the three
months ended March 31, 2016. Subscriber acquisition costs include
certain equipment and labor expenditures and related revenue
associated with subscriber acquisition that are recognized as
incurred at both MONI and LiveWatch.
Ascent’s selling, general & administrative
("SG&A") costs for the three months ended March 31, 2017,
increased 12.8% to $36.2 million. The increase in SG&A for the
first quarter ended March 31, 2017 is attributable to an increase
in subscriber acquisition costs (marketing and sales costs related
to the creation of new subscribers), MONI rebranding expense and a
$713,000 impairment of certain internally developed capitalized
software that was no longer viable. Subscriber acquisition costs
increased to $6.4 million as compared to $4.1 million for the three
months ended March 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 months ended March 31, 2017 of $18.9
million, compared to net loss from continuing operations of $23.2
million in the prior year period.
MONI reported a net loss for the three months
ended March 31, 2017 of $21.0 million, compared to a net loss of
$20.2 million in the prior year period.
Ascent’s Adjusted EBITDA decreased 5.9% to $80.0
million for the three months ended March 31, 2017. The decrease in
Ascent’s Adjusted EBITDA is primarily the result of lower revenues
and an increase in subscriber acquisition costs, net of related
revenue, which is primarily associated with an increase in MONI’s
direct-to-consumer sales activities. MONI’s Adjusted EBITDA
decreased 5.5% to $82.2 million during the three months ended March
31, 2017. MONI's Adjusted EBITDA as a percentage of net revenue for
the three months ended March 31, 2017 was 58.2%, compared to 60.7%
for the three months ended March 31, 2016. The decline is primarily
attributable to the higher expensed creation costs at MONI and
LiveWatch associated with RMR production.
Ascent's Pre-SAC Adjusted EBITDA for the three
months ended March 31, 2017 decreased 2.7% to $87.6 million. The
decrease in Ascent’s Pre-SAC Adjusted EBITDA is primarily the
result of lower Pre-SAC revenues. MONI's Pre-SAC Adjusted EBITDA
for the three months ended March 31, 2017 totaled $89.9 million,
compared to $92.1 million for the three months ended March 31,
2016. MONI's Pre-SAC Adjusted EBITDA as a percentage of Pre-SAC net
revenue for the three months ended March 31, 2017 was 64.3%,
compared to 64.9% in the three months ended March 31, 2016. For a
reconciliation of net loss from continuing operations to Adjusted
EBITDA to Pre-SAC Adjusted EBITDA for Ascent and MONI, as well as a
reconciliation of net revenue to Pre-SAC net revenue, please see
the Appendix of this release.
|
Twelve Months Ended March 31, |
|
2017 |
|
2016 |
Beginning balance of
accounts |
1,080,726 |
|
|
1,090,612 |
|
Accounts acquired |
125,457 |
|
|
152,078 |
|
Accounts canceled |
(150,568 |
) |
|
(148,787 |
) |
Canceled accounts
guaranteed by dealer and other adjustments (a) (b) |
(18,821 |
) |
|
(13,177 |
) |
Ending balance of
accounts |
1,036,794 |
|
|
1,080,726 |
|
Monthly weighted
average accounts |
1,059,526 |
|
|
1,089,346 |
|
Attrition rate -
Unit |
14.2 |
% |
|
13.7 |
% |
Attrition rate - RMR
(c) |
12.3 |
% |
|
12.8 |
% |
Core Attrition (d) |
13.8 |
% |
|
12.9 |
% |
|
|
|
|
|
|
__________________(a) Includes canceled accounts
that are contractually guaranteed to be refunded from holdback.(b)
Includes an estimated 11,518 and 3,170 accounts included in our
Radio Conversion Program that primarily canceled in excess of their
expected attrition for the twelve months ending March 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 March 31, 2017, which excludes
attrition of the Pinnacle Security accounts, was 13.8%, compared to
12.9% for the twelve months ended March 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 13.7% for the
twelve months ended March 31, 2016 to 14.2% for the twelve months
ended March 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. We
believe core attrition best reflects the long run characteristics
of our customer base.
RMR attrition for the twelve months ended March
31, 2017 decreased to 12.3% from 12.8% for the twelve months ended
March 31, 2016, reflecting price increases to existing customers
and higher RMR for new customers.
During the three months ended March 31, 2017 and
2016, MONI acquired 29,376 and 29,211 subscriber accounts,
respectively.
Ascent Liquidity and Capital
Resources
At March 31, 2017, on a consolidated basis,
Ascent had $122.3 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 March 31, 2017, the existing long-term debt
includes the principal balance of $1.8 billion under the MONI
Senior Notes, Credit Facility term loans, Credit Facility revolver
and Ascent’s Convertible Notes. The Convertible Notes have an
outstanding principal balance of $96.8 million as of March 31, 2017
and mature July 15, 2020. The Senior Notes have an outstanding
principal balance of $585.0 million as of March 31, 2017 and mature
on April 1, 2020. The Credit Facility term loan has an outstanding
principal balance of $1.1 billion as of March 31, 2017 and requires
principal payments of approximately $2.8 million per quarter with
the remaining amount becoming due on September 30, 2022. As
of March 31, 2017, the Credit Facility revolver has an outstanding
balance of $69.7 million and becomes due on September 30, 2021.
Conference Call
Ascent will host a call today, Tuesday, May 9,
2017 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 12762669. 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 May
23, 2017 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
12762669.
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, 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. Ascent also
retains ownership of certain commercial real estate assets. MONI,
headquartered in the Dallas Fort-Worth area, secures more than 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
SUBSIDIARIES |
Unaudited Condensed Consolidated Balance
Sheets |
Amounts in thousands, except share
amounts |
|
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
42,257 |
|
|
$ |
12,319 |
|
Marketable securities, at fair value |
80,012 |
|
|
77,825 |
|
Trade
receivables, net of allowance for doubtful accounts of $2,805 in
2017 and $3,043 in 2016 |
12,971 |
|
|
13,869 |
|
Prepaid
and other current assets |
8,769 |
|
|
10,347 |
|
Assets
held for sale |
5,285 |
|
|
10,673 |
|
Total
current assets |
149,294 |
|
|
125,033 |
|
Property and equipment,
net of accumulated depreciation of $31,198 in 2017 and $29,071 in
2016 |
27,406 |
|
|
28,331 |
|
Subscriber accounts,
net of accumulated amortization of $1,269,494 in 2017 and
$1,212,468 in 2016 |
1,377,938 |
|
|
1,386,760 |
|
Dealer network and
other intangible assets, net of accumulated amortization of $35,433
in 2017 and $32,976 in 2016 |
14,367 |
|
|
16,824 |
|
Goodwill |
563,549 |
|
|
563,549 |
|
Other assets |
11,360 |
|
|
11,935 |
|
Total
assets |
$ |
2,143,914 |
|
|
$ |
2,132,432 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
9,631 |
|
|
$ |
11,516 |
|
Accrued
payroll and related liabilities |
4,938 |
|
|
5,067 |
|
Other
accrued liabilities |
46,545 |
|
|
34,970 |
|
Deferred
revenue |
16,168 |
|
|
15,147 |
|
Holdback
liability |
13,768 |
|
|
13,916 |
|
Current
portion of long-term debt |
11,000 |
|
|
11,000 |
|
Liabilities of discontinued operations |
— |
|
|
3,500 |
|
Total
current liabilities |
102,050 |
|
|
95,116 |
|
Non-current
liabilities: |
|
|
|
Long-term
debt |
1,779,056 |
|
|
1,754,233 |
|
Long-term
holdback liability |
2,352 |
|
|
2,645 |
|
Derivative financial instruments |
11,828 |
|
|
16,948 |
|
Deferred
income tax liability, net |
18,826 |
|
|
17,769 |
|
Other
liabilities |
7,044 |
|
|
7,076 |
|
Total
liabilities |
1,921,156 |
|
|
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 11,972,153 and 11,969,152 shares at March 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 March 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 |
1,418,813 |
|
|
1,417,505 |
|
Accumulated
deficit |
(1,188,412 |
) |
|
(1,169,559 |
) |
Accumulated other
comprehensive loss, net |
(7,767 |
) |
|
(9,425 |
) |
Total
stockholders’ equity |
222,758 |
|
|
238,645 |
|
Total
liabilities and stockholders’ equity |
$ |
2,143,914 |
|
|
$ |
2,132,432 |
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated
financial statements. |
|
ASCENT CAPITAL GROUP, INC. AND
SUBSIDIARIES |
Unaudited Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss) |
Amounts in thousands, except shares and per
share amounts |
|
|
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
Net revenue |
$ |
141,200 |
|
|
143,268 |
|
Operating
expenses: |
|
|
|
Cost of
services |
29,969 |
|
|
29,475 |
|
Selling,
general and administrative, including stock-based compensation |
36,245 |
|
|
32,118 |
|
Radio
conversion costs |
232 |
|
|
9,079 |
|
Amortization of subscriber accounts, dealer network and other
intangible assets |
59,547 |
|
|
61,322 |
|
Depreciation |
2,127 |
|
|
2,063 |
|
Gain on
disposal of operating assets |
(6,638 |
) |
|
— |
|
|
121,482 |
|
|
134,057 |
|
Operating
income |
19,718 |
|
|
9,211 |
|
Other income (expense),
net: |
|
|
|
Interest
income |
395 |
|
|
457 |
|
Interest
expense |
(37,486 |
) |
|
(31,424 |
) |
Other
income, net |
242 |
|
|
358 |
|
|
(36,849 |
) |
|
(30,609 |
) |
Loss from
continuing operations before income taxes |
(17,131 |
) |
|
(21,398 |
) |
Income tax expense
from continuing operations |
(1,814 |
) |
|
(1,822 |
) |
Net loss
from continuing operations |
(18,945 |
) |
|
(23,220 |
) |
Discontinued
operations: |
|
|
|
Income
from discontinued operations, net of income tax of $0 |
92 |
|
|
— |
|
Net
loss |
(18,853 |
) |
|
(23,220 |
) |
Other comprehensive
income (loss): |
|
|
|
Foreign
currency translation adjustments |
58 |
|
|
(202 |
) |
Unrealized holding gain (loss) on marketable securities, net |
551 |
|
|
(96 |
) |
Unrealized gain (loss) on derivative contracts, net |
1,049 |
|
|
(11,845 |
) |
Total
other comprehensive income (loss), net of tax |
1,658 |
|
|
(12,143 |
) |
Comprehensive loss |
$ |
(17,195 |
) |
|
(35,363 |
) |
|
|
|
|
Basic and diluted
income (loss) per share: |
|
|
|
Continuing operations |
$ |
(1.56 |
) |
|
(1.86 |
) |
Discontinued operations |
0.01 |
|
|
— |
|
Net
loss |
$ |
(1.55 |
) |
|
(1.86 |
) |
|
|
|
|
|
|
|
Weighted
average Series A and Series B shares – basic and diluted |
|
12,134,061 |
|
|
12,450,892 |
|
Total
issued and outstanding Series A and Series B shares at period
end |
|
12,353,681 |
|
|
12,727,740 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated
financial statements. |
|
ASCENT CAPITAL GROUP, INC. AND
SUBSIDIARIES |
Unaudited Condensed Consolidated Statements of
Cash Flows |
Amounts in thousands |
|
|
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
Cash flows from
operating activities: |
|
|
|
Net
loss |
$ |
(18,853 |
) |
|
(23,220 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Income
from discontinued operations, net of income tax |
(92 |
) |
|
— |
|
Amortization of subscriber accounts, dealer network and other
intangible assets |
59,547 |
|
|
61,322 |
|
Depreciation |
2,127 |
|
|
2,063 |
|
Stock-based compensation |
1,576 |
|
|
1,695 |
|
Deferred
income tax expense |
1,052 |
|
|
1,052 |
|
Gain on
disposal of operating assets |
(6,638 |
) |
|
— |
|
Amortization of debt discount and deferred debt costs |
2,673 |
|
|
2,628 |
|
Bad debt
expense |
2,557 |
|
|
2,544 |
|
Other
non-cash activity, net |
1,872 |
|
|
735 |
|
Changes
in assets and liabilities: |
|
|
|
Trade
receivables |
(1,659 |
) |
|
(2,256 |
) |
Prepaid
expenses and other assets |
1,506 |
|
|
(1,378 |
) |
Subscriber accounts - deferred contract costs |
(754 |
) |
|
(660 |
) |
Payables
and other liabilities |
4,491 |
|
|
11,532 |
|
Operating
activities from discontinued operations, net |
(3,408 |
) |
|
— |
|
Net cash provided by operating activities |
45,997 |
|
|
56,057 |
|
Cash flows from
investing activities: |
|
|
|
Capital
expenditures |
(1,693 |
) |
|
(2,276 |
) |
Cost of
subscriber accounts acquired |
(46,708 |
) |
|
(46,670 |
) |
Purchases
of marketable securities |
(2,627 |
) |
|
(5,036 |
) |
Proceeds
from sale of marketable securities |
997 |
|
|
4,403 |
|
Decrease
in restricted cash |
— |
|
|
55 |
|
Proceeds
from the disposal of operating assets |
12,090 |
|
|
— |
|
Net cash used in investing activities |
(37,941 |
) |
|
(49,524 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds
from long-term debt |
64,750 |
|
|
59,250 |
|
Payments
on long-term debt |
(42,600 |
) |
|
(38,675 |
) |
Value of
shares withheld for share-based compensation |
(268 |
) |
|
(156 |
) |
Net cash provided by financing activities |
21,882 |
|
|
20,419 |
|
Net increase in cash and cash equivalents |
29,938 |
|
|
26,952 |
|
Cash and cash
equivalents at beginning of period |
12,319 |
|
|
5,577 |
|
Cash and cash
equivalents at end of period |
$ |
42,257 |
|
|
32,529 |
|
Supplemental cash flow
information: |
|
|
|
State
taxes paid, net |
$ |
3 |
|
|
19 |
|
Interest
paid |
22,643 |
|
|
16,152 |
|
Accrued
capital expenditures |
780 |
|
|
973 |
|
|
|
|
|
|
|
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),
stock-based compensation, and other non-cash or nonrecurring
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, to fund 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 ("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.
Pre-SAC Adjusted EBITDA
In addition to MONI's dealer sales channel, MONI
and LiveWatch also generate leads and acquire accounts through its
direct-to-consumer sales channels. As such, certain expenditures
and related revenue associated with subscriber acquisition
(subscriber acquisition costs, or "SAC") are recognized as
incurred. This is in contrast to the dealer sales channel, which
capitalizes payments to dealers to acquire accounts. "Pre-SAC
Adjusted EBITDA" is a measure that eliminates the impact of
generating leads and acquiring accounts through the
direct-to-consumer sales channels that is recognized in operating
income. Pre-SAC Adjusted EBITDA is defined as total Adjusted EBITDA
excluding SAC related to internally generated subscriber leads and
accounts through the direct-to-consumer sales channels, as well as
any related revenue. We believe Pre-SAC Adjusted EBITDA is a
meaningful measure of the Company's financial performance in
servicing its customer base. Pre-SAC 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. Pre-SAC
Adjusted EBITDA is a non-GAAP financial measure. As companies often
define non-GAAP financial measures differently, Pre-SAC Adjusted
EBITDA as calculated by the Company 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 to Pre-SAC Adjusted EBITDA for the periods indicated
(amounts in thousands):
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
Net loss from
continuing operations |
(18,945 |
) |
|
(23,220 |
) |
Amortization of
subscriber accounts, dealer network and other intangible
assets |
59,547 |
|
|
61,322 |
|
Depreciation |
2,127 |
|
|
2,063 |
|
Stock-based
compensation |
1,576 |
|
|
1,695 |
|
Radio conversion
costs |
232 |
|
|
9,079 |
|
Rebranding marketing
program |
847 |
|
|
173 |
|
LiveWatch acquisition
contingent bonus charges |
968 |
|
|
900 |
|
Integration /
implementation of company initiatives |
641 |
|
|
— |
|
Severance expense
(a) |
27 |
|
|
245 |
|
Impairment of
capitalized software |
713 |
|
|
— |
|
Gain on disposal of
operating assets |
(6,638 |
) |
|
— |
|
Interest income |
(395 |
) |
|
(457 |
) |
Interest expense |
37,486 |
|
|
31,424 |
|
Income tax expense from
continuing operations |
1,814 |
|
|
1,822 |
|
Adjusted EBITDA |
80,000 |
|
|
85,046 |
|
Gross subscriber
acquisition costs (b) |
9,033 |
|
|
6,366 |
|
Revenue associated with
subscriber acquisition costs (b) |
(1,392 |
) |
|
(1,295 |
) |
Pre-SAC Adjusted
EBITDA |
$ |
87,641 |
|
|
90,117 |
|
|
|
|
|
|
|
|
__________________(a) Severance expense related to a 2016
reduction in headcount event and transitioning executive leadership
at MONI.(b) Gross subscriber acquisition costs and Revenue
associated with subscriber acquisition costs for the three months
ended March 31, 2016 has been restated to include $367,000 of
costs and $170,000 of revenue, respectively, related to MONI's
direct-to-consumer sales channel activities for the period.
The following table provides a reconciliation of
MONI’s net loss to total Adjusted EBITDA to Pre-SAC Adjusted EBITDA
for the periods indicated (amounts in thousands):
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
Net loss |
$ |
(21,013 |
) |
|
(20,210 |
) |
Amortization of
subscriber accounts, dealer network and other intangible
assets |
59,547 |
|
|
61,322 |
|
Depreciation |
2,120 |
|
|
1,975 |
|
Stock-based
compensation |
518 |
|
|
522 |
|
Radio conversion
costs |
232 |
|
|
9,079 |
|
Rebranding marketing
program |
847 |
|
|
173 |
|
LiveWatch acquisition
contingent bonus charges |
968 |
|
|
900 |
|
Integration /
implementation of company initiatives |
641 |
|
|
— |
|
Severance expense
(a) |
27 |
|
|
245 |
|
Impairment of
capitalized software |
713 |
|
|
— |
|
Interest expense |
35,838 |
|
|
31,224 |
|
Income tax expense |
1,784 |
|
|
1,790 |
|
Adjusted EBITDA |
82,222 |
|
|
87,020 |
|
Gross subscriber
acquisition costs (b) |
9,033 |
|
|
6,366 |
|
Revenue associated with
subscriber acquisition costs (b) |
(1,392 |
) |
|
(1,295 |
) |
Pre-SAC Adjusted
EBITDA |
$ |
89,863 |
|
|
92,091 |
|
|
|
|
|
|
|
|
__________________(a) Severance expense related to a 2016
reduction in headcount event and transitioning executive leadership
at MONI.(b) Gross subscriber acquisition costs and Revenue
associated with subscriber acquisition costs for the three months
ended March 31, 2016 has been restated to include $367,000 of
costs and $170,000 of revenue, respectively, related to MONI's
direct-to-consumer sales channel activities for the period.
Presented below is the reconciliation of Net revenue for MONI
and Ascent Capital to Pre-SAC net revenue (amounts in
thousands):
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Net revenue, as
reported |
$ |
141,200 |
|
|
143,268 |
|
Revenue associated with
subscriber acquisition cost |
(1,392 |
) |
|
(1,295 |
) |
Pre-SAC net
revenue |
$ |
139,808 |
|
|
141,973 |
|
|
|
|
|
|
|
|
Contact:
Erica Bartsch
Sloane & Company
212-446-1875
ebartsch@sloanepr.com
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