- Net revenues increased 25% at actual rates
and 7% at constant rates to US$ 139.2 million -
- Operating income increased 61% at actual
rates and 43% at constant rates to US$ 20.9 million -
- OIBDA increased 45% at actual rates and
26% at constant rates to US$ 30.7 million -
ANNOUNCES DEBT REPRICING, REDUCED BORROWING
COST AND IMPROVED MATURITY PROFILE
WILL REPAY EUR 110.0 MILLION OF DEBT WITH
PROCEEDS FROM NEWLY EXERCISED WARRANTS
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, 2018.
Following the previously announced agreement to sell 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.
Operational and financial highlights:
- TV advertising revenues increased 26%
at actual rates and 7% at constant rates.
- Carriage fees and subscription revenues
increased 23% at actual rates and 8% at constant rates.
- OIBDA increased 45% at actual rates and
26% at constant rates, resulting in OIBDA margin expansion to 22%
from 19%.
- The increase in OIBDA improved
operating income 61% at actual rates and 43% at constant
rates.
- Unlevered free cash flow for the three
months ended March 31, 2018 increased 37%.
- The improvement in our operations
reduced our net leverage ratio to 4.8x at the end of the quarter.
Following the agreed debt repricing, our cost of borrowing will
decrease by nearly 200 basis points to about 4.0% beginning in May
2018.
- On April 25, 2018, Time Warner
exercised 100,926,996 warrants and we will apply the proceeds of
US$ 100.9 million, along with excess cash on hand, to repay EUR
110.0 million of the outstanding principal balance of the 2018 Euro
Term Loan.
- Proceeds from the sale of our
operations in Croatia and Slovenia, which we expect to close in the
second quarter subject to remaining regulatory approvals and other
customary closing conditions, will be used to repay debt, and
together with the agreed repricing would decrease our cost of
borrowing by an additional 80 basis points to approximately
3.2%.
Michael Del Nin, Co-Chief Executive Officer, commented: "Today’s
series of announcements bode very well for the future of CME.
Firstly, the financial results for Q1 represent our strongest start
to any year in a decade. The increase in profitability and cash
flow generation in the quarter have helped drive down our leverage
ratio and, when paired with the proceeds from warrants that have
now been exercised, allow us to complete another key step in our
ongoing deleveraging plan. But just as importantly, the new
refinancing transactions, which address the maturity profile of our
debt and significantly cut our borrowing costs to record lows, put
in place the capital structure that we need for the exciting next
phase of the company’s future."
Christoph Mainusch, Co-Chief Executive Officer, added: "We won
the prime time grid in each country nearly every night during the
quarter, which contributed to significant revenue growth. Our
channels provide extensive reach for advertisers because they
continue to be the most popular source of news and entertainment in
our countries. We will invest in local content, while focusing on
controlling costs overall, and remain market leaders in our
territories."
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, 2018 and 2017 were:
(US$ 000's, except per share data) For the
Three Months Ended March 31, (unaudited) 2018
2017 % Actual
% Lfl (1) Net revenues $ 139,182 $ 111,732
24.6% 6.8% Operating income 20,945 13,024 60.8% 43.3% Operating
margin 15.0% 11.7% 3.3 p.p. 3.8 p.p. OIBDA 30,667 21,092 45.4%
26.4% OIBDA margin 22.0% 18.9% 3.1 p.p. 3.4 p.p. Income / (loss)
from continuing operations 6,084 (5,982) NM (2) NM (2) Income /
(loss) from continuing operations per share - basic 0.01 (0.05) NM
(2) NM (2) Income / (loss) from continuing operations per share -
diluted $ 0.01 $ (0.05) NM (2) NM (2) (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
first quarter results on Thursday, April 26, 2018 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 +1-323-701-0225 ten minutes prior to the start time and
reference passcode 7296178. 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, 2018 as well as the following: the effect of
changes in global and regional economic conditions and the extent,
timing and duration of the recovery 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 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 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; our ability to
consummate the sale of our operations in Croatia and Slovenia; 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, 2018. 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, 2018, which was filed with the Securities and
Exchange Commission on April 26, 2018.
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 26 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 and PRO TV Chisinau) 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”.
For additional information, please visit www.cme.net.
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,
2018 2017 Net
revenues $ 139,182 $ 111,732
Operating expenses: Content costs 69,806 58,645 Other
operating costs 12,687 11,255 Depreciation of property, plant and
equipment 7,366 5,959 Amortization of broadcast licenses and other
intangibles 2,356 2,109
Cost of revenues
92,215 77,968 Selling, general and administrative
expenses 26,022 20,740
Operating income
20,945 13,024 Interest expense (15,012 ) (18,993 )
Loss on extinguishment of debt (109 ) — Other non-operating income,
net 4,157 2,232
Income / (loss) before tax
9,981 (3,737 ) Provision for income taxes
(3,897 ) (2,245 )
Income / (loss) from continuing operations
6,084 (5,982 ) Income / (loss) from
discontinued operations, net of tax 988 (5,292 )
Net
income / (loss) 7,072 (11,274 ) Net loss
attributable to noncontrolling interests 178 209
Net income / (loss) attributable to CME Ltd. $
7,250 $ (11,065 ) PER
SHARE DATA: Net income / (loss) per share: Continuing
operations — basic $ 0.01 $ (0.05 ) Continuing operations — diluted
0.01 (0.05 ) Discontinued operations — basic 0.01 (0.04 )
Discontinued operations — diluted 0.00 (0.04 ) Net income / (loss)
attributable to CME Ltd. - basic 0.02 (0.09 ) Net income / (loss)
attributable to CME Ltd. - diluted $ 0.01 $ (0.09 ) Weighted
average common shares used in computing per share amounts (000's):
Basic 158,039 154,795 Diluted 241,905 154,795
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(US$ 000's)
(unaudited)
March 31, 2018 December 31, 2017 ASSETS
Cash and cash equivalents $ 74,264 $ 54,903 Other current assets
250,978 261,715 Assets held for sale 143,481 148,156
Total current assets 468,723 464,774 Property,
plant and equipment, net 105,850 103,648 Goodwill and other
intangible assets, net 1,059,576 1,042,764 Other non-current assets
15,777 16,869
Total assets $
1,649,926 $ 1,628,055
LIABILITIES AND EQUITY Accounts payable and accrued
liabilities $ 147,213 $ 143,893 Current portion of long-term debt
and other financing arrangements 3,439 2,960 Other current
liabilities 33,322 9,280 Liabilities held for sale 33,361
32,131
Total current liabilities 217,335
188,264 Long-term debt and other financing arrangements
1,054,322 1,085,714 Other non-current liabilities 97,542
95,254
Total liabilities $ 1,369,199
$ 1,369,232 Series B Convertible
Redeemable Preferred Stock $ 267,040 $ 264,593
EQUITY
Common Stock $ 11,858 $ 11,639 Additional paid-in capital 1,905,969
1,905,779 Accumulated deficit (1,728,518 ) (1,735,768 ) Accumulated
other comprehensive loss (175,254 ) (187,438 )
Total CME Ltd.
shareholders' equity / (deficit) 14,055 (5,788
) Noncontrolling interests (368 ) 18
Total equity
/ (deficit) 13,687 (5,770 )
Total liabilities and equity $ 1,649,926
$ 1,628,055
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(US$ 000's)
(unaudited)
For the Three MonthsEnded March 31,
2018 2017 Net cash
generated from continuing operating activities $ 66,525 $ 50,420
Net cash used in continuing investing activities (4,085 ) (5,933 )
Net cash used in continuing financing activities (60,447 ) (26 )
Net cash provided by discontinued operations 14,837 1,109 Impact of
exchange rate fluctuations on cash and cash equivalents 2,531
(152 )
Net increase in cash and cash equivalents
$ 19,361 $ 45,418
Supplemental disclosure of cash flow information: Cash paid
for interest (including mandatory cash-pay guarantee fees) $ 4,232
$ 4,133 Cash paid for income taxes, net of refunds $ 4,027 $ 2,121
Supplemental disclosure of non-cash financing
activities: Accretion on Series B Convertible Redeemable
Preferred Stock $ 2,447 $ 2,357
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. From January 1, 2018,
stock-based compensation and certain operating costs incurred on
behalf of our segments at the corporate level have been allocated
to our segments for purposes of evaluating their performance. Prior
period information has been recast to conform to the current period
presentation. 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, 2018 and 2017:
(US$ 000's) For the Three Months Ended
March 31, (unaudited) 2018
2017 % Actual %
Lfl (1) Net revenues Bulgaria $ 19,433 $ 15,305
27.0% 10.2% Czech Republic 51,534 39,474 30.6% 6.5% Romania 45,961
38,944 18.0% 5.4% Slovak Republic 22,953 18,340 25.2% 8.6%
Intersegment revenues (699) (331) NM (2) NM (2)
Total net
revenues $ 139,182 $ 111,732
24.6% 6.8% US$ 000's) For the
Three Months Ended March 31, (unaudited) 2018
2017 % Act % Lfl (1) OIBDA
Bulgaria $ 2,981 $ 1,258 137.0% 105.4% Czech Republic 15,370 10,747
43.0% 16.6% Romania 18,893 14,460 30.7% 16.7% Slovak Republic 1,103
748 47.5% 27.2% Elimination 12 (8) NM (2) NM (2)
Total Operating
Segments 38,359 27,205 41.0% 21.3%
Corporate (7,692) (6,113) (25.8)% (4.4)%
Total OIBDA
$ 30,667 $ 21,092 45.4%
26.4% (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. From
January 1, 2018, stock-based compensation and certain operating
costs incurred on behalf of our segments at the corporate level
have been allocated to our segments for purposes of evaluating
their performance. Prior period information has been recast to
conform to the current period presentation. 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, 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 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 Months Ended March
31,
(unaudited) 2018 2017 Operating
income $ 20,945 $ 13,024
Depreciation of property, plant and equipment 7,366 5,959
Amortization of intangible assets 2,356 2,109
Total OIBDA
$ 30,667 $ 21,092
(US$ 000's) For the Three Months Ended March 31,
(unaudited) 2018 2017
Net cash generated from continuing operating activities
$ 66,525 $ 50,420 Capital expenditures,
net of proceeds from disposals (4,085 ) (5,933 )
Free cash
flow 62,440 44,487 Cash paid for interest
(including mandatory cash-pay guarantee fees) 4,232 4,133
Unlevered free cash flow from continuing operating
activities $ 66,672 $ 48,620
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180425006949/en/
Central European Media EnterprisesMark KobalHead of Investor
Relations+420 242 465 576mark.kobal@cme.net
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