Stingray Group Inc. (TSX: RAY.A; RAY.B) (the “Corporation”;
“Stingray”), a leading distributor of audio and video music brands
in the world, today announced its financial results for the fourth
quarter and fiscal year ended March 31, 2023.
Financial Highlights(in thousands of Canadian
dollars, except per share data) |
Three months endedMarch 31 |
Twelve months endedMarch 31 |
|
2023 |
|
2022 |
|
% |
|
2023 |
|
2022 |
|
% |
|
Revenues |
78,931 |
|
72,644 |
|
8.7 |
|
323,944 |
|
282,626 |
|
14.6 |
|
Adjusted EBITDA(2) |
26,573 |
|
21,023 |
|
26.4 |
|
114,140 |
|
99,269 |
|
15.0 |
|
Net income |
4,447 |
|
4,466 |
|
(0.4 |
) |
30,119 |
|
33,287 |
|
(9.5 |
) |
Per share – diluted ($) |
0.06 |
|
0.06 |
|
(0.0 |
) |
0.43 |
|
0.47 |
|
(8.5 |
) |
Adjusted Net income(2) |
14,668 |
|
11,780 |
|
24.5 |
|
55,202 |
|
56,389 |
|
(2.1 |
) |
Per share – diluted ($)(2) |
0.21 |
|
0.17 |
|
23.5 |
|
0.79 |
|
0.79 |
|
(0.0 |
) |
Cash flow from operating activities |
27,552 |
|
22,127 |
|
24.5 |
|
86,949 |
|
83,663 |
|
3.9 |
|
Adjusted free cash flow(2) |
14,909 |
|
11,833 |
|
26.0 |
|
63,662 |
|
56,933 |
|
11.8 |
|
(1) |
Recurring Commercial Music revenues include subscriptions and usage
in addition to fixed fees charged to our customers on a monthly,
quarterly and annual basis for continuous music, advertising and
digital signage services and excludes credits to clients related to
the COVID-19 pandemic. Non-recurring revenues mainly include
support, installation, equipment, one-time fees and discontinued
operations. Non-recurring revenues are excluded from the organic
growth, as well as the impact of foreign exchange and revenues from
subsidiary DJ Matic. |
|
|
(2) |
This is a
non-IFRS measure and is not a standardized financial measure. Our
method of calculating such financial measures may differ from the
methods used by other issuers and, accordingly, our definition of
these non-IFRS financial measures may not be comparable to similar
measures presented by other issuers. Refer to “Supplemental
Information on Non-IFRS Measures” on pages 31-32 of our Q4 2023
MD&A for more information on each non-IFRS measure. For
reconciliations to the most directly comparable IFRS financial
measure, refer to “Non-IFRS Measures” further into this news
release. |
|
|
Reporting on Stingray’s fiscal 2023 and fourth
quarter performance, President, Co-Founder and CEO Eric Boyko
stated: “Fiscal 2023 has proven to be a transformational year with
the InStore Audio Network (ISAN) acquisition becoming a cornerstone
of our Broadcasting and Commercial Music segment and the
streamlining of operations sharpening our focus on high-growth
drivers like retail media, FAST channels, in-car entertainment, and
B2B-driven subscription video on demand (SVOD). These strategic
initiatives contributed to increasing our revenues by 14.6% to
$323.9 million in 2023, while Adjusted EBITDA improved 15.0% to
$114.1 million. Equally important, these actions have positioned
Stingray for sustained, long-term profitable growth.”
“Broadcasting and Commercial Music revenues grew
22.7% to $195.2 million in 2023, primarily driven by the
acquisition of InStore Audio Network, increased equipment and
installation sales related to digital signage, in- car revenues
increasing and a positive foreign exchange impact partially offset
by decrease in B2C and Music Video on Demand revenues. Radio
revenues, meanwhile, progressed 4.2% year-over-year to $128.7
million largely due to growth in local airtime and digital
revenues.”
“In the fourth quarter, consolidated revenues
rose 8.7% year-over-year to $78.9 million on the strength of
increased equipment and installation sales related to digital
signage, an increase in InStore Audio Network revenues and greater
Radio revenues. Adjusted EBITDA in the fourth quarter surged 26.4%
to $26.6 million on higher revenues combined with a lower
operational cost base.”
“Looking ahead, we intend to accelerate our
sell-through with existing customers and secure new accounts to
grow our Broadcasting and Commercial Music business, which is
operating on an Adjusted EBITDA run-rate of $80.0 million for 2024.
We will continue generating healthy cash flows from our Radio
segment to fund our growth strategy. We will also maintain our
financial discipline to keep our consolidated Adjusted EBITDA
margin above 35%. Finally, we will reduce our debt level to create
added flexibility in order to target acquisitions on an
opportunistic basis. To sum up, the future looks promising for
Stingray with ample room for expansion as strategic growth revenues
have slightly reached over the 50-50 parity with cash flow revenues
from our traditional cable and radio activities,” Mr. Boyko
concluded.
Fourth Quarter ResultsRevenues
in the fourth quarter increased $6.3 million, or 8.7%, to $78.9
million from $72.6 million in the fourth quarter of 2022. The
growth was mainly due to an increase in equipment and installation
sales related to digital signage, an increase in InStore Audio
Network revenues, to an increase in Radio revenues driven by growth
in digital sales and a positive foreign exchange impact.
Revenues in Canada improved $3.1 million, or
7.9%, to $43.6 million from $40.5 million in the same period in
2022. The growth can be attributed to an increase in Radio revenues
based on higher digital sales and an increase in equipment and
installation sales related to digital signage.
Revenues in the United States grew $2.9 million,
or 14.7%, to $22.0 million from $19.1 million in the fourth quarter
of 2022. The increase was primarily due to the acquisition of
InStore Audio Network and a positive foreign exchange impact.
Revenues in Other countries improved $0.3 million, or 1.9%, to
$13.3 million from $13.0 million in the fourth quarter of 2022. The
growth can be attributed to a positive foreign exchange rate
impact.
Broadcasting and Commercial Music revenues in
the fourth quarter of 2023 increased $4.4 million, or 9.8%, to
$50.0 million from $45.6 million in the fourth quarter of 2022. The
growth was driven by higher equipment and installation sales
related to digital signage and a positive foreign exchange
impact.
For the fourth quarter of 2023, Radio revenues
grew $1.8 million, or 6.7%, to $28.9 million from $27.1 million in
the same period of 2022. This increase was largely due to growth in
local airtime and digital revenues.
Adjusted EBITDA in the fourth quarter of 2023
increased $5.6 million, or 26.4%, to $26.6 million from $21.0
million in the fourth quarter of 2022. Adjusted EBITDA margin in
the fourth quarter of 2023 improved to 33.7% from 28.9% in the same
period last year. The increase in Adjusted EBITDA was mainly due to
higher revenues year-over-year, while the improvement in Adjusted
EBITDA margin can be attributed to lower operating costs in the
Broadcasting and Commercial Music segment following cost-saving
initiatives implemented in fiscal 2023.
For the fourth quarter of 2022, net income
totaled $4.4 million ($0.06 per share) compared to $4.5 million
($0.06 per share) in the fourth quarter of 2022. The decrease was
mainly related to a higher interest expense and lower gain on the
fair value of derivative financial instruments and on the fair
value of contingent consideration, partially offset by higher
operating results. Adjusted net income amounted to $14.7 million
($0.21 per share) in the fourth quarter compared to $11.8 million
($0.17 per share) in the same period last year. The increase can be
attributed to higher operating results, partially offset by a
greater interest expense and a lower gain in the fair value of
contingent consideration.
Cash flow generated from operating activities
amounted to $27.6 million in the fourth quarter of 2023 compared to
$22.1 million in the fourth quarter of 2022. The increased was
primarily due to improved operating results. Adjusted free cash
flow generated in the fourth quarter of 2023 totaled $14.9 million
compared to $11.8 million in the same period last year. The
increased was mainly related to improved operating results,
partially offset by higher interest paid.
As of March 31, 2023, the Corporation had cash
and cash equivalents of $15.5 million, subordinated debt of $25.5
million and credit facilities of $361.0 million, of which
approximately $68.6 million was available.
Full Year ResultsFiscal 2023
revenues increased $41.3 million, or 14.6%, to $323.9 million from
$282.6 million in fiscal 2022. The growth was primarily due to the
acquisition of InStore Audio Network, improved Radio revenues,
higher equipment and installation sales related to digital signage,
in-car revenues increasing and a positive foreign exchange impact.
These factors were partially offset by a decrease in B2C and Music
Video on Demand revenues.
Adjusted EBITDA in fiscal 2023 increased $14.8
million, or 15.0%, to $114.1 million from $99.3 million in 2022.
Adjusted EBITDA margin in 2023 reached 35.2% compared to 35.1% in
2022. The improvement in Adjusted EBITDA and EBITDA Margin can
mainly be attributed to the InStore Audio Network acquisition and
higher revenues partially offset by the Canadian Emergency Wage
Subsidy (CEWS) in the comparable period.
Net income in fiscal 2023 totaled $30.1 million
($0.43 per share) compared to $33.3 million ($0.47 per share) in
2022. The decline was mainly due to a gain on the fair value of
contingent consideration in the comparative period and to higher
interest expense, partially offset by higher operating results.
Adjusted net income in fiscal 2023 amounted to
$55.2 million ($0.79 per share) compared to $56.4 million ($0.79
per share) in 2022. The decline was mainly related to a gain on the
fair value of contingent consideration in the comparative period
and to higher interest expense, partially offset by higher
operating results.
Declaration of DividendThe
Corporation declared a dividend of $0.075 per subordinate voting
share, variable subordinate voting share and multiple voting share
on March 22, 2023. The dividend will be payable on or around June
15, 2023, to shareholders on record as of May 31, 2023.
The Corporation’s dividend policy is at the
discretion of the Board of Directors and may vary depending upon,
among other things, our available cash flow, results of operations,
financial condition, business growth opportunities and other
factors that the Board of Directors may deem relevant.
The dividends paid are designated as "eligible"
dividends for the purposes of the Income Tax Act (Canada) and any
corresponding provisions of provincial and territorial tax
legislation.
Business Highlights
- On March 31,
2023, the Corporation acquired the assets and business of the
Ultimate Trivia Network, a move that paves the way for the launch
of an exciting new product, Ultimate Trivia by Stingray.
Initially launching as an ad-supported linear channel,
Ultimate Trivia by Stingray promises to deliver a captivating and
interactive experience for kids and adults of all ages.
- On March 15,
2023, the Corporation announced that Qello Concerts, the premium
streaming service that offers full-length concerts and
award-winning music documentaries across all genres and eras, is
now available on Verizon’s +play- the cutting-edge platform built
by Verizon for customers to shop for, manage and save on their
favorite subscriptions, all in one place.
- On March 1,
2023, the Corporation announced a global deal with Harman, the
premier connected technologies company for automotive, consumer and
enterprise markets, and CARIAD, Volkswagen Group’s software
company, to bring its popular Stingray Karaoke product to selected
Audi models around the globe.
- On February 7,
2023, the Corporation declared a dividend of $0.075 per subordinate
voting share, variable subordinate voting share and multiple voting
share. The dividend was paid on March 15, 2023, to shareholders on
record as of February 28, 2023.
- On January 23,
2023, the Corporation announced the launch of CalmLIFE, a brand-new
digital wellness resource to help viewers live better every day.
Comcast customers with Xfinity X1, Xfinity Flex or Xumo TV, and Cox
customers with Contour devices now have access to a plethora of
full-length 4K wellness assets, including meditation, sleep, and
nature videos.
- On January 3,
2023, the Corporation announced its latest partnership with The
Singing Machine Company, Inc. (“Singing Machine”) (NASDAQ: MICS) –,
the worldwide leader in consumer karaoke products, to launch the
world’s first fully-integrated hardware and software in-car karaoke
solution for the global automotive market.
Conference CallThe Corporation
will hold a conference call Tuesday, June 7, 2023, at 10:00 AM (ET)
to review its financial results. Interested parties can join the
call by dialing 416-764-8658 (Toronto) or 1-888-886-7786 (toll
free). A rebroadcast of the conference call will be available until
midnight, July 7, 2023, by dialing 416-764-8692 or 877-674-7070 and
entering passcode 541796.
About StingrayMontreal-based
Stingray (TSX: RAY.A; RAY.B) is a leading global music, media, and
technology company with close to 1,000 employees worldwide.
Stingray is a premium provider of curated direct-to-consumer and
B2B services, including audio television channels, over 100 radio
stations, SVOD content, 4K UHD television channels, FAST channels,
karaoke products, digital signage, in-store music, and music apps,
which have been downloaded over 160 million times. Stingray reaches
400 million subscribers (or users) in 160 countries.
Forward-Looking InformationThis
news release contains forward-looking information within the
meaning of applicable Canadian securities law. Such forward-looking
information includes, but is not limited to, information with
respect to Stingray's goals, beliefs, plans, expectations,
anticipations, estimates and intentions. Forward-looking
information is identified by the use of terms and phrases such as
"may", "would", "should", "could", "expect", "intend", "estimate",
"anticipate", "plan", "foresee", "believe", and "continue", or the
negative of these terms and similar terminology, including
references to assumptions. Please note, however, that not all
forward-looking information contains these terms and phrases.
Forward-looking information is based upon a number of assumptions
and is subject to a number of risks and uncertainties, many of
which are beyond Stingray's control. These risks and uncertainties
could cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, the risk
factors identified in Stingray's Annual Information Form for the
year ended March 31, 2023, which is available on SEDAR at
www.sedar.com. Consequently, all of the forward-looking information
contained herein is qualified by the foregoing cautionary
statements, and there can be no guarantee that the results or
developments that Stingray anticipates will be realized or, even if
substantially realized, that they will have the expected
consequences or effects on Stingray's business, financial condition
or results of operation. Unless otherwise noted or the context
otherwise indicates, the forward-looking information contained
herein is provided as of the date hereof, and Stingray does not
undertake to update or amend such forward-looking information
whether as a result of new information, future events or otherwise,
except as may be required by applicable law.
Non-IFRS MeasuresThe
Corporation believes that Adjusted EBITDA and Adjusted EBITDA
margin are important measures when analyzing its operating
profitability without being influenced by financing decisions,
non-cash items and income taxes strategies. Comparison with peers
is also easier as companies rarely have the same capital and
financing structure. The Corporation believes that Adjusted Net
income and Adjusted Net income per share are important measures as
it shows stable results from its operation which allows users of
the financial statements to better assess the trend in the
profitability of the business. The Corporation believes that
Adjusted free cash flow and Adjusted free cash flow per share are
important measures when assessing the amount of cash generated
after accounting for capital expenditures and non-core charges. It
demonstrates cash available to make business acquisitions, pay
dividend and reduce debt. The Corporation believes that Net debt
and Net debt to Pro Forma Adjusted EBITDA are important to analyse
the company's debt repayment capacity on an annualized basis,
taking into consideration the annualized adjusted EBITDA of
acquisitions made during the last twelve months. Each of these
non-IFRS financial measures is not an earnings or cash flow measure
recognized by International Financial Reporting Standards (IFRS)
and does not have a standardized meaning prescribed by IFRS. This
method of calculating such financial measures may differ from the
methods used by other issuers and, accordingly, our definition of
these non-IFRS financial measures may not be comparable to similar
measures presented by other issuers. Investors are cautioned that
non-IFRS financial measures should not be construed as an
alternative to net income determined in accordance with IFRS as
indicators of our performance or to cash flows from operating
activities as measures of liquidity and cash flows.
Adjusted EBITDA, Adjusted Net income and
LTM Adjusted EBITDA Reconciliation to Net income
|
3 months |
|
12 months |
(in thousands of Canadian dollars) |
March 31,2023Q4 2023 |
March 31,2022Q4 2022 |
|
March 31,2023Fiscal 2023 |
March 31,2022Fiscal 2022 |
Net income |
4,447 |
|
4,466 |
|
|
30,119 |
|
33,287 |
|
Net finance expense (income) |
3,749 |
|
(769 |
) |
|
26,835 |
|
6,119 |
|
Change in fair value of investments |
11 |
|
12 |
|
|
(289 |
) |
2 |
|
Income taxes |
753 |
|
191 |
|
|
9,540 |
|
9,013 |
|
Depreciation and write-off of property and equipment |
2,406 |
|
3,862 |
|
|
9,737 |
|
11,069 |
|
Depreciation of right-of-use assets |
1,225 |
|
1,201 |
|
|
4,506 |
|
5,076 |
|
Amortization of intangible assets |
4,547 |
|
4,176 |
|
|
18,737 |
|
19,399 |
|
Share-based compensation |
157 |
|
222 |
|
|
611 |
|
798 |
|
Performance and deferred share unit expense |
2,068 |
|
1,750 |
|
|
1,857 |
|
5,799 |
|
Acquisition, legal, restructuring and other expenses |
7,210 |
|
5,912 |
|
|
12,487 |
|
8,707 |
|
Adjusted EBITDA |
26,573 |
|
21,023 |
|
|
114,140 |
|
99,269 |
|
Adjusted EBITDA margin |
33.7 |
% |
28.9 |
% |
|
35.2 |
% |
35.1 |
% |
Net income |
4,447 |
|
4,466 |
|
|
30,119 |
|
33,287 |
|
Adjusted for: |
|
|
|
|
|
Change in fair value of derivative financial instruments |
(70 |
) |
(2,150 |
) |
|
739 |
|
(3,397 |
) |
Amortization of intangible assets |
4,547 |
|
4,176 |
|
|
18,737 |
|
19,399 |
|
Change in fair value of investments |
11 |
|
12 |
|
|
(289 |
) |
2 |
|
Share-based compensation |
157 |
|
222 |
|
|
611 |
|
798 |
|
Performance and deferred share unit expense |
2,068 |
|
1,750 |
|
|
1,857 |
|
5,799 |
|
Acquisition, legal, restructuring and other expenses |
7,210 |
|
5,912 |
|
|
12,487 |
|
8,707 |
|
Income taxes related to change in fair value of investments,
share-based compensation, performance and deferred share unit
expense, amortization of intangible assets, change in fair value of
derivative financial instruments and acquisition, legal,
restructuring and other expenses |
(3,702 |
) |
(2,608 |
) |
|
(9,059 |
) |
(8,206 |
) |
Adjusted Net income |
14,668 |
|
11,780 |
|
|
55,202 |
|
56,389 |
|
Average number of shares outstanding (diluted) |
69,459 |
|
70,655 |
|
|
69,770 |
|
71,464 |
|
Adjusted Net income per share (diluted) |
0.21 |
|
0.17 |
|
|
0.79 |
|
0.79 |
|
(in thousands of Canadian dollars) |
March 31,2023Fiscal 2023 |
|
March 31,2022Fiscal 2022 |
LTM Adjusted EBITDA |
114,140 |
|
|
99,269 |
|
Synergies and Adjusted EBITDA for the months prior to the business
acquisitions which are not already reflected in the results |
– |
|
|
16,000 |
|
COVID-19 credits allocated due to mandated store closures |
– |
|
|
1,535 |
|
Permanent cost-saving initiatives |
2,325 |
|
|
– |
|
Pro Forma Adjusted EBITDA |
116,465 |
|
|
116,804 |
|
Adjusted Free Cash Flow Reconciliation
to Cash Flow from Operating Activities
|
3 months |
|
12 months |
(in thousands of Canadian dollars) |
March 31,2023Q4 2023 |
March 31,2022Q4 2022 |
|
March 31,2023Fiscal 2023 |
March 31,2022Fiscal 2022 |
Cash flow from operating activities |
27,552 |
|
22,127 |
|
|
86,949 |
|
83,663 |
|
Add / Less : |
|
|
|
|
|
Acquisition of property and equipment |
(2,987 |
) |
(2,443 |
) |
|
(8,234 |
) |
(9,061 |
) |
Acquisition of intangible assets other than internally developed
intangible assets |
(383 |
) |
(355 |
) |
|
(1,281 |
) |
(1,134 |
) |
Addition to internally developed intangible assets |
(1,236 |
) |
(593 |
) |
|
(5,943 |
) |
(6,854 |
) |
Interest paid |
(6,842 |
) |
(3,391 |
) |
|
(23,892 |
) |
(14,384 |
) |
Repayment of lease liabilities |
(1,122 |
) |
(1,074 |
) |
|
(4,433 |
) |
(4,815 |
) |
Net change in non-cash operating working capital items |
(7,077 |
) |
(7,571 |
) |
|
7,482 |
|
24 |
|
Unrealized loss (gain) on foreign exchange |
(206 |
) |
(779 |
) |
|
527 |
|
787 |
|
Acquisition, legal, restructuring and other expenses |
7,210 |
|
5,912 |
|
|
12,487 |
|
8,707 |
|
Adjusted free cash flow |
14,909 |
|
11,833 |
|
|
63,662 |
|
56,933 |
|
Calculation of Net Debt and Net Debt to
Pro Forma Adjusted EBITDA Ratio
(in thousands of Canadian dollars) |
March 31, 2023 |
|
March 31, 2022 |
Credit facilities |
360,990 |
|
|
358,203 |
|
Subordinated debt |
25,543 |
|
|
25,442 |
|
Cash and cash equivalents |
(15,453 |
) |
|
(14,563 |
) |
Net debt |
371,080 |
|
|
369,082 |
|
Net debt to Pro Forma Adjusted EBITDA |
3.19 |
|
|
3.16 |
|
Note to readers: Annual
consolidated financial statements and Management’s Discussion &
Analysis of Operating Results and Financial Position are available
on the Corporation’s website at www.stingray.com and on SEDAR at
www.sedar.com.
Contact InformationMathieu
PéloquinSenior Vice-President, Marketing and
CommunicationsStingray(514) 664-1244, ext.
2362mpeloquin@stingray.com
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