oOh!media Limited (ASX:OML) has announced continued double-digit growth in revenue (up 13.1%) and Underlying EBITDA (up 22.5%), while delivering significantly improved operating margins for the year ended 31 December 2017 (CY17).
Digital revenue as a percentage of total revenue increased to a record 59.8% for the full year, extending the strong first half gains in revenue from oOh!media’s digital network of 8,000 screens.
oOh!media’s CEO, Brendon Cook, told us “oOh! has delivered a quality financial result which continues the strong performance since our listing in 2014. The Company has increased revenue by 46.0% and more than doubled Underlying EBITDA to $90.1m since 2014. While the Out Of Home sector has performed strongly, we’re growing our business faster than the Out Of Home market by continuing to lead the market in delivering innovative solutions for clients to integrate data and content as part of our audience-led strategy across our network. Over the course of the year we have worked with clients to deliver ground-breaking campaigns, leveraging our investment in data and audience insights, to deliver outstanding results for advertisers..
oOh!media grew earnings and profitability faster than revenue and increased its market share in the Out Of Home advertising sector, which, according to the Standard Media Index, grew at 7.3% in 2017 compared to the overall media sector growth of 0.7%.
Financial highlights included:
- Revenue of $380.3m, up 13.1% from the year ended 31 December 2016 (CY16), from strong organic growth and acquisitions made in CY16
- Gross profit of $175.5m, up 21.1% on CY16
- Gross profit margin of 46.2%, up from 43.1% in CY16
- Underlying EBITDA of $90.1m, up 22.5% on CY16 and within guidance reaffirmed at the half year result
- Underlying EBITDA1 margin expansion to 23.7% from 21.9% in CY16
- Capex of $33.9m – continued disciplined and focused approach to capex, down 13.0% on CY16
- Underlying NPATA1, , of $47.2m, an increase of 22.5% on CY16
- NPAT of $33.1m, up 35.5% from CY16
- Earnings per share of 20.2 cents per share, up 26.4% from prior year
- Fully franked final dividend of 10.5 cents per share, bringing full year dividend for CY17 to [15.0] cents per share fully franked, up 7.1% on CY16
Operational highlights included:
- Leading Out Of Home industry position maintained with 8,000 digital panels across Australia/New Zealand, 12,000 classic panels and 8 online platforms
- Balanced and diverse lease maturity profile maintained with only 12.1% of revenue attached to contracts up for renewal in CY18, and the cumulative percentage of revenues attached to leases expiring more than three years from the reporting date increased from 50.0% to 65.5% following several key concession extensions
- Acquisitions integrated with cost synergies achieved
- Ground-breaking campaigns conducted in CY17, integrating content, data and a combination of offline (Out Of Home and experiential) and online (Junkee Media and social media) platforms
The Company’s balance sheet remains strong, with the net debt/Underlying EBITDA ratio at 1.4 times compared to 1.6 times for the prior year and remaining well within the Company’s banking covenants.
The Company continues to generate strong cash flow, with free cash flow generated, excluding acquisitions, increasing by 45.0% to $16.6m.
Capital expenditure of $33.9m declined by 13.0% on the prior year, reflecting the Company’s ongoing disciplined approach to the digitisation of assets across the portfolio.
The Board declared a final, fully franked dividend of 10.5 cents per share, payable on 16 March 2018, bringing the full year dividend to 15.0 cents per share fully franked. This is in accordance with the 40-60% of Underlying NPATA payout ratio adopted by the Board. The final dividend for FY16 of 10.0 cents per share included a special dividend component of 3.0 cents per share, related to the proposed merger with APN Outdoor which was terminated on 19 May 2017.
oOh!media is confident of continued growth in the Out Of Home sector for 2018. The Board of Directors takes the opportunity to provide guidance for CY18 EBITDA of $94m-$99m. In providing this guidance, the Board continues its disciplined approach to capital expenditure and intends to spend between $30m-$40m in capex, primarily focused on the conversion of signs to digital and further development of business systems to continue oOh!media’s digital strategy.