Headquartered in
Highlights1:
Ascent Chairman and Chief Executive Officer
"Additionally, we continue to exercise a disciplined approach to capital
allocation. The authorization to repurchase an additional
Three and Nine Months Ended
For the three months ended
Ascent's total cost of services for the three and nine months ended
Selling, general & administrative ("SG&A") costs increased 2.0% to
Ascent's Adjusted EBITDA increased 17.1% to
Ascent reported net losses from continuing operations for the three and
nine months ended
For the three months ended
Monitronics' total cost of services for the three and nine months ended
Monitronics' SG&A costs increased 3.0% to
Monitronics' Adjusted EBITDA for the three months ended
The table below presents subscriber data for the twelve months ended
Twelve Months Ended |
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2014 | 2013 | |||||||||
Beginning balance of accounts | 1,041,740 | 717,488 | ||||||||
Accounts acquired | 155,568 | 437,860 | ||||||||
Accounts canceled | (132,153 | ) | (106,859 | ) | ||||||
Canceled accounts guaranteed by dealer and acquisition adjustments (a) | (8,014 | ) | (b) | (6,749 | ) | (c) | ||||
Ending balance of accounts | 1,057,141 | 1,041,740 | ||||||||
Monthly weighted average accounts | 1,049,454 | 847,673 | ||||||||
Attrition rate | (12.6 | )% | (12.6 | )% | ||||||
________________________________________ |
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(a) | Includes canceled accounts that are contractually guaranteed to be refunded from holdback. | |
(b) |
Includes a net increase of 1,385 subscriber accounts related to the
Security Networks Acquisition. These acquisition adjustments include
a favorable adjustment of 1,503 accounts associated with multi-site
subscribers that were considered single accounts prior to the
completion of the Security Networks integration in |
|
(c) |
Includes 1,946 subscriber accounts that were proactively canceled
during the third quarter of 2013 because they were active with both
|
|
Monitronics' trailing twelve months attrition for the period
Ascent Liquidity and Capital Resources
At
During the nine months ended
At
On
Conference Call
Ascent will host a conference call today,
A replay of the call can be accessed through
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, acquisition opportunities, market potential, consumer demand for interactive and home automation services, benefits from the integration of Security Networks' operations, future financial prospects, the continuation of our stock repurchase program 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, our ability to capitalize on acquisition opportunities, general market and economic conditions (including those conducive to stock repurchases), 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. AND SUBSIDIARIES |
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Condensed Consolidated Balance Sheets |
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Amounts in thousands, except share amounts |
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(unaudited) |
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2014 |
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Assets |
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Current assets: | ||||||||
Cash and cash equivalents | $ | 50,594 | $ | 44,701 | ||||
Restricted cash | 91 | 40 | ||||||
Marketable securities, at fair value | 131,531 | 129,496 | ||||||
Trade receivables, net of allowance for doubtful accounts of |
13,916 | 13,019 | ||||||
Deferred income tax assets, net | 7,128 | 7,128 | ||||||
Income taxes receivable | — | 7 | ||||||
Prepaid and other current assets | 6,863 | 8,400 | ||||||
Assets held for sale | 18,935 | 1,231 | ||||||
Total current assets | 229,058 | 204,022 | ||||||
Property and equipment, net of accumulated depreciation of |
35,700 | 56,528 | ||||||
Subscriber accounts, net of accumulated amortization of |
1,366,250 | 1,340,954 | ||||||
Dealer network and other intangible assets, net of accumulated
amortization of |
49,800 | 64,635 | ||||||
Goodwill | 527,502 | 527,502 | ||||||
Other assets, net | 28,859 | 32,152 | ||||||
Total assets | $ | 2,237,169 | $ | 2,225,793 | ||||
Liabilities and Stockholders' Equity |
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Current liabilities: | ||||||||
Accounts payable | $ | 6,871 | $ | 7,096 | ||||
Accrued payroll and related liabilities | 5,515 | 3,602 | ||||||
Other accrued liabilities | 42,526 | 34,431 | ||||||
Deferred revenue | 14,719 | 14,379 | ||||||
Holdback liability | 18,502 | 19,758 | ||||||
Current portion of long-term debt | 9,166 | 9,166 | ||||||
Liabilities of discontinued operations | 6,354 | 7,136 | ||||||
Total current liabilities | 103,653 | 95,568 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 1,626,079 | 1,572,098 | ||||||
Long-term holdback liability | 6,239 | 6,698 | ||||||
Derivative financial instruments | 3,330 | 2,013 | ||||||
Deferred income tax liability, net | 19,441 | 16,851 | ||||||
Other liabilities | 15,311 | 17,808 | ||||||
Total liabilities | 1,774,053 | 1,711,036 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, |
— | — | ||||||
Series A common stock, |
134 | 137 | ||||||
Series B common stock, |
4 | 4 | ||||||
Series C common stock, |
— | — | ||||||
Additional paid-in capital | 1,452,944 | 1,470,056 | ||||||
Accumulated deficit | (988,314 | ) | (957,179 | ) | ||||
Accumulated other comprehensive income (loss), net | (1,652 | ) | 1,739 | |||||
Total stockholders' equity | 463,116 | 514,757 | ||||||
Total liabilities and stockholders' equity | $ | 2,237,169 | $ | 2,225,793 | ||||
ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIES |
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
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Amounts in thousands, except share and per share amounts |
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(unaudited) |
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Three Months Ended |
Nine Months Ended |
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2014 | 2013 | 2014 | 2013 | |||||||||||
Net revenue | $ | 136,027 | 115,844 | $ | 403,587 | 318,275 | ||||||||
Operating expenses: | ||||||||||||||
Cost of services | 24,835 | 20,155 | 69,907 | 50,951 | ||||||||||
Selling, general, and administrative, including stock-based |
24,336 | 23,870 | 77,609 | 65,116 | ||||||||||
Amortization of subscriber accounts, dealer network and other |
64,341 | 55,746 | 189,382 | 146,059 | ||||||||||
Depreciation | 2,525 | 2,305 | 7,851 | 6,360 | ||||||||||
Restructuring charges | 51 | 402 | 969 | 402 | ||||||||||
Gain on disposal of operating assets, net | — | (17 | ) | (69 | ) | (5,473 | ) | |||||||
116,088 | 102,461 | 345,649 | 263,415 | |||||||||||
Operating income | 19,939 | 13,383 | 57,938 | 54,860 | ||||||||||
Other income (expense), net: | ||||||||||||||
Interest income | 822 | 909 | 2,542 | 2,816 | ||||||||||
Interest expense | (29,894 | ) | (26,022 | ) | (87,761 | ) | (66,650 | ) | ||||||
Other income (expense), net | (10 | ) | 504 | 1,607 | 1,962 | |||||||||
(29,082 | ) | (24,609 | ) | (83,612 | ) | (61,872 | ) | |||||||
Loss from continuing operations before income taxes | (9,143 | ) | (11,226 | ) | (25,674 | ) | (7,012 | ) | ||||||
Income tax benefit (expense) from continuing operations | (1,849 | ) | 3,571 | (5,207 | ) | 1,883 | ||||||||
Net loss from continuing operations | (10,992 | ) | (7,655 | ) | (30,881 | ) | (5,129 | ) | ||||||
Discontinued operations: | ||||||||||||||
Earnings (loss) from discontinued operations | (133 | ) | (83 | ) | (254 | ) | 256 | |||||||
Income tax expense from discontinued operations | — | — | — | (40 | ) | |||||||||
Earnings (loss) from discontinued operations, net of income tax | (133 | ) | (83 | ) | (254 | ) | 216 | |||||||
Net loss | (11,125 | ) | (7,738 | ) | (31,135 | ) | (4,913 | ) | ||||||
Other comprehensive income (loss): | ||||||||||||||
Foreign currency translation adjustments | (305 | ) | 351 | (107 | ) | (17 | ) | |||||||
Unrealized holding losses on marketable securities, net | (1,646 | ) | (1,024 | ) | (1,500 | ) | (3,176 | ) | ||||||
Unrealized gain (loss) on derivative contracts, net | 4,355 | (4,526 | ) | (1,784 | ) | 7,404 | ||||||||
Total other comprehensive income (loss), net of tax | 2,404 | (5,199 | ) | (3,391 | ) | 4,211 | ||||||||
Comprehensive loss | $ | (8,721 | ) | (12,937 | ) | $ | (34,526 | ) | (702 | ) | ||||
Basic and diluted earnings (loss) per share: | ||||||||||||||
Continuing operations | $ | (0.81 | ) | (0.54 | ) | $ | (2.26 | ) | (0.37 | ) | ||||
Discontinued operations | (0.01 | ) | (0.01 | ) | (0.02 | ) | 0.02 | |||||||
Net loss | $ | (0.82 | ) | (0.55 | ) | $ | (2.28 | ) | (0.35 | ) | ||||
Weighted average Series A and Series B shares - basic and diluted | 13,543,444 | 14,025,621 | 13,660,335 | 13,936,235 | ||||||||||
Total issued and outstanding Series A and Series B shares at period end | 13,780,603 | 14,383,315 | ||||||||||||
ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIES |
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Condensed Consolidated Statements of Cash Flows |
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Amounts in thousands |
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(unaudited) |
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Nine Months Ended |
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2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (31,135 | ) | (4,913 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Loss (earnings) from discontinued operations, net of income tax | 254 | (216 | ) | ||||
Amortization of subscriber accounts, dealer network and other intangible assets | 189,382 | 146,059 | |||||
Depreciation | 7,851 | 6,360 | |||||
Stock-based compensation | 5,141 | 5,535 | |||||
Deferred income tax expense (benefit) | 2,597 | (4,092 | ) | ||||
Gain on disposal of operating assets, net | (69 | ) | (5,473 | ) | |||
Long-term debt amortization | 3,255 | 1,263 | |||||
Other non-cash activity, net | 8,679 | 7,634 | |||||
Changes in assets and liabilities: | |||||||
Trade receivables | (6,657 | ) | (6,394 | ) | |||
Prepaid expenses and other assets | 1,612 | 2,617 | |||||
Payables and other liabilities | 8,294 | 21,549 | |||||
Operating activities from discontinued operations, net | (1,036 | ) | (278 | ) | |||
Net cash provided by operating activities | 188,168 | 169,651 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (5,035 | ) | (6,314 | ) | |||
Cost of subscriber accounts acquired | (202,429 | ) | (174,527 | ) | |||
Cash paid for acquisition, net of cash acquired | — | (479,795 | ) | ||||
Purchases of marketable securities | (3,535 | ) | (21,770 | ) | |||
Proceeds from sale of marketable securities | — | 15,384 | |||||
Increase in restricted cash | (51 | ) | (40 | ) | |||
Proceeds from the disposal of operating assets | 241 | 12,886 | |||||
Other investing activities | (436 | ) | — | ||||
Net cash used in investing activities |
(211,245 | ) | (654,176 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 139,500 | 594,875 | |||||
Payments on long-term debt | (88,774 | ) | (90,456 | ) | |||
Payments of financing costs | — | (11,079 | ) | ||||
Stock option exercises | 719 | 10 | |||||
Purchases and retirement of common stock | (22,475 | ) | — | ||||
Bond hedge and warrant transactions, net | — | (6,107 | ) | ||||
Other financing activities | — | (200 | ) | ||||
Net cash provided by financing activities | 28,970 | 487,043 | |||||
Net increase in cash and cash equivalents | 5,893 | 2,518 | |||||
Cash and cash equivalents at beginning of period | 44,701 | 78,422 | |||||
Cash and cash equivalents at end of period | $ | 50,594 | 80,940 | ||||
Supplemental cash flow information: | |||||||
State taxes paid, net | $ | 2,644 | 2,350 | ||||
Interest paid | 67,314 | 49,324 | |||||
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),
restructuring charges, stock-based compensation, and other non-cash or
nonrecurring charges.
The following table provides a reconciliation of Ascent's total Adjusted EBITDA to net loss from continuing operations for the periods indicated (amounts in thousands):
Three Months Ended |
Nine Months Ended |
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2014 | 2013 | 2014 | 2013 | |||||||||||
Total Adjusted EBITDA | $ | 88,580 | 75,659 | $ | 265,070 | 218,183 | ||||||||
Amortization of subscriber accounts, dealer |
(64,341 | ) | (55,746 | ) | (189,382 | ) | (146,059 | ) | ||||||
Depreciation | (2,525 | ) | (2,305 | ) | (7,851 | ) | (6,360 | ) | ||||||
Stock-based compensation | (1,734 | ) | (1,752 | ) | (5,141 | ) | (5,535 | ) | ||||||
Restructuring charges | (51 | ) | (402 | ) | (969 | ) | (402 | ) | ||||||
Security Networks acquisition related costs | — | (1,032 | ) | — | (2,470 | ) | ||||||||
Security Networks integration related costs | — | (535 | ) | (2,182 | ) | (535 | ) | |||||||
Interest income | 822 | 909 | 2,542 | 2,816 | ||||||||||
Interest expense | (29,894 | ) | (26,022 | ) | (87,761 | ) | (66,650 | ) | ||||||
Income tax benefit (expense) from |
(1,849 | ) | 3,571 | (5,207 | ) | 1,883 | ||||||||
Net loss from continuing operations | $ | (10,992 | ) | (7,655 | ) | $ | (30,881 | ) | (5,129 | ) | ||||
The following table provides a reconciliation of
Three Months Ended |
Nine Months Ended |
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2014 | 2013 | 2014 | 2013 | |||||||||||
Total Adjusted EBITDA | $ | 91,138 | 77,649 | $ | 270,674 | 217,472 | ||||||||
Amortization of subscriber accounts, dealer network |
(64,341 | ) | (55,746 | ) | (189,382 | ) | (146,059 | ) | ||||||
Depreciation | (2,246 | ) | (1,910 | ) | (6,827 | ) | (5,119 | ) | ||||||
Stock-based compensation | (511 | ) | (361 | ) | (1,407 | ) | (1,125 | ) | ||||||
Restructuring charges | (51 | ) | (402 | ) | (969 | ) | (402 | ) | ||||||
Security Networks acquisition related costs | — | (1,032 | ) | — | (2,470 | ) | ||||||||
Security Networks integration related costs | — | (535 | ) | (2,182 | ) | (535 | ) | |||||||
Interest expense | (30,422 | ) | (25,732 | ) | (89,404 | ) | (66,325 | ) | ||||||
Income tax benefit (expense) |
(1,899 | ) | 3,582 | (5,211 | ) | 2,017 | ||||||||
Net loss | $ | (8,332 | ) | (4,487 | ) | $ | (24,708 | ) | (2,546 | ) | ||||
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1 | Comparisons are year-over-year unless otherwise specified. | |
2 |
For a definition of Adjusted EBITDA and applicable reconciliations,
see the Appendix to this release. Ascent's net loss for the three
and nine months ended |
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3 |
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4 | Calculated as the average recurring monthly revenue per subscriber. | |
ebartsch@sloanepr.com
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