QMS Delivers H1 CY19 Revenue & Earnings Growth
QMS Media Limited (ASX: QMS) today announced its financial results for the six months to 30 June 2019 (H1 CY19), delivering a strong operational and financial performance against all key business measures.
Group Statutory Financial highlights:
- Revenue up 23% to $128.9 million (up 24% to $130.5 million pre AASB 16).
- Gross profit up 85% to $90.5 million (up 45% to $70.9 million pre AASB 16).
- Gross profit margin of 70% (54% pre AASB 16).
- Underlying EBITDA up 144% to $56.4 million (up 47% to $33.9 million pre AASB 16).
- NPATA up 41% to $21.9 million (up 31% to $20.3 million pre AASB 16).
- NPAT up 65% $16.5 million (up 49% to $14.9 million pre AASB 16).
- Net Debt / Underlying EBITDA of 2.7x, down from 3.3x*
- Interim dividend declared of 1.2 cents per share, fully franked.
Business Segment highlights*:
- QMS Australia achieved strong group revenue and earnings in a competitive marketplace; revenue up 8% to $64.4 million and underlying EBITDA up 16% to $21.6 million.
- The core Australian media business’ singular focus on quality digital assets continues to outperform the market;
- Media revenue up 6.3%, large format billboard revenue up 8.3%.
- Market leading digital revenue contribution, 81% of Australian media revenue.
- QMS Sport’s strong financial performance with revenue and underlying EBITDA growth of 119% and 251% respectively, including contribution from TGI acquisitions.
- Strong Underlying EBITDA growth of 21% for QMS NZ driven by solid digital media performance.
- QMS NZ and MediaWorks merger received regulatory approval in July 2019 with the transaction expected to complete in September CY19.
Our operational and financial results for the first half of 2019 are extremely pleasing, in a challenging media landscape. Our unique diversification strategy, by both category and geography, provides us with a clear point of differentiation from our competitors.
- Barclay Nettlefold, QMS Group CEO
“Our singular focus on quality digital assets and a market first approach to audience data and insights, delivers value for advertisers and this is reflected in our Australian and New Zealand results. QMS Australia continues to grow media revenue ahead of the market and we have positive momentum heading into the second half of the year with Q3 CY19 media revenue for QMS Australia expected to be 15-20% up on the same time last year.
“The year to date results in QMS Sport have been extremely encouraging with the growth in revenue and underlying EBITDA in the half reflecting our previous investments in sports technology and rights, and the initial contribution from TGI following the completion of that acquisition during the half year.
“The diversification of QMS Sport as a global integrated sports platform represents a significant growth opportunity for the Company. The TGI acquisition plus the recently announced acquisitions of TLA and Stride create a unified and powerful technology, infrastructure and digital media platform with extensive relationships across top tier international sporting organisations, clubs and brands.”
Group Results commentary
Revenue growth of 24% reflects growth across all business segments, driven by digital revenue across Australia and New Zealand and the positive contribution of QMS Sport.
Gross margin increased 7.8 percentage points due to high quality, higher margin digital billboards a key driver of margin expansion.
Underlying EBITDA grew 47% with each business segment contributing double-digit growth. EBITDA margins were up 4.0 percentage points. As expected, the benefits from technology and sports rights investments in prior periods are now being realised with strong margin expansion in QMS Sport.
Net Debt / Underlying EBITDA was 2.7x at 30 June 2019, down from 3.3x, reflecting strong earnings growth. On track to achieve target net debt / underlying EBITDA ratio of less than 2.5x by 31 December 2019.
The Board has declared a dividend of 1.2 cents per share (fully franked).
QMS’ differentiated portfolio of digital outdoor and sports media delivers geographic and category diversity and presents a unique proposition and a strong growth outlook.
Quality landmark digital billboards remain the primary focus for QMS Australia, supported by proprietary data and insights that provides advertisers with a greater understanding of the unique value of our assets and the impact they have on their target audiences and ultimately their return on investment.
QMS Sport is transforming into a global integrated platform, underpinned by new technology providing further consolidation opportunities in a fragmented market.
Positive momentum into H2 CY19, with good forward visibility on Q3 CY19.
The Board reaffirms CY19 EBITDA* guidance of $60-$62 million.
*Pre AASB 16 Leases