$航美传媒(AMCN)$ AirMedia Announces Unaudited First Quarter 2015 Financial Results
PR Newswire
BEIJING, May 18, 2015
BEIJING, May 18, 2015 /PRNewswire/ -- AirMedia Group Inc. ("AirMedia" or the "Company") (Nasdaq: AMCN), a leading operator of out-of-home advertising platforms in China targeting mid-to-high-end consumers, as well as a first-mover in the in-flight and on-train Wi-Fi market, today announced its unaudited financial results for the first quarter ended March 31, 2015.
First Quarter 2015 Financial Highlights
-- Total revenues decreased by 3.8% year-over-year and 9.7% quarter-over-quarter to US$61.0 million. -- Net revenues decreased by 4.4% year-over-year and 8.4% quarter-over-quarter to US$60.3 million, exceeding the upper end of the Company's previous guidance by US$4.3 million. -- Net loss attributable to AirMedia's shareholders was US$5.7 million. Basic and diluted net loss attributable to AirMedia's shareholders per American Depositary Share ("ADS") were both US$0.10. The year-over-year increase in net loss attributable to AirMedia's shareholders was partially due to income tax expenses of US$1.9 million in the first quarter of 2015, compared to income tax benefits of US$4,000 in the same period one year ago. -- Adjusted EBITDA attributable to AirMedia's shareholders (non-GAAP), which is EBITDA attributable to AirMedia's shareholders excluding share-based compensation expenses, was a loss of US$317,000, compared to a loss of US$422,000 in the same period one year ago. "As you know, we endeavor to transform into a leading in-flight and on-train Wi-Fi operator in China. We would like to capitalize on the sale of our advertising business at a much more attractive valuation to companies in China so that we can focus our resources on the exciting Wi-Fi business. We are excited about the agreement with Shenzhen Liantronics Co., Ltd. to sell 5% equity interest of our advertising business for a consideration of RMB150 million in cash. We intend to sell the remaining equity interest of our advertising business in the foreseeable future. We are in the process of restructuring our advertising business according to the aforementioned agreement. Meanwhile, we are also discussing with other unrelated third parties who expressed interest in buying our advertising business," commented Mr. Herman Guo, chairman and chief executive officer of AirMedia.
"The first quarter is usually the weakest quarter of a year in advertising industry. Our divestiture of two unprofitable product lines helped us reduce the loss of adjusted EBITDA attributable to AirMedia Group Inc.'s shareholders (non-GAAP) in the first quarter of 2015 year-over-year and quarter-over-quarter during a soft economic environment and advertising market," continued Mr. Guo. "We saw a decrease in revenues from our gas station media network in the first quarter, which, coupled with larger amounts of depreciation of LED screens installed in gas stations, resulted in more losses from this product line. Although we expect revenues from this product line to increase with the expansion of the network of LED screens, as we are focusing more on Wi-Fi business, we intend to take more active action to reduce the loss from this product line."
"We made solid developments in our on-train Wi-Fi business. We recently obtained exclusive rights to install and operate Wi-Fi systems on the ordinary trains operated by Shanghai Railway Bureau and Jinan Railway Bureau. We expect to continue to obtain more concession rights and further improve our market position in on-train Wi-Fi business," continued Mr. Guo.
"We are happy that our top line results exceeded guidance. Our divestiture of two unprofitable product lines was instrumental for us to achieve improved adjusted EBITDA. In addition, our divestiture of TV-attached digital frames only had two month impact in the first quarter of 2015. We expect it to have full-quarter positive impacts on our earnings in the following quarters. Our intended sale of our advertising business is expected to strengthen our cash position and provide capital support for our new Wi-Fi businesses," Mr. Richard Wu, AirMedia's chief financial officer, commented.
First Quarter 2015 Financial Results
Revenues
Total revenues by product line (numbers in US$ 000's except for percentages):
Quarter Quarter Quarter Ended Ended Ended March % of December % of March % of Y/Y Q/Q 31, Total 31, Total 31, Total Growth Growth 2015 Revenues 2014 Revenues 2014 Revenues rate rate ------- -------- -------- -------- ------- -------- ------ ------ Air Travel Media Network 56,197 92.1% 60,972 90.3% 58,072 91.6% -3.2% -7.8% Digital frames in airports 31,962 52.4% 37,367 55.3% 35,183 55.5% -9.2% -14.5% Digital TV screens in airports 2,047 3.4% 4,283 6.3% 2,706 4.3% -24.4% -52.2% Digital TV screens on airplanes 3,608 5.9% 3,864 5.7% 4,274 6.7% -15.6% -6.6% Traditional media in airports 13,204 21.6% 13,798 20.4% 14,635 23.1% -9.8% -4.3% Other revenues in air travel 5,376 8.8% 1,660 2.6% 1,274 2.0% 322.0% 223.9% Gas Station Media Network 2,249 3.7% 2,897 4.3% 2,754 4.3% -18.3% -22.4% Other Media 2,573 4.2% 3,668 5.4% 2,582 4.1% -0.3% -29.9% Total revenues 61,019 100.0% 67,537 100.0% 63,408 100.0% -3.8% -9.7% ------- -------- -------- -------- ------- -------- ------ ------ Net revenues 60,258 65,794 63,000 -4.4% -8.4% Total revenues for the first quarter of 2015 reached US$61.0 million, representing a year-over-year decrease of 3.8% from US$63.4 million in the same period one year ago and a quarter-over-quarter decrease of 9.7% from US$67.5 million in the previous quarter. The year-over-year and quarter-over-quarter decreases were primarily due to decreases in revenues from most product lines other than other revenues in air travel.
In February 2015, AirMedia transferred 81% equity interest of Beijing AirMedia Jinsheng Advertising Co., Ltd. ("Jinsheng Advertising"), the operating entity of its TV-attached digital frames business, to Beijing Tianyi Culture Development Co., Ltd., a third party unrelated to AirMedia. In connection with such equity interest transfer, AirMedia has transferred all relevant assets, liabilities and managerial duties related to the TV-attached digital frames to Jinsheng Advertising with net carrying value of US$1.1 million. AirMedia has transferred part of its concession rights related to the TV-attached digital frames to Jinsheng Advertising and will continue to transfer the rest of such concession rights as AirMedia receives the necessary consents from the respective airports. Due to recent business developments and considerations, AirMedia has also transferred some of its concession rights related to digital TV screens in airports to Jinsheng Advertising and plans to continue to transfer the rest of such concession rights as AirMedia receives the necessary consents from the respective airports. Prior to the full completion of such transfers, AirMedia authorizes Jinsheng Advertising to operate TV-attached digital frames and digital TV screens in airport business under entrustment.
Revenues from digital frames in airports
Revenues from digital frames in airports for the first quarter of 2015 decreased by 9.2% year-over-year and by 14.5% quarter-over-quarter to US$32.0 million. The year-over-year decrease was primarily due to a soft advertising market and the divestiture of TV-attached digital frames. The quarter-over-quarter decrease was primarily due to a seasonally weak quarter in the first quarter of 2015 and the divestiture of TV-attached digital frames.
Revenues from digital TV screens in airports
During the transition period of the divestiture, some advertising contracts signed by AirMedia's sales team were carried forward after the share transfer. As a result, AirMedia still booked revenues from these contracts in the line of revenues from digital TV screens in airports. Revenues from digital TV screens in airports for the first quarter of 2015 decreased by 24.4% year-over-year and by 52.2% quarter-over-quarter to US$2.0 million. The year-over-year and quarter-over-quarter decreases were primarily due to the divestiture of digital TV screens in airports.
Revenues from digital TV screens on airplanes
Revenues from digital TV screens on airplanes for the first quarter of 2015 decreased by 15.6% year-over-year and by 6.6% quarter-over-quarter to US$3.6 million. The year-over-year decrease of revenues from digital TV screens on airplanes was primarily due to a soft advertising market and a decrease in advertisers' demand for digital TV screens as a result of more choices of in-flight entertainment. The quarter-over-quarter decrease of revenues from digital TV screens on airplanes was primarily due to a seasonally weak quarter in the first quarter of 2015.
Revenues from traditional media in airports
Revenues from traditional media in airports for the first quarter of 2015 decreased by 9.8% year-over-year and by 4.3% quarter-over-quarter to US$13.2 million. The year-over-year decrease was primarily because AirMedia had terminated the operations of all billboards and painted advertisements on gate bridges. The quarter-over-quarter decrease was primarily due to a seasonally weak quarter in the first quarter of 2015.
Other revenues in air travel
Other revenues in air travel for the first quarter of 2015 increased by 322.0% year-over-year and by 223.9% quarter-over-quarter to US$5.4 million. The year-over-year and quarter-over-quarter increases were primarily due to revenues from Jinsheng Advertising for operating TV-attached digital frames and digital TV screens in airport business under entrustment pending the completion of transfer of relevant concession rights.
Revenues from the gas station media network
Revenues from the gas station media network for the first quarter of 2015 decreased by 18.3% year-over-year and by 22.4% quarter-over-quarter to US$2.2 million. The year-over-year decrease was primarily due to a soft advertising market. The quarter-over-quarter decrease was primarily due to a seasonally weak quarter in the first quarter of 2015.
As of May 17, 2015, AirMedia operated LED screens in 745 gas stations in 23 cities.
Revenues from other media
Revenues from other media were primarily revenues from unipole signs and other outdoors media, as well as revenues from the Company's new business of film distribution. Revenues from other media for the first quarter of 2015 remained relatively unchanged year-over-year and decreased by 29.9% quarter-over-quarter to US$2.6 million. The quarter-over-quarter decrease was primarily because we recorded large amounts of one-off revenues from film distribution and film investment in the previous quarter.
Business tax and other sales tax
Business tax and other sales tax for the first quarter of 2015 were US$761,000, compared to US$408,000 in the same period one year ago and US$1.7 million in the previous quarter.
Net revenues
Net revenues for the first quarter of 2015 reached US$60.3 million, representing a year-over-year decrease of 4.4% from US$63.0 million in the same period one year ago and a quarter-over-quarter decrease of 8.4% from US$65.8 million in the previous quarter.
Cost of Revenues
Cost of revenues for the first quarter of 2015 was US$58.6 million, which reflected a year-over-year increase of 2.4% from US$57.2 million and a quarter-over-quarter decrease of 5.2% from US$61.8 million in the previous quarter. The year-over-year increase was primarily due to higher concession fees, which were partially offset by lower agency fees for third-party advertising agencies. The quarter-over-quarter decrease was primarily due to lower concession fees and lower agency fees for third-party advertising agencies in the first quarter of 2015. Cost of revenues as a percentage of net revenues in the first quarter of 2015 was 97.2%, up from 90.9% in the same period one year ago and 94.0% in the previous quarter.
AirMedia incurs concession fees to airports for placing and operating digital frames, digital TV screens, traditional media and other displays in airports, to airlines for playing programs on their digital TV screens, to Sinopec for placing outdoors media in its gas stations, to other media resources owners for placing unipole signs and other outdoors media and to railway bureaus for operating Wi-Fi services on trains.
Concession fees for the first quarter of 2015 increased by 7.5% year-over-year and decreased by 1.5% quarter-over-quarter to US$45.8 million. The year-over-year increase was primarily due to newly signed or renewed concession rights contracts during the period. The quarter-over-quarter decrease was primarily due to the decrease in concession fees of certain concession rights of digital TV screens in airports and TV-attached digital frames, which have been transferred to Jinsheng Advertising. Until all relevant concession rights are transferred, AirMedia still needs to book the concession fees of concession rights of digital TV screens in airports and TV-attached digital frames which have not been transferred to Jinsheng Advertising. Concession fees as a percentage of net revenues in the first quarter of 2015 was 76.0%, increasing from 67.6% in the same period one year ago and 70.6% in the previous quarter. The year-over-year increase of concession fees as a percentage of net revenues was primarily due to the fact that net revenues decreased while concession fees increased. The quarter-over-quarter increase of concession fees as a percentage of net revenues was primarily due to the fact that net revenues decreased faster than concession fees in the first quarter of 2015.
Gross Profit
Gross profit for the first quarter of 2015 was US$1.7 million, compared to gross profit of US$5.8 million in the year-ago quarter and US$4.0 million in the previous quarter.
Gross profit as a percentage of net revenues for the first quarter of 2015 was 2.8%, compared to 9.1% in the same period one year ago and 6.0% in the previous quarter. The year-over-year decrease in gross profit as a percentage of net revenues was primarily due to the fact that net revenues decreased while the cost of revenues increased. The quarter-over-quarter decrease in gross profit as a percentage of net revenues was primarily due to the fact that net revenues decreased faster than cost of revenues.
Operating Expenses
Operating expenses (numbers in US$ 000's except for percentages):
Quarter Quarter Quarter Ended Ended Ended March December March Y/Y Q/Q 31, % of Net 31, % of Net 31, % of Net Growth Growth 2015 Revenues 2014 Revenues 2014 Revenues rate rate ------- -------- -------- -------- ------- -------- ------ ------ Selling and marketing expenses 5,008 8.3% 6,465 9.8% 5,052 8.0% -0.9% -22.5% General and administrative expenses 2,504 4.2% 8,192 12.5% 5,854 9.3% -57.2% -69.4% Total operating expenses 7,512 12.5% 14,657 22.3% 10,906 17.3% -31.1% -48.7% ------- -------- -------- -------- ------- -------- ------ ------ Total operating expenses for the first quarter of 2015 were US$7.5 million, which decreased by 31.1% from US$10.9 million in the same period one year ago and 48.7% quarter-over-quarter from US$14.7 million in the previous quarter.
Share-based compensation expenses included in the total operating expenses for the first quarter of 2015 were US$91,000, compared to US$242,000 in the same period one year ago and US$91,000 in the previous quarter. The year-over-year decrease was primarily due to the fact most stock options except for some newly granted ones on June 1, 2014 and August 1, 2014, had fully vested.
Selling and marketing expenses for the first quarter of 2015 were US$5.0 million. This remained relatively unchanged from the same period one year ago and decreased by 22.5% from US$6.5 million in the previous quarter. The quarter-over-quarter decrease was primarily due to lower marketing expenses and lower sales commissions for the Company's direct sales force.
General and administrative expenses for the first quarter of 2015 were US$2.5 million. This represented a year-over-year decrease of 57.2% from US$5.9 million in the same period one year ago and a quarter-over-quarter decrease of 69.4% from US$8.2 million in the previous quarter. The year-over-year and quarter-over-quarter decreases were primarily due to a reversal of bad-debt provisions in the first quarter of 2015.
Loss from Operations
Loss from operations for the first quarter of 2015 was US$5.8 million, compared to loss from operations of US$5.1 million in the same period one year ago and loss from operations of US$10.7 million in the previous quarter. Loss from operations as a percentage of net revenues for the first quarter of 2015 was negative 9.7%, compared to negative 8.2% in the same period one year ago and negative 16.2% in the previous quarter.
Income Tax Expenses/Benefits
Income tax expenses for the first quarter of 2015 were US$1.9 million, compared to income tax benefits of US$4,000 in the same period one year ago and income tax expenses of US$3.1 million in the previous quarter.
Net Loss/Income Attributable to AirMedia's Shareholders
Net loss attributable to AirMedia's shareholders for the first quarter of 2015 was US$5.7 million, compared to net loss attributable to AirMedia's shareholders of US$3.5 million in the same period one year ago and net loss attributable to AirMedia's shareholders of US$11.2 million in the previous quarter. The basic net loss attributable to AirMedia's shareholders per ADS for the first quarter of 2015 was US$0.10, compared to basic net loss attributable to AirMedia's shareholders per ADS of US$0.06 in the same period one year ago and basic net loss attributable to AirMedia's shareholders per ADS of US$0.18 in the previous quarter. The diluted net loss attributable to AirMedia's shareholders per ADS for the first quarter of 2015 was US$0.10, compared to diluted net loss attributable to AirMedia's shareholders per ADS of US$0.06 in the same period one year ago and diluted net loss attributable to AirMedia's shareholders per ADS of US$0.18 in the previous quarter.