oOh!media publishes solid financial results for the first half of 2022

oOh!media Limited announced its half-year financial results ending June 30, 2022.

The media company leveraged audience growth in its major display formats to drive a 10% increase in revenue to $276.1 million.

The company’s strong operating leverage, combined with continued operational discipline, enabled earnings to continue to grow faster than revenues, with adjusted underlying EBITDA increasing by 62% compared to the prior corresponding period for reach $51.5 million.

The financial situation of oOh! continued to strengthen over the period with a 37% decline in net debt compared to December 31, 2021 and a corresponding reduction in its debt-to-equity ratio to 0.4x. Consequently, the Company declared an interim dividend of 1.5 centimes per fully franked share.

The Company also announced a market buyback of up to 10% of its issued share capital, or approximately $75 million, which is expected to begin in September 2022.

See the company presentation here

Overview of oOh!media Limited results highlights:

• Revenue up 10% to $276.1 million – continued momentum in major formats, with strong performance in road, retail and street furniture
• Adjusted underlying EBITDA up 62% to $51.5 million with a 0 point increase in adjusted underlying EBITDA margin reflecting the strong operating leverage of oOh!
• Adjusted NPAT2 of $20.4 million compared to $2.2 million for the prior period
• Financial position further strengthened – debt ratio reduced to 4 times (compared to 0.8 times at December 31, 2021) and net debt reduced by 37%
• EBITDA increased by 17% to $131.8 million
• Reported net profit after tax of $6.1 million, compared to a loss of $9.3 million the previous year

Urban and Railway Furniture

Street Furniture and Rail revenue increased 5% to $96.1 million, with the prior period including revenue of approximately $6.0 million from the Sydney Trains contract (not including at 1S22). Street Furniture revenue continues to grow and is at similar levels to 2019 (pre-COVID-19) as oOh! demonstrates the extent of its network both in the suburbs and in the cities.

Road

The Group’s Road division (billboards) continues to show strong performance, building on its strong result from the previous year. 1H22 revenue increased 17% to $92.0 million. Revenue also exceeded 2019 levels with revenue for 1H22 up 36% from 1H19 as the Company continued to leverage the diversity and scale of its metro and suburban network to deliver results to advertisers.

Detail

Retail format revenues increased 10% to $63.1 million compared to the prior corresponding period. Retail growth improved throughout the semester as advertisers continued to promote brands and products/services within oOh!’s leading retail portfolio, while supporting the retail category of detail as a whole.

Fly

The reopening of state borders and the return of domestic business travel led to a significant performance improvement in the Fly segment, with an 83% increase in revenue over the prior six months corresponding to $12.2 million. Fly continues to see monthly revenue growth as airlines increase capacity and domestic and international passenger audiences return.

Locate

Locate format revenues increased 19% to $9.0 million, but recovery momentum continues to be impacted by the slow return of audiences to CBD office environments. The Locate segment primarily has a variable rent profile which ensures it continues to be a very valuable segment for oOh!.

Other

Revenue represents Junkee Media and Cactus Imaging’s contribution of $3.7 million. As part of the company’s clear strategic focus on Out Of Home, Junkee Media’s digital publishing business was spun off to RACAT Group in December 2021. oOh! retained branded content and industry.

Reinforced final position

The Company’s financial position continued to strengthen during the period with net debt as of June 30, 2022 of $39.8 million compared to $63.5 million as of December 31, 2021.

Credit metrics continued to improve with the Company’s leverage ratio (net debt / underlying adjusted EBITDA) as of June 30, 2022 of 0.4x, compared to 0.8x as of December 31, 2021.

Dividend

The Company’s policy is to pay dividends of 40 to 60% of adjusted net earnings. For HY22, adjusted net income was $20.4 million. The board declared an interim dividend for 1H22 of 1.5 cents per share, fully franked. This represents a payout ratio of 44%.

The record date for the right to receive the interim dividend is September 1, 2022 with an expected payment date of September 22, 2022.

capital management

oh! announced its intention to buy back shares on the market for up to 10% of its issued share capital, or approximately $75 million.

Given the Company’s strong balance sheet and continued cash flow generation, oOh! is able to continue investing in its growth strategy while delivering returns to shareholders.

The share buyback will be in addition to oOh!’s existing dividend policy. The timing and number of shares to be redeemed will depend on the prevailing share price and capital requirements.

Outlook for calendar year 2022

Revenue for the third quarter of CY22 is 37% higher than the corresponding quarter of CY21. Capital expenditures for CY22 are expected to be between $25 million and $35 million, compared to $15 million for CY21, with the upper end of the range dependent on the outcome of lease renewals and development approvals. Capital spending remains focused on revenue growth opportunities and concession renewals.

Cathy O’Connor, general manager, said oOh! successfully continued to implement its strategy to deliver another solid result for the semester.

“Our strategy remains clear and consistent. As the market leader in Australia/New Zealand, we are uniquely positioned to capitalize on the growth of Out Of Home as advertisers increase their investment in this media format.

“We continue to implement revenue growth initiatives by leveraging our existing asset portfolio with continued digital investments in screens and programming and further enhancing our data capabilities.

“This enabled a strong half-year performance with double-digit revenue growth and our strong operating leverage, driving a 62% increase in adjusted underlying EBITDA.

“Our strong performance in the first half continued into the second half with Q3 revenue growth of 37% compared to the previous corresponding quarter of last year.

“Our strategy remains centered on oOh! be a more digital and digitized Out Of Home business.

“During the semester, we launched 378 new digital sites in key locations, including 11 new Road Digitals and 21 new renovated malls.

“We continue to participate in the emerging programmatic digital out-of-home market, with our programmatic revenues more than doubling in the second quarter of CY22 compared to the first quarter.

“We launched our new creative and content innovation hub, Poly, which leverages the scale, data and insights of oOh! to work with advertisers and agencies to push the boundaries of out-of-home creation, capture more consumer attention and deliver a higher return on investment.

“Medium term, the fundamentals of Out of Home as a growth advertising medium remain compelling and, oOh! remains exceptionally well positioned to take advantage of this growth,” said Ms. O’Connor.

Daniel C. Williams