The oOh! Media Ltd (ASX: OML) share price got a wriggle on this morning after the company revealed its financial results for the year ending December 31 2016. Below is a summary of the results for the year.
- Revenue of $336.1m, up 20.1% on calendar year 2015
- Underlying EBITDA (operating income) of $73.5m, up 27.4% on prior year
- Underlying EBITDA margin of 21.9%, up from 20.6%
- Net profit after tax of $21.5m, up 16.8% on prior year
- Net debt at 1.6x full year EBITDA
- Final fully franked dividend of 10 cents per share
- Total dividends for year of 14 cents per share, up from 9.5cps in prior year
- Acquired Executive Channel International (ECN) for $68.5m\
- Announced proposed merger with APN Outdoor Group (ASX: APO)
This has been a busy and generally successful year for the outdoor advertising group with its shares up 12.5% as investors applaud the earnings growth and entrepreneurial merger and acquisition strategy.
The group recently announced it intends to merge with its major rival APN Outdoor Group to form a combined company with pro forma FY2016 EBITDA of $171 million in an exciting looking deal. It is expected to result in significant cost savings and deliver pro-forma earnings per share accretion of just above 14% to shareholders in each company.
The deal will also lessen competition for the groups and should see it generate more pricing power with advertisers as its audience reach expands, while a larger company will also have more financial firepower or balance sheet strength to continue on its acquisitive path.
Outlook
As a result of the planned merger oOh! Media did not provide specific 2017 earnings guidance other than to say it's confident in "continued growth" which is no surprise as the popularity of outdoor and digital advertising continues to grow.
The group does carry net debt at 1.6x underlying EBITDA partly because several of its acquisitions have been funded with debt and this places it higher up the risk scale. Still for believers in the outdoor and digital advertising story it may prove an attractive opportunity.
