Earnings boost: Ooh!Media (ASX:OML) share price spikes 5% with audience rebound

Shares in Ooh!Media closed in the green on Monday as the company released its financial results for the full year ended 31 December 2021.

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Key points

  • Ooh!Media reported its full-year results on Monday. 
  • Investors were pleased with the results, which saw the company grow sales and profit amid a difficult operating environment due to COVID-19. 
  • In the last 6 months, the Ooh!Media share price has gained almost 20%. 

Ooh!Media Ltd (ASX: OML) shares jumped 5.15% into the green on Monday after the company announced its financial results for the full year ended 31 December 2021.

The Ooh!Media share price finished the day up at $1.735 as investors responded positively to the company's earnings results.

Ooh!Media share price jumps on home audience rebound

Key takeouts from the company's earnings results included:

  • Revenue up 18% to $503.7 million – strong revenue recovery across key formats
  • Revenue in Road for November and December 2021 at record monthly levels
  • Gross margin of 44.1%, (up 1.8 points) – "strong recovery towards pre-COVID levels"
  • Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 24% to $77.6 million, with margin expansion leveraging revenue growth
  • Underlying net profit after tax (NPAT) of $12.7 million compared to a loss of $8.5 million in prior year
  • Financial position strengthened further – gearing ratio down to 0.8 times (from 1.8 times CY20) and net debt reduced by 43% compared to 31 December 2020
  • Net profit after tax (NPAT) (pre AASB16) of $800,000 compared to a loss of $24.3 million in the prior year
  • Reported loss after tax (post AASB16) of $10.3 million compared to a loss of $36.2 million in prior year.

What else happened this period for Ooh!Media?

According to the company, it "successfully leveraged the continuing recovery in Out of Home audiences during the year to deliver an 18% year-on-year lift in revenue to $504 million".

Apparently, the diversity of Ooh!Media's assets across a range of out of home formats "ensured it was able to deliver this revenue uplift despite substantial lockdowns in Q3 CY21 and early Q4 and some formats (Fly, Office, Rail) continuing to be impacted by the pandemic".

Not only that, the company maintained significant operating leverage that enabled it to grow earnings and operating income faster than revenue. In other words, each change in sales translated into a higher change in earnings for the company this half.

As such, this resulted in a 24% increase in underlying EBITDA "despite lower rent abatements and no government wage subsidies in CY21 compared to CY20".

Ooh!Media is also set to start rewarding shareholders via a newly-reinstated dividend.

"As a result of oOh!'s strong financial position, the Company will recommence dividends to shareholders for CY21" the company remarked.

Management commentary

Speaking on the announcement, Ooh!Media chief executive officer, Cathy O'Connor, said:

oOh! successfully leveraged Out of Home audience growth to deliver a much improved financial result. The strong result is a testament to our strategy. As the market leader across Australia/New Zealand, we are uniquely positioned to capitalise on the audience recovery in Out of Home. Our scale and diversity across a number of formats means we are also able to deliver this growth despite some formats such as Fly, Office and Rail continuing to be impacted by the pandemic. Meanwhile, our strong operating leverage means we continue to grow earnings faster than revenue which has enabled the Company to return to profitability this year on a pre AASB16 basis and recommence dividends to shareholders. We are also generating further momentum into FY22 with a solid start to the year. First quarter revenue is pacing 15% ahead of the prior corresponding quarter and at 93% of the first quarter 2019. For the medium term, the fundamentals for Out of Home as a growth advertising medium remain compelling. This will only be enhanced by further significant digital investment opportunities across key formats.

What's next for Ooh!Media?

According to the company, it has started the new financial year well and "revenue for the first quarter CY22 is pacing at 15% higher than Q1 2021 and at 93% of Q1 2019".

It also noted that it remains prioritised on revenue growth and putting its capital to work in order to generate cash returns for the company.

"While the impact of the Omicron variant on overall demand for advertising media has been limited, there has been a pronounced impact on audience environments which have seen substantially less foot traffic than pre-COVID such as Offices and Airports Capital expenditure for the full year is expected to be between $45 million and $55 million and remains focused on revenue growth opportunities and concession renewals", it concluded.

Ooh!Media share price snapshot

In the past 6 months, the Ooh!Media share price has gained 19.66%. The past year, however, has seen the company's shares rise by just 2.06%.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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