Tuesdata: Unpacking Ooh Media’s financial results; can the good old days of 2019 return?
Welcome to Tuesdata.
In today’s edition we look at how Australia’s largest listed outdoor company Ooh Media emerged from 2022, with an in-depth analysis of the company’s results, which were released yesterday. We’ll be examining how the company has performed since listing on the ASX eight years ago, and (for those interested in such things), we’ll be digging into the Annual Report which amongst other things discloses CEO Cathy O’Connor’s remuneration for the year.
Further down, there’s also an update on the third down-day in a row on the Unmade Index.
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Four years on, will 2023 be the year Ooh Media moves beyond Covid?
If there’s a benefit to arriving at the helm of a company one year into a pandemic, it’s the fact that beating the previous year‘s numbers is a little more achievable.
After starting in the CEO role early in 2021, Cathy O’Connor has now delivered two consecutive years of growth for Ooh Media, in both revenues and profit.
However, the company is yet to bounce back to its 2019 high point. And if 2023 will be the year for that, will be determined by whether the following winds of digital-driven sector growth can outblow the headwinds of a slowing economy.
Without being foolhardy enough to offer full year guidance, Ooh’s update drew attention to analysts’ predictions of growth in the sector, and let the market reach its own conclusions, point to SMI data about how agencies are once again dialling up the proportion of client budgets they push into out of home.
The market seemed to buy the argument, with the Ooh Media share price rising by more than 4% for the day, taking the company back above a $900m market capitalisation.
Unusually for the ASX, Ooh Media reports its annual results against a calendar year. So unlike most companies which have reporting their half year results this month, Ooh Media’s covered the full 12 months.
Let’s start with a key piece of data – our comparison of Ooh Media’s annual performance since the company hit the ASX.
The red line and the right-hand axis plots statutory EBITDA (earnings before interest taxation and amortisation) profits. The green columns and the left-hand axis covers revenues.
Back in 2015, the first full year after the ASX float, the company founded by Brendon Cook more than three decades ago delivered a profit of $57m on revenues of $280m.
Three years of steady growth followed until 2018 when consolidation came to the outdoor sector, with Ooh Media buying Adshel for $570m. For a while the company’s shares traded at $4. (Nowadays they sit at $1.54 after sinking as low as 61c early in the Covid crisis.)
The step change in profits and revenues shown on the chart back in 2019 came as a result of bringing Adshel into the business.
That delivered a high point in 2019, with revenues of $649m and EBITDA profit of $314m.
And then along came Covid. Along with cinema and magazines, the outdoor sector was among the worst hit. Ooh Media’s revenue slumped to $427m in 2020 with profit dropping to $238m – and that was with the help of $17.7m in JobKeeper funding.
Cook – who had already announced his retirement before the pandemic – stuck around for the early months of the crisis, until O’Connor, previously CEO of Nova Entertainment eventually took charge early in 2021. The company went through an emergency equity raising in March 2020 which raised $167m to see it through the crisis, although it diluted existing shareholders thanks to issuing of 315m new shares in the company.
Since then, it’s been a slow crawl back up. Ooh has sold off non-core assets like youth publishing operation Junkee and not-so non-core assets like its cafe and venue retail media network, to Motio.
Yesterday’s results release show that the recovery continued in 2022. Revenue is now back to $592m ($57m off the 2019 peak) – while profit is back to $288m (within $26m of the 2019 number).
The company’s net debt – mostly paid off thanks to that emergency fund raising – is a relatively low $32.9m.
That leaves the company ready to play in any M&A opportunities that come up, although it seems to have little interest in any marriages outside of the out of home sector. Seven and HT&E may (according to the Australian Financial Review) be flirting with each other but Ooh doesn’t seem to be interesting in getting involved.
One of the vagaries of outdoor is that the out of home players do not own their media properties – they lease them. That means that in any given year, some of those contracts might end. Ooh disclosed that this year the percentage of its revenue tied up in contracts due to expire is 32%. However, it is also in the running for new contracts, including the expanding Sydney Metro.
More useful data: 64% of the company’s revenue comes from digital screens – up from 57% a year before.
And the annual report also covered off director remuneration.
O’Connor was the top paid executive, earning a total package of $2.053m, a jump of 16% on the previous year – thanks to a bigger short term incentive bonus.
The top paid non executive director was chairman Tony Faure, who earned a total of $244,907. That was an increase of $189 on the previous year.
if Ooh indeed defies the sentiment about the wider advertising market and delivers another year of modest growth, topping 2019 and delivering the best profits in the company’s history remains attainable.
Unmade Index – A little more red
It was another gloomy day on The Unmade Index with the market continuing to reassesses the value of broadcast companies in an inflationary sports rights market. The Unmade Index of ASX listed media and marketing companies fell by a further 0.59%, following falls on Thursday and Friday, to 675.1 points.
As reported above, Ooh Media was the only standout performer on Monday, rising by 4.05%. Enero, owner of ad agency BMF, had the worst of it, falling by another 5.65% meaning its value has now fallen by more than 25% over the last week.
Time to leave you to your Tuesday. We’ll be back with a midweek update tomorrow.
Don’t forget, as a paying member, you can get two tickets to next week’s RE:Made – Retail Media Unmade for 30% off. The coupon code you need is: Unmade_Member
Toodlepip…
Tim Burrowes
Publisher – Unmade
tim@unmade.media
