Ascent Capital Group Reports Q1 Earnings
The Monitronics holding company said it delivered meaningful improvements in dealer economics through reductions in creation costs.
ENGLEWOOD, Colo. – Ascent Capital Group (NASDAQ: ASCMA), a holding company that owns Monitronics Int’l, reported net revenue for the first quarter ending March 31 increased 3.5% to $143.3 million. The increase in net revenue is primarily attributable to the inclusion of a full quarter’s impact of revenue from LiveWatch, a direct-to-consumer business, and an increase in Monitronics’ average RMR per subscriber to $42.17 as of March 31.
Ascent reported a first quarter net loss of $23.2 million from continuing operations, compared to net loss from continuing operations of $9.7 million in the prior year period.
Monitronics reported a first quarter net loss of $20.2 million compared to a net loss of $8.3 million in the prior year period.
The company reported $1.86 earnings per share for the quarter, topping the Thomson Reuters’ consensus estimate of $1.89 by 3 cents.
“The team made great strides toward reducing our creation costs during the quarter, lowering our average account purchase multiple by nearly a full turn and implementing meaningful cost savings programs across the business,” Bill Fitzgerald, Capital Group chairman & CEO, said Tuesday during an earnings conference call. “At the same time customer service performance metrics continue to show good improvement which we believe is a key driver behind reducing our attrition.”
Ascent’s total cost of services for the first quarter increased 17.1% to $29.5 million; $2.2 million of the increase is attributable to the inclusion of a full quarter’s impact of LiveWatch’s cost of services, which includes expensed equipment costs associated with the creation of new subscribers of $2.3 million and $643,000 for the quarter and the prior year period, respectively. The increase also reflects higher cellular and field service costs at Monitronics related to the increase in the number of subscribers with interactive and home automation services.
Ascent’s selling, general & administrative (SG&A) costs for the quarter increased 16.4% to $32.1 million. The primary driver of the increase in SG&A expense is attributable to $3.7 million of LiveWatch marketing and sales expense related to the creation of new subscribers. LiveWatch SG&A also includes the accrual of $900,000 and $519,000 for the quarter and the prior year, respectively, related to certain contingent bonuses payable in the future to key members of LiveWatch management in accordance with their employment agreements.
The increase in SG&A is also attributable to increased salaries, wages and benefits at Monitronics, as compared to the prior year period. In connection with particular cost cutting initiatives, Monitronics executed a reduction in force in March. The action resulted in one-time termination benefits of $245,000 being expensed for the three months ended March 31.
Ascent’s adjusted EBITDA decreased 6.3% to $85 million and Monitronics’ adjusted EBITDA decreased 5.1% to $87 million during the quarter. Monitronics’ adjusted EBITDA as a percentage of revenue was 60.7% in the first quarter, compared to 66.2% during the prior year period. The decline is primarily attributable to the higher expensed creation costs within LiveWatch.
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