Ascent Capital Group Reports Q4 Earnings
The MONI and LiveWatch holding company reported RMR attrition declined in the 12 months ended Dec. 31, 2016, to 12.2% vs. 13.4% in the previous year.
ENGLEWOOD, Colo. – Ascent Capital Group (NASDAQ: ASCMA), a holding company that owns MONI and DIY business LiveWatch, on Tuesday reported fourth quarter net revenue decreased 0.6% to $140.7 million as compared to the same period the year prior. The quarterly loss of $18.8 million was primarily attributed to lower account growth at MONI, which provides security alarm monitoring services to more than one million residential and commercial customers.
Ascent’s full-year revenues increased 1.2% to $570.4 million, which the company attributed to increases in average RMR per subscriber to $43.10 compared to $41.92 for the prior year period. The increase also reflects the inclusion of a full first quarter for LiveWatch, which was acquired in February 2015.
MONI’s Pre-SAC (subscriber acquisition costs) adjusted EBITDA was $88.9 million for Q4 and $366.5 million in the full year. Net losses from continuing operations totaled $16.6 million and $76.3 million in the quarter and full year, respectively.
MONI added 26,227 customers in Q4. During an earnings call on Tuesday, MONI President and CEO Jeffery Gardner said customer creation costs decreased during the quarter.
“[O]ur multiple was 35.1, down meaningfully year-over-year and our lowest point in 2016. Our success here is driven by growth at LiveWatch and the changes we have implemented to our dealer program,” he said. “Going forward, our plan is to show continued reductions in creation cost over the next five years. We will accomplish this by continuing to improve the economics of our dealer program and growing MONI and LiveWatch direct sales each year.”
MONI’s Pre-SAC adjusted EBITDA decreased 1.5% in the fourth quarter and decreased 0.7% in the full-year. On a Pre-SAC basis after removing LiveWatch’s expensed creation cost, MONI’s Pre-SAC EBITDA margins in the fourth quarter were 63.7% and 64.8% for the full year. This compares to 64.3% and 66% in the year ago periods.
“Narrower Pre-SAC margins are partially driven by the fact that LiveWatch is a much younger business and therefore has lower margins than MONI,” MONI CFO Michael Meyers said on the call. “As LiveWatch grows and matures, margins will expand approaching MONI’s level.”
LiveWatch delivered year-over-year growth in recurring revenue, with the monthly average for new customers topping $40 in Q4.
Attrition Ticks Downward
RMR attrition decreased 1.2% year-over-year to 12.2%, due to an effective price increase strategy and higher rates associated with selling in more home automation services. Core unit attrition rose modestly on a sequential basis to 13.4%.
“For 2017, our plan is to realize modest improvement in core attrition,” Gardener saids “Over the next five years we anticipate steady declines in core attrition, driven by fewer accounts to coming to term, excellent customer service, a focus on generating higher quality accounts, and our new predictive term analytics.”
The company provided an update on its 2G conversion efforts. Since Q1 2015 the company has reduced 2G radios from 200,000 customers to approximately 12,000 as of year-end. More than $18 million was spent in 2016 converting 2G accounts, with less than 10,000 customers left to convert.
“While we anticipate that the majority of remaining customers will ultimately cancel their service, we will continue our ongoing efforts to convert as many of these customers as possible throughout the coming year,” Meyers said.
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