Ascent Capital Group: Ascent Capital Group Announces Financial Results for the Three Months Ended March 31, 2019

ENGLEWOOD, Colo., May 14, 2019 (GLOBE NEWSWIRE) -- Ascent Capital Group, Inc. ("Ascent" or the "Company") (NASDAQ:ASCMA) has reported results for the three months ended March 31, 2019. Ascent is a holding company that owns Monitronics International, Inc., ("Monitronics", doing business as Brinks Home Security ), one of the nation's largest home security alarm monitoring companies.Headquartered in the Dallas-Fort Worth area, Monitronics provides security alarm monitoring services to approximately 900,000 residential and commercial customers as of March 31, 2019. Monitronics' long-term monitoring contracts provide high margin recurring revenue that produce predictable and stable cash flow.Highlights1: Ascent's net revenue for the three months ended March 31, 2019 totaled $129.6 million.Ascent's net loss for the three months ended March 31, 2019 totaled $27.8 million. Monitronics' net loss for the three ended March 31, 2019 totaled $31.8 million.Ascent's Adjusted EBITDA for the three months ended March 31, 2019 totaled $72.7 million. Monitronics' Adjusted EBITDA for the three ended March 31, 2019 totaled $73.7 million.Results for the Three Months Ended March 31, 2019For the three months ended March 31, 2019, Ascent reported net revenue of $129.6 million, a decrease of 3.1%. The reduction in revenue for the three months ended March 31, 2019 is due to the lower average number of subscribers in the first quarter of 2019. This decrease was partially offset by a 1.2% increase in average recurring monthly revenue ("RMR") per subscriber, to $45.28, due to certain price increases enacted during the past twelve months. In addition, the Company recognized a $1.7 million decrease in revenue for the three months ended March 31, 2019, as compared to a $325,000 increase in revenue for the three months ended March 31, 2018 related to changes in Topic 606 contract assets. All revenues of Ascent are generated by its wholly-owned subsidiary, Monitronics.Ascent's cost of services, which are all incurred by Monitronics, for the three months ended March 31, 2019 decreased 18.2% to $26.8 million. The decrease in cost of services for the three months ended March 31, 2019 is primarily attributable to decreased field service costs due to a lower volume of retention and move jobs being completed and a decrease in expensed subscriber acquisition costs. Subscriber acquisition costs, which include expensed equipment and labor costs associated with the creation of new subscribers, decreased to $1.8 million for the three months ended March 31, 2019, as compared to $3.6 million for the three months ended March 31, 2018.Ascent's selling, general & administrative ("SG&A") costs for the three months ended March 31, 2019, decreased 13.1% to $32.5 million. The decrease in SG&A for the three months ended March 31, 2019 is attributable to reduced subscriber acquisition costs. Subscriber acquisition costs in SG&A decreased to $5.5 million for the three months ended March 31, 2019, as compared to $8.1 million for the three months ended March 31, 2018. Additionally, there was $3.0 million and $892,000 of severance expense related to transitioning Ascent executive leadership and rebranding expense, respectively, that was recognized in the three months ended March 31, 2018 with no corresponding costs incurred during the three months ended March 31, 2019. Offsetting these decreases were increased consulting fees on integration/implementation of company initiatives. Other increases in SG&A contributing to the overall change period over period include deferred and incentive-based compensation costs and Topic 606 contract asset impairment costs.1 Comparisons are year-over-year unless otherwise specified.Monitronics' SG&A costs for the three months ended March 31, 2019 were $31.2 million as compared to $32.0 million for the three months ended March 31, 2018.Monitronics' consolidated creation multiple, including both expensed subscriber acquisition costs and other capitalized creation costs, was 36.8x for the three months ended March 31, 2019.Ascent reported a net loss for the three months ended March 31, 2019 of $27.8 million, compared to net loss of $30.8 million in the three months ended March 31, 2018. The decrease in net loss is primarily attributable to a decrease in operating expenses, including Cost of Services and SG&A as discussed above, partially offset by a decrease in net revenues and an unrealized loss on derivative financial instruments of $7.8 million recognized during the three months ended March 31, 2019.Monitronics reported a net loss for the three months ended March 31, 2019 of $31.8 million, compared to a net loss of $26.2 million in the three months ended March 31, 2018. The increase in Monitronics' net loss is primarily due to $5.2 million in refinancing expenses.Ascent's Adjusted EBITDA increased 5.6% to $72.7 million for the three months ended March 31, 2019. Monitronics' Adjusted EBITDA increased 5.3% to $73.7 million for the three months ended March 31, 2019. This increase is attributable to reduced subscriber acquisition costs, net of creation revenue, of $5.6 million for the three months ended March 31, 2019, as compared to $10.2 million for the three months ended March 31, 2018 and decreases in Cost of Services for the three months ended March 31, 2019, as discussed above. Monitronics' Adjusted EBITDA as a percentage of net revenue for the three months ended March 31, 2019 was 56.9%, as compared to 52.4% in the three months ended March 31, 2018.For a reconciliation of net loss from continuing operations to Adjusted EBITDA, please see the Appendix of this release. LTM Subscriber Rollforward and Attrition Twelve Months Ended March 31, 2019 2018Beginning balance of accounts958,719 1,036,794 Accounts acquired111,376 87,957 Accounts canceled(164,221) (159,845)Canceled accounts guaranteed by dealer and other adjustments (a)(4,681) (6,187)Ending balance of accounts901,193 958,719 Monthly weighted average accounts936,430 998,137 Attrition rate - Unit17.5% 16.0%Attrition rate - RMR (b)17.0% 13.9% (a) Includes canceled accounts that are contractually guaranteed to be refunded from holdback.(b) The recurring monthly revenue ("RMR") of canceled accounts follows the same definition as subscriber unit attrition as noted above. RMR attrition is defined as the RMR of canceled accounts in a given period, adjusted for the impact of price increases or decreases in that period, divided by the weighted average of RMR for that period. Unit attrition increased from 16.0% for the twelve months ended March 31, 2018 to 17.5% for the twelve months ended March 31, 2019. The RMR attrition rate for the twelve months ended March 31, 2019 and 2018 was 17.0% and 13.9%, respectively. Contributing to the increase in unit and RMR attrition were fewer customers under contract or in the dealer guarantee period for the twelve months ended March 31, 2019, as compared to the prior period, increased non-pay attrition as well as some impact from competition from new market entrants. The increase in the RMR attrition rate for the twelve months ended March 31, 2019 was also impacted by a less aggressive price increase strategy in first quarter of 2019.During the three months ended March 31, 2019, Monitronics acquired 20,003 subscriber accounts, as compared to 21,547 subscriber accounts in the three months ended March 31, 2018. Ascent Liquidity and Capital ResourcesAt March 31, 2019, on a consolidated basis, Ascent had $76.3 million of cash and cash equivalents. Subsequent to March 31, 2019, Ascent used approximately $19.8 million of its cash to pay holders of its Convertible Notes as part of an Amended Tender Offer (as defined below). Ascent may use a portion of our remaining cash and cash equivalents to fund operations, decrease debt obligations, fund stock repurchases, or fund potential strategic acquisitions or investment opportunities.The existing long-term debt of the Company at March 31, 2019 includes the aggregate principal balance of $1.9 billion under (i) the Ascent Convertible Notes totaling $21.1 million in aggregate principal amount, maturing on July 15, 2020 and bearing interest at 4.00% per annum (ii) the Monitronics senior notes totaling $585.0 million in principal, maturing on April 1, 2020 and bearing interest at 9.125% per annum (the "Senior Notes"), and (iii) the $1.1 billion senior secured term loan and $295.0 million super priority revolver under the sixth amendment to the Monitronics secured credit agreement dated March 23, 2012, as amended (the "Credit Facility"). The Convertible Notes had an outstanding principal balance of $21.1 million as of March 31, 2019. Following the consummation of the Amended Tender Offer (as defined below), an aggregate principal amount of $260,000 of Convertible Notes remain outstanding as of April 1, 2019. The Senior Notes have an outstanding principal balance of $585 million as of March 31, 2019. The Credit Facility term loan has an outstanding principal balance of $1.1 billion as of March 31, 2019 and requires principal payments of $2.8 million per quarter with the remaining amount becoming due on September 30, 2022. The Credit Facility revolver has an outstanding balance of $181.4 million and an aggregate of $1.0 million under two standby letters of credit issued as of March 31, 2019, which becomes due on September 30, 2021.On February 14, 2019, the Company repurchased $75.7 million in aggregate principal amount of then outstanding Convertible Notes from certain then holders of Convertible Notes pursuant to the previously announced Settlement and Note Repurchase Agreement and Release (the "Settlement Agreement"), dated February 11, 2019, between Ascent and its directors and executive officers, on the one hand, and certain holders of Convertible Notes, on the other hand. Convertible Notes repurchased pursuant to the Settlement Agreement were cancelled.On February 19, 2019, Ascent commenced a cash tender offer to purchase a