CentralNic Group plc (LON:CNIC), the global internet platform company that derives recurring revenues selling online presence and marketing services, has provided an update for the 9 months ending 30 September 2022. The positive trading momentum previously announced has continued, and the Company’s organic growth has further accelerated during the period.
The Company expects to report revenue of approximately USD 525 million, Net Revenue of at least USD 127m and Adjusted EBITDA1 of at least USD 61 million for the nine months ending 30 September 2022, an increase of 86%, 49% and 89% respectively. Adjusted EBITDA/Net Revenue ratio improved to 48% as compared to 38% in the same period last year. Year-on-year organic growth2 for the trailing twelve months ending 30 September 2022 is estimated at c.66%. This outperformance has been driven predominantly by the growth of the Online Marketing Segment, which continues to win market share as a result of the ever-increasing demand for online customer acquisition services that are privacy-safe.
Cash increased to USD 83m at 30 September 2022 from USD 56m as at 31 December 2021, reducing Net Debt 3 to c.USD 63m at 30 September 2022 (USD 81m at 31 December 2021), despite the partially debt financed acquisition of VGL (EUR 21m debt component) and the recent cash settled acquisition of Aporia (USD 11m), being testament to the strong cash conversion. Adjusted operating cash conversion is estimated at approximately 100%.
While the Directors remain cognisant of the current global macro-economic environment, they now have confidence that the Group will materially exceed the current market expectations for the full year4.
Post the period end, CentralNic has entered into a new Senior Facilities Agreement (“SFA”) under which USD 250 million of new debt facilities will be provided by a syndicate of six banks.
The new debt facilities comprise a USD 150 million term loan (“TL”) and a USD 100 million revolving credit facility (“RCF”). The TL will be used in part to refinance the existing EUR 126 million senior secured bonds (for which a corresponding bond call notice is expected to be issued in short order) and repay drawings under the Group’s existing revolving credit facility.
The TL and RCF have an initial maturity date of October 2026, with an option to extend by a further year. The borrowing cost of the facilities is determined by CentralNic’s net leverage, such that this will initially be 2.75% above SOFR, a notable reduction compared to the 7% above 3m EURIBOR for the senior secured bond5 it replaces. The Company intends to enter into an interest swap transaction to fix part of the variable interest component. The settlement of the payments is scheduled to be completed by the end of October.
Ben Crawford, CEO of CentralNic Group, said: “CentralNic continues to build momentum in the third quarter against typical seasonal trends, with year-on-year organic growth now reaching a record 66%, a further acceleration over the 62% reported for the twelve-month period ending 30 June 2022.
“This continued reliable financial performance has allowed us to refinance at a notably improved interest rate, with a pool of quality lending banks which have the means to provide ongoing support to CentralNic’s growth strategy. We look forward to the future with even greater confidence.”
Notice of Results
The Company will publish its unaudited interim report for the nine months ending 30 September 2022 on Monday, 22 November 2022.
There will be a webinar / conference call for equity analysts at 9:30am UK on the day of results, hosted by CEO Ben Crawford and CFO Michael Riedl. Anybody wishing to register should contact Isabelle Smurfit at firstname.lastname@example.org where further details will be provided.
1 Parent, subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses. Non-core operating expenses include items related primarily to acquisition, integration and other related costs, which are not incurred as part of the underlying trading performance of the Group, and which are therefore adjusted for, in line with Group policy.
2 Organic growth is calculated based on trailing twelve-month pro-forma revenue adjusted for acquired revenue, constant currency FX impact and non-recurring and non-cash items (c.USD 682m and c.USD 411m for the trailing twelve months ending 30 September 2022 and 30 September 2021 respectively)
3 Includes gross cash, interest-bearing debt, prepaid finance costs and Mark-To-Market (MTM) for the bond hedges
4 Analyst consensus of revenue and adjusted EBITDA for the financial year ending 31 Dec 2022 as of Sunday, 16 October 2022 is USD 626.6m and USD 72.5m respectively
5 The margin is a function of leverage and con be up to 3.55% if Net Debt/EBITDA exceeds 2.5; the maximum leverage is 3.0x, subject to conditions