Although relatively young ad agency OceanMedia isn’t yet poised for significant cash flow growth, Moody’s Investor’s Service believes it’s positioned nicely to prosper going forward.
In short, Moody’s believes the ad business is trending in OceanMedia’s direction.
Moody’s has assigned the company a B3 Corporate Family Rating and says its outlook is stable.
It’s looking at high leverage of 8.6x through the end of the year, but Moody’s Lee Zeltser says a reduction to 7x is in sight.
Zeltser said, “Moody’s does not expect the company to generate meaningful annual free cash flow through 2016. However, $16 million in cash on MediaOcean’s balance sheet at closing and an undrawn $20 million revolver support the company’s good liquidity position. The revolving credit facility will have a springing covenant, which is not expected to be in effect over the next 12-18 months, as excess availability should remain above the minimum levels.”
Zeltser continued, “The stable ratings outlook reflects Moody’s projection for low to mid single digit annual revenue growth through 2016 with strong adjusted EBITDA expansion as MediaOcean capitalizes on a number of identifiable cost reduction initiatives to boost margins. The company is well positioned to benefit, from a profitability standpoint, from the ongoing secular shift towards digital advertising solutions among marketers from more mature, traditional channels as this transition favorably impacts MediaOcean’s business economics.”
Describing itself, the MediaOcean website states, “Our open platform Connect integrates media suppliers, data providers, ad servers and third-party technologies—allowing agencies to build optimal solutions for business and operations. By integrating multiple solutions into a central hub, Mediaocean helps agencies create a common framework, define standards, unify cross-channel data, and build opportunities that drive continued success.”
