Entercom Communications Corp. (NYSE: ETM) today reported
financial results for the quarter ended March 31, 2020.
Key Highlights
- After being up over 7% February YTD, net revenues for the
quarter were down 4% to $297 million due to the impact of
COVID-19
- Digital revenues were up 41% YoY for the quarter, propelled by
strong audience and revenue growth in podcasting and digital audio
advertising
- To mitigate the impact of the downturn in revenues and to
preserve liquidity, the Company rapidly executed the following
actions:
- Reduced fixed costs by $150 million during the remainder of
2020. The Company will also realize reduced variable expenses tied
to revenues.
- Cut planned capital expenditures by over 40% to a revised range
of between $25 -$30 million for 2020.
- Due to benefits provided by the CARES Act, cash income tax
payments now expected to be less than $10 million for 2020.
- Realized $10.8 million of proceeds from the sale of WAAF-FM in
Boston in April.
- Strong liquidity position and no near term maturities
- $189 million of cash on-hand at March 31st
- 98% of outstanding debt matures November 2024 or later
David J. Field, President and Chief Executive Officer, stated:
“I want to salute the outstanding work and dedication of the
Entercom team, which has risen to the unique challenges of these
unprecedented times to serve the American public, our customers and
our communities. Entercom began the year on a strong note driving
revenues up over 7% through February before facing the impact of
the COVID-19 pandemic. We have taken important actions to mitigate
the impact of the pandemic and are well positioned financially to
operate effectively through the crisis. Strategically, we are well
positioned to fully participate in the recovery and the attractive
growth opportunities in the audio space, with strong leadership
positions in broadcast radio and podcasting, the fastest growing
digital audio platform, unparalleled leadership in news and sports,
and strong data and analytics capabilities.”
First Quarter Summary
- Net revenues for the quarter were $297.0 million, down 4%
compared to $309.0 million in the first quarter of 2019
- Operating income for the quarter was $11.4 million, which
included a non-cash impairment charge of $1.1 million, compared to
$30.4 million in the first quarter of 2019
- Adjusted EBITDA for the quarter was $34.5 million, down 19%
compared to $42.7 million in the first quarter of 2019
- Net loss per diluted share for the quarter was $0.07 compared
to net income of $0.02 per diluted share in the first quarter of
2019
- Adjusted net loss per diluted share for the quarter was $0.01
compared to adjusted net income of $0.03 per diluted share in the
first quarter of 2019
Additional Information
In April, the Company completed its sale of Boston station
WAAF-FM to Educational Media Foundation (“EMF”) for $10.8 million
in cash. EMF began programming the station on February 22, 2020
under a network affiliation agreement.
In response to the negative impact of COVID-19 on the economy
and advertising market, the Company fully drew its revolving credit
facility to increase the amount of cash on its balance sheet. As of
March 31, 2020, the Company had outstanding $1,002 million of
senior debt under its credit facilities, $425 million in
second-lien notes and $400 million in senior notes (the amounts of
senior debt and senior notes both exclude unamortized premium). In
addition, the Company had $189 million in cash on hand.
Earnings Conference Call and Company
Information
Entercom will hold a conference call and simultaneous webcast
regarding the quarterly earnings release on Thursday, May 14, 2020,
at 10:00 AM Eastern Time. The public may access the conference call
by dialing Toll Free: (888) 889-0278 and Toll: (773) 799-3659,
passcode: Entercom (domestic and international callers).
Due to COVID-19, there may be a delay in
joining the call, and so participants should consider dialing in 15
minutes early to ensure hearing the entire call.
Participants may also listen to a live webcast of the call by
visiting the “Investor Relations” section of Entercom’s website at
www.entercom.com. A replay of the conference call will be available
for one week by dialing (888) 566-0689. A webcast replay of the
conference call will be available beginning six hours after the
call on the Company’s website for a period of two weeks. Additional
information is available on the Company’s website at
www.entercom.com.
Certain Definitions
All references to per share data, unless stated otherwise, are
presented as per diluted share. All references to shares
outstanding, unless stated otherwise, are presented to exclude
unvested restricted stock units. All references to net debt are
outstanding debt net of cash on hand.
Station Expenses consist of station operating expenses excluding
non-cash compensation expense.
Corporate Expenses consist of corporate general and
administrative expenses excluding non-cash compensation
expense.
Station Operating Income consists of operating income (loss)
before: depreciation and amortization; time brokerage agreement
fees (income); corporate general and administrative expenses;
non-cash compensation expense (which is otherwise included in
station operating expenses); impairment loss; merger and
acquisition costs, restructuring and integration costs, other
expenses related to the refinancing; non-recurring expenses
otherwise included in corporate or station expenses; and gain or
loss on sale or disposition of assets.
Adjusted EBITDA consists of net income (loss) available to
common shareholders, adjusted to exclude: income taxes (benefit);
income from discontinued operations, net of income taxes or
benefit; total other income or expense; net interest expense;
depreciation and amortization; time brokerage agreement fees
(income); non-cash compensation expense (which is otherwise
included in station operating expenses and corporate G&A
expenses); other expenses related to the refinancing; impairment
loss, merger and acquisition costs, restructuring and integration
costs, preferred stock dividends; non-recurring expenses otherwise
included in corporate or station expenses, loss on early
extinguishment of debt, and gain or loss on sale or disposition of
assets.
Adjusted Free Cash Flow consists of operating income (loss): (i)
plus depreciation and amortization; net (gain) loss on sale or
disposal of assets; non-cash compensation expense (which is
otherwise included in station operating expenses and corporate
general and administrative expenses); impairment loss; merger and
acquisition costs; restructuring and integration costs, other
income and non-recurring expenses otherwise included in corporate
or station expenses; income from discontinued operations (excluding
income taxes or tax benefit); and (ii) less net interest expense
(excluding amortization of deferred financing costs or debt
premium), Adjusted Income Taxes Paid, and Net Capital
Expenditures.
Net Capital Expenditures consists of capital expenditures,
including amortizable intangibles, adjusted to subtract reimbursed
tenant improvement allowances.
Adjusted Income Taxes Paid consist of income tax paid, adjusted
to exclude taxes paid related to the gain/loss on sale or exchange
of radio station assets; and taxes paid related to the gain/loss on
the sale of redundant property.
Adjusted Net Income (Loss) consists of net income (loss)
available to common shareholders adjusted to exclude: (i) income
taxes (benefit) as reported, including income taxes otherwise
included in income from discontinued operations; (ii) gain/loss on
sale of assets, derivative instruments and investments; (iii)
non-cash compensation expense; (iv) impairment loss; (v) merger and
acquisition costs, restructuring and integration costs, and
non-recurring expenses otherwise included in corporate or station
expenses; (vi) other expenses related to refinancing; and (vii)
gain/loss on early extinguishment of debt. For purposes of
comparability, income taxes are reflected at the expected statutory
federal and state income tax rate of 30% without discrete items of
tax.
Adjusted Net Income (Loss) Per Share - Diluted includes any
dilutive equivalent shares when not anti-dilutive. Convertible
Preferred Stock is treated as if it never converted for the
purposes of Adjusted Net Income (Loss) Per Share - Diluted.
Non-GAAP Financial
Measures
It is important to note that station operating income, station
expense, corporate expense, Adjusted EBITDA, Adjusted Net Income,
Adjusted Net Income (Loss) Per Share – Diluted, Adjusted Free Cash
Flow, Net Capital Expenditures and Adjusted Income Taxes Paid are
not measures of performance or liquidity calculated in accordance
with generally accepted accounting principles (“GAAP”). Management
believes that these measures are useful as a way to evaluate the
Company and the means for Management to evaluate our radio
stations’ performance and operations. Management believes that
these measures are useful to an investor in evaluating our
performance because they are widely used in the broadcast industry
as a measure of a radio company’s operating performance.
Certain adjusted non-GAAP financial measures are presented in
this release (e.g., Adjusted Net Income (Loss) and Adjusted Net
Income (Loss) Per Share - Diluted). The adjustments exclude
gain/loss on sale of assets, derivative instruments, and
investments; non-cash compensation expense, other income,
impairment loss, merger and acquisition costs, other expenses
related to the refinancing, and gain/loss on early extinguishment
of debt and non-recurring expenses recognized for restructuring
charges or similar costs, including transition and integration
costs. For purposes of comparability, income taxes are reflected at
the expected federal and state income tax rate of 30%, without
adjustment for discrete tax adjustments.
Management believes these adjusted non-GAAP measures provide
useful information to Management and investors by excluding certain
income, expenses and gains and losses that may not be indicative of
the Company’s core operating and financial results. Similarly,
Management believes these adjusted measures are a useful
performance measure because certain items included in the
calculation of net income (loss) may either mask or exaggerate
trends in the Company’s ongoing operating performance. Further, the
reconciliations corresponding to these adjusted measures, by
identifying the individual adjustments, provide a useful mechanism
for investors to consider these adjusted measures with some or all
of the identified adjustments.
Management uses these non-GAAP financial measures on an ongoing
basis to help track and assess the Company's financial performance.
You, however, should not consider non-GAAP measures in isolation or
as substitutes for net income (loss), operating income, or any
other measure for determining our operating performance that is
calculated in accordance with generally accepted accounting
principles. These non-GAAP measures are not necessarily comparable
to similarly titled measures employed by other companies. The
accompanying financial tables provide reconciliations to the
nearest GAAP measure of all non-GAAP measures provided in this
release.
Note Regarding Forward-Looking
Statements
The information in this news release is being widely
disseminated in accordance with the Securities and Exchange
Commission's Regulation FD.
This news announcement contains certain forward-looking
statements that are based upon current expectations and certain
unaudited information that is presented for illustrative purposes
only and involves certain risks and uncertainties within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. Additional information and key risks are described in the
Company’s filings on Forms S-4, 8-K, 10-Q and 10-K with the
Securities and Exchange Commission. Readers should note that these
statements might be impacted by several factors including changes
in the economic and regulatory climate and the business of radio
broadcasting, in general. The unaudited pro forma information and
same station operating data reflect adjustments and are presented
for comparative purposes only and do not purport to be indicative
of what has occurred or indicative of future operating results or
financial position. Accordingly, the Company’s actual performance
may differ materially from those stated or implied herein. The
Company assumes no obligation to publicly update or revise any
unaudited pro forma or forward-looking statements.
About Entercom Communications Corp.
Entercom Communications Corp. (NYSE: ETM) is a leading American
media and entertainment company reaching and engaging 170 million
people each month through its premier collection of highly rated,
award winning radio stations, digital platforms and live events. As
one of the country’s two largest radio broadcasters, Entercom
offers integrated marketing solutions and delivers the power of
local connection on a national scale with coverage of close to 90%
of persons 12+ in the top 50 markets. Entercom is the #1 creator of
live, original, local audio content and the nation’s unrivaled
leader in news and sports radio. Learn more about
Philadelphia-based Entercom at www.entercom.com, Facebook and Twitter (@Entercom).
(amounts in
thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2020
2019
STATEMENTS OF
OPERATIONS
Net Revenues
$
297,030
$
309,005
Station Expenses
249,549
247,570
Station Expense - Non-Cash
Compensation
502
1,415
Corporate Expenses
15,959
18,778
Corporate Expenses - Non-Cash
Compensation
1,278
2,157
Depreciation And Amortization
12,498
11,104
Time Brokerage Agreement Expense
(Income)
-
40
Merger And Acquisition Costs
-
9
Impairment Loss
1,050
-
Restructuring Charges
4,209
1,014
Integration Costs
622
1,135
Net (Gain) Loss On Sale Or Disposition of
Assets
-
(4,600)
Total Operating Expenses
285,667
278,622
Operating Income
11,363
30,383
Net Interest Expense
23,621
25,220
Income (Loss) Before Income Taxes
(12,258)
5,163
Income Taxes (Benefit)
(3,120)
2,038
Net Income (Loss)
$
(9,138)
$
3,125
Net Income (Loss) Per Share – Basic
$
(0.07)
$
0.02
Net Income (Loss) Per Share – Diluted
$
(0.07)
$
0.02
Dividends Declared And Paid Per Common
Share
$
0.02
$
0.09
Weighted Common Shares Outstanding –
Basic
134,890
138,099
Weighted Common Shares Outstanding –
Diluted
134,890
138,523
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
Net Capital Expenditures
$
8,899
$
20,510
Adjusted Income Taxes Paid
$
1,297
$
697
Cash Dividends On Common Stock Declared
And Paid
$
2,692
$
12,430
SELECTED BALANCE
SHEET DATA
March 31,
December 31,
2020
2019
Cash and Cash Equivalents
$
189,238
$
20,393
Senior Debt - Term B-1 Loan (Includes
Current Portion)
$
758,122
$
770,000
Senior Debt - Revolver (Includes Current
Portion)
$
243,749
$
117,000
Senior Secured Notes
$
425,000
$
425,000
Senior Notes
$
400,000
$
400,000
Total Shareholders' Equity
$
870,187
$
881,443
OTHER FINANCIAL DATA
Three Months Ended
March 31,
2020
2019
Reconciliation Of
GAAP Operating Income To Station
Operating
Income
Operating Income
$
11,363
$
30,383
Corporate Expenses
15,959
18,778
Corporate Expenses - Non-Cash
Compensation
1,278
2,157
Station Expenses - Non-Cash
Compensation
502
1,415
Depreciation And Amortization
12,498
11,104
Merger And Acquisition Costs
-
9
Restructuring Charges
4,209
1,014
Impairment Loss
1,050
-
Integration Costs
622
1,135
Net Time Brokerage Agreement Expense
(Income)
-
40
Net Gain (Loss) On Sale Or Disposition of
Assets
-
(4,600)
Station Operating Income
$
47,481
$
61,435
Reconciliation Of
GAAP Net Income (Loss) To Adjusted EBITDA
Net (Income) Loss
$
(9,138)
$
3,125
Income Taxes (Benefit)
(3,120)
2,038
Net Interest Expense
23,621
25,220
Corporate Expenses - Non-Cash
Compensation
1,278
2,157
Station Expenses - Non-Cash
Compensation
502
1,415
Depreciation And Amortization
12,498
11,104
Time Brokerage Agreement Expense
(Income)
-
40
Merger And Acquisition Costs
-
9
Restructuring Charges
4,209
1,014
Integration Costs
622
1,135
Non-Recurring Expenses Otherwise Included
in Station Expenses
3,000
-
Impairment Loss
1,050
-
Net Gain (Loss) On Sale Or Disposition of
Assets
-
(4,600)
Adjusted EBITDA
$
34,522
$
42,657
Reconciliation of
GAAP Net Income (Loss) To Adjusted Free Cash Flow
Net Income (Loss)
$
(9,138)
$
3,125
Depreciation And Amortization
12,498
11,104
Deferred Financing Costs Included In
Interest Expense
946
801
Amortization Debt Premium Included In
Interest Expense
(849)
(715)
Non-Cash Compensation Expense
1,780
3,572
Merger And Acquisition Costs
-
9
Integration Costs
622
1,135
Restructuring Charges
4,209
1,014
Non-Recurring Expenses Otherwise Included
in Station Expenses
3,000
-
Impairment Loss
1,050
-
Net (Gain) Loss On Sale Or Disposition of
Assets
-
(4,600)
Income Taxes (Benefit)
(3,120)
2,038
Net Capital Expenditures, Including
Amortizable Intangibles
(8,899)
(20,510)
Adjusted Income Taxes Paid
(1,297)
(697)
Adjusted Free Cash Flow
$
802
$
(3,724)
Reconciliation Of
Capital Expenditures, Including Amortizable
Intangibles, To
Net Capital Expenditures
Capital Expenditures, Including
Amortizable Intangibles
$
(9,744)
$
(20,510)
Reimbursed Tenant Improvement
Allowance
845
-
Net Capital Expenditures
$
(8,899)
$
(20,510)
Reconciliation Of
Income Taxes Paid To
Adjusted Income
Taxes Paid
Income Taxes Paid
$
(1,297)
$
(1,790)
Income Taxes Paid Related to Gain/Loss On
Sale Or Exchange
Of Radio Station Assets
-
894
Income Taxes Paid Related to Gain/Loss On
Sale Of Redundant Properties
-
199
Adjusted Income Taxes Paid
$
(1,297)
$
(697)
Reconciliation of
GAAP Net Income (Loss) To Adjusted Net Income
Net Income (Loss)
$
(9,138)
$
3,125
Income Taxes (Benefit)
(3,120)
2,038
Merger And Acquisition Costs
-
9
Non-Recurring Expenses Otherwise Included
in Station Expenses
3,000
-
Impairment Loss
1,050
-
Integration Costs
622
1,135
Restructuring Charges
4,209
1,014
Net (Gain) Loss On Sale Or Disposition of
Assets
-
(4,600)
Non-Cash Compensation Expense
1,780
3,572
Adjusted Net Income Before Income
Taxes
(1,597)
6,293
Income Taxes
(479)
1,888
Adjusted Net Income
$
(1,118)
$
4,405
Weighted Average
Diluted Shares Outstanding For Purposes
Of Computing
Adjusted Net Income Per Share - Diluted
Weighted Common Shares Outstanding -
Diluted As Reported
134,890
138,523
Diluted Shares Excluded When Reporting A
Net Loss
-
-
134,890
138,523
Adjusted Net Income (Loss) Per Share -
Diluted
$
(0.01)
$
0.03
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005124/en/
Joseph Jaffoni, Jennifer Neuman, Norberto Aja
JCIR (212) 835-8500 etm@jcir.com
Entercom Communications (NYSE:ETM)
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