Spanish Broadcasting System, Inc. (the “Company” or “SBS”)
(NASDAQ:SBSA) today reported financial results for the three- and
nine-months ended September 30, 2015.
Financial Highlights
|
|
Three-Months Ended |
|
|
|
|
|
|
Nine-Months Ended |
|
|
|
|
|
(in
thousands) |
|
September 30, |
|
|
% |
|
|
September 30, |
|
|
% |
|
|
|
2015 |
|
|
2014 |
|
|
Change |
|
|
2015 |
|
|
2014 |
|
|
Change |
|
Net
revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
33,476 |
|
|
|
32,713 |
|
|
|
2 |
% |
|
$ |
97,195 |
|
|
|
98,177 |
|
|
|
(1 |
)% |
Television |
|
|
2,905 |
|
|
|
3,565 |
|
|
|
(19 |
)% |
|
|
9,428 |
|
|
|
11,767 |
|
|
|
(20 |
)% |
Consolidated |
|
$ |
36,381 |
|
|
|
36,278 |
|
|
|
0 |
% |
|
$ |
106,623 |
|
|
|
109,944 |
|
|
|
(3 |
)% |
OIBDA, a
non-GAAP measure*: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
14,342 |
|
|
|
12,151 |
|
|
|
18 |
% |
|
$ |
37,366 |
|
|
|
36,094 |
|
|
|
4 |
% |
Television |
|
|
(769 |
) |
|
|
(714 |
) |
|
|
8 |
% |
|
|
(758 |
) |
|
|
(1,535 |
) |
|
|
(51 |
)% |
Corporate |
|
|
(2,870 |
) |
|
|
(2,098 |
) |
|
|
37 |
% |
|
|
(7,442 |
) |
|
|
(7,546 |
) |
|
|
(1 |
)% |
Consolidated |
|
$ |
10,703 |
|
|
|
9,339 |
|
|
|
15 |
% |
|
$ |
29,166 |
|
|
|
27,013 |
|
|
|
8 |
% |
|
* Please
refer to the Non-GAAP Financial Measures section for a definition
of OIBDA and the reconciliation of OIBDA to the most directly
comparable GAAP financial measure. |
Discussion and Results
“We made solid progress in building-out our AIRE
Radio Network platform and expanding our digital assets during the
third quarter,” commented Raúl Alarcón, Jr., Chairman and
CEO. “We are leveraging our strong station brands and
multi-media assets to attract a growing mix of advertising partners
who wish to connect with the rapidly growing Latino
population. Looking ahead, we remain focused on supporting
our leading stations in the nation’s top-ten markets, while
continuing to strategically invest in our network and mobile
distribution channels, with the goal of further increasing our
audience and expanding our share of advertising dollars.”
Quarter End Results
For the quarter-ended September 30, 2015,
consolidated net revenues totaled $36.4 million compared to $36.3
million for the same prior year period, resulting in an increase of
$0.1 million over the prior year period. Our radio segment
net revenues increased by $0.8 million or 2%, due to increases in
national, network, internet, and barter sales, which were partially
offset by a decrease in special events revenue. Our national
sales increased in our New York, Chicago, Los Angeles and San
Francisco markets. Our special events revenue decreased in
our New York, San Francisco, and Puerto Rico markets due to a
decrease in scheduled events. Our network sales increase was
directly related to our “AIRE Radio Network” advertising platform,
which we launched in the beginning of 2014. Our television
segment net revenues decreased $0.7 million or 19%, due to the
decreases in paid-programming, local and barter sales, and special
events revenue.
Consolidated OIBDA, a non-GAAP measure, totaled
$10.7 million compared to $9.3 million for the same prior year
period, representing an increase of $1.4 million or 15%. Our
radio segment OIBDA increased $2.2 million, primarily due to the
decrease in operating expenses of $1.4 million, and an increase in
net revenues of $0.8 million. Radio station operating
expenses decreased mainly due to decreases in special events
expenses, professional fees, and barter expenses, which were offset
by increases in commissions, advertising and promotions, and AIRE
related expenses, such as affiliate station compensation and
promotional events. Our television segment OIBDA decreased
$0.1 million, due to the decrease in net revenues of $0.7 million,
partially offset by the decrease in operating expenses of $0.6
million. Television station operating expenses decreased primarily
due to decreases in special events expenses, production costs, and
the allowance for doubtful accounts. Our corporate expenses
increased $0.8 million or 37%, mostly due to an increase in
professional fees, building facility expenses and directors &
officers insurance premiums.
Operating income totaled $8.8 million compared
to $8.1 million for the same prior year period, representing an
increase of $0.7 million or 9%. This increase in operating
income was primarily due to the decrease in operating expenses
which were partially offset by the impairment of an FCC
broadcasting license.
Nine-Months Ended Results
For the nine-months ended September 30, 2015,
consolidated net revenues totaled $106.6 million compared to $109.9
million for the same prior year period, resulting in a decrease of
$3.3 million or 3%. Our radio segment net revenues decreased
$1.0 million or 1%, due to decreases in local and barter sales, and
special events revenue, which were partially offset by an increase
in network, national, and internet sales. Our local sales
decreased in our Los Angeles, Puerto Rico and San Francisco markets
and the decrease in barter sales occurred throughout all of our
markets. Our national sales increased in our Chicago, New
York, and San Francisco markets. Our special events revenue
decreased in our New York, Miami, Los Angeles and San Francisco
markets due to a decrease in scheduled events. Our network
sales increase was directly related to our “AIRE Radio Network”
advertising platform, which we launched in the beginning of
2014. Our television segment net revenues decreased $2.3
million or 20%, due to the decreases in paid-programming, local
sales and barter sales, and special events revenue.
Consolidated OIBDA, a non-GAAP measure, totaled
$29.2 million compared to $27.0 million for the same prior year
period, representing an increase of $2.2 million or 8%. Our
radio segment OIBDA increased $1.3 million, primarily due to the
decrease in operating expenses of $2.3 million, partially offset by
the decrease in net revenues of $1.0 million. Radio station
operating expenses decreased mainly due to decreases in special
events expenses, barter expenses and professional fees, which were
offset by increases in programming personnel’s compensation and
benefits and AIRE related expenses, such as affiliate station
compensation and promotional events. Our television segment
OIBDA increased $0.8 million, due to the decrease in station
operating expenses of $3.1 million, partially offset by the
decrease in net revenues of $2.3 million. Television station
operating expenses decreased primarily due to decreases in special
events expenses, the allowance for doubtful accounts, production
costs, professional fees and barter expenses. Our corporate
expenses decreased $0.1 million or 1%, mostly due to a decrease in
compensation and benefits caused by the prior year retention bonus
that was granted to our CEO per his new employment contract.
This decrease was offset by increases in professional fees,
building facility expenses, and directors & officers insurance
premiums.
Operating income totaled $25.0 million compared
to $24.5 million for the same prior year period, representing an
increase of $0.5 million or 2%. This increase in operating
income was primarily due to the decrease in operating expenses
which were offset by the decrease in net revenues and the
impairment of an FCC broadcasting license.
Third Quarter 2015 Conference
Call
We will host a conference call to discuss our
third quarter 2015 financial results on Wednesday, November 18,
2015 at 11:00 a.m. Eastern Time. To access the
teleconference, please dial 412-317-6789 ten minutes prior to the
start time.
If you cannot listen to the teleconference at
its scheduled time, there will be a replay available through
Wednesday, December 2, 2015, which can be accessed by dialing
877-344-7529 (U.S.) or 412-317-0088 (Int’l), passcode:
10076157.
There will also be a live webcast of the
teleconference, located on the investor portion of our corporate
Web site, at www.spanishbroadcasting.com/webcasts.shtml. A seven
day archived replay of the webcast will also be available at that
link.
About Spanish Broadcasting System,
Inc.
Spanish Broadcasting System, Inc. is the largest
publicly traded Hispanic-controlled media and entertainment company
in the United States. SBS owns 20 radio stations located in
the top U.S. Hispanic markets of New York, Los Angeles, Miami,
Chicago, San Francisco and Puerto Rico, airing the Spanish
Tropical, Regional Mexican, Spanish Adult Contemporary, Top 40 and
Latin Rhythmic format genres. SBS also operates AIRE Radio Network,
a national radio platform which creates, distributes and markets
leading Spanish-language radio programming to over 100 affiliated
stations reaching 88% of the U.S. Hispanic audience. SBS also
owns MegaTV, a television operation with over-the-air, cable and
satellite distribution and affiliates throughout the U.S. and
Puerto Rico. SBS also produces live concerts and events and owns
multiple bilingual websites, including www.LaMusica.com, an online
destination and mobile app providing content related to Latin
music, entertainment, news and culture. For more information, visit
us online at www.spanishbroadcasting.com.
This press release contains certain
forward-looking statements. These forward-looking statements,
which are included in accordance with the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, may involve
known and unknown risks, uncertainties and other factors that may
cause the Company’s actual results and performance in future
periods to be materially different from any future results or
performance suggested by the forward-looking statements in this
press release. Although the Company believes the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that actual
results will not differ materially from these expectations.
Forward-looking statements, which are based upon certain
assumptions and describe future plans, strategies and expectations
of the Company, are generally identifiable by use of the words
“may,” “will,” “expect,” “believe,” “anticipate,” “intend,”
“could,” “estimate,” “might,” or “continue” or the negative or
other variations thereof or comparable terminology. Factors
that could cause actual results, events and developments to differ
are included from time to time in the Company’s public reports
filed with the Securities and Exchange Commission. All
forward-looking statements made herein are qualified by these
cautionary statements and there can be no assurance that the actual
results, events or developments referenced herein will occur or be
realized. The Company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results.
(Tables Follow)
Below are the Unaudited Condensed Consolidated
Statements of Operations for the three- and nine-months ended
September 30, 2015 and 2014.
|
|
Three-Months Ended |
|
|
Nine-Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
Amounts in thousands,
except per share amounts |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net revenue |
|
$ |
36,381 |
|
|
|
36,278 |
|
|
$ |
106,623 |
|
|
|
109,944 |
|
Station operating
expenses |
|
|
22,808 |
|
|
|
24,841 |
|
|
|
70,015 |
|
|
|
75,385 |
|
Corporate expenses |
|
|
2,870 |
|
|
|
2,098 |
|
|
|
7,442 |
|
|
|
7,546 |
|
Depreciation and
amortization |
|
|
1,152 |
|
|
|
1,272 |
|
|
|
3,622 |
|
|
|
3,806 |
|
(Gain) loss on the
disposal of assets, net |
|
|
1 |
|
|
|
— |
|
|
|
(77 |
) |
|
|
(1,204 |
) |
Impairment charges and
restructuring costs |
|
|
735 |
|
|
|
(30 |
) |
|
|
598 |
|
|
|
(103 |
) |
Operating income |
|
|
8,815 |
|
|
|
8,097 |
|
|
|
25,023 |
|
|
|
24,514 |
|
Interest expense,
net |
|
|
(9,951 |
) |
|
|
(9,927 |
) |
|
|
(29,879 |
) |
|
|
(29,797 |
) |
Dividends on Series B
preferred stock classified as interest expense |
|
|
(2,433 |
) |
|
|
(2,433 |
) |
|
|
(7,300 |
) |
|
|
(7,300 |
) |
Loss before income
taxes |
|
|
(3,569 |
) |
|
|
(4,263 |
) |
|
|
(12,156 |
) |
|
|
(12,583 |
) |
Income tax expense |
|
|
4,123 |
|
|
|
402 |
|
|
|
7,736 |
|
|
|
1,402 |
|
Net loss |
|
$ |
(7,692 |
) |
|
|
(4,665 |
) |
|
$ |
(19,892 |
) |
|
|
(13,985 |
) |
Net loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & Diluted |
|
$ |
(1.06 |
) |
|
|
(0.64 |
) |
|
$ |
(2.74 |
) |
|
|
(1.92 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & Diluted |
|
|
7,267 |
|
|
|
7,267 |
|
|
|
7,267 |
|
|
|
7,267 |
|
Non-GAAP Financial Measures
Operating Income (Loss) before Depreciation and
Amortization, (Gain) Loss on the Disposal of Assets, net, and
Impairment Charges and Restructuring Costs (“OIBDA”) is not a
measure of performance or liquidity determined in accordance with
Generally Accepted Accounting Principles (“GAAP”) in the United
States. However, we believe that this measure is useful in
evaluating our performance because it reflects a measure of
performance for our stations before considering costs and expenses
related to our capital structure and dispositions. This
measure is widely used in the broadcast industry to evaluate a
company’s operating performance and is used by us for internal
budgeting purposes and to evaluate the performance of our stations,
segments, management and consolidated operations. However,
this measure should not be considered in isolation or as a
substitute for Operating Income, Net Income, Cash Flows from
Operating Activities or any other measure used in determining our
operating performance or liquidity that is calculated in accordance
with GAAP. In addition, because OIBDA is not calculated in
accordance with GAAP, it is not necessarily comparable to similarly
titled measures used by other companies.
Included below are tables that reconcile OIBDA
to operating income (loss) for each segment and consolidated
operating income (loss), which is the most directly comparable GAAP
financial measure.
|
|
For the Three-Months Ended September 30,
2015 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
10,703 |
|
|
|
14,342 |
|
|
|
(769 |
) |
|
|
(2,870 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,152 |
|
|
|
432 |
|
|
|
630 |
|
|
|
90 |
|
(Gain) loss on the disposal of
assets, net |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Impairment charges and
restructuring costs |
|
|
735 |
|
|
|
925 |
|
|
|
— |
|
|
|
(190 |
) |
Operating
Income (Loss) |
|
$ |
8,815 |
|
|
|
12,985 |
|
|
|
(1,400 |
) |
|
|
(2,770 |
) |
|
|
For the Three-Months Ended September 30,
2014 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
9,339 |
|
|
|
12,151 |
|
|
|
(714 |
) |
|
|
(2,098 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,272 |
|
|
|
487 |
|
|
|
684 |
|
|
|
101 |
|
(Gain) loss on the disposal of
assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges and
restructuring costs |
|
|
(30 |
) |
|
|
|
|
|
|
|
|
|
|
(30 |
) |
Operating
Income (Loss) |
|
$ |
8,097 |
|
|
|
11,664 |
|
|
|
(1,398 |
) |
|
|
(2,169 |
) |
|
|
For the Nine-Months Ended September 30,
2015 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
29,166 |
|
|
|
37,366 |
|
|
|
(758 |
) |
|
|
(7,442 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,622 |
|
|
|
1,363 |
|
|
|
1,977 |
|
|
|
282 |
|
(Gain) loss on the disposal of
assets, net |
|
|
(77 |
) |
|
|
(68 |
) |
|
|
2 |
|
|
|
(11 |
) |
Impairment charges and
restructuring costs |
|
|
598 |
|
|
|
925 |
|
|
|
— |
|
|
|
(327 |
) |
Operating
Income (Loss) |
|
$ |
25,023 |
|
|
|
35,146 |
|
|
|
(2,737 |
) |
|
|
(7,386 |
) |
|
|
For the Nine-Months Ended September 30,
2014 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
27,013 |
|
|
|
36,094 |
|
|
|
(1,535 |
) |
|
|
(7,546 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,806 |
|
|
|
1,468 |
|
|
|
2,066 |
|
|
|
272 |
|
(Gain) loss on the disposal of
assets, net |
|
|
(1,204 |
) |
|
|
(1,204 |
) |
|
|
— |
|
|
|
— |
|
Impairment charges and
restructuring costs |
|
|
(103 |
) |
|
|
— |
|
|
|
— |
|
|
|
(103 |
) |
Operating
Income (Loss) |
|
$ |
24,514 |
|
|
|
35,830 |
|
|
|
(3,601 |
) |
|
|
(7,715 |
) |
Unaudited Segment Data
We have two reportable segments: radio and television. The
following summary table presents separate financial data for each
of our operating segments:
|
|
Three-Months Ended |
|
|
Nine-Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
(In thousands) |
|
(In thousands) |
|
Net
revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
33,476 |
|
|
|
32,713 |
|
|
$ |
97,195 |
|
|
|
98,177 |
|
Television |
|
|
2,905 |
|
|
|
3,565 |
|
|
|
9,428 |
|
|
|
11,767 |
|
Consolidated |
|
$ |
36,381 |
|
|
|
36,278 |
|
|
$ |
106,623 |
|
|
|
109,944 |
|
Engineering and
programming expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
5,551 |
|
|
|
5,508 |
|
|
$ |
17,113 |
|
|
|
15,938 |
|
Television |
|
|
1,942 |
|
|
|
2,398 |
|
|
|
5,984 |
|
|
|
7,054 |
|
|
|
$ |
7,493 |
|
|
|
7,906 |
|
|
$ |
23,097 |
|
|
|
22,992 |
|
Selling,
general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
13,583 |
|
|
|
15,054 |
|
|
$ |
42,716 |
|
|
|
46,145 |
|
Television |
|
|
1,732 |
|
|
|
1,881 |
|
|
|
4,202 |
|
|
|
6,248 |
|
Consolidated |
|
$ |
15,315 |
|
|
|
16,935 |
|
|
$ |
46,918 |
|
|
|
52,393 |
|
Corporate
expenses: |
|
$ |
2,870 |
|
|
|
2,098 |
|
|
|
7,442 |
|
|
|
7,546 |
|
Depreciation
and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
432 |
|
|
|
487 |
|
|
$ |
1,363 |
|
|
|
1,468 |
|
Television |
|
|
630 |
|
|
|
684 |
|
|
|
1,977 |
|
|
|
2,066 |
|
Corporate |
|
|
90 |
|
|
|
101 |
|
|
|
282 |
|
|
|
272 |
|
Consolidated |
|
$ |
1,152 |
|
|
|
1,272 |
|
|
$ |
3,622 |
|
|
|
3,806 |
|
(Gain) loss on
the disposal of assets, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
— |
|
|
|
— |
|
|
$ |
(68 |
) |
|
|
(1,204 |
) |
Television |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
— |
|
Consolidated |
|
$ |
1 |
|
|
|
— |
|
|
$ |
(77 |
) |
|
|
(1,204 |
) |
Impairment
charges and restructuring costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
925 |
|
|
|
— |
|
|
$ |
925 |
|
|
|
— |
|
Television |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Corporate |
|
|
(190 |
) |
|
|
(30 |
) |
|
|
(327 |
) |
|
|
(103 |
) |
Consolidated |
|
$ |
735 |
|
|
|
(30 |
) |
|
$ |
598 |
|
|
|
(103 |
) |
Operating
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
12,985 |
|
|
|
11,664 |
|
|
$ |
35,146 |
|
|
|
35,830 |
|
Television |
|
|
(1,400 |
) |
|
|
(1,398 |
) |
|
|
(2,737 |
) |
|
|
(3,601 |
) |
Corporate |
|
|
(2,770 |
) |
|
|
(2,169 |
) |
|
|
(7,386 |
) |
|
|
(7,715 |
) |
Consolidated |
|
$ |
8,815 |
|
|
|
8,097 |
|
|
$ |
25,023 |
|
|
|
24,514 |
|
Selected Unaudited Balance Sheet Information and Other
Data:
|
|
As of |
|
(Amounts in
thousands) |
|
September 30, 2015 |
|
Cash and cash
equivalents |
|
$ |
28,292 |
|
Total assets |
|
$ |
456,935 |
|
12.5% Senior Secured
Notes due 2017, net |
|
$ |
271,936 |
|
Other debt |
|
|
5,004 |
|
Total debt |
|
$ |
276,940 |
|
Series B preferred
stock |
|
$ |
90,549 |
|
Accrued Series B
preferred stock dividends payable |
|
|
53,131 |
|
Total |
|
$ |
143,680 |
|
Total stockholders'
deficit |
|
$ |
(93,968 |
) |
Total
capitalization |
|
$ |
326,652 |
|
|
|
For the Nine-Months Ended September
30, |
|
|
|
2015 |
|
|
2014 |
|
Capital
expenditures |
|
$ |
1,384 |
|
|
|
1,868 |
|
Cash paid for income
taxes |
|
$ |
321 |
|
|
|
358 |
|
Analysts and Investors
Joseph A. Garcia
Chief Financial Officer, Chief Administrative
Officer, Senior Executive Vice President and
Secretary
(305) 441-6901
Analysts, Investors or Media
Brad Edwards
Brainerd Communicators, Inc.
(212) 986-6667
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