Entercom Communications (NYSE: ETM) today reported financial
results for the quarter ended June 30, 2018.
Second Quarter
Highlights
- Net revenues for the quarter were
$372.1 million, compared to $125.0 million in the second quarter of
2017. On a same-station basis, net revenues for the quarter were
$372.1 million compared to $405.7 million in the second quarter of
2017
- Operating income for the quarter was
$27.6 million, after a non-cash impairment charge of $29 million
that is primarily due to our pending divestitures, compared to
$16.4 million in the second quarter of 2017
- Net income per diluted share for the
quarter was $0.01, compared to $0.15 in the second quarter of
2017
- Pro Forma Adjusted EBITDA for the
quarter was $82.1 million, compared to $101.7 million in the second
quarter of 2017
David J. Field, President and Chief Executive Officer, stated:
“I am pleased to report that we have made great progress across
multiple fronts as we continue our work to capitalize on our
transformational merger. We have signed a definitive agreement with
Bonneville to complete our last required station divestitures,
successfully launched the new Entercom Audio Network with strong
early revenues, terminated our painful relationship with United
States Traffic Network, achieved rapid growth on our burgeoning
Radio.com platform, and delivered a 5% reduction in Q2 expenses as
we realize our merger-related synergies. Second quarter revenues
were soft, down 8% exacerbated by the loss of $12 million in
revenues from USTN. But revenue performance is improving and we are
currently pacing down 2% in the third quarter excluding the impact
of USTN. For the fourth quarter, we are pacing up 3% on an
unadjusted basis. I am proud of the outstanding team we have built
and the terrific work they are doing to capitalize on our abundant
scale-driven opportunities.”
Additional Information
On August 2, the Company reached a definitive agreement with
Bonneville International Corporation (“Bonneville”) in which
Bonneville will acquire four radio stations in San Francisco and
four radio stations in Sacramento for $141 million. These stations
are currently being held separate from the Company through an FCC
divestiture trust and are operated by Bonneville under a time
brokerage agreement (“TBA”). The Company expects the transaction to
close either late in the third quarter or early in the fourth
quarter, depending on the timing of regulatory approvals, and
expects to realize approximately $122 million in after-tax
proceeds. Based on this final sales price, we determined that the
carrying value of these assets was greater than their fair value
and recorded a non-cash impairment charge of $25.6 million.
The Company expects to close on the sale of a tower site
adjacent to O’Hare Airport in Chicago today and to realize $46
million of gross proceeds. In addition, the Company expects to
close on the sale of an office building on Venice Boulevard in Los
Angeles in September and realize $26 million of gross proceeds. The
Company has also entered into agreements to sell: land and
buildings in Dallas, TX; land and buildings in San Diego, CA; land
and buildings in Sacramento, CA; and land in Austin, TX. For the
full year, the Company now expects that gross proceeds from such
redundant assets sales will total about $95 million and expects to
realize after-tax proceeds from such sales of close to $80 million
versus the $50 million the Company anticipated earlier this
year.
In July, the Company terminated its agreement with United States
Traffic Network (“USTN”) which had provided traffic advertising
sales services and limited traffic reporting services to the
Company. As a result, the Company has taken back all of the
inventory that USTN previously utilized and now will be able to
sell that inventory using its local, national and network sales
teams. The Company is also a secured creditor of USTN and hopes to
recover additional amounts to the extent USTN is able to make
further payments to us or we realize a recovery through the legal
process.
In July, the Company announced a definitive agreement to acquire
101.1 MORE FM (WBEB-FM) from Jerry Lee Radio, LLC in Philadelphia,
PA for $57.5 million in cash. The Company also announced that it
had entered into an agreement to divest 92.5 XTU (WXTU-FM) in
Philadelphia, PA to Beasley Broadcast Group, Inc. for $38.0 million
in cash. The transactions are immediately accretive to
Entercom and are leverage neutral.
In July, the Company launched the Entercom Audio Network. This
new national network allows advertisers to leverage Entercom’s
scale with targeted offerings across its portfolio of 235 top-rated
radio stations reaching over 112 million listeners monthly.
On April 30, the Company completed its acquisition of two
stations in St. Louis, MO from Emmis Communications. The Company
began operating these stations under a TBA on March 1, 2018.
As of June 30, 2018, the Company had outstanding $1,528 million
of senior debt under its credit facilities and $400 million in
senior notes (both amounts exclude unamortized premium from
purchase price accounting). In addition, the Company had $40
million in cash on hand.
Our senior secured net leverage as of June 30, 2018, computed in
accordance with the terms of our Credit Agreement and in accordance
with the terms of our Indenture for our Senior Notes, was 3.8x as
compared to our covenant of 4x and our total net leverage was 4.8x.
On a pro forma basis as if all of the Company’s pending asset sales
had closed by June 30th, and subtracting the EBITDA being sold to
Bonneville and the related time brokerage fees, our senior secured
net leverage would have been 3.4x and our total net leverage would
have been 4.5x.
Given the benefit of the expected asset sales and the Company’s
improving revenue outlook, we expect to remain compliant with our
senior secured net leverage covenant as of September 30, 2018
whether or not the Bonneville divestitures close in the third
quarter or the fourth quarter. In addition, we expect to be able to
reduce our leverage from our as reported leverage as of June 30,
2018 by about ½ turn by the end of this year.
Earnings Conference Call and Company
Information
Entercom will hold a conference call and simultaneous webcast
regarding the quarterly earnings release on Wednesday August 8,
2018 at 8:30 AM Eastern Time. The public may access the conference
call by dialing Toll Free: 888-889-0278 and Toll: 312-470-7365,
passcode: Entercom (domestic and international callers).
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 866-463-2180. 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.
Same Station Net Revenues consist of net revenues adjusted for
material station acquisitions and dispositions as if these
acquisitions and dispositions had occurred as of the beginning of
the comparable prior period.
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, other expenses related to the refinancing;
non-recurring expenses recognized for restructuring charges or
similar costs, including transition and integration costs; 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, preferred stock dividends;
non-recurring expense recognized for restructuring charges or
similar costs, including transition and integration costs, and gain
or loss on sale or disposition of assets.
Pro Forma Adjusted EBITDA consists of Adjusted EBITDA to exclude
those costs incurred by the prior owner that were not assumed by
the Company or were unusual in nature and adjustments for material
acquisitions and divestitures as if these acquisitions and
divestitures had occurred as of the beginning of the period
presented.
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; other expenses related to the refinancing; other
income and non-recurring expenses recognized for restructuring
charges or similar costs, including transition and integration
costs; 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),
preferred stock dividends, taxes paid, capital expenditures and
amortizable intangibles.
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) other income; (v) impairment
loss; (vi) merger and acquisition costs, other expenses related to
the refinancing, loss on extinguishment of debt and non-recurring
expenses recognized for restructuring charges or similar costs,
including transition and integration costs; 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% and 40% without discrete items of tax for
the years 2018 and 2017, respectively.
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, same station net revenues, Adjusted
EBITDA, Pro Forma Adjusted EBITDA, Adjusted Net Income, Adjusted
Net Income (Loss) Per Share - Diluted and Adjusted Free Cash Flow
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 for 2018 and
2017 are reflected at the expected federal and state income tax
rate of 30% and 40%, respectively, 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 pro forma 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 over 100
million people each week 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).
For further information, or to receive future Entercom
Communications news announcements via e-mail, please contact JCIR
at 212/835-8500 or etm@jcir.com.
ENTERCOM
COMMUNICATIONS CORP.
FINANCIAL
DATA
(amounts in
thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended June 30,
June 30, 2018 2017 2018 2017
STATEMENTS OF
OPERATIONS
Net Revenues $ 372,124 $ 124,970 $ 672,684 $ 223,971
Station Expenses 274,159 90,632 527,920 167,593 Station Expense -
Non-Cash Compensation 1,680 372 3,643 577 Corporate Expenses 16,982
7,771 33,691 16,947 Corporate Expenses - Non-Cash Compensation
2,050 1,105 4,010 2,494 Depreciation And Amortization 10,666 2,517
19,137 5,164 Time Brokerage Agreement Expense (Income) (666) -
(1,092) 34 Merger And Acquisition Costs 687 5,829 2,071 16,100
Impairment Loss 28,988 441 28,988 441 Restructuring Charges 686 -
2,167 - Integration Costs 9,494 - 19,223 - Net (Gain) Loss On Sale
Or Disposition of Assets (154) (76) (315)
13,258 Total Operating Expenses 344,572
108,591 639,443 222,608 Operating Income
27,552 16,379 33,241 1,363 Net Interest
Expense 25,706 6,133 49,110 12,110
Income (Loss) Before Income Taxes 1,846 10,246 (15,869)
(10,747) Income Taxes (Benefit) 249 3,832
(3,260) (7,830) Net Income (Loss) Available To The Company -
Continuing Operations 1,597 6,414 (12,609) (2,917) Preferred Stock
Dividend - 550 - 1,100 Net Income
(Loss) Available To Common Shareholders - Continuing Operations
1,597 5,864 (12,609) (4,017) Income From Discontinued Operations,
Net Of Income Taxes 844 - 1,172 - Net
Income (Loss) Available To Common Shareholders $ 2,441 $ 5,864 $
(11,437) $ (4,017)
Net Income (Loss) From Continuing
Operations Available To Common Shareholders - Basic
$ 0.01 $ 0.15 $ (0.09) $ (0.10)
Net Income (Loss) From Continuing
Operations Available To Common Shareholders - Diluted
$ 0.01 $ 0.15 $ (0.09) $ (0.10) Dividends Declared And Paid
Per Common Share $ 0.09 $ 0.075 $ 0.18 $ 0.15 Weighted
Common Shares Outstanding - Basic 138,639 38,945
138,962 38,935 Weighted Common Shares Outstanding -
Diluted 139,263 39,656 138,962 38,935
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
Capital Expenditures, Including Amortizable Intangibles $ 11,995 $
4,350 $ 18,986 $ 7,044 Income Taxes Paid $ 18,791 $ 122 $ 18,836 $
177 Cash Dividends On Common Stock Declared And Paid $ 12,475 $
2,921 $ 24,916 $ 5,837 Cash Dividends On Preferred Stock Declared
And Paid $ - $ 550 $ - $ 1,100
SELECTED BALANCE
SHEET DATA
June 30, December 31, 2018 2017 Cash
and Cash Equivalents $ 39,926 $ 34,167 Senior Debt - Term B-1 Loan
(Includes Current Portion) $ 1,323,350 $ 1,330,000 Senior Debt -
Revolver (Includes Current Portion) $ 205,000 $ 143,000 Senior
Notes $ 400,000 $ 400,000 Total Shareholders' Equity $ 1,711,486 $
1,764,360
OTHER FINANCIAL DATA Three Months
Ended Six Months Ended June 30, June 30,
2018 2017 2018 2017
Reconciliation Of
GAAP Net Revenues To Same Station Net Revenues
Net Revenues $ 372,124 $ 124,970 $ 672,684 $ 223,971 Net
Acquisitions And Divestitures Of Radio Stations -
280,750 - 506,680 Same Station Net Revenues $ 372,124
$ 405,720 $ 672,684 $ 730,651
Reconciliation Of
GAAP Station Operating Expenses To Station Expenses
Station Operating Expenses $ 275,839 $ 91,004 $ 531,563 $ 168,170
Station Expenses - Non-Cash Compensation (1,680)
(372) (3,643) (577) Station Expenses $ 274,159 $
90,632 $ 527,920 $ 167,593
Reconciliation Of
GAAP Corporate General & Administrative Expenses To Corporate
Expenses
Corporate General & Administrative Expenses $ 19,032 $ 8,876 $
37,701 $ 19,441 Corporate Expenses - Non-Cash Compensation
(2,050) (1,105) (4,010) (2,494) Corporate
Expenses $ 16,982 $ 7,771 $ 33,691 $ 16,947
Reconciliation Of
GAAP Operating Income To Station Operating Income
Operating Income $ 27,552 $ 16,379 $ 33,241 $ 1,363 Corporate
Expenses 16,982 7,771 33,691 16,947 Corporate Expenses - Non-Cash
Compensation 2,050 1,105 4,010 2,494 Station Expenses - Non-Cash
Compensation 1,680 372 3,643 577 Depreciation And Amortization
10,666 2,517 19,137 5,164 Merger And Acquisition Costs 687 5,829
2,071 16,100 Restructuring Charges 686 - 2,167 - Impairment Loss
28,988 441 28,988 441 Integration Costs 9,494 - 19,223 - Net Time
Brokerage Agreement Expense (Income) (666) - (1,092) 34 Net Gain
(Loss) On Sale Or Disposition of Assets (154) (76)
(315) 13,258 Station Operating Income $ 97,965 $
34,338 $ 144,764 $ 56,378
Reconciliation Of
GAAP Net Income (Loss) Available To Common Shareholders To Adjusted
EBITDA To Pro Forma Adjusted EBITDA
Net (Income) Loss Available To Common Shareholders $ 2,441 $ 5,864
$ (11,437) $ (4,017) Income Taxes (Benefit) 249 3,832 (3,260)
(7,830) Income From Discontinued Operations, Net Of Income Taxes
(844) - (1,172) - Net Interest Expense 25,706 6,133 49,110 12,110
Corporate Expenses - Non-Cash Compensation 2,050 1,105 4,010 2,494
Station Expenses - Non-Cash Compensation 1,680 372 3,643 576
Depreciation And Amortization 10,666 2,517 19,137 5,164 Time
Brokerage Agreement Expense (Income) (666) - (1,092) 34 Preferred
Stock Dividend - 550 - 1,100 Merger And Acquisition Costs 687 5,829
2,071 16,100 Restructuring Charges 686 - 2,167 - Integration Costs
9,494 - 19,223 - Transition Costs And Non-Recurring Expenses
Otherwise Included In Corporate Expenses 1,100 166 1,100 1,419
Impairment Loss 28,988 441 28,988 441 Net Gain (Loss) On Sale Or
Disposition of Assets (154) (76) (315)
13,258 Adjusted EBITDA 82,083 26,733 112,173 40,849 Net Of
Acquisitions And Divestitures - 74,828 120,604 CBS Radio Costs
Incurred To Separate From Its Parent - 149
1,286 Pro Forma Adjusted EBITDA $ 82,083 $ 101,710 $
112,173 $ 162,739
Reconciliation Of
GAAP Net Income (Loss) Available To Common Shareholders To Adjusted
Free Cash Flow
Net Income (Loss) Available To Common Shareholders $ 2,441 $ 5,864
$ (11,437) $ (4,017) Depreciation And Amortization 10,666 2,517
19,137 5,164 Deferred Financing Costs Included In Interest Expense
796 580 1,591 1,166 Amortization Debt Premium Included In Interest
Expense (716) - (1,432) - Non-Cash Compensation Expense 3,730 1,477
7,653 3,071 Merger And Acquisition Costs 688 5,829 2,071 16,100
Integration Costs 9,494 - 19,223 - Restructuring Charges 686 -
2,167 - Transition Costs And Non-Recurring Expenses Otherwise
Included In Corporate Expenses 1,100 166 1,100 1,419 Impairment
Loss 28,988 441 28,988 441 Net (Gain) Loss On Sale Or Disposition
of Assets (154) (76) (315) 13,258 Income Taxes (Benefit) 249 3,832
(3,260) (7,830) Income Taxes Otherwise Included In Income From
Discontinued Operations 337 - 423 - Capital Expenditures, Including
Amortizable Intangibles (11,995) (4,350) (18,986) (7,044) Income
Taxes Paid (18,791) (122) (18,836)
(177) Adjusted Free Cash Flow $ 27,519 $ 16,158 $ 28,087 $ 21,551
Reconciliation Of
GAAP Net Income (Loss) Available To Common Shareholders To Adjusted
Net Income
Net Income (Loss) Available To Common Shareholders $ 2,441 $ 5,864
$ (11,437) $ (4,017) Preferred Stock Dividend - 550 - 1,100 Income
Taxes (Benefit) 249 3,832 (3,260) (7,830) Income Taxes Included In
Income From Discontinued Operations 336 - 423 - Merger And
Acquisition Costs 687 5,829 2,071 16,100 Transition Costs And
Non-Recurring Expenses Otherwise Included In Corporate Expenses
1,100 166 1,100 1,419 Impairment Loss 28,988 441 28,988 441
Integration Costs 9,494 - 19,223 - Restructuring Charges 686 -
2,167 - Net (Gain) Loss On Sale Or Disposition of Assets (154) (76)
(315) 13,258 Non-Cash Compensation Expense 3,730
1,477 7,653 3,071 Adjusted Income Before Income Taxes
47,557 18,083 46,613 23,542 Income Taxes 14,267 7,233
13,984 9,417 Adjusted Net Income Available To The
Company 33,290 10,850 32,629 14,125 Preferred Stock Dividend
- 550 - 1,100 Adjusted Net Income $ 33,290 $
10,300 $ 32,629 $ 13,025
Numerator For
Purposes Of Computing Adjusted Net Income (Loss) Per Share -
Diluted
Adjusted Net Income (Loss) $ 33,290 $ 10,300 $ 32,629 $ 13,025
Preferred Stock Dividend, Treated As If Preferred Never Converted
- - - - $ 33,290 $ 10,300 $ 32,629 $
13,025
Weighted Average
Diluted Shares Outstanding For Purposes Of Computing Adjusted Net
Income Per Share - Diluted
Weighted Common Shares Outstanding - Diluted As Reported 139,263
39,656 138,962 38,935 Preferred Stock Dividend, Treated As If
Preferred Never Converted - - - - Diluted Shares Excluded When
Reporting A Net Loss - - 1,059 1,026
139,263 39,656 140,021 39,961
Adjusted Net Income (Loss) Per Share - Diluted $ 0.24 $ 0.26 $ 0.23
$ 0.33
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180808005162/en/
JCIRJoseph Jaffoni, JenniferNeuman, Norberto
Aja212-835-8500etm@jcir.com
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