iHeartMedia, Inc. (Nasdaq: IHRT) today reported financial
results for the quarter ended September 30, 2023.
Financial Highlights:1
Q3 2023 Consolidated
Results
- Q3 Revenue of $953 million, down 3.6%; slightly better than the
guidance range of down mid-single digits
- Excluding Q3 Political Revenue, Q3 Revenue down 1%
- GAAP Operating income of $69 million vs. GAAP Operating loss of
$211 million in Q3 2022, which included a $302 million non-cash
impairment charge
- Consolidated Adjusted EBITDA of $204 million, within previously
disclosed guidance range of $195 million to $205 million, compared
to $252 million in Q3 2022
- Cash Flows from operating activities of $96 million
- Free Cash Flow of $68 million
- Received cash proceeds of $45 million from sale of radio
broadcast towers
Q3 2023 Digital Audio Group
Results
- Digital Audio Group Revenue of $267 million up 5%
- Podcast Revenue of $103 million up 13%
- Digital Revenue excluding Podcast of $165 million up 1%
- Segment Adjusted EBITDA of $94 million up 20%
- Digital Audio Group Adjusted EBITDA margin of 35.1%
Q3 2023 Multiplatform Group
Results
- Multiplatform Group Revenue of $626 million down 5%
- Segment Adjusted EBITDA of $162 million down 22%
- Multiplatform Group Adjusted EBITDA margin of 25.9%
Continued Proactive Capital Structure
Improvement Through Debt Paydown
- Cash balance and total available liquidity2 of $213 million and
$625 million, respectively, as of September 30, 2023
- Repurchased $89 million in principal balance of 8.375% Senior
Unsecured Notes (at a discount to par) for $65 million in cash;
expected to generate approximately $7 million of annualized
interest savings
- As of September 30, 2023, since Q2 2022 combined Notes
repurchases of $519 million at a discount to par for $437 million
cash; in aggregate expected to generate approximately $43 million
of annualized interest savings
- Cumulative reduction of the outstanding principal balance of
these Notes from $1.45 billion as of March 31, 2022 to
approximately $0.9 billion as of September 30, 2023
Guidance
- Q4 Consolidated Revenue expected to decline in the high-single
digits; Q4 Consolidated Revenue excluding the impact of Political
expected to decline in the low-single digits3
- October Consolidated Revenue down approximately 8%
- Q4 Consolidated Adjusted EBITDA4 expected to be $205 million to
$215 million
- Remain committed to long term target of approximately 4x Net
Debt to Adjusted EBITDA ("net leverage")4
____________________________________
1 Unless otherwise noted, all results are
based on year over year comparisons.
2 Total available liquidity is defined as
cash and cash equivalents plus available borrowings under our ABL
Facility. We use total available liquidity to evaluate our capacity
to access cash to meet obligations and fund operations.
3 Included in Q4 2022 GAAP Consolidated
Revenue is approximately $66 million of Political Revenue.
4 A full reconciliation of forecasted
Adjusted EBITDA, consolidated revenue excluding political, net debt
and net leverage on a non-GAAP basis to the most-directly
comparable GAAP metrics cannot be provided without unreasonable
efforts due to the inherent difficulty in forecasting and
quantifying with reasonable accuracy significant items required for
the reconciliations, including political revenue, gains or losses
on investments, extinguishment of debt, equity in nonconsolidated
affiliates, impairment charges, stock based compensation, and
restructuring as well as the Company’s cash and cash equivalents
balance.
Statement from Senior Management
“We’re pleased to report that our third quarter results were at
the high end of our Adjusted EBITDA and Revenue guidance ranges.
Our Digital Audio Group’s performance reflects the strong
flow-through characteristics of the business and Podcasting
continues to be a strong growth engine for the Company;
additionally, while the Multiplatform Group does continue to be
impacted by advertising industry uncertainty, we’ve seen sequential
gradual quarter to quarter improvement throughout the year and we
remain confident that the Multiplatform Group will be an additional
growth engine for the company as the advertising marketplace
recovers,” said Bob Pittman, Chairman and CEO of iHeartMedia,
Inc.
“We still feel confident -- and see strong indications -- that
Q4 will continue the trend of sequential quarterly improvement for
both the Digital Audio Group and the Multiplatform Group, and for
iHeart on a consolidated basis. While there continues to be
lingering uncertainty in the advertising market driven by the
current global geopolitical situation, as the advertising ecosystem
continues to improve, combined with what is expected to be a record
political advertising year in 2024, we believe that we will resume
our growth story in terms of revenue and profitability,” said Rich
Bressler, President, COO and CFO of iHeartMedia, Inc.
Consolidated Results of
Operations
Third Quarter 2023 Consolidated
Results
Our consolidated revenue decreased $35.9 million, or 3.6%,
during the three months ended September 30, 2023 compared to the
same period of 2022. Digital Audio revenue increased $13.3 million,
or 5.2%, driven primarily by continuing increases in demand for
podcast advertising. Multiplatform revenue decreased $33.5 million,
or 5.1%, primarily resulting from a decrease in broadcast
advertising due to a challenging macroeconomic environment and a
decline in political advertising, partially offset by an increase
in trade and barter revenues and higher revenues from live events.
Audio & Media Services revenue decreased $15.8 million
primarily due to a decrease in political revenue.
Consolidated direct operating expenses increased $8.3 million,
or 2.2%, during the three months ended September 30, 2023 compared
to the same period of 2022. The increase in direct operating
expenses was primarily driven by higher music license fees, and
higher variable content costs resulting from an increase in digital
revenue, including third-party digital costs and profit sharing
costs. The increase was partially offset by lower employee
compensation as a result of cost savings initiatives.
Consolidated Selling, General & Administrative ("SG&A")
expenses decreased $6.3 million, or 1.6%, during the three months
ended September 30, 2023 compared to the same period of 2022. The
decrease in Consolidated SG&A expenses was driven primarily by
a decrease in costs incurred in connection with executing on our
cost reduction initiatives, partially offset by higher trade and
barter expense, variable bonus expense, and bad debt expense.
Our consolidated GAAP Operating income was $69.0 million
compared to Operating loss of $211.2 million in the third quarter
of 2022, primarily resulting from a non-cash impairment charge of
$302.1 million of our indefinite-lived intangible assets balances
recorded in the third quarter of 2022.
Adjusted EBITDA decreased to $203.8 million compared to $252.2
million in the prior-year period.
Cash provided by operating activities was $96.2 million,
compared to $103.1 million in the prior-year period primarily due
to a decrease in broadcast radio revenue due to a challenging
macroeconomic environment, a decrease in political revenue, and an
increase in floating borrowing rates. Free Cash Flow was $67.7
million, compared to $62.8 million in the prior year period.
Business Segments: Results of
Operations
Third Quarter 2023 Multiplatform Group
Results
(In thousands)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
626,383
$
659,896
(5.1
)%
$
1,751,340
$
1,864,356
(6.1
)%
Operating expenses1
463,939
452,631
2.5
%
1,339,441
1,328,688
0.8
%
Segment Adjusted EBITDA
$
162,444
$
207,265
(21.6
)%
$
411,899
$
535,668
(23.1
)%
Segment Adjusted EBITDA margin
25.9
%
31.4
%
23.5
%
28.7
%
1
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Multiplatform Group decreased $33.5 million, or
5.1% YoY, primarily as a result of the challenging macroeconomic
environment and a decline in political advertising as 2022 was a
mid-term election year, partially offset by an increase in trade
and barter and live events revenues. Broadcast revenue declined
$29.7 million, or 6.1% YoY, driven by lower spot revenue and a
decrease in political advertising, partially offset by an increase
in trade and barter revenues. Networks declined $10.9 million, or
8.6% YoY. Revenue from Sponsorship and Events increased by $6.9
million, or 16.3% YoY.
Operating expenses increased $11.3 million, or 2.5% YoY, driven
primarily by an increase in trade and barter expenses and costs
incurred in connection with live events, partially offset by lower
sales commissions.
Segment Adjusted EBITDA Margin decreased YoY to 25.9% from
31.4%.
Third Quarter 2023 Digital Audio Group
Results
(In thousands)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
267,222
$
253,953
5.2
%
$
751,472
$
720,733
4.3
%
Operating expenses1
173,565
175,636
(1.2
)%
519,115
511,025
1.6
%
Segment Adjusted EBITDA
$
93,657
$
78,317
19.6
%
$
232,357
$
209,708
10.8
%
Segment Adjusted EBITDA margin
35.1
%
30.8
%
30.9
%
29.1
%
1
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Digital Audio Group increased $13.3 million, or
5.2% YoY, driven by Podcast revenue which increased by $11.4
million, or 12.5%, YoY, to $102.7 million, driven primarily by
increased demand for podcasting from advertisers, and Digital,
excluding Podcast revenue, which grew $1.9 million, or 1.1%, YoY,
to $164.6 million, driven by an increase in demand for digital
advertising, partially offset by a decrease in COVID-19 related
advertisers.
Operating expenses decreased $2.1 million, or 1.2% YoY, due to
lower third-party digital costs in connection with COVID-19 related
advertisers, partially offset by higher sales commissions resulting
from higher revenue.
Segment Adjusted EBITDA Margin increased YoY to 35.1% from
30.8%.
Third Quarter 2023 Audio & Media
Services Group Results
(In thousands)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
61,979
$
77,794
(20.3
)%
$
189,134
$
209,716
(9.8
)%
Operating expenses1
45,003
48,044
(6.3
)%
138,315
141,509
(2.3
)%
Segment Adjusted EBITDA
$
16,976
$
29,750
(42.9
)%
$
50,819
$
68,207
(25.5
)%
Segment Adjusted EBITDA margin
27.4
%
38.2
%
26.9
%
32.5
%
1
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Audio & Media Services Group decreased
$15.8 million, or 20.3% YoY, primarily driven by a decrease in
political revenue.
Operating expenses decreased $3.0 million, or 6.3% YoY,
primarily as a result of lower incentive bonus expense and sales
commissions due to lower revenues.
Segment Adjusted EBITDA Margin decreased YoY to 27.4% from
38.2%.
GAAP and Non-GAAP Measures: Consolidated
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
952,989
$
988,930
$
2,684,242
$
2,786,393
Operating income (loss)
$
68,965
$
(211,187
)
$
(877,091
)
$
(115,983
)
Adjusted EBITDA1
$
203,782
$
252,242
$
488,386
$
634,645
Net loss
$
(8,969
)
$
(309,776
)
$
(1,114,314
)
$
(343,333
)
Cash provided by operating activities2
$
96,169
$
103,110
$
58,958
$
206,699
Free cash flow1,2
$
67,651
$
62,753
$
(31,498
)
$
94,132
Free cash flow including net proceeds from
real estate sales1,2
$
67,651
$
70,453
$
(26,869
)
$
125,667
______________________________________________________
1
See the end of this press release for
reconciliations of (i) Adjusted EBITDA to Operating income (loss),
(ii) Adjusted EBITDA to Net loss, (iii) Free Cash Flow and Free
cash flow including net proceeds from real estate sales to cash
provided by operating activities, (iv) revenue, excluding political
advertising revenue, to revenue, and (v) Net Debt to Total Debt.
See also the definitions of Adjusted EBITDA, Free Cash Flow, Free
cash flow including net proceeds from real estate sales, Adjusted
EBITDA margin, and Net Debt under the Supplemental Disclosure
Regarding Non-GAAP Financial Information section in this
release.
2
We made cash interest payments of $108.7
million in the three months ended September 30, 2023, compared to
$89.9 million in the three months ended September 30, 2022.
Certain prior period amounts have been reclassified to conform
to the 2023 presentation of financial information throughout the
press release.
Liquidity and Financial
Position
As of September 30, 2023, we had $213.5 million of cash on our
balance sheet. For the nine months ended September 30, 2023, cash
provided by operating activities was $59.0 million, cash used for
investing activities was $40.0 million and cash used for financing
activities was $142.0 million.
Capital expenditures for the nine months ended September 30,
2023 were $90.5 million compared to $112.6 million in the nine
months ended September 30, 2022. Capital expenditures during the
nine months ended September 30, 2023 decreased primarily due to
lower spending on real estate optimization initiatives.
As of September 30, 2023, the Company had $5,228.7 million of
total debt and $5,015.2 million of Net Debt. The terms of our
capital structure include no material maintenance covenants, and
there are no material debt maturities prior to 2026, providing
structural resilience. During the three months ended September 30,
2023, we repurchased $89.1 million in aggregate principal amount of
iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027,
at a discount to par, for $65.2 million in cash. During the nine
months ended September 30, 2023, we repurchased $189.0 million in
aggregate principal amount of iHeartCommunications Inc.'s 8.375%
Senior Unsecured Notes due 2027, at a discount to par, for $137.5
million in cash.
In September 2023, we sold 122 of our broadcast tower sites for
net proceeds of $45.3 million and entered into long-term operating
leases for use of space on 121 of the broadcast towers and related
assets.
Cash balance and total available liquidity5 were $213.5 million
and $625 million, respectively, as of September 30, 2023.
____________________________________
5
Total available liquidity is defined as
cash and cash equivalents plus available borrowings under our ABL
Facility. We use total available liquidity to evaluate our capacity
to access cash to meet obligations and fund operations.
Revenue Streams
The tables below present the comparison of our historical
revenue streams (including political revenue) for the periods
presented:
(In thousands)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
2023
2022
Change
2023
2022
Change
Broadcast Radio
$
455,103
$
484,812
(6.1
)%
$
1,267,493
$
1,362,601
(7.0
)%
Networks
116,334
127,239
(8.6
)%
346,456
372,329
(6.9
)%
Sponsorship and Events
49,500
42,562
16.3
%
120,297
114,226
5.3
%
Other
5,446
5,283
3.1
%
17,094
15,200
12.5
%
Multiplatform Group1
626,383
659,896
(5.1
)%
1,751,340
1,864,356
(6.1
)%
Digital ex. Podcast
164,559
162,700
1.1
%
475,291
475,254
—
%
Podcast
102,663
91,253
12.5
%
276,181
245,479
12.5
%
Digital Audio Group
267,222
253,953
5.2
%
751,472
720,733
4.3
%
Audio & Media Services
Group1
61,979
77,794
(20.3
)%
189,134
209,716
(9.8
)%
Eliminations
(2,595
)
(2,713
)
(7,704
)
(8,412
)
Revenue, total1
$
952,989
$
988,930
(3.6
)%
$
2,684,242
$
2,786,393
(3.7
)%
1
Excluding the impact of political revenue,
Revenue from the Multiplatform Group and Consolidated Revenue
decreased by 3.2% and 1.0% for the three months ended September 30,
2023 compared to the three months ended September 30, 2022,
respectively. Excluding the impact of political revenue, Revenue
from Audio & Media Services decreased by 7.4% for the three
months ended September 30, 2023 compared to the three months ended
September 30, 2022. See the end of this press release for a
reconciliation of revenue, excluding political advertising revenue,
to revenue.
Conference Call
iHeartMedia, Inc. will host a conference call to discuss results
and business outlook on November 9, 2023, at 8:30 a.m. Eastern
Time. The conference call number is (888) 330-2446 (U.S. callers)
and +1 (240) 789-2732 (International callers) and the passcode for
both is 71596. A live audio webcast of the conference call will
also be available on the Investors homepage of iHeartMedia's
website investors.iheartmedia.com. After the live conference call,
a replay will be available for a period of thirty days. The replay
numbers are (800) 770-2030 (U.S. callers) and +1 (647) 362-9199
(International callers) and the passcode for both is 71596. An
archive of the webcast will be available beginning 24 hours after
the call for a period of thirty days.
About iHeartMedia, Inc.
iHeartMedia (Nasdaq: IHRT) is the number one audio company in
the United States, reaching nine out of 10 Americans every month.
It consists of three business groups.
With its quarter of a billion monthly listeners, the iHeartMedia
Multiplatform Group has a greater reach than any other media
company in the U.S. Its leadership position in audio extends across
multiple platforms, including more than 860 live broadcast stations
in over 160 markets nationwide; its National Sales organization;
and the company’s live and virtual events business. It also
includes Premiere Networks, the industry’s largest Networks
business, with its Total Traffic and Weather Network (TTWN); and
BIN: Black Information Network, the first and only 24/7 national
and local all news audio service for the Black community.
iHeartMedia also leads the audio industry in analytics, targeting
and attribution for its marketing partners with its SmartAudio
suite of data targeting and attribution products using data from
its massive consumer base.
The iHeartMedia Digital Audio Group includes the company’s
fast-growing podcasting business -- iHeartMedia is the number one
podcast publisher in downloads, unique listeners, revenue and
earnings -- as well as its industry-leading iHeartRadio digital
service, available across more than 250 platforms and thousands of
devices; the company’s digital sites, newsletters, digital services
and programs; its digital advertising technology companies; and its
audio industry-leading social media footprint.
The Company’s Audio & Media Services reportable segment
includes Katz Media Group, the nation’s largest media
representation company, and RCS, the world's leading provider of
broadcast and webcast software.
Certain statements herein constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other important factors which
may cause the actual results, performance or achievements of
iHeartMedia, Inc. and its subsidiaries to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. The words or phrases
“guidance,” “believe,” “expect,” “anticipate,” “estimates,”
“forecast” and similar words or expressions are intended to
identify such forward-looking statements. In addition, any
statements that refer to expectations or other characterizations of
future events or circumstances, such as statements about
positioning in uncertain economic environment and future economic
recovery, driving shareholder value, our expected costs savings and
other capital and operating expense reduction initiatives,
utilizing new technologies, improving operational efficiency,
future advertising demand, trends in the advertising industry,
including on other media platforms; strategies and initiatives,
expected interest rates and interest expense savings, and our
anticipated financial performance, liquidity, and net leverage are
forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties
and other important factors, some of which are beyond our control
and are difficult to predict. Various risks that could cause future
results to differ from those expressed by the forward-looking
statements included in this press release include, but are not
limited to: risks related to weak or uncertain global economic
conditions; the impact of COVID-19 or other future public health
crises; competition, including increased competition from
alternative media platforms and technologies; dependence upon our
brand and the performance of on-air talent, program hosts and
management; fluctuations in operating costs; technological changes
and innovations; shifts in population and other demographics;
impact of acquisitions, dispositions and other strategic
transactions; risks related to our indebtedness; legislative or
regulatory requirements; impact of legislation, ongoing litigation
or royalty audits on music licensing and royalties; regulations and
concerns regarding privacy and data protection and breaches of
information security measures; risks related to our Class A common
stock; and regulations impacting our business and the ownership of
our securities. Other unknown or unpredictable factors also could
have material adverse effects on the Company’s future results,
performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release may not occur. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as
of the date hereof. Additional risks that could cause future
results to differ from those expressed by any forward-looking
statement are described in the Company’s reports filed with the
U.S. Securities and Exchange Commission, including in the section
entitled “Part I, Item 1A. Risk Factors” of iHeartMedia, Inc.’s
Annual Reports on Form 10-K and “Part II, Item 1A. Risk Factors” of
iHeartMedia, Inc.’s Quarterly Reports on Form 10-Q. The Company
does not undertake any obligation to publicly update or revise any
forward-looking statements because of new information, future
events or otherwise.
APPENDIX
TABLE 1 - Comparison of operating
performance
(In thousands)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
952,989
$
988,930
(3.6
)%
$
2,684,242
$
2,786,393
(3.7
)%
Operating expenses:
Direct operating expenses (excludes
depreciation and amortization)
379,997
371,719
2.2
%
1,079,678
1,067,625
1.1
%
Selling, general and administrative
expenses (excludes depreciation and amortization)
393,628
399,892
(1.6
)%
1,190,202
1,163,293
2.3
%
Depreciation and amortization
106,451
109,305
323,028
334,144
Impairment charges
570
309,750
965,087
311,329
Other operating expense, net
3,378
9,451
3,338
25,985
Operating income (loss)
$
68,965
$
(211,187
)
$
(877,091
)
$
(115,983
)
Depreciation and amortization
106,451
109,305
323,028
334,144
Impairment charges
570
309,750
965,087
311,329
Other operating expense, net
3,378
9,451
3,338
25,985
Restructuring expenses
16,227
24,486
46,469
54,588
Share-based compensation expense
8,191
10,437
27,555
24,582
Adjusted EBITDA1
$
203,782
$
252,242
(19.2
)%
$
488,386
$
634,645
(23.0
)%
1
See the end of this press release for
reconciliations of (i) Adjusted EBITDA to Operating income (loss),
(ii) Adjusted EBITDA to Net loss, (iii) Free Cash Flow and Free
cash flow including net proceeds from real estate sales to cash
provided by operating activities, (iv) revenue, excluding political
advertising revenue, to revenue, and (v) Net Debt to Total Debt.
See also the definitions of Adjusted EBITDA, Free Cash Flow, Free
cash flow including net proceeds from real estate sales, Adjusted
EBITDA margin and Net Debt under the Supplemental Disclosure
section in this release.
TABLE 2 - Statements of
Operations
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
952,989
$
988,930
$
2,684,242
$
2,786,393
Operating expenses:
Direct operating expenses (excludes
depreciation and amortization)
379,997
371,719
1,079,678
1,067,625
Selling, general and administrative
expenses (excludes depreciation and amortization)
393,628
399,892
1,190,202
1,163,293
Depreciation and amortization
106,451
109,305
323,028
334,144
Impairment charges1
570
309,750
965,087
311,329
Other operating expense, net
3,378
9,451
3,338
25,985
Operating income (loss)
68,965
(211,187
)
(877,091
)
(115,983
)
Interest expense, net
99,509
87,890
293,659
248,603
Gain (loss) on investments, net
(7,381
)
(3,466
)
(19,924
)
4,359
Equity in loss of nonconsolidated
affiliates
(3,514
)
(132
)
(3,518
)
(190
)
Gain on extinguishment of debt
23,947
6,892
51,474
15,095
Other expense, net
(738
)
(581
)
(1,109
)
(3,026
)
Loss before income taxes
(18,230
)
(296,364
)
(1,143,827
)
(348,348
)
Income tax benefit (expense)
9,261
(13,412
)
29,513
5,015
Net loss
(8,969
)
(309,776
)
(1,114,314
)
(343,333
)
Less amount attributable to noncontrolling
interest
84
587
1,469
1,211
Net loss attributable to the Company
$
(9,053
)
$
(310,363
)
$
(1,115,783
)
$
(344,544
)
1
Impairment charges in the nine months
ended September 30, 2023 includes $595.5 million related to the
impairment of Goodwill, $363.6 million related to the impairment of
FCC licenses, and $6.1 million related to impairments of
right-of-use assets. The right-of-use asset impairments are part of
our operating expense-savings initiatives. As previously disclosed,
we have taken strategic actions to streamline our real estate
footprint and related expenses, resulting in impairment charges due
to the write-down of right-of-use assets and related fixed assets,
including leasehold improvements. Impairment charges in the three
and nine months ended September 30, 2022 include $302.1 million
related to the impairment of FCC licenses, and $7.6 million and
$9.2 million, respectively, related to impairments of right-of-use
assets.
TABLE 3 - Selected Balance Sheet
Information
Selected balance sheet information for September 30, 2023 and
December 31, 2022:
(In millions)
September 30, 2023
December 31, 2022
Cash
$
213.5
$
336.2
Total Current Assets
1,349.0
1,472.8
Net Property, Plant and Equipment
580.8
694.8
Total Assets
6,877.5
8,335.9
Current Liabilities (excluding current
portion of long-term debt)
742.3
831.2
Long-term Debt (including current portion
of long-term debt)
5,228.7
5,414.2
Stockholders' Equity (Deficit)
(406.8
)
684.5
Supplemental Disclosure Regarding
Non-GAAP Financial Information
The following tables set forth the Company’s Adjusted EBITDA,
Adjusted EBITDA margin, revenues excluding political advertising
revenue, Free Cash Flow and Free cash flow including net proceeds
from real estate sales for the three and nine months ended
September 30, 2023 and 2022, and Net Debt as of September 30, 2023.
Adjusted EBITDA is defined as consolidated Operating income
adjusted to exclude restructuring expenses included within Direct
operating expenses and SG&A expenses, and share-based
compensation expenses included within SG&A expenses, as well as
the following line items presented in our Statements of Operations:
Depreciation and amortization, Impairment charges and Other
operating (income) expense, net. Alternatively, Adjusted EBITDA is
calculated as Net income (loss), adjusted to exclude Income tax
(benefit) expense, Interest expense, net, Depreciation and
amortization, (Gain) loss on investments, net, Gain on
extinguishment of debt, Other expense, net, Equity in loss of
nonconsolidated affiliates, net, Impairment charges, Other
operating income (expense), net, Share-based compensation expense,
and restructuring expenses. Restructuring expenses primarily
include expenses incurred in connection with cost-saving
initiatives, as well as certain expenses, which, in the view of
management, are outside the ordinary course of business or
otherwise not representative of the Company's operations during a
normal business cycle. Adjusted EBITDA margin is calculated as
Adjusted EBITDA divided by Revenue.
The Company uses Adjusted EBITDA and Adjusted EBITDA margin,
among other measures, to evaluate the Company’s operating
performance. Adjusted EBITDA is among the primary measures used by
management for the planning and forecasting of future periods, as
well as for measuring performance for compensation of executives
and other members of management. We believe this measure is an
important indicator of the Company’s operational strength and
performance of its business because it provides a link between
operational performance and operating income. It is also a primary
measure used by management in evaluating companies as potential
acquisition targets.
The Company believes the presentation of these measures is
relevant and useful for investors because it allows investors to
view performance in a manner similar to the method used by the
Company’s management. The Company believes it helps improve
investors’ ability to understand the Company’s operating
performance and makes it easier to compare the Company’s results
with other companies that have different capital structures or tax
rates. In addition, the Company believes this measure is also among
the primary measures used externally by the Company’s investors,
analysts and peers in its industry for purposes of valuation and
comparing the operating performance of the Company to other
companies in its industry.
Since Adjusted EBITDA is not a measure calculated in accordance
with GAAP, it should not be considered in isolation of, or as a
substitute for, operating income as an indicator of operating
performance and may not be comparable to similarly titled measures
employed by other companies. Adjusted EBITDA is not necessarily a
measure of the Company’s ability to fund its cash needs. As it
excludes certain financial information compared with operating
income, the most directly comparable GAAP financial measure, users
of this financial information should consider the types of events
and transactions which are excluded.
We define Free Cash Flow as Cash provided by (used for)
operating activities less capital expenditures, which is disclosed
as Purchases of property, plant and equipment in the Company's
Consolidated Statements of Cash Flows. We define Free cash flow
including net proceeds from real estate sales as Free Cash Flow
further adjusted to include proceeds from real estate sales. We use
Free Cash Flow and Free cash flow including net proceeds from real
estate sales, among other measures, to evaluate the Company’s
liquidity and its ability to generate cash flow. We believe that
Free Cash Flow and Free cash flow including net proceeds from real
estate sales are meaningful to investors because they provide them
with a view of the Company's liquidity after deducting capital
expenditures, which are considered to be a necessary component of
ongoing operations; and include proceeds from real estate sales in
the case of Free cash flow including net proceeds from real estate
sales. In addition, we believe that Free Cash Flow and Free cash
flow including net proceeds from real estate sales helps improve
investors' ability to compare our liquidity with that of other
companies.
Since Free Cash Flow and Free cash flow including net proceeds
from real estate sales are not measures calculated in accordance
with GAAP, they should not be considered in isolation of, or as a
substitute for, Cash used for operating activities and may not be
comparable to similarly titled measures employed by other
companies. Free Cash Flow and Free cash flow including net proceeds
from real estate sales is not necessarily a measure of our ability
to fund our cash needs.
The Company presents revenue, excluding the effects of political
revenue. Due to the cyclical nature of the electoral system and the
seasonality of the related political revenue, management believes
presenting revenue, excluding the effects of political revenue,
provides additional information to investors about the Company’s
revenue growth from period to period.
We define Net Debt as Total Debt less Cash and cash equivalents.
We define net leverage as Net Debt divided by Adjusted EBITDA. The
Company uses net leverage and Net Debt to evaluate the Company's
liquidity. We believe these measures are an important indicator of
the Company's ability to service its long-term debt
obligations.
Since these non-GAAP financial measures are not calculated in
accordance with GAAP, they should not be considered in isolation
of, or as a substitute for, the most directly comparable GAAP
financial measures as an indicator of operating performance or
liquidity.
As required by the SEC rules, the Company provides
reconciliations below to the most directly comparable measures
reported under GAAP, including (i) Adjusted EBITDA to Operating
income (loss), (ii) Adjusted EBITDA to Net loss, (iii) Free Cash
Flow and Free cash flow including net proceeds from real estate
sales to cash provided by operating activities, (iv) revenue,
excluding political advertising revenue, to revenue, and (v) Net
Debt to Total Debt.
We have provided forecasted Revenue, Consolidated Revenue
excluding political and Adjusted EBITDA guidance for the quarter
ending December 31, 2023 and long-term net leverage guidance, which
reflects targets for Adjusted EBITDA and net debt. Our Earnings
Call on November 9, 2023 may present guidance that includes
Adjusted EBITDA. A full reconciliation of the forecasted Adjusted
EBITDA, Consolidated Revenue excluding political, net debt and net
leverage on a non-GAAP basis to its most-directly comparable GAAP
metrics cannot be provided without unreasonable efforts due to the
inherent difficulty in forecasting and quantifying with reasonable
accuracy significant items required for the reconciliations,
including political revenue, gains or losses on investments,
extinguishment of debt, equity in nonconsolidated affiliates,
impairment charges, stock based compensation, and restructuring as
well as the Company's cash and cash equivalent balance.
Reconciliation of Operating income (loss) to Adjusted
EBITDA
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended June
30,
2023
2022
2023
2022
2023
Operating income (loss)
$
68,965
$
(211,187
)
$
(877,091
)
$
(115,983
)
$
(897,194
)
Depreciation and amortization
106,451
109,305
323,028
334,144
108,065
Impairment charges1
570
309,750
965,087
311,329
960,570
Other operating (income) expense, net
3,378
9,451
3,338
25,985
(261
)
Restructuring expenses
16,227
24,486
46,469
54,588
10,789
Share-based compensation expense
8,191
10,437
27,555
24,582
9,212
Adjusted EBITDA
$
203,782
$
252,242
$
488,386
$
634,645
$
191,181
1
Impairment charges in the nine months
ended September 30, 2023 includes $595.5 million related to the
impairment of Goodwill, $363.6 million related to the impairment of
FCC licenses, and $6.1 million related to impairments of
right-of-use assets. The right-of-use asset impairments are part of
our operating expense-savings initiatives. As previously disclosed,
we have taken strategic actions to streamline our real estate
footprint and related expenses, resulting in impairment charges due
to the write-down of right-of-use assets and related fixed assets,
including leasehold improvements. Impairment charges in the three
and nine months ended September 30, 2022 include $302.1 million
related to the impairment of FCC licenses, and $7.6 million and
$9.2 million, respectively, related to impairments of right-of-use
assets.
Reconciliation of Net loss to EBITDA and Adjusted
EBITDA
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended June
30,
2023
2022
2023
2022
2023
Net loss
$
(8,969
)
$
(309,776
)
$
(1,114,314
)
$
(343,333
)
$
(882,982
)
Income tax (benefit) expense
(9,261
)
13,412
(29,513
)
(5,015
)
(96,357
)
Interest expense, net
99,509
87,890
293,659
248,603
98,693
Depreciation and amortization
106,451
109,305
323,028
334,144
108,065
EBITDA
$
187,730
$
(99,169
)
$
(527,140
)
$
234,399
$
(772,581
)
(Gain) Loss on investments, net
7,381
3,466
19,924
(4,359
)
6,038
Gain on extinguishment of debt
(23,947
)
(6,892
)
(51,474
)
(15,095
)
(22,902
)
Other expense, net
738
581
1,109
3,026
272
Equity in loss of nonconsolidated
affiliates
3,514
132
3,518
190
44
Impairment charges
570
309,750
965,087
311,329
960,570
Other operating (income) expense, net
3,378
9,451
3,338
25,985
(261
)
Restructuring expenses
16,227
24,486
46,469
54,588
10,789
Share-based compensation expense
8,191
10,437
27,555
24,582
9,212
Adjusted EBITDA
$
203,782
$
252,242
$
488,386
$
634,645
$
191,181
Reconciliation of Cash Used For Operating Activities to Free
Cash Flow and Free cash flow including net proceeds from real
estate sales
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Cash provided by operating activities
$
96,169
$
103,110
$
58,958
$
206,699
Purchases of property, plant and
equipment
(28,518
)
(40,357
)
(90,456
)
(112,567
)
Free cash flow
67,651
62,753
(31,498
)
$
94,132
Net proceeds from real estate sales1
—
7,700
4,629
31,535
Free cash flow including net proceeds from
real estate sales
$
67,651
$
70,453
$
(26,869
)
$
125,667
1
During the three and nine months ended
September 30, 2023 and 2022, we deployed capital expenditures to
accelerate the proactive streamlining of our real estate footprint
aimed at reducing our structural cost base. This initiative has
succeeded in making certain real estate assets redundant, enabling
the Company to sell such assets to partially fund the initiative’s
gross capital expenditures.
Reconciliation of Revenue to Revenue excluding Political
Advertising
(In thousands)
Three Months Ended
September 30,
%
Change
Nine Months Ended
September 30,
%
Change
2023
2022
2023
2022
Consolidated revenue
$
952,989
$
988,930
(3.6
)%
$
2,684,242
$
2,786,393
(3.7
)%
Excluding: Political revenue
(7,944
)
(33,968
)
(17,721
)
(66,215
)
Consolidated revenue, excluding
political
$
945,045
$
954,962
(1.0
)%
$
2,666,521
$
2,720,178
(2.0
)%
Multiplatform Group revenue
$
626,383
$
659,896
(5.1
)%
$
1,751,340
$
1,864,356
(6.1
)%
Excluding: Political revenue
(5,261
)
(18,283
)
(12,598
)
(37,418
)
Multiplatform Group revenue, excluding
political
$
621,122
$
641,613
(3.2
)%
$
1,738,742
$
1,826,938
(4.8
)%
Digital Audio Group revenue
$
267,222
$
253,953
5.2
%
$
751,472
$
720,733
4.3
%
Excluding: Political revenue
(320
)
(2,270
)
(1,666
)
(4,942
)
Digital Audio Group revenue, excluding
political
$
266,902
$
251,683
6.0
%
$
749,806
$
715,791
4.8
%
Audio & Media Group Services
revenue
$
61,979
$
77,794
(20.3
)%
$
189,134
$
209,716
(9.8
)%
Excluding: Political revenue
(2,363
)
(13,415
)
(3,457
)
(23,855
)
Audio & Media Services Group revenue,
excluding political
$
59,616
$
64,379
(7.4
)%
$
185,677
$
185,861
(0.1
)%
Reconciliation of Total Debt to Net Debt
(In thousands)
September 30,
2023
Current portion of long-term debt
$
390
Long-term debt
5,228,316
Total debt
$
5,228,706
Less: Cash and cash equivalents
213,479
Net debt
$
5,015,227
Segment Results
The following tables present the Company's segment results for
the Company for the periods presented:
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Three Months Ended September 30,
2023
Revenue
$
626,383
$
267,222
$
61,979
$
—
$
(2,595
)
$
952,989
Operating expenses(1)
463,939
173,565
45,003
69,295
(2,595
)
749,207
Adjusted EBITDA
$
162,444
$
93,657
$
16,976
$
(69,295
)
$
—
$
203,782
Adjusted EBITDA margin
25.9
%
35.0
%
27.4
%
21.4
%
Depreciation and amortization
(106,451
)
Impairment charges
(570
)
Other operating expense, net
(3,378
)
Restructuring expenses
(16,227
)
Share-based compensation expense
(8,191
)
Operating income
$
68,965
Operating margin
7.2
%
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Three Months Ended September 30,
2022
Revenue
$
659,896
$
253,953
$
77,794
$
—
$
(2,713
)
$
988,930
Operating expenses(1)
452,631
175,636
48,044
63,090
(2,713
)
736,688
Adjusted EBITDA
$
207,265
$
78,317
$
29,750
$
(63,090
)
$
—
$
252,242
Adjusted EBITDA margin
31.4
%
30.8
%
38.2
%
25.5
%
Depreciation and amortization
(109,305
)
Impairment charges
(309,750
)
Other operating expense, net
(9,451
)
Restructuring expenses
(24,486
)
Share-based compensation expense
(10,437
)
Operating loss
$
(211,187
)
Operating margin
(21.4
)%
(1)
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring expenses and share-based
compensation expenses.
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Nine Months Ended September 30,
2023
Revenue
$
1,751,340
$
751,472
$
189,134
$
—
$
(7,704
)
$
2,684,242
Operating expenses(1)
1,339,441
519,115
138,315
206,689
(7,704
)
2,195,856
Segment Adjusted EBITDA
$
411,899
$
232,357
$
50,819
$
(206,689
)
$
—
$
488,386
Adjusted EBITDA margin
23.5
%
30.9
%
26.9
%
18.2
%
Depreciation and amortization
(323,028
)
Impairment charges
(965,087
)
Other operating expense, net
(3,338
)
Restructuring expenses
(46,469
)
Share-based compensation expense
(27,555
)
Operating loss
$
(877,091
)
Operating margin
(32.7
)%
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Nine Months Ended September 30,
2022
Revenue
$
1,864,356
$
720,733
$
209,716
$
(8,412
)
$
2,786,393
Operating expenses(1)
1,328,688
511,025
141,509
178,938
(8,412
)
2,151,748
Segment Adjusted EBITDA
$
535,668
$
209,708
$
68,207
$
(178,938
)
$
—
$
634,645
Adjusted EBITDA margin
28.7
%
29.1
%
32.5
%
22.8
%
Depreciation and amortization
(334,144
)
Impairment charges
(311,329
)
Other operating expense, net
(25,985
)
Restructuring expenses
(54,588
)
Share-based compensation expense
(24,582
)
Operating loss
$
(115,983
)
Operating margin
(4.2
)%
(1)
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring expenses and share-based
compensation expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109796953/en/
For further information: Media
Wendy Goldberg Chief Communications Officer (212) 377-1105
wendygoldberg@iheartmedia.com
Investors Mike McGuinness EVP,
Deputy CFO, and Head of Investor Relations (212) 377-1336
mbm@iheartmedia.com
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