Entercom Communications Corp. (NYSE: ETM) today reported
financial results for the quarter ended September 30, 2020.
Third Quarter Summary
- Net revenues for the quarter were $268.5 million, up 53%
compared to the second quarter of 2020 and down 30% compared to the
third quarter of 2019
- Net revenues improved each month during the third quarter
compared to the prior year: July was down 36%, August was down 32%
and September was down 25%
- Digital revenues were $47.3 million, up 41% compared to the
third quarter of 2019 and were propelled by continued strong
audience and revenue growth in podcasting and digital audio
advertising
- Station expenses for the quarter declined 16% to $228.1 million
compared to the prior year and corporate expenses declined 24% to
$13.1 million
- Operating loss for the quarter was $0.3 million, which included
a non-cash impairment charge of $11.8 million, compared to
operating income of $79.5 million in the third quarter of 2019
- Adjusted EBITDA for the quarter was $31.1 million, compared to
$98.0 million in the third quarter of 2019
- During the third quarter, the Company used cash on-hand to pay
down its outstanding revolver from $243.7 million at June 30th to
$77.7 million at September 30th
- Liquidity at September 30th was $198 million comprised of
$165.6 million of available revolver capacity and $32.4 million of
cash on-hand
CEO Comment
David J. Field, President and Chief Executive Officer, stated:
“I am pleased to report that Entercom continued to make significant
organizational improvements in the third quarter in the face of the
deeply challenging pandemic. Third quarter net revenues were up 53%
from the second quarter while our continuing work on enhancing our
business model yielded an 18% reduction in operating expenses
versus the prior year enabling us to rebound to positive Adjusted
EBITDA of $31 million. We expect further improvement in both
revenues and Adjusted EBITDA in the fourth quarter.
We continue to suffer from the deep impact of the pandemic which
has caused many of our advertisers in businesses such as concerts
and live events, tourism, gyms, nightclubs, museums, movies, theme
parks, public transportation, airlines, restaurants, and others to
temporarily cease or significantly curtail their operations and
advertising. We look forward to welcoming them back once we emerge
from the pandemic.
We continue to build and transform Entercom into a leading
multi-platform audio content and entertainment company with scaled
audience reach, robust data, analytics and attribution
capabilities, and a leadership position in virtually every segment
of the dynamic and growing audio market, including broadcasting,
podcasting, digital, events, network, music, sports and news.
Entercom is strategically well positioned for future performance as
our enhanced capabilities enable us to expand our customer
relationships and accelerate growth.
As an illustration of the appeal of our evolving capabilities,
we recently announced a landmark six-year partnership with FanDuel
which we believe is the largest advertising deal in the history of
the radio business. This partnership is a powerful testament to the
importance of our unrivaled audio sports business which includes
most of the country’s leading sports talk stations and
personalities with their deep fan engagement.”
Recent Company Developments
- Landmark strategic partnership with FanDuel. We
announced a six-year partnership designating FanDuel as the
official sportsbook partner of Entercom. The agreement, which we
believe is the largest advertising deal in radio history, brings
FanDuel’s sports betting content, products, and risk and trading
expertise to our listeners via integration across our entire sports
portfolio.
- Station Exchange with Urban One. We announced a
broadcast exchange agreement in which we will transfer ownership of
our four stations in Charlotte in exchange for Urban One’s WTEM-AM,
Washington, DC (Sports); WHHL-FM, St. Louis (Urban/R&B/Hip
Hop); and WPHI 103.9 FM, Philadelphia. In addition, in the St.
Louis market, we will also acquire the Urban AC format and brand
assets of WFUN-FM which we will transition to and use to replace
the format on our 96.3 FM signal.
- Continuing Robust Slate of Podcast Launches. Our podcast
business – including Cadence13 and Pineapple Street Studios –
continued to deliver more top-rated hits than virtually any other
Podcast network, with six shows in the top-ten on the Apple Podcast
charts during the third quarter. Recent launches include hit
podcasts with Kevin Durant, Jon Meacham, Charli and Dixie D’Amelio,
two of the world’s biggest social media influencers, and new
collaborations with HBO, Netflix, Buzzfeed News, Audible and LeBron
James’ Springhill Studios.
- Credit Agreement Amendment. In July, the Company amended
the financial maintenance covenant and other provisions under its
Credit Agreement. Among other things, the amendment provides for a
covenant testing holiday for the quarters ending September 30, 2020
and December 31, 2020. Testing of the financial maintenance
covenant will resume on March 31, 2021 with the Company using fixed
amounts for Consolidated EBITDA for the quarters ending June 30,
2020, September 30, 2020 and December 31, 2020. Those amounts
represent the amounts reported to the Company’s lenders for the
corresponding quarters in 2019.
Earnings Conference Call and Company Information
Entercom will hold a conference call and simultaneous webcast
regarding the quarterly earnings release on Friday, November 6,
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). 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 (800) 841-8615. 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.
About Entercom Communications Corp.
Entercom Communications Corp. (NYSE: ETM) is a leading audio and
entertainment company engaging over 170 million consumers each
month through its iconic broadcast brands, expansive digital
platform, premium podcast network and live events and experiences.
With presence in every major U.S. market, and accessible on every
device, Entercom delivers the industry’s most compelling live and
on-demand content and experiences from voices and influencers its
communities trust and love. The company’s robust portfolio of
assets and integrated solutions offer advertisers today’s most
engaged audiences through targeted reach, brand amplification and
local activation—all at national scale. Entercom is the unrivaled
leader in local radio sports and news and the #1 creator of live,
original local audio content in the U.S. Learn more at
www.entercom.com, Facebook and Twitter (@Entercom).
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; 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; COVID-19 related expenses,
non-recurring expenses/recoveries 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, COVID-19
related expenses, other income and non-recurring
expenses/recoveries 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, COVID-19
related expenses, and non-recurring expenses/recoveries 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.
ENTERCOM
COMMUNICATIONS CORP.
FINANCIAL
DATA
(amounts in
thousands, except per share data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
STATEMENTS OF
OPERATIONS
Net Revenues
$
268,505
$
386,141
$
741,403
$
1,075,811
Station Expenses
228,147
272,005
666,643
797,502
Station Expense - Non-Cash
Compensation
524
1,107
1,552
3,765
Corporate Expenses
13,105
17,178
37,423
51,141
Corporate Expenses - Non-Cash
Compensation
1,421
2,234
4,616
6,521
Depreciation And Amortization
12,547
11,183
37,665
33,252
Time Brokerage Agreement Expense
(Income)
-
13
-
106
Merger And Acquisition Costs
-
434
61
476
Impairment Loss
11,814
-
17,021
-
Restructuring Charges
1,206
1,577
10,310
5,953
Integration Costs
-
689
490
3,280
Other Expenses Related To Refinancing
-
-
-
1,864
Net (Gain) Loss On Sale Or Disposition of
Assets
-
231
(228)
(2,683)
Total Operating Expenses
268,764
306,651
775,553
901,177
Operating Income (Loss)
(259)
79,490
(34,150)
174,634
Net Interest Expense
20,846
25,256
66,109
75,420
Loss on Early Extinguishment of Debt
-
-
-
1,781
Income (Loss) Before Income Taxes
(21,105)
54,234
(100,259)
97,433
Income Taxes (Benefit)
(4,227)
16,026
(20,432)
30,110
Net Income (Loss)
$
(16,878)
$
38,208
$
(79,827)
$
67,323
Net Income (Loss) Per Share - Basic
$
(0.13)
$
0.28
$
(0.59)
$
0.49
Net Income (Loss) Per Share - Diluted
$
(0.13)
$
0.28
$
(0.59)
$
0.49
Dividends Declared And Paid Per Common
Share
$
0.00
$
0.02
$
0.02
$
0.20
Weighted Common Shares Outstanding -
Basic
134,735
136,449
134,753
137,944
Weighted Common Shares Outstanding -
Diluted
134,735
136,453
134,753
138,295
SUPPLEMENTAL
BREAKDOWN OF REVENUE BY TYPE
Spot (local and national)
$
183,011
$
288,927
$
488,891
$
805,161
Digital (including podcasting)
47,337
33,473
131,188
98,430
Network
18,908
23,035
56,889
56,260
Sponsorships and Events
8,776
22,470
32,871
61,684
Other
10,473
18,236
31,564
54,276
$
268,505
$
386,141
$
741,403
$
1,075,811
Political
$
4,964
$
1,724
$
13,394
$
4,692
SUPPLEMENTAL
BREAKDOWN OF REVENUE BY FORMAT
Music
$
133,555
$
227,445
$
395,867
$
641,604
Sports
59,885
82,742
132,072
210,034
News/Talk
47,100
60,968
136,964
177,140
Non-format specific
27,965
14,986
76,499
47,033
$
268,505
$
386,141
$
741,403
$
1,075,811
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
Net Capital Expenditures
$
5,812
$
20,658
$
21,060
$
58,067
Adjusted Income Taxes Paid
$
2,660
$
-
$
3,957
$
8,461
Cash Dividends On Common Stock Declared
And Paid
$
-
$
2,677
$
2,692
$
27,594
SELECTED BALANCE
SHEET DATA
September 30,
December 31,
2020
2019
Cash and Cash Equivalents
$
32,369
$
20,393
Senior Debt - Term B-1 Loan (Includes
Current Portion)
$
755,378
$
770,000
Senior Debt - Revolver (Includes Current
Portion)
$
77,727
$
117,000
Senior Secured Notes
$
425,000
$
425,000
Senior Notes
$
400,000
$
400,000
Total Shareholders' Equity
$
803,687
$
881,443
OTHER FINANCIAL
DATA
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Reconciliation Of
GAAP Operating Income To Station
Operating
Income
Operating Income (Loss)
$
(259)
$
79,490
$
(34,150)
$
174,634
Corporate Expenses
13,105
17,178
37,423
51,141
Corporate Expenses - Non-Cash
Compensation
1,421
2,234
4,616
6,521
Station Expenses - Non-Cash
Compensation
524
1,107
1,552
3,765
Depreciation And Amortization
12,547
11,183
37,665
33,252
Merger And Acquisition Costs
-
434
61
476
Restructuring Charges
1,206
1,577
10,310
5,953
Impairment Loss
11,814
-
17,021
-
Integration Costs
-
689
490
3,280
Other Expenses Related To Refinancing
-
-
-
1,864
Net Time Brokerage Agreement Expense
-
13
-
106
Net Gain (Loss) On Sale Or Disposition of
Assets
-
231
(228)
(2,683)
Station Operating Income
$
40,358
$
114,136
$
74,760
$
278,309
Reconciliation Of
GAAP Net Income (Loss) To Adjusted EBITDA
Net Income (Loss)
$
(16,878)
$
38,208
$
(79,827)
$
67,323
Income Taxes (Benefit)
(4,227)
16,026
(20,432)
30,110
Net Interest Expense
20,846
25,256
66,109
75,420
Corporate Expenses - Non-Cash
Compensation
1,421
2,234
4,616
6,521
Station Expenses - Non-Cash
Compensation
524
1,107
1,552
3,765
Depreciation And Amortization
12,547
11,183
37,665
33,252
Time Brokerage Agreement Expense
(Income)
-
13
-
106
Merger And Acquisition Costs
-
434
61
476
Restructuring Charges
1,206
1,577
10,310
5,953
Integration Costs
-
689
490
3,280
COVID-19 Related Expenses
3,187
-
11,598
-
Non-Recurring Expenses/(Recoveries)
Otherwise Included in Corporate Expenses
693
1,000
(3,307)
1,000
Impairment Loss
11,814
-
17,021
-
Other Expenses Related To Refinancing
-
-
-
1,864
Loss On Early Extinguishment Of Debt
-
-
-
1,781
Net Gain (Loss) On Sale Or Disposition of
Assets
-
231
(228)
(2,683)
Adjusted EBITDA
$
31,133
$
97,958
$
45,628
$
228,168
Reconciliation of
GAAP Net Income (Loss) To Adjusted Free Cash Flow
Net Income (Loss)
$
(16,878)
$
38,208
$
(79,827)
$
67,323
Depreciation And Amortization
12,547
11,183
37,665
33,252
Deferred Financing Costs Included In
Interest Expense
999
755
2,942
2,227
Amortization Debt Premium Included In
Interest Expense
(849)
(678)
(2,547)
(2,248)
Non-Cash Compensation Expense
1,945
3,341
6,168
10,286
Merger And Acquisition Costs
-
434
61
476
Integration Costs
-
689
490
3,280
Restructuring Charges
1,206
1,577
10,310
5,953
COVID-19 Related Expenses
3,187
-
11,598
-
Non-Recurring Expenses (Recoveries)
Otherwise Included in Corporate Expenses
693
1,000
(3,307)
1,000
Impairment Loss
11,814
-
17,021
-
Net (Gain) Loss On Sale Or Disposition of
Assets
-
231
(228)
(2,683)
Other Expenses Related To Refinancing
-
-
-
1,864
Loss On Early Extinguishment Of Debt
-
-
-
1,781
Income Taxes (Benefit)
(4,227)
16,026
(20,432)
30,110
Net Capital Expenditures, Including
Amortizable Intangibles
(5,812)
(20,658)
(21,060)
(58,067)
Adjusted Income Taxes Paid
(2,660)
-
(3,957)
(8,461)
Adjusted Free Cash Flow
$
1,965
$
52,108
$
(45,103)
$
86,093
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Reconciliation Of
Capital Expenditures, Including Amortizable
Intangibles, To
Net Capital Expenditures
Capital Expenditures, Including
Amortizable Intangibles
$
(5,812)
$
(22,862)
$
(21,905)
$
(63,575)
Reimbursed Tenant Improvement
Allowance
-
2,204
845
5,508
Net Capital Expenditures
$
(5,812)
$
(20,658)
$
(21,060)
$
(58,067)
Reconciliation Of
Income Taxes Paid To
Adjusted Income
Taxes Paid
Income Taxes Paid
$
(2,660)
$
(3,935)
$
(3,957)
$
(18,481)
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
-
3,935
-
9,126
Adjusted Income Taxes Paid
$
(2,660)
$
-
$
(3,957)
$
(8,461)
Reconciliation of
GAAP Net Income (Loss) To Adjusted Net Income (Loss)
Net Income (Loss)
$
(16,878)
$
38,208
$
(79,827)
$
67,323
Income Taxes (Benefit)
(4,227)
16,026
(20,432)
30,110
Merger And Acquisition Costs
-
434
61
476
COVID-19 Related Expenses
3,187
-
11,598
-
Non-Recurring Expenses (Recoveries)
Otherwise Included in Corporate Expenses
693
1,000
(3,307)
1,000
Other Expenses Related To Refinancing
-
-
-
1,864
Impairment Loss
11,814
-
17,021
-
Integration Costs
-
689
490
3,280
Restructuring Charges
1,206
1,577
10,310
5,953
Loss On Early Extinguishment Of Debt
-
-
-
1,781
Net (Gain) Loss On Sale Or Disposition of
Assets
-
231
(228)
(2,683)
Non-Cash Compensation Expense
1,945
3,341
6,168
10,286
Adjusted Net Income (Loss) Before Income
Taxes
(2,260)
61,506
(58,146)
119,390
Income Taxes (Benefit)
(678)
18,452
(17,444)
35,817
Adjusted Net Income (Loss)
$
(1,582)
$
43,054
$
(40,702)
$
83,573
Weighted Average
Diluted Shares Outstanding For Purposes
Of Computing
Adjusted Net Income Per Share - Diluted
Weighted Common Shares Outstanding -
Diluted As Reported
134,735
136,453
134,753
138,295
Adjusted Net Income (Loss) Per Share -
Diluted
$
(0.01)
$
0.32
$
(0.30)
$
0.60
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201106005101/en/
Joseph Jaffoni, Jennifer Neuman, Norberto Aja JCIR
(212) 835-8500 etm@jcir.com
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