Entercom Communications Corp. Reports Second Quarter Results

BALA CYNWYD, Pa.--()--Entercom Communications Corp. (NYSE: ETM) today reported financial results for the quarter ended June 30, 2014.

Second Quarter Highlights

  • Net Revenues decreased 1% to $100.2 million
  • Station Expenses increased 3% to $68.0 million
  • Station Operating Income decreased 9% to $32.2 million
  • Adjusted EBITDA decreased 12% to $26.9 million
  • Adjusted Net Income per share decreased 12% to $0.23
  • Free Cash Flow decreased 21% to $15.0 million

David J. Field, President and Chief Executive Officer, stated: “Revenue declined 1% from the prior year as results were impacted by sluggish business conditions during the quarter. Operationally, we continue to focus on developing our powerful local brands, content and digital capabilities and building our new SmartReach Digital division. These efforts are enhancing our value to listeners and customers and raising our growth potential. Broadcast radio fundamentals are strong with growing, massive audience reach and a superior ROI to competitive forms of media.”

Additional Information

The Company reduced its outstanding debt by $4.1 million (net of cash) during the quarter. As of June 30, 2014, the Company had $7.1 million in cash and $489.8 million of senior debt and senior notes.

Earnings Conference Call and Company Information

Entercom will hold a conference call regarding the quarterly earnings release on Tuesday, August 5, 2014 at 10:30 a.m. Eastern Time. Investors will have the opportunity to submit questions to the Company regarding the earnings release by emailing their inquiries to questions@entercom.com. Questions should be sent at least 10 minutes prior to the call. The Company will only discuss inquiries made by email prior to the conference call. The public may access the conference call by dialing 888-889-0278 (passcode: Entercom). A replay of the conference call will be available and can be accessed either by dialing 800-925-2685 or by visiting the Company’s website: www.entercom.com. Additional information and reconciliation of same station results are available on the Company’s website at www.entercom.com.

About Entercom

Entercom Communications Corp. (NYSE: ETM), led by President and CEO David Field, is one of the largest radio broadcasting companies in the United States, with a nationwide portfolio of over 100 stations in 23 markets, including San Francisco, Boston, Seattle, Denver, Portland, Sacramento and Kansas City.

Known for developing unique and highly successful locally programmed stations, Entercom is home to some of radio's most distinguished brands and compelling personalities. The company also is the radio broadcast partner of the Boston Red Sox, Buffalo Bills, Buffalo Sabres, Kansas City Royals, Memphis Grizzlies, New Orleans Saints, New Orleans Pelicans, Oakland Athletics, Oakland Raiders and San Jose Sharks.

Entercom focuses on creating effective multi-platform marketing solutions for its customers, incorporating the company's audio, digital and experiential assets. Additionally, the company has a long-standing commitment to responsible corporate citizenship and environmental stewardship. Entercom stations play a vital, hands-on role in improving their communities, providing over $100 million in annual support for local charitable organizations.

The company's radio stations have received numerous awards, including multiple Edward R. Murrow Awards for excellence in broadcast journalism, as well as the National Association of Broadcasters (NAB) Marconi Award for excellence in radio broadcasting. In 2012, Entercom was named by Information Week as one of the Top 500 Technology Innovators in the United States.

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; and gain or loss on sale or disposition of assets.

Adjusted EBITDA consists of net income (loss), adjusted to exclude: income taxes (benefit); total other 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); impairment loss; merger and acquisition costs; and gain or loss on sale or disposition of assets.

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; and (ii) less net interest expense (excluding amortization of deferred financing costs), taxes paid and capital expenditures.

Adjusted Net Income consists of net income (loss) adjusted to exclude: (i) income taxes (benefit) as reported; (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; 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 42% without discrete items of tax.

Adjusted Net Income Per Share includes any dilutive equivalent shares when not anti-dilutive.

Same Station is computed by comparing the performance of stations operated by the Company throughout the relevant period to the comparable performance in the prior year’s corresponding period (excluding non-cash compensation expense). Any acquisition or disposition of radio stations not deemed to be material by management are ignored for the purpose of computing this data. There were no material acquisitions during the periods presented in the tables below.

Non-GAAP Financial Measures

It is important to note that Station Operating Income, Station Expense, Corporate Expense, Same Station Net Revenues, Same Station Expenses, Same Station Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share And 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 and Adjusted Net Income Per Share). The adjustments exclude gain/loss on sale of assets, derivative instruments, and investments; non-cash compensation expense, other income, impairment loss and gain/loss on early extinguishment of debt. 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 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.

 
Second Quarter 2014
Earnings Release
 

ENTERCOM COMMUNICATIONS CORP.

FINANCIAL DATA

(amounts in thousands, except per share data)

(unaudited)

   
Three Months Ended Six Months Ended
June 30, June 30,
2014   2013 2014   2013

STATEMENTS OF OPERATIONS

 
Net Revenues $ 100,201   $ 101,239  

$

178,436  

$

179,599  
 
Station Expenses 67,962 65,741 125,787 123,601
Station Expense - Non-Cash Compensation 259 180 395 335
Corporate Expenses 5,333 4,845 10,676 10,085
Corporate Expenses - Non-Cash Compensation 1,026 776 2,099 1,763
Depreciation And Amortization 1,867 2,192 3,841 4,516
Impairment Loss - 850 - 850
Net Gain On Sale Or Disposition of Assets   (162 )   (1,613 )   (202 )   (1,591 )
Total Operating Expenses   76,285     72,971     142,596     139,559  
Operating Income   23,916     28,268     35,840     40,040  
 
Other Expense (Income) Items:
Net Interest Expense 9,812 11,310 19,715 22,784
Other Expense (Income)   55     (62 )   -     (93 )
Total Other Expense   9,867     11,248     19,715     22,691  
 
Income Before Income Taxes 14,049 17,020 16,125 17,349
Income Taxes   5,912     7,127     6,625     7,707  
Net Income $ 8,137   $ 9,893   $ 9,500   $ 9,642  
 
Net Income Per Share - Basic $ 0.22   $ 0.26   $ 0.25   $ 0.26  
 
Net Income Per Share - Diluted $ 0.21   $ 0.26   $ 0.25   $ 0.25  
 
Weighted Common Shares Outstanding - Basic   37,687     37,344     37,681     37,308  
Weighted Common Shares Outstanding - Diluted   38,446     38,103     38,515     38,201  
 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 
Capital Expenditures $ 3,149 $ 1,465 $ 4,782 $ 2,428
Income Taxes Paid $ 78 $ 68 $ 79 $ 69
 

SELECTED BALANCE SHEET DATA

June 30,
2014 2013
 
Cash and Cash Equivalents $ 7,099 $ 6,339
Total Assets $ 908,595 $ 909,578
Current Portion Of Senior Debt $ 5,886 $ 18,027
Senior Debt (including Current Debt) $ 272,000 $ 328,077

Senior Notes

$ 217,772 $ 217,483

Total Shareholders' Equity

$ 309,507 $ 275,497
 
OTHER FINANCIAL DATA
 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
 

Reconciliation Of GAAP Station Operating Expenses To Station Expenses

Station Operating Expenses $ 68,221 $ 65,921 $ 126,182 $ 123,936
Station Expenses - Non-Cash Compensation   (259 )   (180 )   (395 )   (335 )
Station Expenses $ 67,962   $ 65,741   $ 125,787   $ 123,601  
 

Reconciliation Of GAAP Corporate General & Administrative Expenses To Corporate Expenses

Corporate General & Administrative Expenses $ 6,359 $ 5,621 $ 12,775 $ 11,848
Corporate Expenses - Non-Cash Compensation   (1,026 )   (776 )   (2,099 )   (1,763 )
Corporate Expenses $ 5,333   $ 4,845   $ 10,676   $ 10,085  
 

Reconciliation Of GAAP Operating Income To Station Operating Income

Operating Income $ 23,916 $ 28,268 $ 35,840 $ 40,040
Corporate Expenses 5,333 4,845 10,676 10,085
Corporate Expenses - Non-Cash Compensation 1,026 776 2,099 1,763
Station Expenses - Non-Cash Compensation 259 180 395 335
Depreciation And Amortization 1,867 2,192 3,841 4,516
Impairment Loss - 850 - 850
Net Gain On Sale Or Disposition of Assets   (162 )   (1,613 )   (202 )   (1,591 )
Station Operating Income $ 32,239   $ 35,498   $ 52,649   $ 55,998  
 

Reconciliation Of GAAP Net Income To Adjusted EBITDA

Net Income $ 8,137 $ 9,893 $ 9,500 $ 9,642
Income Taxes 5,912 7,127 6,625 7,707
Total Other Expense 9,867 11,248 19,715 22,691
Corporate Expenses - Non-Cash Compensation 1,026 776 2,099 1,763
Station Expenses - Non-Cash Compensation 259 180 395 335
Depreciation And Amortization 1,867 2,192 3,841 4,516

Impairment Loss

- 850 - 850

Net Gain On Sale Or Disposition of Assets

  (162 )   (1,613 )   (202 )   (1,591 )
Adjusted EBITDA $ 26,906   $ 30,653   $ 41,973   $ 45,913  
 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
 

Reconciliation Of GAAP Net Income To Free Cash Flow

Net Income $ 8,137 $ 9,893 $ 9,500 $ 9,642
Depreciation And Amortization 1,867 2,192 3,841 4,516
Impairment Loss - 850 - 850
Deferred Financing Costs Included In Interest Expense 1,048 1,010 2,134 2,053

Amortization Of Original Issue Discount Included In Interest Expense

75 68 149 133
Non-Cash Compensation Expense 1,285 956 2,494 2,098
Net Gain On Sale Or Disposition of Assets (162 ) (1,613 ) (202 ) (1,591 )
Other Expense (Income) 55 (62 ) - (93 )
Income Taxes 5,912 7,127 6,625 7,707
Capital Expenditures (3,149 ) (1,465 ) (4,782 ) (2,428 )
Income Taxes Paid   (78 )   (68 )   (79 )   (69 )
Free Cash Flow $ 14,990   $ 18,888   $ 19,680   $ 22,818  
 

Reconciliation Of GAAP Operating Income To Free Cash Flow

Operating Income $ 23,916 $ 28,268 $ 35,840 $ 40,040
Depreciation and Amortization 1,867 2,192 3,841 4,516
Impairment Loss - 850 - 850
Non-Cash Compensation Expense 1,285 956 2,494 2,098

Interest Expense, Net of Interest Income, Deferred Financing Costs & OID

(8,689 ) (10,232 ) (17,432 ) (20,598 )
Capital Expenditures (3,149 ) (1,465 ) (4,782 ) (2,428 )
Net Gain On Sale Or Disposition of Assets (162 ) (1,613 ) (202 ) (1,591 )
Income Taxes Paid   (78 )   (68 )   (79 )   (69 )
Free Cash Flow $ 14,990   $ 18,888   $ 19,680   $ 22,818  
 

Reconciliation Of GAAP Net Income To Adjusted Net Income

Net Income $ 8,137 $ 9,893 $ 9,500 $ 9,642
Income Taxes 5,912 7,127 6,625 7,707
Net Gain On Sale Or Disposition of Assets (162 ) (1,613 ) (202 ) (1,591 )
Impairment Loss - 850 -

 

850

Other Expense (Income)

55 (62 ) - (93 )

Non-Cash Compensation Expense

  1,285     956     2,494     2,098  
Adjusted Income Before Income Taxes 15,227 17,151 18,417 18,613
Income Taxes   6,395     7,203     7,735     7,817  
Adjusted Net Income $ 8,832   $ 9,948   $ 10,682   $ 10,796  
 

Weighted Average Diluted Shares Outstanding

Weighted Average Diluted Shares Outstanding - Diluted   38,446     38,103     38,515     38,201  
 
Adjusted Net Income Per Share - Diluted $ 0.23   $ 0.26   $ 0.28   $ 0.28  
 

Contacts

Entercom Communications Corp.
Steve Fisher
Executive Vice President and Chief Financial Officer
610-660-5647

Contacts

Entercom Communications Corp.
Steve Fisher
Executive Vice President and Chief Financial Officer
610-660-5647