EX-99.1 2 d428965dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

For Immediate Release

July 28, 2017

   

Contact: Richard Schmaeling

Executive Vice President

and CFO, Entercom

(610) 660-5686

Richard.Schmaeling@entercom.com

ENTERCOM COMMUNICATIONS CORP.

REPORTS SECOND QUARTER RESULTS AND

ANNOUNCES $0.20 SPECIAL DIVIDEND

Bala Cynwyd, PA—Entercom Communications (NYSE: ETM) today reported financial results for the quarter ended June 30, 2017.

Second Quarter Highlights

 

  •   Net revenues increased 3% to $125.0 million, compared to $121.6 million in the second quarter of 2016

 

  •   Operating income was $16.4 million, compared to $27.6 million in the second quarter of 2016

 

  •   Net income per diluted share was $0.15, compared to net income per diluted share of $0.26 in the second quarter of 2016

 

  •   Same station net revenues increased by 1% excluding political

 

  •   Adjusted EBITDA decreased 13% to $26.7 million

David J. Field, President and Chief Executive Officer, stated: “We continue to make great progress in our planning for our transformational merger with CBS Radio that will make us the #1 provider of original, local audio content in the U.S. and create the scale to compete with other media for a larger share of ad spending. As we meet with clients, agencies, and strategic partners, we are more confident than ever about the value-creating opportunities ahead. Second quarter revenues increased 3% as reported, and up 1% on a same-station basis ex-political. Expenses were up more than usual due to our acquisition in Charlotte, some significant one time only expenses and additional costs related to building the organization in anticipation of the merger. We expect expense growth to recede in the 3rd quarter and look for meaningful margin expansion post-closing.”

Additional Information

Today the Company announced that, as permitted under its merger agreement with CBS Radio, it would pay a special one-time dividend of $0.20 per share on August 30th to shareholders of record on August 15th. This dividend will be in addition to the Company’s regular quarterly dividend of $0.075 per share, which will be paid on September 15th to shareholders of record on August 15th.

 

Exhibit 99.1 – Page 1

Second quarter results include $5.8 million in merger and acquisition costs related to the Company’s pending acquisition of CBS Radio, which were primarily for legal and consulting services.

As of June 30, 2017, the Company had outstanding $467.6 million of senior debt under its credit facilities and $27.7 million in perpetual cumulative convertible preferred stock. In addition the Company had $8.6 million in cash on hand.

During the second quarter, the Company revised its accounting for its digital marketing services product line, Smart Reach Digital, in order to account for its revenues on a gross basis and to include the related COGS in station operating expenses, versus its prior treatment of classifying those costs as a deduction from revenue. All prior periods presented have also been revised to reflect this revision.

Earnings Conference Call and Company Information

Entercom will hold a conference call regarding the quarterly earnings release on Friday July 28, 2017 at 10:00 AM 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 866-452-2106 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.

 

Exhibit 99.1 – Page 2

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, other expenses related to the refinancing and 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); 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, preferred stock dividends and 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.

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, loss on extinguishment of debt, other income and non-recurring expenses recognized for restructuring charges or similar costs, including transition and integration costs; and (ii) less net interest expense (excluding amortization of deferred financing costs), preferred stock dividends, taxes paid and capital expenditures.

Adjusted Net Income (Loss) consists of net income (loss) available to common shareholders 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, 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 40% without discrete items of tax.

Adjusted Net Income Per Share 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 Per Share.

 

Exhibit 99.1 – Page 3

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 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 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, 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 40% 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.

 

Exhibit 99.1 – Page 4

About Entercom Communications Corp.

Entercom Communications Corp. (NYSE: ETM) is the fourth-largest radio broadcasting company in the U.S., reaching and engaging more than 40 million people a week through its portfolio of highly rated stations in top markets across the country. Entercom is a purpose-driven company, deeply committed to entertaining and informing its listeners with the best locally curated music, news, sports, and talk content, driven by compelling local personalities. Entercom delivers superior ROI by connecting its customers and audiences through its leading local brands and unparalleled local marketing solutions, which include over 4,000 events each year, and its SmartReach Digital product suite. Learn more about Philadelphia-based Entercom at www.Entercom.com, Facebook and Twitter (@Entercom).

 

Exhibit 99.1 – Page 5

ENTERCOM COMMUNICATIONS CORP.

FINANCIAL DATA

(amounts in thousands, except per share data)

(unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

STATEMENTS OF OPERATIONS

         

Net Revenues

    $ 124,970     $ 121,571     $ 223,971     $ 218,580  
  

 

 

    

 

 

    

 

 

    

 

 

  

Station Expenses

      90,632       83,369       167,593       155,763  

Station Expense – Non-Cash Compensation

      372       363       577       590  

Corporate Expenses

      7,771       7,319       16,947       13,662  

Corporate Expenses – Non-Cash Compensation

      1,105       1,174       2,494       2,429  

Depreciation And Amortization

      2,517       2,517       5,164       4,964  

Time Brokerage Agreement Expense

      —         —         34       —    

Merger And Acquisition Costs

      5,829       —         16,100    

Impairment Loss

      441       —         441       62  

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Operating Expenses

      108,591       93,987       222,608       176,251  
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating Income

      16,379       27,584       1,363       42,329  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Interest Expense

      6,133       9,147       12,110       18,539  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (Loss) Before Income Taxes

      10,246       18,437       (10,747 )      23,790  

Income Taxes (Benefit)

      3,832       7,603       (7,830 )      8,544  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available To The Company

      6,414       10,834       (2,917 )      15,246  

Preferred Stock Dividend

      550       412       1,100       825  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available To Common Shareholders

    $ 5,864     $ 10,422     $ (4,017 )    $ 14,421  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available To Common Shareholders Per Share – Basic

    $ 0.15     $ 0.27     $ (0.10 )    $ 0.37  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available To Common Shareholders Per Share – Diluted

    $ 0.15     $ 0.26     $ (0.10 )    $ 0.37  
  

 

 

    

 

 

    

 

 

    

 

 

  

Dividends Declared And Paid Per Common Share

    $ 0.075     $ 0.075     $ 0.15     $ 0.075  
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted Common Shares Outstanding – Basic

      38,945       38,469       38,935       38,463  
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted Common Shares Outstanding – Diluted

      39,656       41,130       38,935       39,274  
  

 

 

    

 

 

    

 

 

    

 

 

  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

         

Capital Expenditures

    $ 4,321     $ 1,073     $ 6,745     $ 2,038  

Income Taxes Paid

    $ 122     $ 68     $ 177     $ 208  

Cash Dividends On Common Stock Declared And Paid

    $ 2,921     $ 2,886     $ 5,837     $ 2,886  

Cash Dividends On Preferred Stock Declared And Paid

    $ 550     $ 412     $ 1,100     $ 825  
SELECTED BALANCE SHEET DATA    June 30,              
     2017     2016              

Cash and Cash Equivalents (Excludes Cash From Variable Interest Entity)

    $ 8,592     $ 11,071      

Senior Debt – Term B Loan And Other (Includes Current Portion)

    $ 458,078     $ 230,093      

Senior Debt – Revolver (Includes Current Portion)

    $ 9,500     $ 17,000      

Senior Notes

    $ —       $ 218,453      

Perpetual Cumulative Convertible Preferred Stock

    $ 27,732     $ 27,619      

Total Shareholders’ Equity

    $ 389,150     $ 373,678      

 

Exhibit 99.1 – Page 6

OTHER FINANCIAL DATA

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

Reconciliation Of GAAP Station Operating Expenses To Station Expenses

         

Station Operating Expenses

    $ 91,004     $ 83,732     $ 168,170     $ 156,353  

Station Expenses – Non-Cash Compensation

      (372 )      (363 )      (577 )      (590 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Station Expenses

    $ 90,632     $ 83,369     $ 167,593     $ 155,763  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation Of GAAP Corporate General & Administrative

Expenses To Corporate Expenses

         

Corporate General & Administrative Expenses

    $ 8,876     $ 8,493     $ 19,441     $ 16,091  

Corporate Expenses – Non-Cash Compensation

      (1,105 )      (1,174 )      (2,494 )      (2,429 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Corporate Expenses

    $ 7,771     $ 7,319     $ 16,947     $ 13,662  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation Of GAAP Operating Income To Station Operating Income

         

Operating Income

    $ 16,379     $ 27,584     $ 1,363     $ 42,329  

Corporate Expenses

      7,771       7,319       16,947       13,662  

Corporate Expenses – Non-Cash Compensation

      1,105       1,174       2,494       2,429  

Station Expenses – Non-Cash Compensation

      372       363       577       590  

Depreciation And Amortization

      2,517       2,517       5,164       4,964  

Merger And Acquisition Costs

      5,829       —         16,100       —    

Impairment Loss

      441       —         441       62  

Time Brokerage Agreement Expense

      —         —         34       —    

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Station Operating Income

    $ 34,338     $ 38,202     $ 56,378     $ 62,817  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation Of GAAP Net Income (Loss) Available To Common

Shareholders To Adjusted EBITDA

         

Net Income (Loss) Available To Common Shareholders

    $ 5,864     $ 10,422     $ (4,017 )    $ 14,421  

Income Taxes (Benefit)

      3,832       7,603       (7,830 )      8,544  

Net Interest Expense

      6,133       9,147       12,110       18,539  

Corporate Expenses – Non-Cash Compensation

      1,105       1,174       2,494       2,429  

Station Expenses – Non-Cash Compensation

      372       363       577       590  

Depreciation And Amortization

      2,517       2,517       5,164       4,964  

Time Brokerage Agreement Expense

      —         —         34       —    

Preferred Stock Dividend

      550       412       1,100       825  

Merger And Acquisition Costs

      5,829       —         16,100       —    

Transition Costs

      166       —         1,419    

Impairment Loss

      441       —         441       62  

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ 26,733     $ 30,883     $ 40,850     $ 49,155  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Exhibit 99.1 – Page 7

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

Reconciliation Of GAAP Net Income (Loss) Available To Common

Shareholders To Adjusted Free Cash Flow

         

Net Income (Loss) Available To Common Shareholders

    $ 5,864     $ 10,422     $ (4,017 )    $ 14,421  

Depreciation And Amortization

      2,517       2,517       5,164       4,964  

Deferred Financing Costs Included In Interest Expense

      580       632       1,166       1,319  

Amortization Of Original Issue Discount Included In Interest Expense

      —         93       —         184  

Non-Cash Compensation Expense

      1,477       1,537       3,071       3,019  

Merger And Acquisition Costs

      5,829       —         16,100       —    

Transition Costs

      166       —         1,419       —    

Impairment Loss

      441       —         441       62  

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 

Income Taxes (Benefit)

      3,832       7,603       (7,830 )      8,544  

Capital Expenditures

      (4,321 )      (1,073 )      (6,745 )      (2,038 ) 

Income Taxes Paid

      (122 )      (68 )      (177 )      (208 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Free Cash Flow

    $ 16,187     $ 20,908     $ 21,850     $ 29,048  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation Of GAAP Operating Income To Adjusted Free Cash Flow:

         

Operating Income

    $ 16,379     $ 27,584     $ 1,363     $ 42,329  

Depreciation and Amortization

      2,517       2,517       5,164       4,964  

Non-Cash Compensation Expense

      1,477       1,537       3,071       3,019  

Net Interest Expense, Excluding Deferred Financing Costs & OID

      (5,553 )      (8,422 )      (10,944 )      (17,036 ) 

Preferred Stock Dividend

      (550 )      (412 )      (1,100 )      (825 ) 

Capital Expenditures

      (4,321 )      (1,073 )      (6,745 )      (2,038 ) 

Merger And Acquisition Costs

      5,829       —         16,100       —    

Transition Costs

      166       —         1,419       —    

Impairment Loss

      441       —         441       62  

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 

Income Taxes Paid

      (122 )      (68 )      (177 )      (208 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Free Cash Flow

    $ 16,187     $ 20,908     $ 21,850     $ 29,048  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation Of GAAP Net Income (Loss) Available To Common

Shareholders To Adjusted Net Income

         

Net Income (Loss) Available To Common Shareholders

    $ 5,864     $ 10,422     $ (4,017 )    $ 14,421  

Preferred Stock Dividend

      550       412       1,100       825  

Income Taxes (Benefit)

      3,832       7,603       (7,830 )      8,544  

Merger And Acquisition Costs

      5,829       —         16,100       —    

Transition Costs

      166       —         1,419       —    

Impairment Loss

      441       —         441       62  

Net Gain (Loss) On Sale Or Disposition of Assets

      (76 )      (755 )      13,258       (1,219 ) 

Non-Cash Compensation Expense

      1,477       1,537       3,071       3,019  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Income Before Income Taxes

      18,083       19,219       23,542       25,652  

Income Taxes

      7,233       7,688       9,417       10,261  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Net Income Available To The Company

      10,850       11,531       14,125       15,391  

Preferred Stock Dividend

      550       412       1,100       825  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Net Income

    $ 10,300     $ 11,119     $ 13,025     $ 14,566  
  

 

 

    

 

 

    

 

 

    

 

 

  

Numerator For Purposes Of Computing Adjusted Net Income

Per Share – Diluted

         

Adjusted Net Income

    $ 10,300     $ 11,119     $ 13,025     $ 14,566  

Preferred Stock Dividend, Treated As If Preferred Never Converted

      —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  
   $ 10,300     $ 11,119     $ 13,025     $ 14,566  
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted Average Diluted Shares Outstanding For Purposes

Of Computing Adjusted Net Income Per Share – Diluted

         

Weighted Common Shares Outstanding – Diluted As Reported

      39,656       41,130       38,935       39,274  

Preferred Stock Dividend, Treated As If Preferred Never Converted

      —         (1,923 )      —  —         —    

Diluted Shares Excluded When Reporting A Net Loss

      —         —         1,026    
  

 

 

    

 

 

    

 

 

    

 

 

  
     39,656       39,207       39,961       39,274  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Net Income Per Share – Diluted

    $ 0.26     $ 0.28     $ 0.33     $ 0.37  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Exhibit 99.1 – Page 8