CMLS - Earnings call transcript Q3 2019

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Operator

Welcome to the Cumulus Media quarterly Earnings Conference Call. I'll now turn it over to Collin Jones, Senior Vice President of Corporate Development and Strategy. Sir, you may proceed.

Collin Jones

Thank you, operator. Welcome, everyone, to our third quarter 2019 earnings conference call.

note on statements forward-looking this federal laws. please release today's statements start, securities discussed and call we that in certain press under Before may constitute implied materially results Actual from may statements. differ expressed results or in forward-looking the assessments statements they assumptions, of and are These number and uncertainties. a and management's to based on risks are current subject

in our In non-GAAP the as of should useful presented XX-Q, is although it financial portion found with supplementary tomorrow not available the also reconciliations considered accordance press to are will as certain to to can the The financial in terms our non-GAAP filings. full these use website and be we'll A information addition, press measures. believe superior be be description Form We release GAAP. risks release including investors morning. SEC measures and of Relations our our Investor in filings, well SEC

of how a be today's our website. available A that will be on about also access can to for call found recording for Details month. replay

now turn Mary? President CEO, our and it to over Berner. I Mary that, With

Mary Berner

thanks And on Veterans for Collin. Thanks, joining everyone us Day.

start, served armed we today. are who the women men in I have who all acknowledge CFO, like and thank Before and our John our forces, of me including serving Abbot, and to joins

excluding and are to was basis, X.X% EBITDA X.X% the up quarter station reporting was of another quarter strong a We up happy political. in results today. Revenue on same

driven national channels. was primarily in digital in revenue spot performance This broadcast as increases as network our businesses, by and well

growing other our predominantly expense the side costs by onetime revenue of and the increases streams, were certain driven On net increases. variable

key and which focused Our on update priorities EBITDA strategic shortly. I'll growth execution against you continued our reflects

XX-Q streams single note basis, this with provided detail But in previously. release, a moved revenue have more than and I that before on segment to reporting presented on you'll press do, we our quarter our

company how of is we operate in segment. the that the the of During organized reporting concluded and reportable business quarter our how appropriateness changes one segment and the light we assess have and we

way, moving this the lens. we it as from year's business performance. benefits, many because ranging revenue Say change company yielded of the this reflected gain single managing and financial revenue management through has in incremental derived such reporting This necessary important our And by was a all the and among approach efficient the another operate a digital as with inventory operations to or and more of channels, holistic functions accounting, from company. view finance initiatives, expense

of we've reflective last I less more we addition And as helpful the business. reporting we detailed you disclosure quarter And in providing our on enhanced are than will becomes find segment also that now believe of in had or the said, two that than streams. level been we old revenue operate more to the previously the we it providing how

So, the of performance the back drivers in to the quarter.

$X million Our our to multi-pronged reached profitable platform each XX% booking digital in that of in business in both digital growth, quarter. meaningful our streaming local over and growing milestones result digital services marketing revenue combined C-Suite, the strategy revenue and September, continues revenue month. with

this and as the in in businesses with deeply more over selling XX,XXX relationships, and these corporate on we radio lines efforts strong with sales we relentless products. the focus local XX% solutions digital grew local We the to a quarter marketing efficient Collectively, our execution. ensuring of engage combine on that revenue have evolution capitalize by do

and sales buy. integrate to for advertisers radio For to our both to sell local easier our organization example, campaigns digital make and local

process creative quarter of significantly advertising the spot those This campaigns. concierge simplifying exclusive buying coordinated an creative that and digital advertisers, to the introduced white selling Cumulus integrated we platform provides label local and

able mean I derive customer bought we're needs. almost XX% increasing the schedule, we've additional that percentage value also and the reflective by we also XX% a our streaming experienced meet saw of services streaming attachment product relationships, attachment, local from C-Suite C-Suite direct of nearly products September, to-date. as their that a and of bought to our that clients highest and In we And offer

believe XX and on demonstrated bear sales evolve higher dividends the firmly form we of ability future more quarter. fact million that clients, XX% customer the growing stronger in the Also In revenue organically approximately side, growth constantly fastest with products US, digital our monthly network set and to the attachment digital podcast even the in rates. are downloads, we and capabilities will in relationships our the additional in nearly

track This the puts And from beginning been I our contribute to million year. podcasting our reiterate continues that would over to in momentum. has $XX deliver profitable and nicely on to us rapid EBITDA positive growth revenue this business

For podcasts. a a consistently Show, Shapiro which we by XXX,XXX among have podcasting perspective, the in vertical, stronghold news five top talk built month each content Ben The over the anchored in ranks

radio with an in one Kevin including also rapidly other with color syndication. pro and the also media where we off areas, experienced [indiscernible] we weekday for podcast a with of and NFL comedian the him show popular recently, commentators most eSports developed launched partnership former growing eGaming star We've expansions and sports, podcast McAfee, also in several space. standup Pat announced content More a social bowler, kicked

the XX the Day, the exciting entertainment new ranked the network called against an gate and Last right cofounded well podcasts content we of category. in of its and competing first category, podcast Producer which life its of People, debuted the the some by biggest top in with it September, company Pod in in Lemonada out Executive And podcast partner Save known

businesses generate from each additional a in critical divided And a between sit of but revenue line our contribution two. our as view healthy business the color, growth is streaming the beginning. both you with digital comparable To here top margins a give still margins and a we our Podcast three bottom third. today, three and digital lowest with third, roughly fall little broadcast to among we have margin to these highest margin a is C-Suite radio. contribution core digital margin our of As business, the we third,

remains a Investing key enhancing term Alongside continue in in these operating core progress digital strategy. initiatives, these of our performance we business. growth long our in to element make initiatives the

we like but and the traffic rollouts our inventory change system quarter, radio always has fully and started is ago. completed the system's been to years out A This stations significant two a organizational that build nearly payoff great. undertaking, this

To benefit from new network pricing our of to advertising and thanks million our not bespoke without national capabilities, generate generated alone, the management incremental largely QX we this new that revenue. tools, incremental be over in platform clear, we simply vehicles and developed systems yield revenue, sometimes we cross high meet opportunistic demand. and could to margin or $X delivered advertiser have In

It's some brands. out and worth stations contributions also meaningful in other the calling standout our from quarter of some

performing and transactions where from DC, to in Indianapolis, Indianapolis Cincinnati, quarter that we also QX. we Rouge. would are I best for the speaking the continuing Chicago, And Our Baton of swap completed benefit markets note that

grew cluster months is The spring that we revenue over gap we In on over rock year ratings a Allentown, And one gains transaction, to we across entire station station Indianapolis the ratings WODE-FM multiple market the to in the with growth. by a flipped the year, and XXX% format impressive a same enjoying ratings basis, for swap in double of traction for consecutive book fill in number market the last of in increases posted we converted to September market. other digits that quarter. quarter share expanded mentioned the

examples. XXers made deal some we've added also a FM been of by of and KNBR. Head number flipping San distribution the In our heritage signed Programming position working new our simulcasts to KNBR. Greg to multiyear a significant to cement A We markets the few other then Philips. to sports In voice leading moves KFOG-FM of a brand of we've under Francisco, Papa programming the station Brian

month the first XX% band FM rating on share skyrocketed, year its up for year. KNBR over In

Houston, KRBE We securing a also multiyear this KRBE-FM recently position on Station most our to radios of award CHR Show received for leading in station's the powerhouse the Marconi show annual Ryan Roulette also and in award The Notably market. prestigious a resigned deal, the year, morning Year.

year received market also platform. Little important of our Rock number news medium to winning station It's KIPR-FM this position note the XX talk with Cumulus for a Jams record also stations year. and fact, the Power of nominations of In strong

Our rating includes powerhouse which month and grew our Mark Levin, year Ben Shapiro stations every and syndication share network performed this well. news very roster, Savage had also Michael talk

be has the in news broadcast a live robust XX% simulcasts the talk and the In success to more XX show elections. aggregate we Shapiro's fall listenership demo his XX% than for particular the In been well is impressive, our XXXX, particularly to book. over up XXXX what environment us up countdown political we podcast, positions XX to with of strength from expect in spring in very XXXX as Ben

These these strong financial of shareholders. to highlights support applies everyone driving energy our strategic to value and great and performance focus our are a And whole priorities indicative focused priorities. believe continued execution the the the goals, on team for Cumulus at by singularly and we testament that which our are

cash to And quarter, goal with we maximize before and And reduce by these completed exit below our leverage bond generated loan Our pay deal to that’s the completed financial four June, we debt comes times. goal which operating free refinancing. down an And opportunistic financial the term in the is fully of we in loan this flow, EBITDA is second compete largely parties. top term to facility. refinanced our pursuit have goals from

debt, pay interest which a pay $XX.XX maturity translates from and Doing from at million around Our summer. profile and net the down XXXX value from last per with million half a $XXX X.X now simple times bankruptcy. rates a outstanding down share had math, into nearly down lower of since shares we of leverage, capital structure than emerged has we debt turn XX we emergence with

we're drive So long our doing value for things. we're that right And think against strategic the our will our execution priorities financial strong focus goals, stakeholders we these confident by on fueled the term. in

are fourth low station the down pacing a excluding basis a basis, seeing to headwind forward point this XXX Political single on political. Looking same about digits point. quarter, is at we

said, we consensus when demand that we news and cycle. are we believe The sluggish a considering we QX, estimates in in year. our confident the where exceed advertiser for the EBITDA QX, declines dominated That has for that the start, reflected and got that uncertainty performance political outlook will quarter saw to macroeconomic off

the call And with John. turn I'll over that, to

John Abbot

Great. you, Mary. Thank

we which that a are prior that not of numbers the of quarters M&A this Apple for I adjusted of on station sale comparability, adjusting to same though, all completed. with numbers to speak WABC transactions our As basis, financials announced our Red for for Media, close hope would I'll to quarter. the we've last sake year's note the

As segment is a - that Mary we're now a as mentioned, the this Mary operating reporting the platform change quarter. necessitated way indicated unified single business one to

be few that valuable presentation the release press And with the I expect pages new the to do your more of the of presentation. we However, financials by historical the to would new to help quarter see point to breakdown you will modeling of you. last quarter revenue a

have Day. Of out to the reach or feel closed to other to is bridging any questions, format please SEC mentioned old for free course, is, note Veterans and you new. One item to probably Collin me the if

XX-Q available won't should tomorrow be morning. but thing it our available So today, be first

Quarter up last C-Suite was With quarter, from led standpoint, was up digits, broadcast as had The XX% includes excluding financials. in the revenue the And for political up or the to digital, spot moving Total X.X%. quarter. characteristics similar up nearly that and revenue double streaming X%. national which was which revenue this network led a industry quarter podcasting $XX.X million, that

year. from last of was impact revenue million market national year, about up comparison or of as a we spot And positive $X.X drivers contributed driven political in of Including by mentioned, were about of of network Mary of the million management QX political $X.X partially about and total million revenue growth. XXXX. million local challenges against $X spot in revenue directly political up this performance. did offset $X.X initiatives were These the X.X% We the continuation

this external certain down higher from and year; expense resulting growing local almost our increases increase amortization expense bankruptcy expense debt increases the one FTD quarter Moving in time bad nature, expenses increases including streams. digital accounted or debt; last I like largely largely in lines up the remaining costs. the increase health million, higher comparisons in offs, for increase the the revenue P&L, would of particularly commission's; by half increase or cost credits the X.X%. quarter on right $X.X increases bad total in of care with and which against is characterize The expense revenue in driver of other were new in variable in in uncontrollable an biggest

was on same quarter came decline million the $XXX,XXX of Without and station in basis for a year-over-year. a up for X.X%. EBITDA political, or at $XX.X normalizing excluding $X.X or EBITDA political million, X.X%

M&A reminder, look the year earlier compatibility also as a activity As impact this we quarter. into fourth will from

your providing $XXX.X comp million political XXXX, $XX.X for headwind to are station pacing as is on we the modeling And same for revenue QX that and respectively. a In basis. points QX including to mentioned, help basis year, So currently. and $XX.X adjusted XXX M&A a total political had million revenue EBITDA last million of about numbers Mary

on spend about year. more million on to a $X.X Moving for QX the And off expect to P&L. little spent year, we $XX we million CapEx than full CapEx. In this

we've term interest a of Turning XXXX. plus now completed million refinanced bears plus million late at prepayment accompanied very new-term loan In rate retire loan term a be reduction from fully sheet, $XXX refinancing, term our fully to XX, We've active. to course XXX, is The our a maturity loan to loan the old has LIBOR of a voluntary September, $XX loan. of LIBOR where the which exit which continued the was old of by And facility. term balance XXX. March new rate we

since $X.XX emergence total now as a billion, from pay bankruptcy to X.X the net way at of from look mentioned million Mary down. we share debt of per and value reduction or have $XXX times And we it like is $XX.XX which leverage of and debt of

you generation, update I Looking cash on ahead to with wanted to provide additional for DC opportunities the land an sale.

the and from the dismissed. plans that as a there sometime faced to received buyer or expect opposition in active toll As we community heard progress, court of approvals to one in appeals was year. QX other the final face the next have positive noted previous of Toll was that appealing to-date. development Last on we've early discussed and later that October, arguments on Brothers our calls, In we has those continue on organizations appeal, QX get ruling quarter,

remain with be to we with firm And Toll Brothers that will outcome that's attractive to positive from that parties. ruling a both optimistic commitment able a we reach

that in we share. property As we've said updated value this progress on keep our there's you unlocked before, continue we and believe to more to as selling be we'll have to

of Now, I'd like petition filed we ruling to FCC. give you the a brief update for on with the the status that declaratory

limits current structure, Our X of A ownership warrants, consists rule and class comply that crafted share with in was XX%. to series X equity shares foreign the to B which and

higher ruling under A the simplify trade allow and the in to structure to shares in NASDAQ, foreign we ownership that on rules. the accelerate then of class for conversions filed petition declaratory However, permitted warrants the stock July to our XXXX in

only No the review shortly our not And notice also branch respect XX FCC, than a May the comments has for The of Telecom but FCC comments executive a group petition on to other from the on Telecom party the XXXX. review Team petition, has sign of started involves closed. and Team filing issued off filed period our the Team with request Telecom. of representatives the public the named Approval by thereafter.

the And Telecom's to months, in matter Telecom resolution we process Team line any the Team down the coming far requests have in the pretty unforeseen on and data to the questions. We're outcomes of review. barring to responding hope

we'd point, question. the ready the for this for line to open we're up first at like Operator, So Q&A.

Operator

question of Wolfe from from Research. first comes Ryvicker Marci the Instructions] [Operator line Your

Marci Ryvicker

a this positive a want into dig was to little big because very bit I digital Thank you surprise. very much.

us Can and number? the podcast question. You digital first you makes C-Suite percent the the gave revenue up that talk margins. about of from That's total streaming the

And low then then also But secondly, you consensus to pacing going singles. EBITDA. down hit mentioned you're you said,

less. into I you But you spending meant control bit that what can quarter? are know the little would that's fourth about talk imply. a if imply to that maybe So you don't cost

Mary Berner

a is bifurcated fourth a similar largely training, to that the Thanks, third, Marci. podcasting seeing with The regard pacing third, quarter, revenue a roughly C-Suite. trends and on And, we've seen digital of percent Sure. third; in be continuing, digital stage. and at the with to consensus prior also expenses. weakest John business lumpy. about [indiscernible] Again, I'll the on strength quarters take up the local, continues nationals network let on implication the we're

John Abbot

I question, missed don't million. know if we're - right I year number. is think I Yeah. for $XXX there maybe a I around the specific that know total hitting consensus, around good confident very and was And don't a there's about feel that expenses. the

Marci Ryvicker

because Mary down, to pacing they're you're EBITDA. consensus still I it's that think though even hit said had going

So implying more you that I wasn't fourth cost sure if controls you in had quarter. were the

sure didn't So wasn't - reference the to what consensus I XXX% I EBITDA.

John Abbot

Yeah.

about talking account and our the performance when the into quarter, And year. whole about we're year. quarter think good outlook the I fourth you take full feel we for our third

really, I what really think saying. we’re it's

Marci Ryvicker

political. have How a the compare million does follow-up just third I And quarter on that $X.X one is there to… comparison - in

John Abbot

year? last For

Mary Berner

quarter? For year last

Marci Ryvicker

Yes.

John Abbot

million. Last year $X.X it was

Marci Ryvicker

No, before. the year

an, like political So are from getting this you more [indiscernible]. in

John Abbot

off over So here? last cycle

Marci Ryvicker

Yes.

John Abbot

on of in with I that don't circle we’ll have you front me, back that.

Marci Ryvicker

Thank you. Okay.

John Abbot

Thank Absolutely. you.

Operator

comes question of Silver B. from from the Riley Your next FBR. line Zach

Zach Silver

question. for Thanks great. taking Okay, the

one The low pacing on the down single. is just first

where If qualitatively XXXX, us for how too year some you could categories? going next seeing more - more strength on feeling political. into where you're you're give detail I ex early maybe And then seeing with but you're and what guess weakness

Mary Berner

Yeah. performance. I the visibility mean, into we don't category have

trends be And Digital that the again, lumpy. quarters point. early this after pacing quarter call nicely continues network a right I we've this for at largely as is to stage. is up. Nationals we're seen And up. weakest little Local similar it's fact said, the at prior that And in now. so this to fourth seeing

regard about how with we year. a And XXXX. to Obviously, it's feel political

love we So year. political

early years. this some states what forward processing to stage certain changes the to ramp to especially primaries to We're some political of frothy at move and are anticipated political up they we moving seeing So it with in expect as at forward be do their XXXX.

So the way the we've it us we're way believe to XXXX, for are likely I into that this in but I continue. about plan seeing certainly nothing abates, local now hope stage, We the at that we would the to to been that it characterize trends is XXXX. leads weakness thinking and materially change guess spot

spot We us to offset. have we not and expect for inventory to previous years. from the much - previous think and or should potential than network to most or prior in allow pricing better to manage pricing specifically in nationals years, benefit should it our utilization And us, initiatives. political continue Unlike years management inventory benefit XXXX

expect that minimize spillage be especially high pressure to rate and across And a maximize going going we there's platform. fact back we reduction given reduction available aware, in because demand on that's to So and Twitter cutting put to pricing. important Facebook able - ads, the you're no impression, be to be there's with think the well

- year. think with call that a to the change So, trends we of believe that's little us political nothing it's throughout I don't the too exception leads - early to but will

Zach Silver

it. ahead Got And… Go John. Yeah.

John Abbot

you've so. slow I quarter. start on trends was of a is operators, other seeing the pacing, right? quarter the Where from But some as to back was looking better the fourth reset, probably the it it heard think quarter On similar we're end

Zach Silver

you incremental traffic something think inventory forward? And that? there's high then million What a the that margin your exactly you is and And was remarks about is that prepared $X upgrades. coming made from a, in going comment it. revenue Got sustainable of

Mary Berner

mean, or I a a platform. it's capability Yes,

visibility participate we and So ensure before. revenue, in placement pricing do essentially, we were that we to something to were deals the into couldn't actually incremental with national driving required able

So we were to create opportunities. able new channel

custom created we networks, So for example.

to can demand of that up - of or because can marketplace create a we we package to the scoop all have we in eye So and inventory, fulfill demand. inventory bird's view our

to expect so certainly that of a driver share. we not performance, certainly it's And if - our, overall been be key

Zach Silver

much. very it. Thank you Got

Operator

you. Thank

Markets. comes Your line the last Noble Michael question Kupinski of Capital from from

Michael Kupinski

and you your on Thank work. hard congratulations

I stable They to bit want First a ask of ratings. time. about just all, little at this remain

now? just seeing know ratings put not higher your are they some changes, markets. You're I wondering, up forth, mentioned, I any we you dynamic contributing of was but so formats and pretty in of when especially terms in stable

Mary Berner

back Yes, gain as would to characterize mean, we we're of we up share from the I lost it 'XX. XXXX back those near that saying that I And most levels.

point, and this about is had So point battles ratings the our impact. our picking at the highest as where out challenge you maintaining

As earlier, remains before I remains talk next really, strength currently, us And ways news now calls, we're side. more seeing consume platform sports in the which we content. alternative think the locals I biggest going this positions prior real challenge sports Sports well mentioned into and said that's our given the year. to right on our

year One. was a Westwood sports us at for big However, this driver earlier

Michael Kupinski

is current portfolio of regarding plans And you. the course a from sense and in obviously wondering began your of operators a so. then, of was reflection a to swap what settled just portfolio there Got or you've the portfolio. this that I your earlier year quiet, you since just what And in or at interest are of your us is time on your Can of a repositioning this are? you kind thoughts little fact it's the give your been other kind lack

John Abbot

to Yes. that the that and those. opportunities optimize just strategy remains we is an pursue will important of continue our do to extent strategic to see And operating to component Look, portfolio. the

We have, think are a we broad tremendous footprint. and reach nice, that portfolio a comfortable with the provides we national it

accretive that's pursue to will and their opportunistic be transactions situations we will are we accretive themselves a present transaction where to continue or able put those. But together

a opportunities against we're arise yet. as ago closed reflection transact it's hadn't that WABC, to But able announced think I those, a obviously how just we So, while of

Michael Kupinski

to then in Got want And the of I you. back. digital, terms go

you're but little Can talk of the there, some bit turn You podcasts. talked outlook about particularly. C-Suite that just really that I And products you growth to about course, the a your C-Suite the growth your to driving seeing are want there? of products

been bit more I in type with know lot more like type a have little attribution that of data aggressive peers pursuing. they're your kind that businesses digital of models other a and their things attribution

of you grow bit think point going of you Whether in can the Can kind going you're little tools is you forward? you where businesses? layer development data about for your tell at that you of are me that digital opportunity or further growth or in forward? fast a actually How utilizing attribution this stage another to not

Mary Berner

Yeah, I mean, I advertisers would It's important attribution, and things. take a step back when prove and radio answer does it think what you that's two really to more it that broadly is about that looking works are for. essentially,

So is guarantee One which some results ROI which ultimate the side. to the that's locally epic products the we in the is truly Westwood are guarantee attribution and unique national have and us, guaranteeing that

allow CPMs standpoint, I us on would drive platforms we variety owned third to that the significant of and already party are higher a say that, users both capturing data across from on data a our digital a audience.

language we that our and that is think that I believe industry the that advertisers. how it's our how where now we I same are to we we speaks do it's and peers measure effectiveness critical about prove believe our

are can our all attribution we parties the third a exists metrics actually solutions. and that today, of number working data, do we deliver competitors, so proof of similar with locally like similar of to provide technology And we performance all those with that

in work a it's progress. I So think

Michael Kupinski

of you business like to some in benchmarks, revenues contribute digital would any you thoughts what at see And terms then to do of the point. you. Got total have maybe company

John Abbot

we've that. being it we to No, continue growth what I we the good talked feel of digital. And feel in about is. about And mean, about certainly able total opportunity percent grow revenue to good ahead our

in way local we those are And one low. attachment rates continuing many I growth about in the drive products, to rates. how And that. just occur see that think we C-Suite and think you rate attachment still from asked particular, market include is C-Suite fairly about that sales the

Mary Berner

prepared in there. XX,XXX And as of and approximately just lot - I we my businesses quickly, mean, I give there's idea, C-Suite pretty reached attaching an said, XX of product. reached a upside remarks, XX% to we Yeah, with you those local just

Michael Kupinski

Appreciate you. Thanks. Got it.

John Abbot

you. Thank

Operator

comments. back call the for turn closing presenters I'll the over to

Mary Berner

We for Have joining soon. you. us Alright, thanks day. today. great speaking you a with everybody Thank forward look again to

Operator

joining conference for us today's call. concludes you This Thank today.

You disconnect. may now

Cumulus Media (CMLS) 11 Nov 192019 Q3 Earnings call transcript