ETM - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to Entercom's Second Quarter 2018 Earnings Release Conference call. [Operator Instructions]. This conference is being recorded. I would like to introduce your first speaker for today's call, Mr. Rich Schmaeling, CFO and Executive Vice President. begin. now may you Sir,

Richard Schmaeling

shortly Thank you, quarter recorded. to second from company company and replay uncertainties. could and based today's available replay by Good conference call. morning, telephone website our expectations upon earnings number on being be the and our welcome conclusion projected. This of will call Entercom's available Fel. after call The statements, results forward-looking those A involve release. in the any materially such and company's current differ actual at Should risks noted make statements are is

concerning any could company's differ SEC information statements. forward-looking no and actual the materially Form on results assume XX-Q, XX-K Additional to factors that filings X-K. in update are to described We cause obligation

non-GAAP information. reconciliation measures of the now website We reference call, you refer may financial our such call a David During CEO this forma at I'll you for pro of financial measures. Entercom. entercom.com Field, hand to other certain and to

David Field

for pace news to it unrivaled significant in broadcasters, despite any take Rich. one a creating powerful Thanks, impact CBS scale aggressive of we the of most When knew of of the and creator announced Like stations merger, Entercom leader local effectively organization sports radio.com we radio Radio, work Entercom content, of time first number would two were knew the merger transformational is many we of ad of performance. to largest share the spending. country's change, that very an transformational compete total business. some one outstanding the and special country's with a live original radio, our group morning, our the more for radio events a Good audio everyone. larger The we and and new plus

while and many around well-managed outstanding the number than of the capitalize country, to Radio, are stronger we level but had organization great and synergies, parts; X the what substantial great to had and been been through macro creating the and significantly we of on three, the the which value sum brands the achieve opportunities to drive underperforming growth of number creation at and a people elevate scale-driven the compete new new in to for time industry; to have growth more initiatives and other successfully participate turn media far goals, number simultaneously streams. other not to CBS revenue share divisional working innovation integrate effectively a resume merger seamlessly and ad principal Entercom was and a Specifically, companies significantly versus one, at two, dollars believe on all across and two at larger

In track and the cash and significant that rewards that the I to $XX cost the on and Traffic first we and have about positioned of work As States line expectations. we financially-distressed these we year of revenue that deliver achieve inherited half to top our growth. we or the we which situation, drive of half flow, the we that Network, is report with a merger, to see million over stated revenues from XXXX second occasions, the expected in USTN, the consistently CBS have many all the United of building year. on extensive development, opportunities start of to in am would has to acceleration period be and and sustainable are noted comments, begin growth revenue addressing excited us and believe on well for public our challenge already the during Entercom very are despite pleased

year in from we and the and beyond. feel we company the of the where good we forward, are making see positive headed look the about the we momentum across are improvements widespread back As half

developments the this Before year. more of progress, elaborating an detailed the back our some like point, on pacings color share half recent for on then results provide our first including some to I'd quarter on and second and update cover our

revenues by in quarter of declined the loss USTN. from million $XX X%, Second exacerbated revenues

first regain the that quarter. As impacted that matter behind have the and call would recall, noted situation we may by USTN that news with advertising line is us. which persisted while tracking they that it adversely hopeful QX was pacings cautioned soft you also we definitely we footing, was that were were in QX The first put have not. possible quarter resolved local conditions, USTN our this earnings good in and quarter now entirely into our that we would its

you We a more few color will USTN in minutes. provide with on

declined color the fact, We QX, of quarter synergies which costs quarter the we quarter the of look operating the results second went for first kicked X% that by merger-related the of on year. is costs as to call our what our had in half in impact results us first merger-related second trajectory quarter our our further the noted expenses and that the Our exactly through and we'll on would have as onetime abate and year to happened ahead in.

Here's some were in quarter. Francisco Austin. San National additional were color QX markets local revenues Houston, with down. the on up and Top-performing

lottery and insurance, top-performing drugstores, e-commerce. casinos, categories and Our were

inventory adverse have Bonneville, as and and to Sacramento for behind signed to quarter, low it poor discontinue sell our customer is sales report in continue a business we relationships I Last us X% quarter of definitive pricing. buy on Francisco prior organization. assets we resellers number positive quarter. to make With during the this in agreement $XXX impact am it at second term and noted excellent our practice developments us, undermining continued pleased required plan our on bulk cost resell In San clients, the but then progress existing as addition, week, to smart, advertising we enhancing a an approximately short to we steps million. call, to who deep to does the to and divestiture Purging revenues executing in during rate take discounts, our and

last QX. important provide merger-related, event in additional This completes We Rich expect our some color. will or divestitures. this QX to the piece DOJ-required close transaction of early CBS later

we to Network market market previously one us. significant our scale-enabled or With we unavailable agreement million Audio signed our We partners. opportunity for the capture premium $XX of expect complete large and year. example an significant We real is to start. new clients, Staples The a opportunity Entercom L.A. sell the of our this our already Walgreens, of July million and just it from estimate addition, double X venture a a share or and Audio years. indeed.com, roughly billion we in a share have outstanding including that at has brands, several million. Gamble, is partial nonstrategic in in directly with to the dollars a either these of off we believe next larger Hyundai, now radio business of early upside have great that new $XX to more. nonstrategic $X This couple is estate of over days better & share Currently, market, and scale Entercom written Procter In sales was network approximately X% and launched that the Network on asset in-house to could

ratings Our growth. focus on brands yield to and significant content continues

XXXX, in revenues, launched. brands entire One of each -- are success in winning of approximately of the the rating extended now we now during month we the and seeing is Chicago through X in our new year also in stations is subcomponent improvements our of ago double-digit X% Within growth the posting across of and our doubling X see other are quarter. the group, JAMS June, ratings have of that averaging third forward months growth some streak impact almost portfolio X We per the these pacings.

some still work. Another the of year, last for the remaining brands ahead fourth while one way brands X require that's but pacing behind additional quarter,

the creator We leading very one #X also local emergent excited positioned become being Entercom the nation's content. believe original radio.com, radio.com our rapidly capitalizing are country's player is digital space. the to accelerating of on performance of the platforms, at audio We digital audio in audio about

in of very the our important across on upside platform be local last our our platform. sports, #X such with leadership and platform well digital nation's brands as Our capitalize of agreement line and on full will personalities to destiny, up benefits analytics, large TuneIn radio.com In the our CadenceXX. opportunities, in the this country, investment our the an deep as in podcaster through in news the owning our are of available and digitally week, as plus local success own control position we and terminated derive as advertising own of driver our exclusively the data order

our We to are encouraged by progress date. very

according the as of that audio In pleased now comScore. to fact, fastest-growing in radio.com am report States digital app the to I June, is United

is and Amazon admittedly, Microsoft now does XXX% few listening Now app digital past driven Amazon's growth increase we as to doubled Radio.com and with also Android the Car a more. Apple off cross-platform of live and into total, over have is over still drive a as the well over Fire being transition Sony's has us devices that into audio Alexa weeks we on noteworthy, huge entered weeks. past but in low play exited growth Roku, our as radio.com and not account speakers, more That TuneIn. few smart Google's agreements past helped quarter. relatively installs the the TV, the [indiscernible] In is Auto, than take base,

have The and This premium from added new American Times York content life. We New also including publishers,

audio revenues are a continues digital follow. radio.com significant the emerge in as the to starting market, new As national to player

to to not are half influx year. on increasingly where another In scale audio our are as of creating a is is This opportunities the conversation, the see great as example was see growth fact, the early revenue. year, the for company This agencies bookings to We're through an company. the over significant the continuing real space sports and of base is growth upside small here last in back but significant. radio.com from bear player a is XX% events new our beginning gambling-related enters national up this digital also business nice bringing in ad of

emerging working in a gambling, radio, we position While are expands, well been talk to that hard category. our leadership in on markets. capitalize We've states improve few sports also currently, only our sports have outstanding as performance with to local legalized positioned high-growth very that

developing growing talent have talent, our upgraded our We've leadership divestiture and markets on addition the at completed corporate a been operating our integrated highly also and financial XX of and new, in managers Philadelphia. organizational strategies. list also and brands of market our and the great ratings, we a added as We're of enhancing of focused team platforms. value-creating simultaneous to deal culture In transition announced number to acquisition month, has successfully practices to enhancements digital making in we well. sales an extensive Last a and

We years are stand-alone performer an top-rated a many Philadelphia, million. has buying station $XX.X for WBEB that independently-operated, in been perennial for

market's country are WXTU, station, We to $XX selling Beasley the million. for

As accretive we and and transaction synergies the previously the large has net are to transactions Entercom are significantly leverage-neutral. announced,

roughly the extricated a internal more a is color, as but CBS and with we is that a $XX also QX unfortunate impact As been efforts big has will expected from earlier, QX have inherited no our USTN in on of ourselves Radio I on merger. have This root. million including the noted expected traffic the take Rich performance headline QX, very impact sales diminished while from our a had challenging our distraction that, million merger, provide since impact on situation it hit we $X USTN. will

own in we we XXXX Looking and revenues. the double WBBM most Angeles, brands roughly disruptive the traffic and inventory, in Los Wins segment. Entercom in XXXX of pleased news XXXX like as to expect to this of in is pursue market our in control New traffic-related With we leading opportunities attractive are KNX York, revenues be industry's valuable ahead, Chicago, level destiny

matter We are putting on us. to behind moving be very and happy this

enhancements. beginning Turning new and performance improving, on are organizational pleased our to is to our third quarter performance. to am report initiatives and our capitalize we sales that I many

to merger mentioned would some it positively start happening. clear I begin to been of our hold to the is any magnitude, our enhancements this from with as and take impact earlier, for our we As initiatives transformational have performance. now and strategies time That take

for with impact %. currently we excluding are down USTN pacings, of pacing the quarter Third compensation the quarter, down adverse of are X% loss the third X USTN,

up dollars encouraging. political is X% ad any basis. pacing it For fourth still quarter, are we currently a quarter early, the an I unadjusted on placed in very mentioned, I add later. acceleration it local market initiatives but material that the is is that would neither caution I has to tends improving of but mostly noting performance. that It bit shed, growth as is that get book for previously from worth our coming also some directionally

stations the stations. the Entercom in with improved stations Entercom now legacy to the their markets, quarter pacings, outperformed in performance lag. While legacy and are continued we the CBS pacing as legacy But roughly CBS third the and legacy improved second have stations quarter look line their to

fact, during the pacing second as page we see the quarter. that CBS Houston. up are evidence In Angeles, markets QX, turning now of In considerable Washington several the are of New legacy on Philadelphia, Los half year, largest to sum, and including York, we turn the we

Network to accelerating are and where results early we Audio is and behind our our Bonneville begin drivers. achieved merger, lifting integration merger we front our our our we just pacings Much significant resolved us any have certainly and takes a Like heavy much bit as the several expense and successfully and have await, We radio.com of headed. and progress key gain us but and systems of across we it feel have very locally achieved are and We work transformational Entercom launches. major mess. for strong of about -- traction good growth reductions, we of We time. divestitures from achieved the challenges have our in USTN

and team acceleration And want in pacings are that, terrific turn opportunities. growth we and Entercom I'll drive work our year. significant revenue thanking abundant I during Entercom to and markets various the for to progress build half on at and they're to the outstanding close all drivers, Given continue top over the it of the to line by the with our across our to doing new EBITDA capitalize second Rich. to and expect begin the revenue we making our

Richard Schmaeling

revenue traffic revenues period after accounting fully gaps quarter recognizing USTN, learning then are to Thanks, David. they been issue and subsequent thereafter, to a in of are believe CBS $XX to stopped they After was down report purchase million July the filling with in acquiring second accounting we we end stopped that of our CBS ultimately paying the had not about that USTN when via closing By we November net as ugly On exacerbated, result us the pre-acquisition and our Entercom contract from for of breach where of its for the which, its thoroughly million, from for same Radio selling against agreement of owed traffic local immediately solving by now Radio, David as $XX Entercom. had USTN were March, station in their problems, led USTN has of by evaluating, couple vast close terminated own, in an our perspective, upon inventory been of deciding loss basis, then, markets, on relied said, all its not the our traffic revenue X% financial or we the as and for and and progressing, of receivables first USTN. the either reserved USTN self-producing on closing. content. This USTN Entercom we its merger learned already reared majority paying reports. head been had

including $XX end restructure fix with an into note. traffic After equity our to balance at some and financial in room sheet agreement including alternatives, all of into our their March to traffic, receivable senior our contract of and secured a As network, them USTN its breathing a million problems, give no converting the total to have exposure matter. agreed to own exploring we launching this result, April with Entercom

merger, about of its organization part recognize CBS with X/X inventory to viability. as revenue standard of has paid through local internal of quarter Network, under million the took traffic they the new the $X by closing and an addition, June USTN third that restructuring, been the us now Weather Information Radio revenue concerns the with other this inventory Traffic, our able accounting that traffic Entercom did at even or financial sales USTN, about that pass inventory that will end been directly Since if recognize sold back was combined had being not In called and our terminated. markets. Entercom TWIN, in Entercom we contract They recognition their from of because already

owes full the about the or about $XX revenues if For and year, part that recognize payments from recovery USTN USTN they million will further or revenue a under our to if year. at contract $XX.X of of X/X this will was expected realize through approximately amount we of the projected traffic over the be this know make we currently a USTN process. additional with legal inventory outset million Entercom contracts formerly we us,

$XX in confident our be segment, Given monetize and more and able brands news. about XXXX, market we of our Entercom To the internal revenues to project given inventory we the our the we'll than that least, traffic XXXX subject from of network our the behind largely to will that ourselves be matter leader of us, own and to situation be double the premium natural scale, this expertise market this are traffic in are are do have that say inventory we in we a we the for by control able be to to happy segment inventory successfully our million. radio in we and

owners. litigation, won't situation which and is with specificity of further so provide claims to against or is and this know, we be its we frivolous the about able the dispute USTN may this believe you as former subject merit, USTN Finally, without

revenues station and environment our continued same impacted in pacings the the by for the quarter slipped were our softness also advertising as David, progressed. by discussed quarter local As second

expenses. our to Moving

for and million expense integration included in services. services, costs. million costs million caption total integration $XXX.X been associated Corporation executing a quarter divestitures associated primarily million related IT charge, transitional of services with the have $XX operating with $XX.X program. on at P&L about administrative, These transitional our the and include expenses costs Our we've $XX onetime Since costs noncash of closing, of came and and restructuring, of to for from the M&A digital million integration, as-reported impairment $XX and our within estimate Bonneville classified in not our CBS incurred were

company the terminated. of service XX, As related of agreements of the all migrating off services transitional June completed and have CBS's

between remainder $XX $XX In X% on items we or D&A operating be cash total will basis miscellaneous expenses $X.X the X% same synergy and pro in same this expect the and And in June million operating of this for year-to-date, our million. onetime of down synergies, $XX the to adjusting noncash at year. bringing to our to forma and for X% station June quarter slightly track cash same-station operating down we second the second year-to-date, the out combined hit million exceed in that like total Excluding X% target we realized million, about from $XX income, our are came or each cost on expenses same-station quarter, year, expenses million or costs are million a $XXX total million station quarter. cash our net down net cost XXXX. $XXX

of $XXX Our in to program achieve our synergies next cost overall of remain of at plan middle net run run by on to and the million target year. integration we ahead track slightly our continues rate

was our financial compliance net We basis, quarter position. ended the and total to of our with on a $X.XX Turning leverage, billion X.Xx. net debt

to average our compared of was covenant was weighted Our senior as leverage of debt secured and cost Xx X.X%. our X.Xx

stations quarter timing reached expect fourth a we regulatory the third in these David, $XXX divestiture Bonneville million As quarter, approvals. definitive either of we to sell the to for early the depending mentioned agreement or and close sales in late by remaining the on

market all divested than the stations consistent For earnings EBITDA, forma on in adjusted San Xx. was indication million and financial proceeds already to operating that release. at -- of softness of adjusted as seller $XX expect note These reduced primarily Francisco with associated expected the a income based from this what of will year, back has August interest these you net the due with sales after-tax Bonneville's $XXX million from proceeds. in the the sales, see data in us Also reconciliation determining these in are market after-tax although forma less income last to we pro other multiple, to of Bonneville section by been GAAP EBITDA pro of being in deducted of

redundant better are other Our proceeding sales than expected. asset

million We L.A. on building of $XX O'Hare million the of and and of to the expect realize in to on an today, gross adjacent sale in September sale Chicago on to expect Boulevard in and site gross Airport proceeds. we proceeds, office Venice tower close the to close realize expect in $XX

earnings to of asset I first now proceeds call. the X expect gross from accounting now we for with For of asset after-tax total year-end, after-tax proceeds $XX at third of XX% full we'll redundant close quarter use million debt. total, we $XX summary, outlined the or million and which about about our sales specific year, of $XXX pay million, million sales the anticipated down just by versus sales to this expect million proceeds In of quarter the $XX we $XX time

as our compliance forma leverage after-tax secured had of June EBITDA these versus TBA closed these And and calculation, impact at total senior from as all the been sold have leverage been deducting basis fees the proceeds X.Xx TTM X.Xx basis, the our as on versus related X.Xx sales by XX pro reported. a and reported. have our would X.Xx leverage if Looking of would

covenant quarter. leverage expected the or divestitures asset Bonneville whether of of Given compliant third the and the sales or fourth our remain to the expect not senior in close revenue with XX, benefit as the September outlook, improving these secured we quarter

rapidly remain by our we expect as reduce leverage reported to our committed year-end, able to target turn X/X total X.Xx to and as as possible. from quarter we leverage our addition, to In leverage be of second about by getting

that This will and to and continue $XX up and progresses, this expenditures CapEx year Our what million. we expenditures, range provided the our as gains redundant during our now real estate few expenditures, a year expect we of is $XX including sales to hurry QX savings call ramp maximize to range questions. between $XX as were Operator? income sheltering then asset estate full via on up will integration-related real like-kind the million we quarter $X our will exchanges. up With from go onetime we capital tax first from XXXX our our million your projects million that,

Operator

[Operator Instructions].

Our first from Fargo. question comes Ryvicker from Marci Wells

Marci Ryvicker

I have a couple.

Rich, is, that fall year-to-date, and first maybe into million the -- Can million $XX The about $XX talk million synergies. thank you, for last. you $XX QX QX? how in falls

Richard Schmaeling

Yes.

to split I evenly. kind be it me right we'll think like looks That's what now. of

Marci Ryvicker

Okay. QX unadjusted down format X%, I changes I know a And of I is are down QX, up underlying I from in at the think numbers, a and unadjusted. a impact the pacing think is format there revenue rest was all understand does to QX lot changes. my guess, I What for know right? just first quarter, numbers because just I was trends think, X% the mean? we've CBS. down gotten And underlying I of X% X%, X%, quarters, want then, including from but impact X% was all-in,

David Field

Yes, Marci.

or of $X third incur roughly will excluding is but the -- factor that quarter you additional we the million will remaining down be to quarter, impact in just X%, expect impact to if down -- clear, USTN, X% we So pacing in the incur. of like third the

will USTN. For get now that own so that control be a and are, destiny. own X accelerate plus ability an a because now position which We fourth the We have done the to have all-in in we of that quarter, where the to internal about wash now us point. prejudices our our bit opportunity we're and frankly, in back number, represents efforts from fourth have it again, taken quarter, to talking a little we believe control

Marci Ryvicker

a then, Or seen station in radio because I'm seeing and Is from what quarter is a second the TV seeing And quarter a a are political into lot not a you're little guidance. issue? starting of issue? it tremendous from amount third market we've it the groups Okay. the surprised

David Field

issue it's per not it. reflects fact an it I'd gets se, television its later that than dollars radio traditionally say political gets the

consistent October, So with periods, normal. healthy of amount this and is expect It's entirely a obviously, past political early we September, and still in November.

Marci Ryvicker

yet, in included that's dollars if Okay. those seeing your pacing correct? And you're not not

David Field

correct. is That

Operator

Our comes next Bank. from from Watts question Deutsche Aaron

Aaron Watts

from local guess, And Just you're to softer Is you're you the to push year? sounded the driving call out a I a than me. better like a else continuing? follow-up couple theme rest national. that's first, that place seeing. the on It improving that's little can was trends Anything that? that seeing anything helping things of

David Field

Yes. Thanks, Aaron.

earlier pacing I second through York, and the year. now markets and and in number local are seeing element. improving progress which are QX. absolutely New half our the up right? that the improvement the a we as one of Los it things, of back single it's been and There's year, others We're no QX So Angeles, across pacings us seeing locally, mentioned D.C., clearly Philadelphia, we're for has what first held Houston half has of that

leadership to enhancements starting gain moves, clearly, so But So traction. made, some new the the we've the forth initiatives. systems of are it's and the also scale-based

of So acceleration great. see to dollars Audio is radio.com Entercom a bit we're little We're digital now in, the starting are we're rolling Network experiencing our the impact in national first sales. which that of

a bit and of it's time, to just months take been would several it see hard and little we've number it. on for of things So knew starting working a we're that

Aaron Watts

see When about independent Great. numbers the then, that's today, any half deleveraging the of asset to a Okay. a half And one leverage turn that you from deleveraging for expect of you targets. Rich. of couple talked business? turn on your clarifiers that reported the A of is sales off

Richard Schmaeling

now year-end, sales asset we proceeds, are No, X/X the about to expect from including through after-tax delever our of where so we benefit churn.

Aaron Watts

Okay. Got it.

net be basis. in the would just not the to down See are expectation with principal it leverage that that So inclusive. And reduction? proceeds debt is cash a -- going those it hold actual on pay your

Richard Schmaeling

decline expect we our by will Look, year-end. debt net

Operator

next from Wells question Hebert comes from Securities. Fargo Our Davis

Davis Hebert

traffic to side focus the second. Just for wanted a on

said from I level you understand what you think, David, -- and what the doubling. time wanted frame, we're I revenue just anticipate about? that to talking

David Field

Sure.

So just quarter. hit $X clear, third expect in to be adverse a million the about we

be We quarter, to expect fourth a we and wash then these expect to in disruptive XXXX. in the double revenues it XXXX about

dollars business we easy the some traffic as -- we So first you'll the as as think of of more the get the comps we second in year, and comparisons traffic ramp have essentially and zero difficult. so little quarter obviously, second the rate up there will -- growth see diminish quarter and because a half situation, own the in our I

Richard Schmaeling

add just year revenue million. expect the formerly was inventory part -- did we that, And full to in from USTN $XX to contract the of about that be that to our XXXX, we say

off XXXX. So doubling that million, doubling in $XX more than

Davis Hebert

is are any expenses And Understood. traffic in already there as ramp you investment-like Or up that Okay. numbers? business? that the

David Field

to the and situation. know all that prior services reports you Well, whole essentially what's been nice in-house doing this virtually of we had is traffic

incremental negligible. the costs from So is standpoint an operational

to area, We but new will the expense to brought some up that leadership a very it'll involved. in sales drive very, be our small beef relative We little bit. revenues

Davis Hebert

million some down just couple a borrowing? there the $XX of some then, And should pay think, that Was this revolver borrowed year? on saw back leverage. And another, the you we in on in I I your Understood. half Okay. seasonality expect quarter.

Richard Schmaeling

the we St. going in of $XX of consummated acquisition X things seasonality, there. the the from stations for couple net million million. in two about a increase debt are working just quarter. $XX also Louis the our drivers on of in Normal Then, million. capital quarter Those $XX the during MS primary That's

Davis Hebert

Okay, was getting unrealized that then, in terms which include I include X.Xx doesn't of does about the X.Xx, know understood. leverage. million right? synergies. And I asset the about, And sales, positive to that $XXX of Is impact

Richard Schmaeling

agreement. is high, XX% And about the has clear, based little our of pro is be million a that, calculation to That our cost-savings. cap that on forma $XX in

when what's at and subject greater So our but in a were total than $XX million cap, is million, the it's look calculation. synergies, unrealized included to gross that $XX XX% I

Operator

show no We at Instructions]. [Operator further time. this this at questions speakers. questions further no time, show We

Richard Schmaeling

our you other Thank point. you, this Operator. We're calls very much. concludes Thank conflicting at call. This with

David Field

Bye Thank you all. now.

Richard Schmaeling

Bye, bye.

Operator

today's concludes And that for Thank you participation. your conference.

now may disconnect. You

Audacy (AUDAQ) 8 Aug 182018 Q2 Earnings call transcript