ETM - Earnings call transcript Q4 2019

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Operator

Good morning. And welcome to Entercom’s Fourth Quarter 2019 Earnings Release Conference Call. All participants will be in a listen-only mode. This conference is being recorded.

I would like to introduce your first speaker for today’s call, Mr. Executive and CFO Schmaeling, Vice President. Rich may you begin. Sir,

Rich Schmaeling

website welcome Thank is earnings quarter and Good available our being today’s at conclusion and noted you, morning Entercom’s in Company on conference available replay A by will fourth after call, replay the of Ted. recorded. be shortly the call. number telephone This call release. our

actual Company’s and the statements, from in which upon Company’s the forward-looking uncertainties. materially Company risks are involve make current could may call, and those this these During expectations differ forward-looking results The based projected statements.

factors cause Form described on of Additional that information materially Factors Company’s differ the results XX-K. are concerning the section Risk could actual Report to Annual in

Company’s forward-looking We update SEC obligation to As except law. statements no filings. updated risks such, uncertainties the may assume any and maybe be required as by in from time-to-time

reference and we the entercom.com financial During measures such Investors may forma of We to for our page this certain website at financial information. other refer of you non-GAAP call, pro reconciliations measures.

I’ll David now of CEO to Field, call Entercom. the hand

David Field

Thanks, Thanks joining fourth Entercom’s for everybody earnings Rich. call. everybody. us quarter for morning, Good

was consecutive our growth. of QX quarter fifth

EBITDA net up For XXXX, with XX%; revenues strong ex-political; Entercom X% income adjusted up adjusted or financial the net and per share X% XX%. performance delivered year full up

in and growth sustained multi-platform in the businesses beginning for interested to are enhance space. investments and emerging analytics Company our events and position to audio along we and us offerings significant podcasting, Our data increasingly our of reshape digital, network with undervalued the advertisers, sports, expansion as and integrated our

audio and media are increasingly a smart our when about time when an scale. capitalize audio we business renaissance time think at podcasting, As leading speakers, disrupted, to our and hearable devices, are a on search evolving competitive is we at

customer our enhancing in progress and our elevating our original capabilities, strong expanding line product making are relationships. lineup of and content We

the now, radio acquisition of the of and the United number audio We broadcasting podcasting Pineapple our our competitive scale. second content is country’s local country’s we the CadenceXX one across of are one the companies. also nationally one three in Street to companies The of the two none. top creator States, with line-ups XX And quarter, strength original of markets largest in by and are Studios the during third fourth virtue quarter, of station

or report to just pleased surpassed podcast I’m at the billion current our exclusively annual X creates that run rate. now Company that our downloads represents,

sampling titles Farrow's Goop; includes with with that top Our Rules bestselling small the the Catch author, have Ronan new and Pod and the history list at podcast Save a XX Kill; Brown, number The revisions Clearing, chart. Against whose one This Michael Apple just is Anything with and us just year, numerous this trailer unlocking Paltrow's America; debuted Brene Gwyneth the Gladwell; Dr. Lewis; portfolio on list. features Chamberlain, Goes Apple with of reached Malcolm Emma

In with addition, important we in and Apple, others. during partners RADIO.COM, app scratch audio established fastest including Amazon, digital growing from and XXXX, into built country strategic the have the Google relationships essentially

nicely, by A future. grow Brown Zac The positioned than list significantly a today company shows are Keith in country host artists. revenues growing And completed profits the with the of of and the across growth Entercom year In ago. rapidly XXXX, among for the Band, and full operations we to significant data Our Urban, audio sum, its Sons, Killers, it’s headlined first Billy in network Swift, continues year events many a & Mumford Taylor and other featured Eilish, likes stronger of

than quarter. while per was net on Political Revenue I’d the increased as up X% increases off-cycle our these was flat quarter revenue albeit increased Adjusted was to down was quarter, for radio in of and for ex-political. stronger touch revenues additional progress ex-political quarter. national X%, adjusted typical significantly I XX%. network. like expected, on will areas, by share the Fourth the our first growth digital, driven income some results a EBITDA color each events, solid financial fourth quarter. X% in for share Spot but

We also margin modest during the fourth achieved quarter. growth

his XXXX, by whole, a on as we financial For to X%. will results color margin our provide grew Rich close further during remarks.

important advertisers with rethinking deliver solutions particularly becoming an in their scale data Having with its robust, clients landscape. As audio increasingly an through product this large to along podcasting, marketing underinvested a in the media digital broadcast becoming their that reach since long industry. partnerships increasing the nationally and clients. business within who becoming is competitive emerging in new And for and unmatched Entercom strategy, more radio is is mix opportunities is the positioned line interested multi-platform, national building have factor scaled meaningful are significant in factor well as investment. this integrated radio competitive radio evolves, can with

earlier, of has on local customers station and second touched I scale. strong position events a capabilities offer podcasting data newly plus to Entercom set in our XX and in analytics, at established and platforms of line top powerful the in digital, leadership As for none our a markets, sports,

York platform take look To a this context for add a powerful customers. provides uniquely some how it at New to and quick let’s point, Entercom

listened most XXXX all music plus the top Our States. ALT York’s the the new WCBS-AM station most XX.X United the FM, and WCBS-FM, United WFAN, all group WINS, there to in States, station including in station and new XXX.X includes New listened new the support station Country. to

Giants, the York Nets lineup of and a feature and robust Yankees, for Devils and home Brooklyn products, local also events, digital so much plus more. are We radio Mets and New the Jersey the the

positions of the these of in radio most country’s leading have many similarly powerful revenue are and We one markets producer markets. in the number

little I’d like on business. more a other few of the also a color areas provide to

Angeles, new Miami. performance addition spaces revenues Philadelphia, four margins Los Our that is of enhanced events our at business and and constructed driving now by we Atlanta is recently higher facilities in and the

performed in invited XXX show Coldplay Miami grand facilities be and our opening guests. in New live shows, our in HD Atlanta Similarly, new Philadelphia live podcasts the the Radio of in January, Space boutique year. at Sound exclusive should other spaces front active and at the Verizon Los in for programs entertainment new Theatre Wilshire Boulevard small This and Angeles, and across

our have including and We Super shows well with Brown audio our other show, video RADIO.COM as live our the show, social of Bowl. begun recently the along some of night as streaming before Band platforms, on Zac Coldplay

work team largest marketing business local We continue states gambling. to legalize we achieve growing their significant to and relationships our And as unrivaled sports our our further national opportunities are client the partnership country’s with radio elevate progress brands. from more with

provided Mass be reduce Worcester, for we Last week, announced proceeds a used sale Boston Market debt. non-strategic limited accretive FM the station million. to coverage of to $XX.XX the The will sale the in that and is

grow past platforms digital broadcasters posting to listening RADIO.COM our growth months X Triton’s of the to continue the us major Our webcast nicely, over total commercial making and metrics. growing according the double-digit, all fastest

RADIO.COM Our and TLH strategic in growth distribution acceleration continued is of our being from speakers, driven by relationships expansion feature. Rewind new smart listening lift an our across

industry’s previous first As the announced call, Rewind, earnings a on we our audio experience. automated reminder, end-to-end DVR-like RADIO.COM

revenue XX% monthly to enhanced of and by due execution. achieving per surging Streaming We both active we are RADIO.COM, growth up digital in hours growth over strong users thousand improved audience as XXXX. also revenues in also listening sales way were

on new we final product for only with Google kit as One audio deepen key our the Google partner News new Alexa. note to on skills a serve radio on partners, for partner strategic Amazon’s the broadcaster to and first continue the digital, becoming launch to relationships commercial beta Assistant,

team, A see based the including across I turn and our the digital, of few our opportunities Entercom summary we events, the and impact with our client increasing capabilities. political, over national the before feel to audio about work Rich. business in thoughts its good for outlook podcasting, growth sports, it of products advanced attribution XXXX plus data on analytics We areas partnership

we on growth. in and cash expect quarters solid revenue, flow five to to consecutive of free As and generate a build our EBITDA growth XXXX continue result,

leverage remains focused the from by strength growth of for trades It least and believe see XX%. of on creation. yield current that value We flow opportunities from and X.X business our our are of a half level currently disconnected year-end reducing XXXX. we cash the the valuation We stock turn by at at free times current a

about are investors. look for We the excited forward to work future to great realize continuing and hard value to

now I’ll your it and questions. then turn over Rich? to Rich

Rich Schmaeling

David. Thanks

support net income was made investments of per and EBITDA solid for Entercom. XXXX significant while and share growth our in posting growth. progress against initiatives strategic transition important an year We

at XXXX. We’ll of over transform During end completed and our another we integration of $XXX cost hard million synergies during the structure $XX synergies the to to work of this advertising finding the which of gross synergies round are year cost from next Radio actions landscape. about continue the program, million XXXX, XXXX generated through initiatives to million and CBS realized net to already rapidly we adapt evolving $XXX recognize and of cost

targeting by strides our is the channel and team, fueled Entercom in the audience second offering, through our direct gaining in significant and made national that also industry. none our attribution an advertiser building network, We data first in audio party fielding significant momentum national sales partnership to prime

combination We and power of acquisitions in Media of are the excited CadenceXX the about Street also Pineapple Entercom. with

time, highly complementary this Entercom’s core high-growth to business be getting source will and just is We a new revenue are of business over going. also our synergies. significant Podcasting

for Turning quarter. to our fourth the results

revenues X%, were up were Our up and X% ex-political. net to close

the guidance million podcast million. came $XX for Our $XX from in our versus quarter to million $XX.X revenues at range

fourth quarter share Philadelphia, spot during year, reported Miller Overall, Our for the across our York, as Cleveland, markets, Pittsburg in the and revenue Washington D.C., continued San Richmond. gain markets by Kaplan. to we full fastest quarter growing New the all and were Francisco,

ad the political weakest, month beverages. services, and and entertainment, improvement quarter performing December October the professional was services, due categories to best year-over-year. the in was decline gambling, Our of financial largely insurance, home were strongest

$XXX Our $X total million of discussed impairment event refinancing, costs expenses charge include our XX-Q fourth the expenses quarter came and the quarter and to corporate noncash $X costs, FCC million a third related operating nonrecurring within for for estimated costs. our that settle for million in a cyber million and at in $XXX.X matter combined included restructuring integration charge, the

the goodwill appraisal fair remaining our they an After of Media. balance our exceeded based represents conducted annual the Our concluded this as Street $XX value price. and on value impairment prevailing goodwill recent our independent million stock during the CadenceXX of implied with charge, and Pineapple fourth assessment of associated by that goodwill quarter our carrying acquisitions

we million quarter, $XX.X operating fourth cash basis or costs expenses year. in onetime costs out items For fourth million last excluding the reported million non-cash in total charge came down and the adjusting and of $XXX.X same-station our podcast like X% from the of impairment $XXX.X the quarter and D&A, at

full totaled for were For million. operating our and year, cost realized to the X.X% cash million our $XX same-station year the total expenses down synergies $XX net

over As we million mentioned cost expect year P&L realize during last earlier, taken this $XX of synergies the course to actions from year. of in

continue strategies structure efforts further as the new provide Company details in developing hard about our and leverage year the data. investments and work is actions progresses. addition, significant In ongoing We’ll our and transform at cost to technology to these

significant Adjusted revenues. EBITDA of by in the EBITDA year-over-year political and expanded the in points grew quarter to decline basis XX.X%, a XX fourth X% despite margin our impact year-over-year

year, full was up XX.X% was For margin points year-over-year. XXX the basis and our EBITDA

for cash fourth the flow for million $XXX.X free $XX.X quarter million the adjusted Our full year. was and

count share on free is million, flow of flow XXXX yield Given diluted our XX%. our free based cash over adjusted XXX cash current

to For to adjusted revenues our will expect will mid-single-digits. and our grow EBITDA be year-over-year X% to X% the we quarter, we low first expect by up

our position. to Turning financial

we quarter, B. amended our maturity fourth to align loan and our better the During term its extended revolver of

the million term lien basis and second is also by X.X%, percent loan partially After at at points pay proceeds down notes. We cost unchanged the fixed $XXX of added XX% these XXXX. to debt to We used on XX% repriced was B, of B. average term these our margin end now reducing transactions, versus our our loan our and our XX weighted

Our $X.XX debt at net year-end billion. was

for before and leverage net one-half more of year total expect of X.X our times our total flow to turn leverage the accordance and of both use pay the down calculated agreements. cash first times next Our with was our of net the our is priority by X.X free times, in was by to lien to its top credit The leverage this leverage we debt, and end or to middle get target X reduce year. Company’s

totaled reimbursements. installation of Our net $XX.X the capital $XX.X full quarter expenditures expenditures for year tenant million. were And million, fourth our net

Now that equal the CBS X% us, will XXXX behind and net of expect we about decline capital program is Radio revenues. integration in our that expenditures

Ted? now your that, questions. to go we’ll With

Operator

Instructions] [ph] the Kim in [Operator from Wolfe Hyun The queue Research. question first with is

now is open. line Your

Unidentified Analyst

have couple. Good morning. I a

first your your for same-station First, is quarter ex-podcasting? pacing, growth what

David Field

Yes.

you guidance. The at you quarter. and are we’re we as X% think, consistent increase -- up about the sort for guidance we flattish I looking what would of imply view a not that pacing seeing the I think X% in talked podcasting. at we’re with And this information saw, outside to can giving basically of marketplace, time, is,

Unidentified Analyst

Got it.

with advertisers to across on acquisitions. you incremental your is spots Now, digest recent some platforms, your couple revenue? you I your sell if could podcasting deeper bringing and opportunity monetization terrestrial plan, that was to had cross a and now potential along digital and your wondering a your podcasting of of dig network little the spots months What

David Field

Right.

and solution, fundamental business. terms being our platform One the into it’s as think and -- podcasting just incorporate see truly just going look as forward, session, in well we of as the our digital that’s and to side, a we’re of across not drive scale we two and So, stations frankly, you we again, reach business. and as finding our scale can increasingly as our have saleable across platform, the our number to with that increasingly we advertisers listenership, we listenership But offer enhancing real to, network the integrated, important. -- radio resonating to able also podcasting an become of building and pollinate our three, our sales to important that our expect areas multi-platform of part is, cross customers offering digital alluded all the entire offerings, impressions provide, true, platform on podcast radio our to that

Operator

Silver from is B. question Zack FBR. from Next Riley

open. now is line Your

Zack Silver

is wondering you going to remarks, help there’s XXXX. maybe effect, of advertising, I squeezed a big that TV? can in out a TV for in there secondary also, guys, maybe more, parse expect was good political what as will political of advertisers -- stations, as your if one there David, are mentioned to year out more political on come where particularly see prepared just and more crowd First growth lift, revenue out we is since sort to maybe you solid bit a see for you you local getting a pretty they’re

David Field

we growth And to. Sure, this what XXXX, be as about to business talked in our look evolves about significant areas. earlier we our shows happy several as and see, opportunities product of gets across reshaped,

So, whether events, mentioned, as network and national it’s political, digital forth. sports, or you podcasting, business, so our

more more All put go as the yes, than we as through of others we are robust we plus we political, column, talk year. to some them, in about And the as seeing, the has you years, our what to know ahead been TV. it substantive significantly is so far in political of of past a it Nonetheless, past. relative component we’re less model than seeing

Zack Silver

buy any in stock in guys you did the fourth then, the quarter? And back

Rich Schmaeling

quarter. the in fourth Not

Zack Silver

XXXX looks given the of political like be target -- it of the capital XXXX. by sort year, allocation, to this lift you’re In terms end going a approaching you’re of leverage

coming As you year? in you some few is a cash -- to flow guys opportunities about stock authorization stock you I Can your to this a XX% have think repurchase talk trading times, mentioned remaining at yield. still the free

David Field

Sure.

the cash to utilize So, cash about interesting enormous generates. options ample flow as great great because that we business things it are all amount know, And of we the that how flow. one free lots we of free we have radio the as position, is of

organic certainly use of the our and the we we It’s going be making our we’ve are think priority opportunities capital? we from undervalued first first highly delever. is continue we and solid Rich And and based and fourth you’ve right foremost to think done delever. consistently, stock quarter what think, our that’s what me is best within heard I and business, the at in look on but to growth

Zack Silver

then, just And on for could, XXXX. trajectory the more I if expense one

in with some you podcast synergies, other factoring maybe that can cost organic of same-station business. from a labor rights sports you Excluding and the $XX I of the out sense give -- net give million is there’s I can what and trajectory inflationary also, OpEx that sort the understand acquisitions incremental the guess, with But, sort of us a costs in in sense costs cost XXXX? us

Rich Schmaeling

I think, now, more historically is closer about expense we a little probably to X%. said that X%. organic It’s bit what our growth is it’s

pressure in some are We seeing wages.

and increases products, that medical other of agency a That’s experiencing the us. creates our in driver cost We’re sell cost benefits. within we for business, digital people’s goods that then, we sold. key of And growing digital a have

other cost And proportion increasing costs. model those by drivers detail for that there’s total relative the revenue, drivers costs rapidly are but are more do you and are that to type driving our of plan further so greater underlying So, We have variable base. Zack also revenue to greater visibility XXXX, of our of in the a becoming revenue. provide reporting of

Operator

from is question Wells with Next Fargo. Steven Cahall

Steven Cahall

Maybe to me. my new I’m if guidance year-end. about you right, leverage to around of I of I by getting for previously by talked math mid-Xs down think Couple the And gets X your the doing first, end XXXX. times think,

buyback shift cash I’m is it just wrong sure doing can to see you to help towards about not, understand there. that maybe last talking and you I’m if versus the make incremental just us So, maybe lower carve-out? the a year. of bit want a I is it And anything talk if flow, were end And what free delta, of

think, podcasting a revenue accretive in growth revenue overall the of And all this you a wondering year. I side, the then, versus from was company. digital sort is digital perspective I And your expect probably growth on growth what

the could margin MAUs of as grows revenue? what That’d like just about do the that look great. maybe revenue us profile how you. related faster be currently the than the spot radio that, you Thank we So, on digital business give And if RADIO.COM? for think

Rich Schmaeling

leverage So a, has changed. nothing from from a perspective,

to shows or take half a turn to projection bit Xx. expect just be off above And We our little more. a

don’t So, be that little be And on think to of nothing’s middle the inside top bit will by changed. of north perfectly of we’re a I we’ll target we think comfortably that. going be X.X, XXXX. just

little a the So, again, how nothing maybe we changed from score, has that change bit. language

any Sorry if confusion. I caused

pointed perspective the digital about podcasting IAB a We projections PwC grow growth think, to. their good From business. XXXX. We’ve podcasts our growth are by will market and a and we’ve to about drivers, talked other who XX% projecting it’s baseline to measure point in

And the perspective we course, we podcast breakeven. profitability digits call And were perhaps the there we marching lots saw over start consistent think we guided years, get aspire a going to that up From is single in we’re we And about And XXXX year better. expect to quarter you XXs. that to somewhat front, had the think to with to our we there. to mid fourth time, overall of do for Of previously on be podcast margin over XX will do that work three margin business, a full in over better. the as EBITDA that the then, in we business think time. margin next levers about the said we XXs

market and for extracting XXXX. revenue. half not They than margin the XXXX. our IAB in of in particular consistent haven’t about opportunity has overall the growing broadcast per XX%. the published business improving XXXX, we that. line course said dilutive a our say, we’ve about we’re look of margin. similar first we’ve see in enjoy we’re And business. about quite the growth, to excluding half higher if And keeps -- We digital a business product grown same. podcasting. about audio the past that rest CPMs But, bit at of profile It’s that That getting for the little to as of growth And better rapidly. And you of second going in we grew streaming profitability yet faster with our -- that’s the digital It’s think calls overall

right so source outside helpful That So, is overall you’re I that is and do of revenues the will core, it upon our the be revenue overall think of growth a composition called, profile. bottom improved the our accretive profitability line. of to

Operator

Huber Next Craig question Huber from is with Partners. Research

line Your is now open.

Craig Huber

revenue, before? Rich, $XX ad the think political about year the in down million, I $X million was one, first quarter, that My a

Rich Schmaeling

Yes.

-- think I it’s right. think I that have you

look ‘XX, me right if But, in in to Let cycle, it prior at XXXX. double. the was close quarter performance combined now. interestingly, check so And you revenue and back in go the XXXX, was the

Craig Huber

say for And cetera. quarter quarter I New over New increase, just the expense then also, And for thought outlook you this medical we in that could New you X% for this said Year, finished? again, the if Year? just organic et your can again then will, you the and you But just growth this given go please up wage Year, for

Rich Schmaeling

of we’ve So, our been growth that our our given growth organic expense to has is some that in benefit. just business pressure cost and and you goods as our wage that elements of the profile historically, digital about has sold tied and increases of it cost said X% evolving know

call look our So, little is about bit so. X%, let’s profile than underlying X%, growth a it more at organic

Craig Huber

the quarter in sorry, organically? I’m number, that you finished, just was What

Rich Schmaeling

at well, net benefit synergies our full to based was million that’s $XX over hit the on organic little year, full used of a year -- It’s XXXX growth, $XX we math cost to -- initiatives. million we X% savings look what the and for cost of

Craig Huber

just nearly million, A Rich, quarters that the non-cash true-up also X the Was the end the of the at and year first Company? your Nitpick a given performance from $X question, significantly compensation of year-over-year. up

Rich Schmaeling

Yes.

Craig Huber

acquisition content you I last paying there have you what you question, with forward? if you or here? But have? content debt. on know podcast jumper right focus quite my see acquisitions are to you to would any going the guess do available, more more quite you Are is appetite want you podcast Okay. any down And the I what

David Field

have. the was and Street and CadenceXX said, give created to super deliberately of about capabilities We never set slate you Pineapple of acquired augment say we able done forth. and teams so to the And for That we something are XXXX quality create of really We being we deeper really, that strength we our feel already a us it content talent be programming. we a that’s and being work original what both to good with But, never. don’t compelling, if strategically made have. that’s of to that and there’s the need ton product sense, feel that found a

Craig Huber

And How you’ve then, could. don’t earliest the trend the in is part at my last after advertising. I the question, that do did if quarter, I election? XXXX? think all of the Thank in mentioned you. particularly auto changed here And

David Field

that number a mentioned performers. was down mid-single-digits lead business Auto were quarter. Rich in So, fourth the of categories there

Craig Huber

in XXXX? is similar here That early trend

David Field

We’ve standpoint. trend never category current a about talked from lines

just we do reasons. for competitive that historic So, on basis,

Operator

John The Square Management. final question in queue is Ellis Capital from with Palmer

John Ellis

your But, my debt regarding was stock debt. down buybacks. continue one sorry, do to on comp you just on question want to answered continue conversion Do rate from shift, down pay floating focus second debt? on stock-based guys is more to doing or of plan first -- My mix you your switch paying fixed as you to already rate

Rich Schmaeling

Yes.

fixed. So, by ‘XX, of XX% we at year end were

to mix that markets from makes expect we’ll we more capital rate do that’s and During think become don’t of more sense more at our a course perspective the a prepayable floating of change we that fixed, a pay and bit debt, anything XXXX, perfect. little We think mix. as to down we’re

Operator

this I am time. further showing at no questions

David Field

Great. back this We showing for the care. in months. to look call. appreciate up forward morning Thank another everybody reporting We you. few Take

Operator

call. concludes participation. Thank you your for This today’s

You may this time. at disconnect

Audacy (AUDAQ) 25 Feb 202019 Q4 Earnings call transcript