Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Rob, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the iHeartMedia Third Quarter 2022 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Mike McGuinness, Deputy CFO and Head of Investor Relations. ahead. go Please

Mike McGuinness

and join everyone, call. for the taking Good for thank our to us earnings third time afternoon, you quarter XXXX

Joining questions. our are CEO; me our prepared At discussion our will of for and take management Chairman your the Bob conclusion and COO President, Pittman, Bressler, remarks, and CFO. Rich today's

may along on that you call can In addition we forward-looking release, that website press include remarks. have an note to our our follow with regarding to performance management's factors and stated results from our based call investor our filings. operating results. Please presentation certain financial These the is available statements on identified use statements could current are on in as what of SEC and actual expectations result today's a and company's differ this

call, SEC will measures. Relations the are are the included Investor certain non-GAAP this now I'll Bob. GAAP non-GAAP investor during call release, filings, our section our earnings turn over of to we presentations financial to financial and refer and which in measures website. between And Reconciliations on Additionally, available our

Bob Pittman

afternoon, and Thank and growth. and quarter good to solid another third for call. We're everyone. earnings revenue Mike, you pleased report our for of results operating quarter consumer Thanks, usage, XXXX iHeart joining conference earnings

and needed put most. critically vital and I even take local a inspiring teams members it results, I performance their Before the above to find resources they you our important in through connection through particular, the cases, some information, could on the who Ian when want personal that safety line team ensure possible. well-being updates listeners all, Hurricane thank to in our who tirelessly And made this worked

communities. company from available disasters, is of only especially strong indeed and of our that The radio in serve, what is we're all during our times community apart we role Radio is media. proud media play and connection sets to platform in and often dedication natural the this critical crisis and other consistently need

to me consolidated take the through we for approximately quarter, of X% you the $XXX well we of adjusted million high high Growing prior improvement the of guidance also end third $XXX our the margins XX.X%, adjusted guidance some grew QX believe quarter, of a and range compared highlights in XX compared XX% revenues the $XXX let adjusted macroeconomic uncertain of our versus year. to We to million X%. of generated an environment. provided company the EBITDA EBITDA prior prior the We of were performed provided point at the basis Now X% year. end million at range performance. In to EBITDA year by

clear has in It's a our total overall is financial XX% revenues company this performance. indication where revenues. transformation digital our enough successful meaningfully business is digital of our undergone Our now significant environment this of the performance strong comprised company to high-growth that impact

adjusted EBITDA to year, our The digital XX%. quarter prior increasing year group versus margins adjusted the Turning MAGNA growth of revenue EBITDA XX% industry-leading and XX% increasing for deliver to audio according continues to individual prior with versus segments. operating

according industry up Within the our and the to to prior ex grew revenues, our podcast the revenues, digital overall digital outperforming versus of which podcast growth growth according MAGNA XX% XX% audio year, MAGNA. podcast which XX% group, year-over-year versus of year, industry were prior also outperforming XX% year-over-year

thousands our us products products ex advertising tens consumers with social, our This ad a our advertisers. of business extension podcasting our solutions, our leveraging to and deep streaming display of third-party OTT, allows are tech range digital our holistic offer in As relationships included reminder, businesses. products, to of advertising

with ad seller, our platforms. strategy the sales sales unparalleled by iHeart unique capability audio tech a executed industry-leading our by anywhere powered is can largest that we across and partners now is anything, offer advertising this our of ad of the multiple All any force solutions, sell and

ranked publisher Podtrac, podcast segment podcast was is the we've the noted far In to our the publishers iHeartRadio according than it of again X in combined, the before, industry, more the September, as next publishing largest #X and remains monthly most focus. by U.S. downloads profitable podcasting with

the We we're in continue highest to the measured with ranked content publisher publisher the U.S. content be Podtrac, of all largest categories. in podcast range only and as ranked with and the widest XX by

leadership unique XX% content through creators, of We podcast to experience for capabilities assets, and build month which assets, while continue broadcast will marketplace, consumers maintaining the gives us EBITDA every believe podcast that our With edge. reached U.S. our important strong with those and we promote ability and take in combined user revenue audio podcast our as our with expanding our to margin. position and audiences an we radio believe share

unique reach remind also more the more and Xx audio and ad-enabled as largest I TV service largest metaverse truly people that streaming flat the podcasting radio multi-platform business. resiliency to haul. we margins reach EBITDA group will you us ad assets gives to multi-platform our revenues political adjusted adjusted each month, partners. the compared from and to unparalleled from our prior to the the even as unique low to the economic The as even spend in and well generating the than market, which expect products iHeartRadio than third twice during recovers Turning network, to were want our has its scale, this In both long events providing which period, year's XX.X%, over platforms expand and XXs, due to slightly events, This U.S. create EBITDA more speed this capabilities. as many networks as Google also and data the than ability EBITDA group, again in revenue radio our essentially benefit a app our to the multi-platform reach and now new advertising adjusted our and includes to to margins broadcast quarter, the group year, asset Facebook unique consumer were the demonstrated

unparalleled unified at emerging reach, combined the user of along platforms agencies radio gives growth pricing with our and our segment per clients most platforms in with and tech other business. buying long-term lower ad us major this potential confidence than That media, of the

turn thoughts I you. to over me a additional Rich, let with of share it couple Before

has have by the Although we robust certainly since has performance at advertising it past been as of would economic been don't times. saw advertising softened think hit downturn we the year, as beginning hard in the an

decisions we Analytic advertising and The think Let advertising during saw me their downturn. advertising saw sales cases, budgets causing cut the last those decisions are, think approximately tell over advertising same advertising advertisers last why in that the the moderate increase is. We people controlling controlled today or that increased suspect them learned people approximately XX%. during economic of who to who sales stark partners, recession, According their most by XX%. by their is many decline to spend same a lesson, we And period, advertising cutbacks. that advertisers while which their you maintained

advantage advertising advertising larger the year-over-year, period at between of see SKU advertisers, this our towards a long big of we looking digital that companies large business companies the differential our advertisers also In rate growth and slight relative during revenue skew uncertainty. fact data the to probably the tail a partners the is and small

built products to that we As about think profitability belief into needs the the Music business. earliest a to give iHeart guided Ball any the Festival, our as believe out radio build Tour, even new us of like we investing final most built you We in iHeartRadio we Jingle the the focus iHeartRadio tentpole always business. in thought, the and as and stages. Awards I'd our some how This iHeartRadio we app more be events as our podcast insight like recently, Music

Metaverse, remain iHeartLand third playtime. as and Metaverse, next Roblox, the well active very building of committed In daily reaching to total look new games users, immediately. on platform, quarter, we on stages Farm, Now Roblox, with at in building State though as profitability of we we're based launched sponsors development. X% as early among the users and the Among millions in players the we our in available is even the the and iHeartLand both all Intel and daily Fortnite other top partnering for

And iHeartLand were importantly, player they with our competitive launches were These hit more counts and done profitably. playtime. on the Metaverse based in maps of X% but is on consumers, top set Fortnite, among

scale We after done strong our have also our radio of a making audio, consumer and used while it future business and and of platform we've our leadership one. growth, the across is position unparalleled each platform sure to the profitable flywheel build platform for discipline effect cost monetization rigorous that engine

flow. will businesses, assure new as can and We that build will we and continue free profitability team cash do focus management more that so on we a adjacent importantly, to as we you that

advertisers should we continue downturn and transform we're proactively with As also a multi-platform look economic audio positions both and for us turn we company, digital strong I'll give occurred. believe economic ahead, the We over this the Rich. position navigate the prolonged growth groups of the to and our ability through preparing us period And continued now to and and of recovery it uncertainty beyond. consumers through to

Rich Bressler

Bob. Thanks,

As despite we macroeconomic I performed take uncertain mentioned, environment. the you through well that, notice our results, as you'll Bob

our of investor XX Slide to Turning deck.

high X%. Our provided year-over-year we were the up to up consolidated end revenues approximately at of the X% approximately range X% of guidance

year-over-year. revenues approximately impact our X% political, the Excluding consolidated of were up

content by and and the quarter, increase expenses sharing expenses, the profit operating costs local the expenses third-party direct higher national in revenue, and Our increased events. related XX% drives of return primarily digital to which for driven

initiatives expenses sales prior partially over X% compared charges higher related a reduction lower cost expense our primarily QX bonus by increased to we Our bonus due to to in onetime by our performance target began in higher quarter SG&A revenue, and years. driven offset commissions for the

million $XXX an the million quarter GAAP loss quarter. prior third operating operating $XX Our year in to of was compared income

a approximately related billion As impairment, in $XXX licenses. of assets this a our sheet we to balance on FCC FCC licenses. had intangible of noncash of Prior to result our million impairment $X.X

to And average significant sensitive of these each since the triggered test we those required interest in assets. are on intangible fair changes value impairment. assets has noncash capital intangible impairment The weighted is highly in March rates year, and a to cost increase analysis for

Our $XXX $XXX of the to million end $XXX million in million provided guidance $XXX we to quarter year the third high EBITDA range of adjusted compared was million. prior quarter at the

our there I'll operating If a And the performance. you the of segments. additional as performance on note, additional our Slide are slides segment to on investor X, presentation turn in revenue back color provide

up group year-over-year. revenues were XX% year-over-year EBITDA was up adjusted Digital and XX% Audio

group, year-over-year. year-over-year non grew audio which XX% digital podcasting XX% grew revenues, the revenues, podcasting Within digital which our and our

of our publisher. of leadership our investor detail the a X Slides dynamics, in point ecosystem high-value position reference, podcast XX segment show this deck As through and in in

prior the audio digital quarter to adjusted in in content third of due Margins and as a timing Multi-platform year. the to range. related both XX% be decline the flat whole. is at This quarter, back the adjusted XX.X%, launches the will expenses essentially in Looking certain were group from and EBITDA down this margin the to group year-over-year. QX EBITDA slightly revenues feel that declined confident we in for XX.X%

political, quarter. spend the slightly XXXX, fourth adjusted and Multi-platform points of occurs would multi-platform over XX down have points basis Excluding XX.X% a XX down up margins XX.X% XX.X%, basis impact of group EBITDA QX year-over-year. as the reminder, from QX been sequentially XXXX. Group in And from political were our in half X% revenues in

management and were as our Audio radio increases adjusted and up & business. revenues These Media XX% XX% were expense year-over-year. Services revenues EBITDA year-over-year within CAPS was political attributable primarily well TV as up to Group

summary Turning a also continue to quarter's to cash balance to $X.X debt our each quarter EBITDA debt. of is net Within debt a There of performance, improve net which approximately outstanding, our ratio. we $XXX At of had we XX. includes end, Slide billion adjusted million.

goal now ratio continue reduce that moved expect to overall efficiently EBITDA these to flow as and expanding well approximately and cash to have our using adjusted earnings that progress are towards Xx into the free through converting flow to ratio We we into mid-Xs, debt. free as make our that moving to cash

no we In debt and profile of the maturities the to opportunistic highlighted responding million to debt type our and million principal have $XX of of repurchases debt be past developments. material completed positions current QX. we calls, in macro In unsecured in this X X/X% the As until no covenants us we on both environment, $XXX resilient our senior XXXX. market QX, maintenance adding principle to notes, proactively repurchased

a approximately unsecured total of repurchased senior As of notes, September we XX, have in $XXX our million of resulting $XX interest annualized savings X/X% million. X of

cash par at We have repurchase and to been in flow meaningful both notes free their earnings discount to the accretion. able value, these market generating a

We adjusted will third $XX continually monitor real cash free the we further as In of to the $XX our when generated flow sales flow including and cash improve quarter, opportunities free capital and look market million conditions arise. from our optimize estate proceeds million. was structure

balance our liquidity available and cash Our million. $XXX is million, total is $XXX

committed As we've amount we focused continued on environment been Bob in are free for that most that free and EBITDA creates this Despite to remain adjusted the to growth the and business flow. our shareholders. utilizing revenues has highlighted, both flow cash generation in discussing, uncertain achieve value year-over-year cash cash our

some me let with specific Now provide for you guidance QX.

XXXX QX to X% expect X% revenues to We approximately up be our year-over-year.

it were on October still based our the are but the closing much political. month of approximately consolidated revenues preliminary of We year-over-year, of strength October, up X%

guidance implies the year EBITDA yield of highest in company's $XXX full million, $XXX a which EBITDA in year range to million to also million, to which We will EBITDA adjusted second expect the history. $XXX adjusted of full million range XXXX generate $XXX the QX

full the range the of $XXX to for free expect generate $XXX we Further, million million flow. of year, in cash to

ahead, and generating we want ever have we seen remind you the those free persist. strong flow we worst flow, in XXXX, I generated the still expect As all positive free year cash to that company cash characteristics to think

We for be full We year year. midterm last record XXXX the advertising expect presidential a in and political XXXX. political be year the midterm anticipate political a to at in between advertising midpoint election the last also to

million. $XXX full year our million $XXX expect expenditures be and to between We capital

continue will towards of leverage to progress want leave target Xx. you previously significant to with we our I make net finally, announced this. And approximately

our and that into businesses cost committed organizational are to future. support structure growing right base the ensuring We we the have place and today in to

new We ROI work a opportunities efficiency lower continue allocation cost to our increase and capital our technologies on and discretionary identifying utilizing to maintain rigorous additional to reducing savings spending. of

million represent us in enabled focus mind, context XXXX base to And additional from savings have XXXX, annualized historical program a to This execute to which approximately that reduction cost of XX%. approximately our $XXX we of a an targeted $XX million on see the be remainder third the will fourth XXXX some of annual these executed and of of the was savings, end full to the actions the in quarter, which executed at results. quarter in of our benefit with we

deliver through have appropriate further order taken the in financial actions but resilient the we potential advertisers I'd And significant economic outperform position We downturn. remains our iHeart remain any joining There marketplace, you believe team uncertainty macro our in quarter third we to continue and to appreciate earnings call. all bolster today again, our communities, like to entire shareholders. and to who for thank

the Thank it turn questions. to we'll your over you. take Now to operator

Operator

line And Instructions] Fargo. the from question from [Operator of Steven your first Cahall Wells comes

Steven Cahall

marketplace. It seeing detail. slowdown And you're thanks sound guidance like a for the the much in ad doesn't of

an the digital kind you how Now are bookings behind can bit and that we're strength talk a of are us unpack into kind on just of political little the multi-platform Could November about and basis. performing. ex-political election you. you help most Maybe of

trying look all we into like to to what handle next get as trends we're get think as I year. a the

positive a maybe next then as again, can help bit for a political you you year that so I'll follow-up. the a here, just rest what real us And ends of quick tailwind unpack little once have the And week? see of outlier

Bob Pittman

Sure.

specifics. some let I'll -- Rich add me Let

it overall, was think is way advertising I we I going began. this the mean, it not year what certainly, be thought to

we that are it expected. the we I so think -- And has don't robustness

degradation I seen with we've some you've it's business falling not However, that audience I think erosion. of -- it's had you see And off, been people think audience. associated of that a in our if

a times. asked analysis we concentrated smaller that? ourselves, I think what's think slower advertisers. that run is And the towards larger large spend are is that has in And our advertisers. that business in piece goes to the other an QX. economic the advertiser And a we -- our to behind even recently okay, outperformed I more ability think largest We substantially I advertisers

spent who downturn, there the which think the in through sharp I between earnings highlighted people XXXX the the people experience, was the call, who And difference not. we did a where

think recent most people they're about lessons thinking it. that those I and of

the are really have they when their the I to And think if long businesses. spend to just don't business get you down, advertiser, small those turns on tail money advertising.

been a So days. these our positive turns X which sort were we areas super of to get what of for, we has growth, into for probably how that do be tail out looking in was long

Rich Bressler

a a maybe add to things your me couple knowing which Steven, of deeper. question, what Bob follow-up -- let little just may not just but said,

challenging year again, things the this in all operating said and of One environment. we've

think as company is year and versus we've on incredibly cash as that the not had you year, got thought this resilient And tell and of I exactly year forward. if than best decide, point, to And free the will EBITDA has given is the had ever an the on going a we've were basis. quarter still flow revenue we to as business, going second we company be probably Bob's we've guidance a basis. just we've just again, -- we've again, year the iHeart based probably best this guidance seen would that a ever have a uncertainty that second the best ever

you're diversity was medium just medium, the resiliency as being out, terms And advertiser seeing to it to our the out, combination of, the of outlier, Bob continued point think an we've point, which of efficiency your the in is of I the what reach base. pointed our as of a

our reminder, that's category than revenues. of our no in have we as more Just X% a company

of challenging we a didn't We But operate time, period when in things companies. would allows And more individual some us to. that's time, advertisers to got same that the have of no through come it X%. to through if none don't come at which like other have again, us you've it than

million as of best that the And changed. then $XXX number Bob change had think think the had. a kind highlighted best respect between sorry, his company. comments, regarded, what I we we've best approximately was I political, as a just the still And past, approximately think no President was The ever company. and -- to as -- is presently in and we've numbers, had somewhere to non-presidential said in year political previous we've I X political with million that be those year hasn't really And be political we will $XXX this I'm

the by does for add give to thing X sense way, political I'd you And majority advertising the last in some you to your of your models. just completeness for QX, come of

Steven Cahall

then just as to follow-up, And early it's guide too a I XXXX. to know Great.

of You we again, like announced into some it going some real have cost And head it. support which the reduction, you incremental strength to is revenue the certainly as year. sounds

deleverage to should we think to that know at? you'll free cash able target. consistent So might if nothing continue either in a or flow between XXXX where versus is I just EBITDA be generation XXXX you else deleveraging end

thoughts So there? curious your

Rich Bressler

your XXXX think I first here guiding be and guidance, on that that provide now. we the any to going haven't answer provided statement Well, my to will we're not

companies up if against other And industry, conversion. we of flow. think I you to we We in look we sorry, release, million, in mid-Xs earnings the our feel think free put into talked cash we $XXX free EBITDA you down $XXX in about us leverage the to the of conversion which for million $XXX see, ratio. about of mid-Xs, million number cash terms I said year the $XXX flow at good you to million, that as highlighted came I'm if

with flow, free always cash that to Bob cash value generates particularly industry, focus. along I that flow, an Mike think and for And a business equity just of flow with is continue and management our I, this be which team, cash a our generates through As lot articulate people will free shareholders.

Operator

the your Day from comes line B. Riley And from Dan next question of Securities.

Dan Day

free for million cash. flow of implies cash cash little in with free quarter flow The guidance of $XXX fourth well $XXX the ended Yes, quarter. the over a million under

good a you'd to economic be maybe in debt as environment, just can versus par. buying So you and balance of talk is much aggressive cash that admittedly uncertain build being just about sort what level you could how willing a discount back at possibly think cash given here be the it's if let you an as to

Rich Bressler

guidance. facts Rich, it's Well, for the speak themselves, gave I look, think the we you

biggest As our business. a this fixed know, is be quarter always different. the been of we're has cost year and no QX And year you will revenue

the think think think cash surprise So of when it's be think return be our continues made, structure the biggest in And to with QX opening which free and I continue flow cost our the I our quarter. the you've of that million. always optimistic, in well And that's do at an no it comment -- note, back that remarks, that's savings on we're the been good at And $XX any math, pretty and our free just seen numbers general a will focus cash look always since our Bob Mike. been XX-ish when to our approximately sorry, cash. opportunistic it executed and $XXX you flow million, that looking the run yield cash company, I And we we of and been more today has bit to focus is capital in that look and have capital. I'm be little we've highlighted we'll opportunistic and and QX annual resulted but type improve I on analysis, a of you bought and in

Bob Pittman

through. And we let we balance swiftest your positive look was free worst either we need what point kind downturn XXXX about on me cash add probably have And and in the of that even year, flow. cash

plenty of have always what regardless of we cash, see. will liquidity we that confident of feel we think I So plenty

Dan Day

it. more, could. if I And X Appreciate Great.

specifically like the especially you you're fourth end here, quarter what after side, could in on digital the on if quarter Just color on podcasting. provide seeing some

lapping the I macro think it tougher decelerates comps would growth the revenue be stuff. the obviously, and

in the fourth to point growth revenue Just far quarter? as podcast as anything you can

Rich Bressler

can in we of I terms saw indicated end, Yes. about we Look, October, up think I preliminary -- everything X%. quarter you closed I after over were think closes mean, talk out, I

against at the If how look MAGNA, digital excluding our again, -- in up the look about the have podcasting XX%, And this we at podcasting, you asked performed was industry, called specifically you our were Investor industry, we digital, deck, quarters and XX%, and to year-over-year were overall. XX%, also according up and was and up believe. the we industry up XX% I highlight we

you So about back expect any be digital our don't if to look XX% see to continues we We changes at digital very really in EBITDA strong. it to in be business, talked the QX. that. And audio that margins we group to

Operator

Your next Research. question of Goss Barrington comes from line Jim the from

Jim Goss

But All wondering it about right. wonder little that a to aside Or industry whatever feel was seem has? you from Certainly, and noncash. station for if I have expectations maybe think you comment maybe values? it can doesn't. rates, it the implications bit. does you revenue implications on The write-down, discount about it's I just

Rich Bressler

that in. assets value it's interest the rate exercise, capability incredibly generation of is which don't for think sensitive indication the the has it I think highlighted, the just environment any I -- a mathematical don't thank interest very noncash, I you future is terms not we're clear, a of significantly think majority almost to it's be of reflective Again, so this is at entirely, if A value of No, whatsoever. the rate our as revenue you in that. of it, to And or environment. just

Jim Goss

as economic we to if step Okay. what around think in would during the deeper X fare what you X, move would COVID you Well, experienced was were economy. are. But as are hopefully I'm lower we is wondering into if your And you are expectations but -- situation? now, there not recession, severe And this also, a the if how in we a

Bob Pittman

X, et can't were I what's people savings, than houses, imagine much sort down. things X, they saw and here spending XXXX what of in do in businesses again. locked consumers years, forget But there's, what, cetera. shut consumer between interesting and same think get turned downturns, normally their I is because worse and mistake XX the we into

years remember we've later, one. can't So I X X where got

about advertising think realized that much I they I'm came gets, those I people mean and think will how any made on fact restart. no source for how this lost So had downturn, We'll which who XXXX, the expensive severe when of and was how moderate they -- remember I the us, how that. it And more matter is guessing, our in much it some obviously, advertising severe, revenue. out, to decisions then won't think I effect

So in we're okay, what that happens how what no matter watching revenue. impact and is the does ad economy,

Rich Bressler

how our is, industry, look the And this look point, compared thing only I'd at is you to gave that just add and number you of the if a in test at results the quarter, performed -- already we I period you to during pandemic of time.

our we there our can and ability make free and shareholders. and visibility models understand control we happen we in don't watch costs to going creates for are do, and we to on can't our that, control have watch that into what's operate So again, sure than what the things the our better through flow cash any own value you all run and your economy phone and you'll but

to with listening So everybody to -- thank the so story, that, ad-hoc we for want call.

follow-up and are We everybody's all for available questions appreciate support.

Operator

This participation. conference Thank concludes your today's call. for you

You may now disconnect.

iHeartMedia (IHRT) 3 Nov 222022 Q3 Earnings call transcript