Townsquare Reports Second Quarter 2017 Results
GREENWICH, Conn., Aug. 9, 2017 /PRNewswire/ -- Townsquare Media, Inc. (NYSE: TSQ) ("Townsquare," the "Company," "we," "us," or "our") announced today financial results for the second quarter ended June 30, 2017.
"We are pleased to report another solid quarter that was in line with our expectations," commented Steven Price, Chairman and Chief Executive Officer of Townsquare. "In the second quarter, net revenue increased 2.6%, and net income and Adjusted EBITDA were approximately flat. Our second quarter performance was anchored by our Local Marketing Solutions segment, where revenue increased 4.3% over the prior year, and 4.8% excluding political revenue. Our results in this segment are representative of the continued strength of our local advertiser solutions and the strength our local teams."
Second Quarter Highlights*
-- As compared to the second quarter of 2016:
-- Net revenue increased 2.6%, consistent with previously issued
guidance
-- Local Marketing Solutions net revenue increased 4.3%
-- Entertainment net revenue was approximately flat
-- Net income was approximately flat
-- Adjusted EBITDA was approximately flat, consistent with previously
issued guidance
-- Diluted net income and diluted Adjusted Net Income Per Share of $0.20
and $0.21, respectively
Year to Date Highlights*
-- As compared to the first half of 2016:
-- Net revenue decreased 1.1%
-- Local Marketing Solutions net revenue increased 2.9%
-- Entertainment net revenue decreased 10.2%
-- Net income decreased 39.4%
-- Adjusted EBITDA decreased 5.0%
-- Repaid $6.7 million of long-term debt
* See below for discussion of non-GAAP measures and reconciliations to GAAP measures.
Segment Reporting
We have two reportable segments, Local Marketing Solutions, which provides broadcast and digital products and solutions to advertisers and businesses within our local markets, and Entertainment, which provides live event experiences and music and lifestyle content directly to consumers, and promotion, advertising and product activations to local and national advertisers.
Quarter Ended June 30, 2017 Compared to the Quarter Ended June 30, 2016
Net Revenue
Net revenue for the quarter ended June 30, 2017 increased $3.5 million, or 2.6%, to $140.7 million, as compared to $137.2 million in the same period last year. Local Marketing Solutions net revenue increased $3.8 million, or 4.3%, to $90.5 million and Entertainment net revenue decreased $0.2 million, or 0.5%, to $50.2 million, due to revenue declines in certain of our live events and in our national digital business. Excluding political revenue, net revenue increased $3.9 million, or 2.9%, to $140.1 million and Local Marketing Solutions net revenue increased $4.2 million, or 4.8%.
Net Income
Net income for the quarter ended June 30, 2017 decreased $39 thousand, or 0.7%, to $5.6 million as compared to $5.6 million in the same period last year.
Adjusted EBITDA
Adjusted EBITDA for the quarter ended June 30, 2017 increased $0.1 million, or 0.2%, to $25.3 million as compared to $25.3 million in the same period last year.
Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016
Net Revenue
Net revenue for the six months ended June 30, 2017 decreased $2.5 million, or 1.1%, to $229.1 million, as compared to $231.6 million in the same period last year. Local Marketing Solutions net revenue increased $4.6 million, or 2.9%, to $166.5 million and Entertainment net revenue decreased $7.1 million, or 10.2%, to $62.5 million, in part due to revenue declines in our live events business, in part due to the prior year sale of certain live events, in addition to revenue declines in our national digital business. Excluding political revenue and the sale of certain live events, net revenue increased $0.1 million, or 0.0%, to $228.0 million, Local Marketing Solutions net revenue increased $5.9 million, or 3.7%, to $165.5 million and Entertainment net revenue decreased $5.9 million, or 8.6%, to $62.5 million.
Net Income
Net income for the six months ended June 30, 2017 decreased $1.7 million, or 39.4%, to $2.6 million, as compared to $4.2 million in the same period last year.
Adjusted EBITDA
Adjusted EBITDA for the six months ended June 30, 2017 decreased $1.9 million, or 5.0%, to $35.4 million, as compared to $37.2 million in the same period last year.
Liquidity and Capital Resources
As of June 30, 2017, we had a total of $31.1 million of cash on hand and $50.0 million of available borrowing capacity under our revolving credit facility. As of June 30, 2017, we had $571.9 million of outstanding indebtedness, representing 5.5x and 5.2x gross and net leverage, respectively, based on Adjusted EBITDA for the twelve months ended June 30, 2017 of $104.9 million.
The table below presents a summary, as of August 8, 2017, of our outstanding common stock and securities convertible into common stock, excluding options issued under our 2014 Omnibus Incentive Plan.
Security Number Outstanding(1) Description
-------- -------------------- -----------
Class A common stock 13,819,639 One vote per share.
Class B common stock 3,022,484 10 votes per share.(2)
Class C common stock 1,636,341 No votes.(2)
Each warrant is exercisable
for one share of Class A
common stock, at an exercise
price of $0.0001 per share.
The aggregate exercise price
for all warrants currently
Warrants 8,977,676 outstanding is $898.(3)
-------- ---------
Total 27,456,140
(1) Each of the shares of common stock listed below, including the shares of Class A common stock issuable upon exercise of the
warrants, has equal economic rights.
(2) Each share converts into 1 share of Class A common stock upon transfer or at the option of the holder, subject to certain
conditions, including compliance with FCC rules.
(3) The warrants are fully vested and exercisable for shares of Class A common stock, subject to certain conditions, including
compliance with FCC rules.
Conference Call
Townsquare Media, Inc. will host a conference call to discuss certain second quarter 2017 financial results on Wednesday, August 9, 2017 at 8:00 a.m. Eastern Time. The conference call dial-in number is 1-877-407-0784 (U.S. & Canada) or 1-201-689-8560 (International) and the confirmation code is 13667230. A live webcast of the conference call will also be available on the equity investor relations page of the Company's website at www.townsquaremedia.com.
A replay of the conference call will be available through August 16, 2017. To access the replay, please dial 1-844-512-2921 (U.S. & Canada) or 1-412-317-6671 (International) and enter confirmation code 13667230. A web-based archive of the conference call will also be available at the above website for thirty days after the call.
About Townsquare Media, Inc.
Townsquare is a media, entertainment and digital marketing solutions company principally focused on small and mid-sized markets across the U.S. Our assets include 312 radio stations and more than 325 local websites in 66 U.S. markets, a digital marketing solutions company serving approximately 11,750 small to medium sized businesses, approximately 550 live events with nearly 18 million attendees each year in the U.S. and Canada, and one of the largest digital advertising networks focused on music and entertainment reaching more than 50 million unique visitors each month. Our brands include iconic local media assets such as WYRK, KLAQ, K2 and NJ101.5; acclaimed music festivals such as Mountain Jam, WE Fest and the Taste of Country Music Festival; unique touring lifestyle and entertainment events such as the America on Tap craft beer festival series, the Insane Inflatable 5K obstacle race series and North American Midway Entertainment, North America's largest mobile amusement company; and leading tastemaker music and entertainment owned and affiliated websites such as XXLmag.com, TasteofCountry.com, Loudwire.com and BrooklynVegan.com. For more information, please visit www.townsquaremedia.com.
Forward-Looking Statements
Except for the historical information contained in this press release, the matters addressed are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms. By nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. See "Risk Factors" and "Forward-Looking Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on or about the date hereof, for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements. Townsquare Media, Inc. assumes no responsibility to update any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures and Definitions
In this press release, we refer to Adjusted EBITDA, Adjusted EBITDA Less Interest, Capex and Taxes, Adjusted Net Income and Adjusted Net Income Per Share, which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP").
We define Adjusted EBITDA as net income (loss) before the deduction of income taxes, other (income) expense (net), interest expense, cancellation and (repurchase) of debt, transaction costs, stock-based compensation, net (gain) loss on sale of assets, impairment of FCC licenses, impairment on investment and depreciation and amortization. Adjusted EBITDA Less Interest, Capex and Taxes is defined as Adjusted EBITDA less net cash interest expense, capital expenditures and cash paid for taxes. Adjusted Net Income is defined as net income (loss) before the deduction of income taxes, transaction costs, net (gain) loss on sale of assets and cancellation and (repurchase) of debt. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average shares outstanding. These measures do not represent, and should not be considered as alternatives to, net income (loss) or cash flows from operations, as determined under GAAP. In addition, these non-GAAP measures may not be comparable to similarly-named measures reported by other companies. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth in the tables below.
We use Adjusted EBITDA to facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. We use Adjusted Net Income and Adjusted Net Income Per Share to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of transaction costs, net (gain) loss on sale of assets and cancellation and (repurchase) of debt. Further, while discretionary bonuses for members of management are not determined with reference to specific targets, our Board of Directors may consider Adjusted EBITDA, Adjusted EBITDA Less Interest, Capex and Taxes, Adjusted Net Income and Adjusted Net Income Per Share when determining discretionary bonuses.
Investor Relations
Claire Yenicay
(203) 900-5555
investors@townsquaremedia.com
TOWNSQUARE MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(in Thousands, Except Share and Per Share Data)
(unaudited)
June 30, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash $31,072 $51,540
Accounts receivable, net of allowance of $1,468 and $1,433, respectively 66,536 59,642
Prepaid expenses and other current assets 13,374 11,445
------ ------
Total current assets 110,982 122,627
Property and equipment, net 142,659 139,607
Intangible assets, net 512,549 513,915
Goodwill 295,266 292,953
Investments 4,563 4,313
Other assets 9,967 7,290
Total assets $1,075,986 $1,080,705
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,357 $10,602
Current portion of long-term debt 5 6,901
Deferred revenue 17,721 17,213
Accrued expenses and other current liabilities 23,397 25,813
Accrued interest 4,586 4,622
----- -----
Total current liabilities 55,066 65,151
Long-term debt, less current portion (net of deferred financing costs of $7,504 and $8,006, respectively) 564,439 564,315
Deferred tax liability 52,814 50,967
Other long-term liabilities 9,804 10,221
----- ------
Total liabilities 682,123 690,654
Stockholders' equity:
Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 13,819,639 and 13,735,690 shares issued and outstanding, respectively 138 137
Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,022,484 shares 30 30
issued and outstanding, respectively
Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 1,636,341 shares 17 17
issued and outstanding, respectively
Total common stock 185 184
Additional paid-in capital 366,663 365,434
Retained earnings 26,567 24,450
Accumulated other comprehensive loss (608) (722)
Non-controlling interest 1,056 705
----- ---
Total stockholders' equity 393,863 390,051
------- -------
Total liabilities and stockholders' equity $1,075,986 $1,080,705
========== ==========
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands, Except Per Share Data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net revenue $140,663 $137,157 $229,080 $231,589
Operating costs and expenses:
Direct operating expenses, excluding depreciation, amortization and stock-based 108,724 105,594 181,735 182,498
compensation
Depreciation and amortization 6,836 6,003 13,226 12,126
Corporate expenses 6,635 6,313 11,984 11,870
Stock-based compensation 183 204 371 457
Transaction costs 190 181 389 350
Net loss on sale and retirement of assets 716 1,079 714 713
Total operating costs and expenses 123,284 119,374 208,419 208,014
Operating income 17,379 17,783 20,661 23,575
------ ------ ------ ------
Other expense (income):
Interest expense, net 7,990 8,881 16,244 17,446
Repurchase of debt - (427) - (461)
Other expense (income), net 16 44 49 (403)
Income before income taxes 9,373 9,285 4,368 6,993
Provision for income taxes 3,810 3,683 1,813 2,776
Net income $5,563 $5,602 $2,555 $4,217
====== ====== ====== ======
Net income attributable to:
Controlling interests $5,168 $5,451 $2,117 $4,007
Non-controlling interests 395 151 438 210
Net income per share:
Basic $0.30 $0.31 $0.14 $0.23
----- ----- ----- -----
Diluted $0.20 $0.20 $0.09 $0.15
----- ----- ----- -----
Weighted average shares outstanding:
Basic 18,470 18,365 18,450 18,114
Diluted 28,445 27,438 28,498 27,238
------ ------ ------ ------
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands)
(unaudited)
Six Months Ended
June 30,
2017 2016
---- ----
Cash flows from operating activities:
Net income attributable to:
Controlling interests $2,117 $4,007
Non-controlling interests 438 210
--- ---
Net income $2,555 $4,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 13,226 12,126
Amortization of deferred financing costs 851 809
Deferred income tax expense 1,813 2,776
Provision for doubtful accounts 1,112 1,272
Stock-based compensation expense 371 457
Repurchase of debt - (461)
Write-off of deferred financing costs 83 339
Net loss on sale and retirement of assets 714 713
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (11,041) (5,050)
Prepaid expenses and other assets (4,252) (5,511)
Accounts payable (1,497) 5,642
Accrued expenses (2,087) (3,147)
Accrued interest (5) (291)
Other long-term liabilities (416) (477)
Net cash provided by operating activities 1,427 13,414
----- ------
Cash flows from investing activities:
Purchase of property and equipment (12,352) (12,416)
Payments for acquisitions, net of cash received (2,157) (373)
Acquisition of intangibles (150) -
Proceeds from insurance settlement - 451
Proceeds from sale of assets 190 1,162
Net cash used in investing activities (14,469) (11,176)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (6,662) (17,460)
Deferred financing costs (432) -
Proceeds from sale of minority interest in subsidiary - 50
Proceeds from exercise of employee stock options 346 -
Cash distributions to non-controlling interests (87) (88)
Repayments of capitalized obligations (613) (84)
Net cash used in financing activities (7,448) (17,582)
------ -------
Net effect of foreign currency exchange rate changes 22 (346)
--- ----
Net decrease in cash and restricted cash (20,468) (15,690)
Cash and restricted cash:
Beginning of period 51,540 33,298
------ ------
End of period $31,072 $17,608
======= =======
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in Thousands)
(unaudited)
Six Months Ended
June 30,
2017 2016
---- ----
Supplemental Disclosure of
Cash Flow Information:
Cash payments:
Interest $15,314 $16,573
Income taxes 1,341 815
Purchase obligations:
Capital lease $ - $525
Barter transactions:
Barter revenue
- included in
net revenue $11,633 $9,732
Barter expense
- included in
direct
operating
expenses 6,624 6,818
Equity issued in respect of
acquisitions:
Common stock,
joint venture
acquisition $513 $ -
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS BY SEGMENT
(in Thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Statement of Operations Data:
Local Marketing Solutions net revenue $90,458 $86,704 $166,534 $161,911
Entertainment net revenue 50,205 50,453 62,546 69,678
Net revenue 140,663 137,157 229,080 231,589
Operating Costs and Expenses:
Local Marketing Solutions direct operating expenses 59,408 54,889 114,740 109,053
Entertainment direct operating expenses 49,316 50,705 66,995 73,445
Direct operating expenses, excluding depreciation, amortization and 108,724 105,594 181,735 182,498
stock-based compensation
Depreciation and amortization 6,836 6,003 13,226 12,126
Corporate expenses 6,635 6,313 11,984 11,870
Stock-based compensation 183 204 371 457
Transaction costs 190 181 389 350
Net loss on sale and retirement of assets 716 1,079 714 713
--- ----- --- ---
Total operating costs and expenses 123,284 119,374 208,419 208,014
Operating income 17,379 17,783 20,661 23,575
Other expense (income):
Interest expense, net 7,990 8,881 16,244 17,446
Repurchase of debt - (427) - (461)
Other expense (income), net 16 44 49 (403)
--- --- --- ----
Total other expense 8,006 8,498 16,293 16,582
----- ----- ------ ------
Income before income taxes 9,373 9,285 4,368 6,993
Provision for income taxes 3,810 3,683 1,813 2,776
----- ----- ----- -----
Net income $5,563 $5,602 $2,555 $4,217
====== ====== ====== ======
The following table reconciles on a GAAP basis net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income for the three and six months ended June 30, 2017 and 2016, respectively (dollars in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income $5,563 $5,602 $2,555 $4,217
Provision for income taxes 3,810 3,683 1,813 2,776
----- ----- ----- -----
Income before taxes 9,373 9,285 4,368 6,993
Transaction costs 190 181 389 350
Net loss on sale and retirement of assets 716 1,079 714 713
Repurchase of debt - (427) - (461)
---- --- ----
Adjusted income before taxes 10,279 10,118 5,471 7,595
Provision for income taxes 4,178 4,013 2,271 3,014
Adjusted Net Income $6,101 $6,105 $3,200 $4,581
====== ====== ====== ======
Adjusted Net Income Per Share:
Basic $0.33 $0.33 $0.17 $0.25
----- ----- ----- -----
Diluted $0.21 $0.22 $0.11 $0.17
----- ----- ----- -----
Weighted average shares outstanding:
Basic 18,470 18,365 18,450 18,114
------ ------ ------
Diluted 28,445 27,438 28,498 27,238
------ ------ ------ ------
The following table reconciles on a GAAP basis net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes for the three and six months ended June 30, 2017 and 2016, respectively (dollars in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income $5,563 $5,602 $2,555 $4,217
Provision for income taxes 3,810 3,683 1,813 2,776
Interest expense, net 7,990 8,881 16,244 17,446
Transaction costs 190 181 389 350
Depreciation and amortization 6,836 6,003 13,226 12,126
Stock-based compensation 183 204 371 457
Repurchase of debt - (427) - (461)
Other(a) 732 1,123 763 310
--- ----- --- ---
Adjusted EBITDA 25,304 25,250 35,361 37,221
------ ------ ------ ------
Net cash interest expense (12,157) (13,250) (15,314) (16,573)
Capital expenditures (6,699) (5,920) (12,352) (12,416)
Cash paid for taxes (1,028) (380) (1,341) (815)
Adjusted EBITDA Less Interest, Capex and Taxes $5,420 $5,700 $6,354 $7,417
====== ====== ====== ======
(a) Other includes net loss on sale and retirement of assets and other expense (income), net.
The following table reconciles net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA on a quarterly basis for the twelve months ended June 30, 2017 (dollars in thousands):
Quarter Ended Twelve
Months
Ended
-----
September 30, December 31, March 31, June 30, June 30,
2016 2016 2017 2017 2017
---- ---- ---- ---- ----
Net income (loss) $15,863 $3,211 $(3,008) $5,563 $21,629
Provision (benefit) for income taxes 10,493 3,771 (1,997) 3,810 16,077
Interest expense, net 8,294 8,332 8,254 7,990 32,870
Transaction costs 256 238 199 190 883
Depreciation and amortization 5,686 6,164 6,390 6,836 25,076
Stock-based compensation 206 3,591 188 183 4,168
Impairment on investment 4,236 - - - 4,236
Repurchase of debt - (85) - - (85)
Other(a) (374) (317) 31 732 72
---- ---- --- --- ---
Adjusted EBITDA $44,660 $24,905 $10,057 $25,304 $104,926
======= ======= ======= ======= ========
(a) Other includes net gain (loss) on sale of assets and other expense (income), net.
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SOURCE Townsquare Media, Inc.
