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Townsquare Reports Strong Fourth Quarter
Posted by:Consultant, March - 12 - 2019

Townsquare Reports Strong Fourth Quarter: Net Revenue Rises 12% And Adjusted EBITDA Increases 9%

Townsquare Media, Inc. (NYSE: TSQ) (“Townsquare,” the “Company,” “we,” “us,” or “our”) announced today financial results for the fourth quarter and year ended December 31, 2018.
“2018 was an exciting year for Townsquare.  We reoriented our business to focus on the profitable growth of Townsquare’s local media and digital marketing solutions offerings, completed two strategic, tuck-in radio acquisitions, initiated a dividend, and delivered strong revenue and Adjusted EBITDA growth that exceeded our business plan,” commented Bill Wilson, Chief Executive Officer of Townsquare.

Mr. Wilson continued, “In 2018, we delivered net revenue growth of approximately 5% and Adjusted EBITDA growth of over 7%, driven by the impressive growth of our digital businesses, which now total $120 million in annual net revenue and thus nearly 30% of our total net revenue.  Further, we beat our previously issued 2018 revenue guidance. The fourth quarter delivered the strongest year over year growth in 2018, with net revenue growth of 12%, and we saw sequential improvement in our advertising business throughout the year.”

“In addition, Townsquare Interactive added 2,950 net subscribers in 2018 (compared to 1,700 in 2017) and thus ended the year with approximately 15,350 subscribers and nearly $50 million in net revenue.”

The Company also announced today that its board of directors approved a quarterly cash dividend of $0.075 per share.  The dividend will be payable on May 15, 2019, to shareholders of record as of the close of business on April 2, 2019.

Fourth Quarter Highlights*

  • As compared to the fourth quarter of 2017 on a GAAP basis:
    • Net revenue increased 12.0% and 14.4% excluding live events net revenue
    • Net revenue increased 7.5% excluding political revenue
    • Townsquare Interactive net revenue increased by 28.5%
    • Advertising net revenue increased by 12.6%
    • Live Events net revenue decreased by 41.8%
    • Net loss decreased 39.9%, and net income from continuing operations decreased 350.5%
    • Adjusted EBITDA increased by 9.1%
  • As compared to the fourth quarter of 2017 on a pro forma basis:
    • Net revenue increased 9.7%, and 12.0% excluding live events net revenue
    • Net revenue increased 5.2% excluding political revenue
    • Net loss decreased by 38.6%
    • Adjusted EBITDA increased by 6.4%
  • Diluted net loss per share from continuing operations and diluted Adjusted Net Income Per Share were $1.26 and $0.26, respectively
  • Townsquare Interactive added 850 net subscribers

Full Year Highlights*

  • As compared to the year ended December 31, 2017, on a GAAP basis:
    • Net revenue increased 4.7%, and 8.6% excluding live events net revenue
    • Net revenue increased 2.8% excluding political revenue
    • Townsquare Interactive net revenue increased by 21.4%
    • Advertising net revenue increased by 6.9%
    • Live Events net revenue decreased by 21.1%
    • Net loss increased 207.4%, and net income from continuing operations decreased 102.0%
    • Adjusted EBITDA increased by 7.3%
  • As compared to the year ended December 31, 2017, on a pro forma basis:
    • Net revenue increased 3.7%, and 7.4% excluding live events net revenue
    • Net revenue increased 1.9% excluding political revenue
    • Net loss increased 274.3%
    • Adjusted EBITDA increased by 5.9%
  • Diluted net loss per share from continuing operations and diluted Adjusted Net Income Per Share were $0.03 and $1.08, respectively
  • Townsquare Interactive added 2,950 net subscribers, ending the year with approximately 15,350 subscribers
  • Repaid $11.4 million of long-term debt

* See below for discussion of non-GAAP measures and reconciliations to GAAP measures.

Quarter Ended December 31, 2018, Compared to the Quarter Ended December 31, 2017

Net Revenue 

Net revenue for the quarter ended December 31, 2018, increased $11.7 million, or 12.0%, to $109.0 million, as compared to $97.3 million in the same period last year.  Excluding political revenue, net revenue increased $7.2 million, or 7.5%, to $103.3 million, as compared to $96.1 million in the same period last year.  Excluding live events net revenue, which was budgeted to decline in 2018, net revenue increased $13.4 million, or 14.4%, to $106.6 million, as compared to $93.2 million in the same period last year.

Pro forma net revenue for the quarter ended December 31, 2018, increased $9.6 million, or 9.7%, to $109.0 million, as compared to $99.3 million in the same period last year.  As used in this release, the term “pro forma” means pro forma for our acquisition of three radio stations in Princeton, NJ on July 2, 2018.  Excluding political revenue, net revenue increased $5.2 million, or 5.2%, to $103.3 million, as compared to $98.1 million in the same period last year. Excluding live events net revenue, which was budgeted to decline in 2018, net revenue increased $11.4 million, or 12.0%, to $106.6 million, as compared to $95.2 million in the same period last year.

Net Loss 

Net loss for the quarter ended December 31, 2018, decreased $10.8 million, or 39.9%, to $16.3 million, as compared to $27.1 million in the same period last year.  Net loss from continuing operations decreased $32.5 million or 350.5%, to a net loss of $23.2 million, as compared to net income of $9.3 million in the same period last year. The decline in net income was driven by an increase in non-cash impairment charges in 2018, due in part to the revision of certain assumptions in the Company’s annual testing for intangible impairment as a result of the Company’s depressed stock price and market capitalization as compared to the prior year, among other factors.  Net income was also impacted by an $11.7 million decline in income tax benefit, primarily related to the 2017 Tax Cut and Jobs Act.

Pro forma net loss for the quarter ended December 31, 2018, decreased $10.3 million, or 38.6%, to $16.3 million, as compared to $26.6 million in the same period last year.  The decline in net income was driven by an increase in non-cash impairment charges in 2018, due in part to the revision of certain assumptions in the Company’s annual testing for intangible impairment as a result of the Company’s depressed stock price and market capitalization as compared to the prior year, among other factors.  Net income was also impacted by an $11.7 million decline in income tax benefit, primarily related to the 2017 Tax Cut and Jobs Act.

Adjusted EBITDA

Adjusted EBITDA for the quarter ended December 31, 2018, increased $2.0 million, or 9.1%, to $23.9 million, as compared to $21.9 million in the same period last year.

Pro forma Adjusted EBITDA for the quarter ended December 31, 2018, increased $1.4 million, or 6.4%, to $23.9 million as compared to $22.4 million in the same period last year.

Year Ended December 31, 2018, Compared to the Year Ended December 31, 2017

Net Revenue 

Net revenue for the year ended December 31, 2018, increased $19.2 million, or 4.7%, to $430.6 million, as compared to $411.4 million in the same period last year.  Excluding political revenue, net revenue increased $11.6 million, or 2.8%, to $420.6 million, as compared to $409.0 million in the same period last year.  Excluding live events net revenue, which was budgeted to decline in 2018, net revenue increased $30.6 million, or 8.6%, to $388.0 million, as compared to $357.4 million in the same period last year.

Pro forma net revenue for the year ended December 31, 2018, increased $15.4 million, or 3.7%, to $434.2 million, as compared to $418.8 million in the same period last year.  Excluding political revenue, net revenue increased $7.8 million, or 1.9%, to $424.2 million, as compared to $416.4 million in the same period last year.  Excluding live events net revenue, which was budgeted to decline in 2018, net revenue increased $26.9 million, or 7.4%, to $391.4 million, as compared to $364.6 million in the same period last year.

Net Loss

Net loss for the year ended December 31, 2018, increased $21.3 million, to a net loss of $31.6 million, as compared to a net loss of $10.3 million in the same period last year.  Net loss from continuing operations decreased $25.3 million, or 102.0%, to a net loss of $0.5 million, as compared to net income of $24.8 million in the same period last year.  The decline in net income was driven by an increase in non-cash impairment charges in 2018, due in part to the revision of certain assumptions in the Company’s annual testing for intangible impairment as a result of the Company’s depressed stock price and market capitalization as compared to the prior year, among other factors. Net income was also impacted by a $9.0 million decline in income tax benefit, primarily related to the 2017 Tax Cut and Jobs Act.

Pro forma net loss for the year ended December 31, 2018, increased $22.4 million, to a net loss of $30.6 million, as compared to $8.2 million in the same period last year. The decline in net income was driven by an increase in non-cash impairment charges in 2018, due in part to the revision of certain assumptions in the Company’s annual testing for intangible impairment as a result of the Company’s depressed stock price and market capitalization as compared to the prior year, among other factors.  Net income was also impacted by a $9.0 million decline in income tax benefit, primarily related to the 2017 Tax Cut and Jobs Act.

Adjusted EBITDA

Adjusted EBITDA for the year ended December 31, 2018, increased $6.5 million, or 7.3%, to $96.5 million, as compared to $90.0 million in the same period last year.

Pro forma Adjusted EBITDA for the year ended December 31, 2018, increased $5.4 million, or 5.9%, to $97.5 million, as compared to $92.1 million in the same period last year.

Liquidity and Capital Resources

As of December 31, 2018, we had a total of $61.4 million of cash on hand and $50.0 million of available borrowing capacity under our revolving credit facility. As of December 31, 2018, we had $560.5 million of outstanding indebtedness, representing 5.7x and 5.1x gross and net leverage, respectively, based on pro forma Adjusted EBITDA for the year ended December 31, 2018, of $97.5 million.

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