Entercom Communications Corporation (ETM)

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Entercom Communications (ETM)

Q1 2013 Earnings Call

May 08, 2013 4:30 pm ET

Executives

Stephen F. Fisher - Chief Financial Officer and Executive Vice President of Operations

David J. Field - Chief Executive Officer, President, Director and Member of Executive Committee

Presentation

Operator

Good afternoon, and welcome to Entercom's First Quarter 2013 Earnings Release Conference Call. [Operator Instructions] This conference is being recorded.

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

Stephen F. Fisher

Thank you, operator, and thank you, everyone, for joining us this afternoon. As mentioned, this call is being recorded, and a replay will be available on our company website shortly after the conclusion of today's call, and it's also available by telephone at the replay noted in our release, which was put out this afternoon at 4.

With our notice of today's call, we asked that you submit your questions in advance of the call to the e-mail address, questions@entercom.com. In addition, I'm always available for any follow-up questions, if you'd wish to call me directly, at (610) 660-5647.

Should the company make any forward-looking statements, such statements are based on current expectations and involve risks and uncertainties. The company's actual results could differ materially from those projected. Additional information concerning factors that could cause actual results to differ is described in the company's SEC filings on Form 10-Q, 10-K and 8-K. The company assumes no obligation to update any forward-looking statements. By the way, I may note that we intend to file our 10-Q tomorrow morning.

During this call, we may reference certain non-GAAP financial measures, and we refer you to our website at entercom.com for a reconciliation of such measures and other pro forma financial information you might find of interest.

So with that, let me turn it over to David Field, President and Chief Executive Officer.

David J. Field

Thanks, Steve. Good afternoon, everyone. Thanks for joining today's Entercom earnings call.

I'll start with a summary of the quarter's financial highlights followed by some color on recent operational developments and then address current business conditions before turning it back to Steve and your questions.

I'm pleased to report that Entercom posted growth in adjusted EBITDA, adjusted net income and free cash flow during the quarter. First quarter revenues were down 2% to $78.4 million, but this was offset by a 3% decline in station expenses to $57.9 million. As a result, Entercom's adjusted EBITDA rose 1% to $15.3 million. Adjusted net income rose by $0.05 per share. And free cash flow increased from $1 million to $4 million.

As we indicated in our previous earnings call in early February, the year started with sluggish business conditions that generally persisted throughout the quarter. In fact, total radio market revenues across our markets finished the quarter down 3% in Q1 as reported by Miller Kaplan.

Having just completed a very strong fourth quarter on the top line and, now, a softer first quarter, it is worth taking a look at our results over the past 12 months, as perhaps a more indicative and smoother look at our performance.

For the 12 months ended March 31, our revenues grew by 2%, expenses were down 4% and our adjusted EBITDA was up 16%.

Turning back to first quarter. Here are a few other insights. Local and national revenues were essentially the same with both down low-single digits. Our best-performing markets were Indianapolis, Kansas City, Memphis and New Orleans. Top-performing categories were financials, travel, telecom, home improvement and drugstores.

As I noted earlier, through prudent expense management, we were able to continue to achieve meaningful sustainable reductions in our costs and improve our margins during the quarter. This comes on top of a 4% reduction in expenses during 2012. In addition, we drove interest expense down 20%, as a result of the savings we achieved during our fourth quarter bank loan repricing and our ongoing debt reduction, as we continue to apply the vast majority of our substantial free cash flow to repaying our outstanding bank debt, further strengthening our healthy balance sheet. And with trailing 12-month free cash flow per share now at $1.74, our stock trades at a 20% free cash flow yield based on yesterday's closing price.

It is important to reiterate that our efforts to pursue smart ways to reinvent our business model have not come at the expense of reinvesting in our future. To the contrary, we continue to boost our investment in new brands and content, expanded distribution, better operating systems and enhanced digital platforms to strengthen our value proposition to our listeners and customers and create new revenue opportunities. And we are very pleased with the state of our brands. We had a very solid set of winter ratings results and like how we are positioned in our markets across the country.

We believe we have a significant opportunity to improve our revenue performance by capitalizing on our strong competitive positions and driving higher shares in a number of our markets. We also continue to look for opportunities to enhance our brands. For example, just last week, we announced a new multi-year agreement with the Oakland Raiders to become their flagship broadcasting partner on our San Francisco sports station beginning with the upcoming 2013 season. Adding NFL play-by-play to 95.7 The GAME will be a great addition to a lineup that already includes the Oakland A's and a great team of highly talented and award-winning personalities.

Read the rest of this transcript for free on seekingalpha.com