Entercom Communications Corporation (ETM)

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Industry: Consumer Services
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Entercom Communications Corporation (ETM)

Q4 2013 Earnings Conference Call

Date and Time ET

Executives

Steve Fisher - CFO and EVP of Operations

David Field - President and CEO

Analysts

Presentation

Operator

Good morning and welcome to Entercom's Fourth Quarter 2013 Earnings Release Conference Call. All parties 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. Steve Fisher, CFO and Executive Vice President. Sir, you may begin.

Steve Fisher

Good afternoon everyone and thank you again for joining Entercom Communications for our fourth quarter and year end 2013 earnings conference call. This call is being recorded, and a replay will be available on our company website, shortly after the conclusion of today's call, and we will also be available by telephone at the replay number, noted in our press release, which was issued earlier this morning.

With our notice of today's call, we ask that you submit your questions in advance of the call; in addition, and I'd like to point this out again, I'm always available for any follow-up questions, if you'd wish to call me directly at 610-660-5647.

These notes, before we begin, should the company make any forward-looking statements, such statements are based on current expectation and involve risks and uncertainties. Company's actual results could differ materially from those projected. Additional information concerning factors that could cause results to differ, is described in the company's SEC filings on Forms 10-Q, 10-K and 8-K. The company assumes no obligation to update any forward-looking statements.

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

So with that out of the way, let me turn the call over to David Field, President and Chief Executive Officer.

David Field

Thanks Steve and welcome everyone. Thanks for joining today's call. We have a fair amount of good news to cover with you today. But I will start with a summary of the quarter's financial highlights, followed by some color on recent developments and Q1 revenue trends, before turning it back to Steve and your questions.

Up against a tough political comp in 2013, Entercom's fourth quarter revenues were down 2%. Excluding political advertising, revenues were up 2%. Station expenses in the quarter were down 1%, and as a result, fourth quarter station operating income declined 5%. However, free cash flow for the quarter increased 2%, as we benefited from further reduction in general interest expense. Adjusted net income for the quarter was flat.

Our interest expense benefited from our significant debt reduction during 2013, from the December repricing of our term loan-B, which cut our borrowing costs on this tranche of debt by 100 basis points. This rate reduction follows a similar repricing event last December, reflecting the strength of our balance sheet.

While 2013 was not a year we are particularly proud of from a revenue standpoint, it was a year, in which we made great progress with our brands, and our organizational capabilities.

As we discussed in our past couple earnings calls, we have made significant investments and changes in our sales organization over the past couple of years, and that caused some disruption to our sales performance. I believe at this point, we have turned the corner. While we still have plenty of room for improvement, there is no question in our mind, that Entercom ended the year in a materially stronger position than we started, and we are positioned for a strong 2014.

It is worth recalling, that on our November earnings call, I noted that we were pacing down 5% for Q4. Contrasting that with our final result of down 2%, illustrates the significant improvement we achieved over the past couple of months of a quarter. In addition, it was good to see most of our markets gained revenue share in the month of December. Now we still have way to go, to be hitting on all cylinders, but we are pleased with our progress.

Here are some additional data points on the fourth quarter; our best performing categories were insurance, professional services, home furnishings, health and medical, and retail. Automotive spending was also up for the quarter. local revenues were up low single digits for the quarter, while national revenues declined low single digit. Our best performing markets were San Francisco, Kansas City and Memphis.

We also had another set of great ratings results in the Fall Nielsen. In fact, our consolidated ratings have now grown in six of the last seven quarters. We have a large number of rating success stories across the country, as our programming strategies continue to bear fruit. I am most excited about some of the more interesting developmental situation, where we have recently bolstered our competitive position.

For example, The Wolf in Kansas City, has surged to become the number one Country station in that market, and ranks third among all stations with adults 25-54, and first among adults 18-34. Also in Kansas City, The Point, a relatively new brand, has steadily grown, and now ranks second with women 25-54.

But the big headline here, is the steady company-wide ratings growth we have achieved over the past several [bucks]. On a related note, we took this occasion to elevate our long term programming head, Pat Paxton, to President of Programming. Pat has done a wonderful job, leading our programming efforts for many years, and we congratulate him on his new title.

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