iHeartMedia, Inc. (Nasdaq: IHRT) today reported financial
results for the quarter ended June 30, 2023.
Financial Highlights:1
Q2 2023 Consolidated
Results
- Q2 Revenue of $920 million, down 3.6%; slightly better than the
guidance range of down mid-single digits
- Excluding Q2 Political Revenue, Q2 Revenue down 1.8%
- GAAP Operating loss of $897 million vs. GAAP Operating income
of $83 million in Q2 2022, which includes $961 million of non-cash
intangible impairment charges
- Non-cash intangible impairment charges were recorded in Q2 2023
primarily driven by the current debt and equity valuations in the
marketplace
- Consolidated Adjusted EBITDA of $191 million, within guidance
range of $180 million to $200 million, compared to $237 million in
Q2 2022 and more than double Q1 2023 Adjusted EBITDA
- Cash Flows from operating activities of $57 million
- Free Cash Flow of $34 million, Free Cash Flow including net
proceeds from real estate sales was $39 million
Q2 2023 Digital Audio Group
Results
- Digital Audio Group Revenue of $261 million up 3%
- Podcast Revenue of $97 million up 13%
- Digital Revenue excluding Podcast of $164 million down 2%
- Segment Adjusted EBITDA of $85 million up 7%
- Digital Audio Group Adjusted EBITDA margin of 32.4%
Q2 2023 Multiplatform Group
Results
- Multiplatform Group Revenue of $596 million down 6%
- Segment Adjusted EBITDA of $162 million down 17%
- Multiplatform Group Adjusted EBITDA margin of 27.3%
Continued Proactive Capital Structure
Improvement Through Debt Paydown
- Cash balance and total available liquidity2 of $165 million and
$585 million, respectively, as of June 30, 2023
- Repurchased $80 million in principal balance of 8.375% Senior
Unsecured Notes (at a discount to par) for $57 million in cash;
expected to generate approximately $7 million of annualized
interest savings
- As of June 30, 2023, since Q2 2022 combined Notes repurchases
of $430 million at a discount to par for $372 million cash; in
aggregate expected to generate approximately $40 million of
annualized interest savings
- Cumulative reduction of the outstanding principal balance of
these Notes from $1.45 billion as of March 31, 2022 to
approximately $1 billion as of June 30, 2023
Guidance
- Q3 Consolidated Revenue expected to decline in the mid-single
digits; Q3 Consolidated Revenue excluding the impact of Political
expected to decline in the low-single digits3
- July Consolidated Revenue down approximately 5%
- Q3 Consolidated Adjusted EBITDA4 expected to be $195 million to
$205 million
- Remain committed to long term target of approximately 4x Net
Debt to Adjusted EBITDA ("net leverage")4
_________________________ 1 Unless
otherwise noted, all results are based on year over year
comparisons.
2 Total available liquidity is defined as
cash and cash equivalents plus available borrowings under our ABL
Facility. We use total available liquidity to evaluate our capacity
to access cash to meet obligations and fund operations.
3 Included in Q3 2022 GAAP Consolidated
Revenue is approximately $34 million of Political Revenue.
4 A full reconciliation of forecasted
Adjusted EBITDA, net debt and net leverage on a non-GAAP basis to
the most-directly comparable GAAP metrics cannot be provided
without unreasonable efforts due to the inherent difficulty in
forecasting and quantifying with reasonable accuracy significant
items required for the reconciliations, including gains or losses
on investments, extinguishment of debt, equity in nonconsolidated
affiliates, impairment charges, stock based compensation, and
restructuring as well as the Company’s cash and cash equivalents
balance.
Statement from Senior Management
“We are pleased to report that our second quarter 2023 results
reflected Adjusted EBITDA slightly above the midpoint of the
guidance range, and more than double the Adjusted EBITDA we
generated in the first quarter, and our consolidated revenue were
above the guidance range. The continued positive performance of our
Digital Audio Group, led by our Podcasting business, and the
significantly improved relative performance of our Multiplatform
Group during this soft advertising period, are encouraging metrics
for us, and we’re seeing indications of improving macroeconomic
trends which we expect to have a positive impact for us in the
second half of the year, with most of that impact in Q4,” said Bob
Pittman, Chairman and CEO of iHeartMedia, Inc.
“We continue to see macroeconomic improvements in the
advertising marketplace and believe they are an indication that our
Multiplatform revenues will continue their quarterly sequential
improvement and that our Digital Audio Group revenues will continue
to grow in the second half of 2023," said Rich Bressler, President,
COO and CFO of iHeartMedia, Inc. "These improving trends, in
combination with our performance in the first and second quarters
relative to guidance, along with a presidential election ahead that
should generate record political advertising dollars. gives us
confidence that if this advertising marketplace recovery continues,
we expect to have a strong 2024 with a resumption of our growth
story in terms of revenue, profitability and Free Cash Flow
generation.”
Consolidated Results of
Operations
Second Quarter 2023 Consolidated
Results
Our consolidated revenue decreased $34.0 million, or 3.6%,
during the three months ended June 30, 2023 compared to the same
period of 2022. Digital Audio revenue increased $8.3 million, or
3.3%, driven primarily by continuing increases in demand for
podcast advertising. Multiplatform revenue decreased $37.4 million,
or 5.9%, primarily resulting from a decrease in broadcast
advertising due to a challenging macroeconomic environment, as well
as a decline in political advertising. Audio & Media Services
revenue decreased $5.3 million primarily due to a decrease in
political revenue, partially offset by continued growth in digital
revenues.
Consolidated direct operating expenses decreased $10.3 million,
or 2.8%, during the three months ended June 30, 2023 compared to
the same period of 2022. The decrease was primarily driven by lower
digital performance royalty fees including the impact of expenses
recorded in 2022 upon the settlement of amounts related to prior
years, as well as lower employee compensation as a result of cost
savings initiatives. The decrease was partially offset by higher
variable content costs resulting from an increase in digital
revenue, including third-party digital costs and production
costs.
Consolidated Selling, General & Administrative ("SG&A")
expenses increased $14.7 million, or 3.9%, during the three months
ended June 30, 2023 compared to the same period of 2022. The
increase in Consolidated SG&A expenses was driven primarily by
higher variable bonus expense and higher bad debt expense,
partially offset by lower sales commissions.
Our consolidated GAAP Operating loss was $897.2 million compared
to Operating income of $82.9 million in the second quarter of 2022,
primarily resulting from a non-cash impairment charge of $964.5
million mainly due to the impairment of our goodwill and
indefinite-lived intangible assets balances.
Adjusted EBITDA decreased to $191.2 million compared to $237.2
million in the prior-year period.
Cash provided by operating activities was $56.8 million,
compared to $155.8 million in the prior-year period, and Free Cash
Flow was $34.0 million, compared to $106.1 million in the
prior-year period primarily due to a decrease in broadcast radio
revenue due to a challenging macroeconomic environment, an increase
in borrowing rates, and timing of payments.
Business Segments: Results of
Operations
Second Quarter 2023 Multiplatform Group
Results
(In thousands)
Three Months Ended
June 30,
%
Six Months Ended
June 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
595,944
$
633,300
(5.9
)%
$
1,124,957
$
1,204,460
(6.6
)%
Operating expenses1
433,542
438,804
(1.2
)%
875,503
876,057
(0.1
)%
Segment Adjusted EBITDA
$
162,402
$
194,496
(16.5
)%
$
249,454
$
328,403
(24.0
)%
Segment Adjusted EBITDA margin
27.3
%
30.7
%
22.2
%
27.3
%
1 Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Multiplatform Group decreased $37.4 million, or
5.9% YoY, primarily as a result of the challenging macroeconomic
environment and a decline in political advertising. Broadcast
revenue declined $33.4 million, or 7.2% YoY, driven by lower spot
revenue and a decrease in political advertising. Networks declined
$5.4 million, or 4.2% YoY. Revenue from Sponsorship and Events
increased by $0.1 million, or 0.4% YoY.
Operating expenses decreased $5.3 million, or 1.2% YoY, driven
primarily by cost savings initiatives and sales commissions,
partially offset by higher bad debt expense.
Segment Adjusted EBITDA Margin decreased YoY to 27.3% from
30.7%.
Second Quarter 2023 Digital Audio Group
Results
(In thousands)
Three Months Ended
June 30,
%
Six Months Ended
June 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
260,854
$
252,561
3.3
%
$
484,250
$
466,780
3.7
%
Operating expenses1
176,272
173,678
1.5
%
345,549
335,389
3.0
%
Segment Adjusted EBITDA
$
84,582
$
78,883
7.2
%
$
138,701
$
131,391
5.6
%
Segment Adjusted EBITDA margin
32.4
%
31.2
%
28.6
%
28.1
%
1 Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Digital Audio Group increased $8.3 million, or
3.3% YoY, driven by Podcast revenue which increased by $11.0
million, or 12.8%, YoY, to $96.7 million, driven primarily by
increased demand for podcasting from advertisers, partially offset
by Digital, excluding Podcast revenue, which declined $2.7 million,
or 1.6%, YoY, to $164.1 million, driven by a decrease in COVID-19
related advertisers.
Operating expenses increased $2.6 million, or 1.5% YoY, due to
higher variable costs, including third-party digital costs and
sales commissions primarily resulting from higher revenue,
partially offset by a decrease in performance royalty fees.
Segment Adjusted EBITDA Margin increased YoY to 32.4% from
31.2%.
Second Quarter 2023 Audio & Media
Services Group Results
(In thousands)
Three Months Ended
June 30,
%
Six Months Ended
June 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
65,804
$
71,065
(7.4
)%
$
127,155
$
131,922
(3.6
)%
Operating expenses1
47,305
48,995
(3.4
)%
93,312
93,465
(0.2
)%
Segment Adjusted EBITDA
$
18,499
$
22,070
(16.2
)%
$
33,843
$
38,457
(12.0
)%
Segment Adjusted EBITDA margin
28.1
%
31.1
%
26.6
%
29.2
%
1 Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring Expenses.
Revenue from our Audio & Media Services Group decreased $5.3
million, or 7.4% YoY, driven by a decrease in political revenue,
partially offset by continued growth in digital-placement
revenues.
Operating expenses decreased $1.7 million, or 3.4% YoY,
primarily as a result of lower cost of sales due to lower
revenues.
Segment Adjusted EBITDA Margin decreased YoY to 28.1% from
31.1%.
GAAP and Non-GAAP Measures: Consolidated
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue
$
920,014
$
954,005
$
1,731,253
$
1,797,463
Operating income (loss)
$
(897,194
)
$
82,869
$
(946,056
)
$
95,204
Adjusted EBITDA1
$
191,181
$
237,185
$
284,605
$
382,403
Net income (loss)
$
(882,982
)
$
15,182
$
(1,105,345
)
$
(33,557
)
Cash provided by operating activities2
$
56,772
$
155,801
$
(37,211
)
$
103,589
Free cash flow1,2
$
33,999
$
106,148
$
(99,149
)
$
31,379
Free cash flow including net proceeds from
real estate sales1,2
$
38,628
$
126,617
$
(94,520.3
)
$
55,214
_________________________
1
See the end of this press release for
reconciliations of (i) Adjusted EBITDA to Operating income (loss),
(ii) Adjusted EBITDA to Net loss, (iii) Free Cash Flow and Free
cash flow including net proceeds from real estate sales to cash
used for operating activities, (iv) revenue, excluding political
advertising revenue, to revenue, and (v) Net Debt to Total Debt.
See also the definitions of Adjusted EBITDA, Free Cash Flow, Free
cash flow including net proceeds from real estate sales, Adjusted
EBITDA margin, and Net Debt under the Supplemental Disclosure
Regarding Non-GAAP Financial Information section in this
release.
2
We made cash interest payments of $93.7
million in the three months ended June 30, 2023, compared to $83.9
million in the three months ended June 30, 2022.
Certain prior period amounts have been reclassified to conform
to the 2023 presentation of financial information throughout the
press release.
Liquidity and Financial
Position
As of June 30, 2023, we had $165.3 million of cash on our
balance sheet. For the six months ended June 30, 2023, cash used
for operating activities was $37.2 million, cash used for investing
activities was $59.3 million and cash used for financing activities
was $74.9 million.
Capital expenditures for the six months ended June 30, 2023 were
$61.9 million compared to $72.2 million in the six months ended
June 30, 2022. Capital expenditures during the six months ended
June 30, 2023 decreased primarily due to cost savings
initiatives.
As of June 30, 2023, the Company had $5,316.4 million of total
debt and $5,151.1 million of Net Debt. The terms of our capital
structure include no material maintenance covenants, and there are
no material debt maturities prior to 2026, providing structural
resilience. During the three months ended June 30, 2023, we
repurchased $79.9 million in aggregate principal amount of
iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027,
at a discount to par, for $57.0 million in cash.
Cash balance and total available liquidity5 were $165.3 million
and $585 million, respectively, as of June 30, 2023.
_________________________ 5 Total
available liquidity is defined as cash and cash equivalents plus
available borrowings under our ABL Facility. We use total available
liquidity to evaluate our capacity to access cash to meet
obligations and fund operations.
Revenue Streams
The tables below present the comparison of our historical
revenue streams (including political revenue) for the periods
presented:
(In thousands)
Three Months Ended
June 30,
%
Six Months Ended
June 30,
%
2023
2022
Change
2023
2022
Change
Broadcast Radio
$
429,152
$
462,547
(7.2
)%
$
812,390
$
877,789
(7.5
)%
Networks
122,168
127,532
(4.2
)%
230,122
245,090
(6.1
)%
Sponsorship and Events
38,210
38,064
0.4
%
70,797
71,665
(1.2
)%
Other
6,414
5,157
24.4
%
11,648
9,916
17.5
%
Multiplatform Group1
595,944
633,300
(5.9
)%
1,124,957
1,204,460
(6.6
)%
Digital ex. Podcast
164,147
166,880
(1.6
)%
310,732
312,555
(0.6
)%
Podcast
96,707
85,681
12.9
%
173,518
154,225
12.5
%
Digital Audio Group
260,854
252,561
3.3
%
484,250
466,780
3.7
%
Audio & Media Services
Group1
65,804
71,065
(7.4
)%
127,155
131,922
(3.6
)%
Eliminations
(2,588
)
(2,921
)
(5,109
)
(5,699
)
Revenue, total1
$
920,014
$
954,005
(3.6
)%
$
1,731,253
$
1,797,463
(3.7
)%
1
Excluding the impact of political revenue,
Revenue from the Multiplatform Group and Consolidated Revenue
decreased by 4.5% and 1.8% for the three months ended June 30, 2023
compared to the three months ended June 30, 2022, respectively.
Excluding the impact of political revenue, Revenue from Audio &
Media Services increased by 2.4% for the three months ended June
30, 2023 compared to the three months ended June 30, 2022. See the
end of this press release for a reconciliation of revenue,
excluding political advertising revenue, to revenue.
Conference Call
iHeartMedia, Inc. will host a conference call to discuss results
and business outlook on August 8, 2023, at 8:00 a.m. Eastern Time.
The conference call number is (888) 330-2446 (U.S. callers) and +1
(240) 789-2732 (International callers) and the passcode for both is
71596. A live audio webcast of the conference call will also be
available on the Investors homepage of iHeartMedia's website
investors.iheartmedia.com. After the live conference call, a replay
will be available for a period of thirty days. The replay numbers
are (800) 770-2030 (U.S. callers) and +1 (647) 362-9199
(International callers) and the passcode for both is 71596. An
archive of the webcast will be available beginning 24 hours after
the call for a period of thirty days.
About iHeartMedia, Inc.
iHeartMedia (Nasdaq: IHRT) is the number one audio company in
the United States, reaching nine out of 10 Americans every month.
It consists of three business groups.
With its quarter of a billion monthly listeners, the iHeartMedia
Multiplatform Group has a greater reach than any other media
company in the U.S. Its leadership position in audio extends across
multiple platforms, including more than 860 live broadcast stations
in over 160 markets nationwide; its National Sales organization;
and the company’s live and virtual events business. It also
includes Premiere Networks, the industry’s largest Networks
business, with its Total Traffic and Weather Network (TTWN); and
BIN: Black Information Network, the first and only 24/7 national
and local all news audio service for the Black community.
iHeartMedia also leads the audio industry in analytics, targeting
and attribution for its marketing partners with its SmartAudio
suite of data targeting and attribution products using data from
its massive consumer base.
The iHeartMedia Digital Audio Group includes the company’s
fast-growing podcasting business – iHeartMedia is the number one
podcast publisher in downloads, unique listeners, revenue and
earnings – as well as its industry-leading iHeartRadio digital
service, available across more than 250 platforms and thousands of
devices; the company’s digital sites, newsletters, digital services
and programs; its digital advertising technology companies; and its
audio industry-leading social media footprint.
The Company’s Audio & Media Services reportable segment
includes Katz Media Group, the nation’s largest media
representation company, and RCS, the world's leading provider of
broadcast and webcast software.
Certain statements herein constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other important factors which
may cause the actual results, performance or achievements of
iHeartMedia, Inc. and its subsidiaries to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. The words or phrases
“guidance,” “believe,” “expect,” “anticipate,” “estimates,”
“forecast” and similar words or expressions are intended to
identify such forward-looking statements. In addition, any
statements that refer to expectations or other characterizations of
future events or circumstances, such as statements about
positioning in uncertain economic environment and future economic
recovery, driving shareholder value, our expected costs savings and
other capital and operating expense reduction initiatives,
utilizing new technologies, improving operational efficiency,
future advertising demand, trends in the advertising industry,
including on other media platforms; strategies and initiatives,
expected interest rates and interest expense savings, and our
anticipated financial performance, liquidity, and net leverage are
forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties
and other important factors, some of which are beyond our control
and are difficult to predict. Various risks that could cause future
results to differ from those expressed by the forward-looking
statements included in this press release include, but are not
limited to: risks related to weak or uncertain global economic
conditions; the impact of COVID-19 or other future public health
crises; competition, including increased competition from
alternative media platforms and technologies; dependence upon our
brand and the performance of on-air talent, program hosts and
management; fluctuations in operating costs; technological changes
and innovations; shifts in population and other demographics;
impact of acquisitions, dispositions and other strategic
transactions; risks related to our indebtedness; legislative or
regulatory requirements; impact of legislation, ongoing litigation
or royalty audits on music licensing and royalties; regulations and
concerns regarding privacy and data protection and breaches of
information security measures; risks related to our Class A common
stock; and regulations impacting our business and the ownership of
our securities. Other unknown or unpredictable factors also could
have material adverse effects on the Company’s future results,
performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release may not occur. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as
of the date hereof. Additional risks that could cause future
results to differ from those expressed by any forward-looking
statement are described in the Company’s reports filed with the
U.S. Securities and Exchange Commission, including in the section
entitled “Part I, Item 1A. Risk Factors” of iHeartMedia, Inc.’s
Annual Reports on Form 10-K and “Part II, Item 1A. Risk Factors” of
iHeartMedia, Inc.’s Quarterly Reports on Form 10-Q. The Company
does not undertake any obligation to publicly update or revise any
forward-looking statements because of new information, future
events or otherwise.
APPENDIX
TABLE 1 - Comparison of operating
performance
(In thousands)
Three Months Ended
June 30,
%
Six Months Ended
June 30,
%
2023
2022
Change
2023
2022
Change
Revenue
$
920,014
$
954,005
(3.6
)%
$
1,731,253
$
1,797,463
(3.7
)%
Operating expenses:
Direct operating expenses (excludes
depreciation and amortization)
355,061
365,382
(2.8
)%
699,681
695,906
0.5
%
Selling, general and administrative
expenses (excludes depreciation and amortization)
393,773
379,057
3.9
%
796,574
763,401
4.3
%
Depreciation and amortization
108,065
110,788
216,577
224,839
Impairment charges
960,570
245
964,517
1,579
Other operating (income) expense, net
(261
)
15,664
(40
)
16,534
Operating income (loss)
$
(897,194
)
$
82,869
$
(946,056
)
$
95,204
Depreciation and amortization
108,065
110,788
216,577
224,839
Impairment charges
960,570
245
964,517
1,579
Other operating (income) expense, net
(261
)
15,664
(40
)
16,534
Restructuring expenses
10,789
19,009
30,243
30,102
Share-based compensation expense
9,212
8,610
19,364
14,145
Adjusted EBITDA1
$
191,181
$
237,185
(19.4
)%
$
284,605
$
382,403
(25.6
)%
1
See the end of this press release for
reconciliations of (i) Adjusted EBITDA to Operating income (loss),
(ii) Adjusted EBITDA to Net loss, (iii) Free Cash Flow and Free
cash flow including net proceeds from real estate sales to cash
used for operating activities, (iv) revenue, excluding political
advertising revenue, to revenue, and (v) Net Debt to Total Debt.
See also the definitions of Adjusted EBITDA, Free Cash Flow, Free
cash flow including net proceeds from real estate sales, Adjusted
EBITDA margin and Net Debt under the Supplemental Disclosure
section in this release.
TABLE 2 - Statements of
Operations
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue
$
920,014
$
954,005
$
1,731,253
$
1,797,463
Operating expenses:
Direct operating expenses (excludes
depreciation and amortization)
355,061
365,382
699,681
695,906
Selling, general and administrative
expenses (excludes depreciation and amortization)
393,773
379,057
796,574
763,401
Depreciation and amortization
108,065
110,788
216,577
224,839
Impairment charges1
960,570
245
964,517
1,579
Other operating (income) expense, net
(261
)
15,664
(40
)
16,534
Operating income (loss)
(897,194
)
82,869
(946,056
)
95,204
Interest expense, net
98,693
81,494
194,150
160,713
(Gain) loss on investments, net
(6,038
)
9,590
(12,543
)
7,825
Equity in loss of nonconsolidated
affiliates
(44
)
(29
)
(4
)
(58
)
Gain on extinguishment of debt
22,902
8,203
27,527
8,203
Other expense, net
(272
)
(2,175
)
(371
)
(2,445
)
Income (loss) before income taxes
(979,339
)
16,964
(1,125,597
)
(51,984
)
Income tax benefit (expense)
96,357
(1,782
)
20,252
18,427
Net income (loss)
(882,982
)
15,182
(1,105,345
)
(33,557
)
Less amount attributable to noncontrolling
interest
1,488
781
1,385
624
Net income (loss) attributable to the
Company
$
(884,470
)
$
14,401
$
(1,106,730
)
$
(34,181
)
1
Impairment charges in the six months ended
June 30, 2023 includes $595.5 million related to the impairment of
Goodwill, $363.6 million related to the impairment of FCC licenses,
and $5.5 million related to impairments of right-of-use assets. The
right-of-use asset impairments are part of our operating
expense-savings initiatives. As previously disclosed, we have taken
strategic actions to streamline our real estate footprint and
related expenses, resulting in impairment charges due to the
write-down of right-of-use assets and related fixed assets,
including leasehold improvements. During the three and six months
ended June 30, 2022, we recognized non-cash impairment charges of
$0.2 million and $1.6 million, respectively, as a result of these
cost-savings initiatives.
TABLE 3 - Selected Balance Sheet
Information
Selected balance sheet information for June 30, 2023 and
December 31, 2022:
(In millions)
June 30, 2023
December 31, 2022
Cash
$
165.3
$
336.2
Total Current Assets
1,336.4
1,472.8
Net Property, Plant and Equipment
649.7
694.8
Total Assets
6,983.8
8,335.9
Current Liabilities (excluding current
portion of long-term debt)
730.4
831.2
Long-term Debt (including current portion
of long-term debt)
5,316.4
5,414.2
Stockholders' Equity (Deficit)
(403.5
)
684.5
Supplemental Disclosure Regarding
Non-GAAP Financial Information
The following tables set forth the Company’s Adjusted EBITDA,
Adjusted EBITDA margin, revenues excluding political advertising
revenue, Free Cash Flow and Free cash flow including net proceeds
from real estate sales for the three and six months ended June 30,
2023 and 2022, and Net Debt as of June 30, 2023. Adjusted EBITDA is
defined as consolidated Operating income adjusted to exclude
restructuring expenses included within Direct operating expenses
and SG&A expenses, and share-based compensation expenses
included within SG&A expenses, as well as the following line
items presented in our Statements of Operations: Depreciation and
amortization, Impairment charges and Other operating (income)
expense, net. Alternatively, Adjusted EBITDA is calculated as Net
income (loss), adjusted to exclude Income tax (benefit) expense,
Interest expense, net, Depreciation and amortization, (Gain) loss
on investments, net, Gain on extinguishment of debt, Other expense,
net, Equity in loss of nonconsolidated affiliates, net, Impairment
charges, Other operating income (expense), net, Share-based
compensation expense, and restructuring expenses. Restructuring
expenses primarily include expenses incurred in connection with
cost-saving initiatives, as well as certain expenses, which, in the
view of management, are outside the ordinary course of business or
otherwise not representative of the Company's operations during a
normal business cycle. Adjusted EBITDA margin is calculated as
Adjusted EBITDA divided by Revenue.
The Company uses Adjusted EBITDA and Adjusted EBITDA margin,
among other measures, to evaluate the Company’s operating
performance. Adjusted EBITDA is among the primary measures used by
management for the planning and forecasting of future periods, as
well as for measuring performance for compensation of executives
and other members of management. We believe this measure is an
important indicator of the Company’s operational strength and
performance of its business because it provides a link between
operational performance and operating income. It is also a primary
measure used by management in evaluating companies as potential
acquisition targets.
The Company believes the presentation of these measures is
relevant and useful for investors because it allows investors to
view performance in a manner similar to the method used by the
Company’s management. The Company believes it helps improve
investors’ ability to understand the Company’s operating
performance and makes it easier to compare the Company’s results
with other companies that have different capital structures or tax
rates. In addition, the Company believes this measure is also among
the primary measures used externally by the Company’s investors,
analysts and peers in its industry for purposes of valuation and
comparing the operating performance of the Company to other
companies in its industry.
Since Adjusted EBITDA is not a measure calculated in accordance
with GAAP, it should not be considered in isolation of, or as a
substitute for, operating income as an indicator of operating
performance and may not be comparable to similarly titled measures
employed by other companies. Adjusted EBITDA is not necessarily a
measure of the Company’s ability to fund its cash needs. As it
excludes certain financial information compared with operating
income, the most directly comparable GAAP financial measure, users
of this financial information should consider the types of events
and transactions which are excluded.
We define Free Cash Flow as Cash provided by (used for)
operating activities less capital expenditures, which is disclosed
as Purchases of property, plant and equipment in the Company's
Consolidated Statements of Cash Flows. We define Free cash flow
including net proceeds from real estate sales as Free Cash Flow
further adjusted to include proceeds from real estate sales. We use
Free Cash Flow and Free cash flow including net proceeds from real
estate sales, among other measures, to evaluate the Company’s
liquidity and its ability to generate cash flow. We believe that
Free Cash Flow and Free cash flow including net proceeds from real
estate sales are meaningful to investors because they provide them
with a view of the Company's liquidity after deducting capital
expenditures, which are considered to be a necessary component of
ongoing operations; and include proceeds from real estate sales in
the case of Free cash flow including net proceeds from real estate
sales. In addition, we believe that Free Cash Flow and Free cash
flow including net proceeds from real estate sales helps improve
investors' ability to compare our liquidity with that of other
companies.
Since Free Cash Flow and Free cash flow including net proceeds
from real estate sales are not measures calculated in accordance
with GAAP, they should not be considered in isolation of, or as a
substitute for, Cash used for operating activities and may not be
comparable to similarly titled measures employed by other
companies. Free Cash Flow and Free cash flow including net proceeds
from real estate sales is not necessarily a measure of our ability
to fund our cash needs.
The Company presents revenue, excluding the effects of political
revenue. Due to the cyclical nature of the electoral system and the
seasonality of the related political revenue, management believes
presenting revenue, excluding the effects of political revenue,
provides additional information to investors about the Company’s
revenue growth from period to period.
We define Net Debt as Total Debt less Cash and cash equivalents.
We define net leverage as Net Debt divided by Adjusted EBITDA. The
Company uses net leverage and Net Debt to evaluate the Company's
liquidity. We believe these measures are an important indicator of
the Company's ability to service its long-term debt
obligations.
Since these non-GAAP financial measures are not calculated in
accordance with GAAP, they should not be considered in isolation
of, or as a substitute for, the most directly comparable GAAP
financial measures as an indicator of operating performance or
liquidity.
As required by the SEC rules, the Company provides
reconciliations below to the most directly comparable measures
reported under GAAP, including (i) Adjusted EBITDA to Operating
income (loss), (ii) Adjusted EBITDA to Net loss, (iii) Free Cash
Flow and Free cash flow including net proceeds from real estate
sales to cash used for operating activities, (iv) revenue,
excluding political advertising revenue, to revenue, and (v) Net
Debt to Total Debt.
We have provided forecasted Revenue and Adjusted EBITDA guidance
for the quarter ending June 30, 2023 and net leverage guidance for
December 31, 2023, which reflects anticipated Adjusted EBITDA for
the year ending December 31, 2023 and net debt as of December 31,
2023. Our Earnings Call on August 8, 2023 may present guidance that
includes Adjusted EBITDA. A full reconciliation of the forecasted
Adjusted EBITDA, net debt and net leverage on a non-GAAP basis to
its most-directly comparable GAAP metrics cannot be provided
without unreasonable efforts due to the inherent difficulty in
forecasting and quantifying with reasonable accuracy significant
items required for the reconciliations, including gains or losses
on investments, extinguishment of debt, equity in nonconsolidated
affiliates, impairment charges, stock based compensation, and
restructuring as well as the Company's cash and cash equivalent
balance.
Reconciliation of Operating income (loss) to Adjusted
EBITDA
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended March
31,
2023
2022
2023
2022
2023
Operating income (loss)
$
(897,194
)
$
82,869
$
(946,056
)
$
95,204
$
(48,862
)
Depreciation and amortization
108,065
110,788
216,577
224,839
108,512
Impairment charges1
960,570
245
964,517
1,579
3,947
Other operating (income) expense, net
(261
)
15,664
(40
)
16,534
221
Restructuring expenses
10,789
19,009
30,243
30,102
19,454
Share-based compensation expense
9,212
8,610
19,364
14,145
10,152
Adjusted EBITDA
$
191,181
$
237,185
$
284,605
$
382,403
$
93,424
1
Impairment charges in the six months ended
June 30, 2023 includes $595.5 million related to the impairment of
Goodwill, $363.6 million related to the impairment of FCC licenses,
and $5.5 million related to impairments of right-of-use assets. The
right-of-use asset impairments are part of our operating
expense-savings initiatives. As previously disclosed, we have taken
strategic actions to streamline our real estate footprint and
related expenses, resulting in impairment charges due to the
write-down of right-of-use assets and related fixed assets,
including leasehold improvements. During the three and six months
ended June 30, 2022, we recognized non-cash impairment charges of
$0.2 million and $1.6 million, respectively, as a result of these
cost-savings initiatives.
Reconciliation of Net income (loss) to EBITDA and Adjusted
EBITDA
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended March
31,
2023
2022
2023
2022
2023
Net income (loss)
$
(882,982
)
$
15,182
$
(1,105,345
)
$
(33,557
)
$
(222,363
)
Income tax (benefit) expense
(96,357
)
1,782
(20,252
)
(18,427
)
76,105
Interest expense, net
98,693
81,494
194,150
160,713
95,457
Depreciation and amortization
108,065
110,788
216,577
224,839
108,512
EBITDA
$
(772,581
)
$
209,246
$
(714,870
)
$
333,568
$
57,711
(Gain) Loss on investments, net
6,038
(9,590
)
12,543
(7,825
)
6,505
Gain on extinguishment of debt
(22,902
)
(8,203
)
(27,527
)
(8,203
)
(4,625
)
Other expense, net
272
2,175
371
2,445
99
Equity in loss of nonconsolidated
affiliates
44
29
4
58
(40
)
Impairment charges
960,570
245
964,517
1,579
3,947
Other operating (income) expense, net
(261
)
15,664
(40
)
16,534
221
Restructuring expenses
10,789
19,009
30,243
30,102
19,454
Share-based compensation expense
9,212
8,610
19,364
14,145
10,152
Adjusted EBITDA
$
191,181
$
237,185
$
284,605
$
382,403
$
93,424
Reconciliation of Cash Used For Operating Activities to Free
Cash Flow and Free cash flow including net proceeds from real
estate sales
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Cash used for operating activities
$
56,772
$
155,801
$
(37,211
)
$
103,589
Purchases of property, plant and
equipment
(22,773
)
(49,653
)
(61,938
)
(72,210
)
Free cash flow
33,999
106,148
(99,149
)
$
31,379
Net proceeds from real estate sales1
4,629
20,469
4,629
23,835
Free cash flow including net proceeds from
real estate sales
$
38,628
$
126,617
$
(94,520
)
$
55,214
1
During the three and six months ended June
30, 2023 and 2022, we deployed capital expenditures to accelerate
the proactive streamlining of our real estate footprint aimed at
reducing our structural cost base. This initiative has succeeded in
making certain real estate assets redundant, enabling the Company
to sell such assets to partially fund the initiative’s gross
capital expenditures.
Reconciliation of Revenue to Revenue excluding Political
Advertising
(In thousands)
Three Months Ended
June 30,
%
Change
Six Months Ended
June 30,
%
Change
2023
2022
2023
2022
Consolidated revenue
$
920,014
$
954,005
(3.6
)%
$
1,731,253
$
1,797,463
(3.7
)%
Excluding: Political revenue
(6,172
)
(23,084
)
(9,775
)
(32,247
)
Consolidated revenue, excluding
political
$
913,842
$
930,921
(1.8
)%
$
1,721,478
$
1,765,216
(2.5
)%
Multiplatform Group revenue
$
595,944
$
633,300
(5.9
)%
$
1,124,957
$
1,204,460
(6.6
)%
Excluding: Political revenue
(3,852
)
(13,470
)
(7,336
)
(19,135
)
Multiplatform Group revenue, excluding
political
$
592,092
$
619,830
(4.5
)%
$
1,117,621
$
1,185,325
(5.7
)%
Digital Audio Group revenue
$
260,854
$
252,561
3.3
%
$
484,250
$
466,780
3.7
%
Excluding: Political revenue
(846
)
(1,397
)
(1,346
)
(2,672
)
Digital Audio Group revenue, excluding
political
$
260,008
$
251,164
3.5
%
$
482,904
$
464,108
4.0
%
Audio & Media Group Services
revenue
$
65,804
$
71,065
(7.4
)%
$
127,155
$
131,922
(3.6
)%
Excluding: Political revenue
(1,475
)
(8,217
)
(1,093
)
(10,440
)
Audio & Media Services Group revenue,
excluding political
$
64,329
$
62,848
2.4
%
$
126,062
$
121,482
3.8
%
Reconciliation of Total Debt to Net Debt
(In thousands)
June 30, 2023
Current portion of long-term debt
$
440
Long-term debt
5,315,955
Total debt
$
5,316,395
Less: Cash and cash equivalents
165,325
Net debt
$
5,151,070
Segment Results
The following tables present the Company's segment results for
the Company for the periods presented:
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Three Months Ended June 30,
2023
Revenue
$
595,944
$
260,854
$
65,804
$
—
$
(2,588
)
$
920,014
Operating expenses(1)
433,542
176,272
47,305
74,302
(2,588
)
728,833
Adjusted EBITDA
$
162,402
$
84,582
$
18,499
$
(74,302
)
$
—
$
191,181
Adjusted EBITDA margin
27.3
%
32.4
%
28.1
%
20.8
%
Depreciation and amortization
(108,065
)
Impairment charges
(960,570
)
Other operating expense, net
261
Restructuring expenses
(10,789
)
Share-based compensation expense
(9,212
)
Operating loss
$
(897,194
)
Operating margin
NM
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Three Months Ended June 30,
2022
Revenue
$
633,300
$
252,561
$
71,065
$
—
$
(2,921
)
$
954,005
Operating expenses(1)
438,804
173,678
48,995
58,264
(2,921
)
716,820
Adjusted EBITDA
$
194,496
$
78,883
$
22,070
$
(58,264
)
$
—
$
237,185
Adjusted EBITDA margin
30.7
%
31.2
%
31.1
%
24.9
%
Depreciation and amortization
(110,788
)
Impairment charges
(245
)
Other operating expense, net
(15,664
)
Restructuring expenses
(19,009
)
Share-based compensation expense
(8,610
)
Operating income
$
82,869
Operating margin
8.7
%
(1)
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring expenses and share-based
compensation expenses.
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Six Months Ended June 30, 2023
Revenue
$
1,124,957
$
484,250
$
127,155
$
—
$
(5,109
)
$
1,731,253
Operating expenses(1)
875,503
345,549
93,312
137,393
(5,109
)
1,446,648
Segment Adjusted EBITDA
$
249,454
$
138,701
$
33,843
$
(137,393
)
$
—
$
284,605
Adjusted EBITDA margin
22.2
%
28.6
%
26.6
%
16.4
%
Depreciation and amortization
(216,577
)
Impairment charges
(964,517
)
Other operating income, net
40
Restructuring expenses
(30,243
)
Share-based compensation expense
(19,364
)
Operating loss
$
(946,056
)
Operating margin
NM
Segments
(In thousands)
Multiplatform Group
Digital Audio Group
Audio & Media Services
Group
Corporate and other reconciling
items
Eliminations
Consolidated
Six Months Ended June 30, 2022
Revenue
$
1,204,460
$
466,780
$
131,922
$
(5,699
)
$
1,797,463
Operating expenses(1)
876,057
335,389
93,465
115,848
(5,699
)
1,415,060
Segment Adjusted EBITDA
$
328,403
$
131,391
$
38,457
$
(115,848
)
$
—
$
382,403
Adjusted EBITDA margin
27.3
%
28.1
%
29.2
%
21.3
%
Depreciation and amortization
(224,839
)
Impairment charges
(1,579
)
Other operating expense, net
(16,534
)
Restructuring expenses
(30,102
)
Share-based compensation expense
(14,145
)
Operating income
$
95,204
Operating margin
5.3
%
(1)
Operating expenses consist of Direct
operating expenses and Selling, general and administrative
expenses, excluding Restructuring expenses and share-based
compensation expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808394152/en/
Media Wendy Goldberg Chief
Communications Officer (212) 377-1105
wendygoldberg@iheartmedia.com
Investors Mike McGuinness EVP,
Deputy CFO, and Head of Investor Relations (212) 377-1336
mbm@iheartmedia.com
iHeartMedia (NASDAQ:IHRT)
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