Category: Media and Entertainment

Motorsport Games (MSGM) – Pushes Out IndyCar Launch

Posted on by cpereira@noblefcm.com


Monday, March 27, 2023

Motorsport Games, a Motorsport Network company, combines innovative and engaging video games with exciting esports competitions and content for racing fans and gamers around the globe. The Company is the officially licensed video game developer and publisher for iconic motorsport racing series across PC, PlayStation, Xbox, Nintendo Switch and mobile, including NASCAR, INDYCAR, 24 Hours of Le Mans and the British Touring Car Championship (“BTCC”). Motorsport Games is an award-winning esports partner of choice for 24 Hours of Le Mans, Formula E, BTCC, the FIA World Rallycross Championship and the eNASCAR Heat Pro League, among others.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 results The company reported revenue of $3.8 million and an adj. EBITDA loss of $3.5 million in the quarter, roughly in line with our estimates. The quarter was driven by the successful release of NASCAR Rivals on the Nintendo Switch and reduced compensation expenses. The company made an investment in its user base by releasing a free DLC expansion pack for NASCAR 21: Ignition.

2023 outlook. The company announced the highly anticipated launch of its IndyCar game will be delayed until 2024. Management attributed the delay to an increased focus on quality, given that an Indy game has not been released in over a decade. As such, we are lowering our estimates in anticipation of adverse effects on revenue in 2023.


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Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

A Reason for Investors to Look at the New Dynamics of Broadcast Media

Posted on by phoffman@channelchek.com
Image Credit: Cottonbro Studio (Pexels)

Selling Air Time is Getting Easier for Broadcast Radio

Is broadcast radio losing its power? It doesn’t appear to be, and the medium may be of interest to investors that prefer to shy away from short-lived investment trends and instead look to more easily understood opportunities. According to the industry publication Ad Age, the industry is nearing an intersection where “18- to 49-year-olds are spending more time listening to radio than watching linear TV.” At least one large company has reworked its advertising budget to save money with the expectation of reaching more people. Is this a trend hat will grow?

Re-investing in Radio

Soap opera’s got their start nearly 100 years ago as Proctor and Gamble, manufacturer of soap and candles, created the addictive entertainment to position its product ads in front of the typical soap decision maker of the time. As TV became a fixture in households in the 1950s, P&G adapted and brought the shows and the advertising to television. Last year P&G increased its spending on traditional broadcast radio by 43%. Despite all the new advertising options available, and the ability to refine targeting, P&G has a method to their madness, and it’s worth understanding.

Why the Reversal?

Last year, in the face of rising costs, the marketing giant came under margin pressure. In an attempt to minimize price hikes and maintain old margins, they cut ad spending by 10%, with a new budget of $2.2 billion.

The CEO Jon Moeller had told P&G brand marketers to focus on how many people they reach and how often, rather than how targeted or how much they spend. Chief Brand Officer Marc Pritchard became focused on the effectiveness of radio, connected TV, and streaming free ad-supported TV (FAST).

Belt Tightening

Just as inflation has caused many households to be more frugal, perhaps use less expensive brands, and eat more at home, companies like P&G are finding they are taking a similar approach. And if it helps keep prices down, they can more easily retain customers and attract new ones.  

Here is some data on the extreme cost of reaching a broadcast TV audience. In the business, CPM (cost per mile) is a paid ad method where there is a certain rate for every 1000 impressions an ad receives. The CPM to reach TV audiences is as high as $35 to $65. For comparison, YouTube video CPMs range from $20 to $25, and linear TV is in the $10 to $15 range.

But radio can be bought in the $5-$6 CPM range. The targeting may not be as precise as broadcast TV or other media, but the amount spent for every 1000 impressions is a fraction of the alternatives.

During the last week in March, and first week in April, investors in South Florida and Naples will have the opportunity to meet the management of two interesting broadcast media companies, in a relaxed setting.

Places Investors Might Explore

Other large advertisers are stepping up their radio efforts as well. Pharmaceutical companies Pfizer, and Johnson & Johnson have started to spend more. According ad intelligence provider Vivvix. Pfizer became a top-five radio advertiser last year. They did this by more than doubling spending.

If you haven’t been following media companies, there is some acclimating to terminology, seasons, and how they profit. Two key places for information is the media report that Noble Capital Markets published late January of this year. The report which is available at this link was prepared by top analysts and discusses the recent state of radio, TV, digital media, and publishing.

A video produced just weeks before the published report by members of the same team can be helpful in providing you with insight as to one media company’s strengths over another. The video, featuring Michael Kupinski, Director of Research at Noble Capital Markets, is a half-hour full of insights. At this link.

Do you wish to hear directly from management of broadcast media companies impacted by new trends?

There are two companies that will be conducting three roadshows in Florida over the next two weeks. If you can attend, you’ll have the opportunity to hear directly from management what the future expectations are, and you’ll have the opportunity to ask questions of your own. The company names, locations and dates are available at this link, along with other scheduled roadshows.

Take Away

The most talked about stocks on the chat boards aren’t the only actionable opportunities astute investors can select from. As with all investing, growing your knowledge base can help one expand their watch-list.

P&G’s ad spend adjustment comes at a time when standard AM/FM radio has caught to and is neck and neck with linear TV (for people 18-49 in the U.S.). Radio audiences may not be growing, but they are not declining as broadcast TV audiences have – they are fairly consistent, and ad costs are a great value at a time when companies are dealing with their own increasing costs. This is getting the attention of large advertisers, and it perhaps should get the attention of investors.

Paul Hoffman

Managing Editor, Channelchek

Direct Digital Holdings (DRCT) – Shifts Gears For Enhanced Revenue Growth

Posted on by cpereira@noblefcm.com


Friday, March 24, 2023

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q4 results. The company reported strong Q4 revenue of $29.4 million, in line with our estimate of $29.3 million. The quarter was driven by robust Sell-side advertising revenues of $22.4million, an increase of 231% from the prior year period. Q4 Adj. EBITDA of $1.8 million was flat year over year and missed our estimate of $2.7 million, largely due to elevated compensation costs.

2023 outlook. The company is shifting its focus to pursue larger, but more price sensitive clients. As such, we expect higher investment and compensation costs to support larger accounts. The company plans to invest to offer new products, like data analytics to support higher future margins. We believe adj. EBITDA will be flat over the prior year, given increased investment and lower margin clients.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Travelzoo (TZOO) – Results Point Toward Favorable Momentum

Posted on by cpereira@noblefcm.com


Thursday, March 23, 2023

Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q4 results. The company reported strong Q4 operating results, with revenue up 31.6% to $18.6 million and Adj. EBITDA up an impressive 328% to $4.7 million. Notably, the company’s North America segment grew revenue by 53% and reported margins of 29%. The company benefited from favorable travel trends and lower operating expenses, particularly marketing expenses. 

Favorable trends. The company has positive revenue and margin momentum moving into 2023. Management highlighted the opportunity for further margin growth given potential advertising price increases in Q2. The company appears to be benefiting from pent up travel demand from its travel enthusiast base. 


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Release – Travelzoo Reports Fourth Quarter 2022 Results

Posted on by aweinsoff@channelchek.com

Research News and Market Data on TZOO

03/22/2023

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NEW YORK, March 22, 2023 /PRNewswire/ — Travelzoo® (NASDAQ: TZOO):

  • Revenue of $18.6 million, up 36% year-over-year
  • In constant currencies, revenue was $19.4 million, up 42% year-over-year
  • Non-GAAP consolidated operating profit of $4.8 million
  • Earnings per share (EPS) of $0.20

Travelzoo, a global Internet media company that provides exclusive offers and experiences for members, today announced financial results for the fourth quarter ended December 31, 2022. Consolidated revenue was $18.6 million, up 36% from $13.7 million year-over-year. In constant currencies, revenue was $19.4 million. Travelzoo’s reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members.

The reported net income attributable to Travelzoo from continuing operations was $2.5 million for Q4 2022. At the consolidated level, including minority interests, the reported net income from continuing operations was $2.5 million. EPS from continuing operations was $0.20, compared to EPS of ($0.27) in the prior-year period.

Non-GAAP operating profit was $4.8 million. The calculation of non-GAAP operating profit excludes impairment of intangible assets ($200,000), amortization of intangibles ($453,000), stock option expenses ($348,000) and severance-related expenses ($200,000). GAAP operating profit was $3.6 million. See section “Non-GAAP Financial Measures” below.

“Revenue growth accelerated in both North America and in Europe, leading to much stronger earnings,” said Holger Bartel, Travelzoo’s Global CEO. “As the recovery from the pandemic continues, we will leverage Travelzoo’s global reach and trusted brand to further improve earnings in future periods.”

“With more than 30 million members, 7 million mobile app users, and 4 million social media followers, Travelzoo is loved by travel enthusiasts who are affluent, active and open to new experiences.”

Cash Position
As of December 31, 2022, consolidated cash, cash equivalents and restricted cash were $19.4 million. Net cash used in operations was $2.3 million for the three months ended December 31, 2022. Cash was used primarily in connection with a decrease of merchant payables by $6.3 million.

Reserve
Reported revenues include a reserve of $1.3 million related to commissions to be earned from vouchers sold. The reserve is booked as contra revenue.

Travelzoo North America
North America business segment revenue increased 53% year-over-year to $13.1 million. Operating profit for Q4 2022 was $3.7 million, or 29% of revenue, compared to an operating loss of $2.1 million in the prior-year period.

Travelzoo Europe
Europe business segment revenue increased 9% year-over-year to $4.7 million. At constant currencies, Europe business segment revenue increased 23% year-over-year. Operating profit for Q4 2022 was $42,000, compared to an operating loss of $1.7 million in the prior-year period.

Jack’s Flight Club
On January 13, 2020, Travelzoo acquired 60% of Jack’s Flight Club, a membership subscription service. Jack’s Flight Club revenue increased 6% year-over-year to $855,000. During Q4 2022, premium subscribers increased 27%. Revenue from increases in subscribers is reported with a lag because we recognize revenue from subscriptions monthly pro rata over the subscription period (quarterly, semi-annually, annually). Non-GAAP operating profit for Q4 2022 was $220,000, compared to a non-GAAP operating profit of $292,000 in the prior-year period. After consolidation with Travelzoo, Jack’s Flight Club’s net loss was $102,000, with $61,000 attributable to Travelzoo as a result of recording $200,000 of intangible assets impairment and $216,000 of amortization of intangible assets related to the acquisition.

Licensing
In June 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoo’s brand, business model, and members in Japan. In August of 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Australia for the exclusive use of Travelzoo’s brand, business models, and members in Australia, New Zealand, and Singapore. Under these arrangements, Travelzoo’s existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor. Licensing revenue is booked with a lag of one quarter. Travelzoo recorded $7,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q4 2022. Licensing revenue is expected to increase going forward.

Members and Subscribers
As of December 31, 2022, we had 30.4 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.3 million as of December 31, 2022, down 4% from December 31, 2021. In Europe, the unduplicated number of Travelzoo members was 9.0 million as of December 31, 2022, up 8% from December 31, 2021. Jack’s Flight Club had 1.9 million subscribers as of December 31, 2022, up 8% from December 31, 2021.

Discontinued Operations
As announced in a press release on March 10, 2020, Travelzoo decided to exit its Asia Pacific business and operate it as a licensing business going forward. Consequently, the Asia Pacific business has been classified as discontinued operations since March 31, 2020. Prior periods have been reclassified to conform with the current presentation. Certain reclassifications have been made for current and prior periods between the continued operations and the discontinued operations in accordance with U.S. GAAP.

Income Taxes
Income tax expense was $1.1 million in Q4 2022, compared to an income tax benefit of $333,000 in the prior-year period.

Non-GAAP Financial Measures
Management calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoo’s calculation of non-GAAP operating income, also called “non-GAAP operating profit” in this press release and today’s earnings conference call, excludes the following items: impairment of intangibles, amortization of intangibles, stock option expenses, and severance-related expenses. This press release includes a table which reconciles GAAP operating income to the calculation of non-GAAP operating income. Non-GAAP operating income is not required by, or presented in accordance with, generally accepted accounting principles in the United States of America (“GAAP”). This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Looking Ahead
For Q1 2023, we currently expect higher revenue and profitability. During the pandemic, we have been able to lower our fixed costs. We believe we can keep our fixed costs relatively low in the foreseeable future.

Conference Call
Travelzoo will host a conference call to discuss fourth quarter 2022 results today at 11:30 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to

  • download the management presentation (PDF format) to be discussed in the conference call
  • access the webcast.

About Travelzoo
Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect”, “predict”, “project”, “anticipate”, “believe”, “estimate”, “intend”, “plan”, “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Travelzoo, Top 20, and Jack’s Flight Club are registered trademarks of Travelzoo.

Investor Relations:
ir@travelzoo.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/travelzoo-reports-fourth-quarter-2022-results-301778197.html

SOURCE Travelzoo

Release – Motorsport Games to Report Fourth Quarter Of 2022 & Full Year 2022 Financial Results

Posted on by aweinsoff@channelchek.com

Research News and Market Data on MSGM

MARCH 21, 2023

MIAMI, March 21, 2023 (GLOBE NEWSWIRE) — Motorsport Games Inc. (NASDAQ: MSGM) (“Motorsport Games” or the “Company”), a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world, will report its financial results for the fourth fiscal quarter of 2022 and full 2022 fiscal year on Friday, March 24, 2023 after market close. Management will host a conference call and webcast on the same day at 5:00 p.m. ET to discuss the results.

Participants may access the live webcast on the Company’s investor relations website at https://ir.motorsportgames.com under “Events.” The call may also be accessed by dialing 1 (877) 407-0784 from the U.S., or by dialing 1 (201) 689-8560 internationally.

About Motorsport Games:
Motorsport Games, a Motorsport Network company, is a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world. Combining innovative and engaging video games with exciting esports competitions and content for racing fans and gamers, Motorsport Games strives to make the joy of racing accessible to everyone. The Company is the officially licensed video game developer and publisher for iconic motorsport racing series across PC, PlayStation, Xbox, Nintendo Switch and mobile, including NASCAR, INDYCAR, 24 Hours of Le Mans and the British Touring Car Championship (“BTCC”), as well as the industry leading rFactor 2 and KartKraft simulations. rFactor 2 also serves as the official sim racing platform of Formula E, while also powering F1 Arcade through a partnership with Kindred Concepts. Motorsport Games is an award-winning esports partner of choice for 24 Hours of Le Mans, Formula E, BTCC, the FIA World Rallycross Championship and the eNASCAR Heat Pro League, among others. Motorsport Games is building a virtual racing ecosystem where each product drives excitement, every esports event is an adventure and every story inspires.

Website and Social Media Disclosure:

Investors and others should note that we announce material financial information to our investors using our investor relations website (ir.motorsportgames.com), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media and blogs, to communicate with our investors and the public about our company and our products. It is possible that the information we post on our websites, social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the websites, social media channels and blogs, including the following (which list we will update from time to time on our investor relations website):

WebsitesSocial Media
motorsportgames.comTwitter: @msportgames & @traxiongg
traxion.ggInstagram: msportgames & traxiongg
motorsport.comFacebook: Motorsport Games & traxiongg
 LinkedIn: Motorsport Games
 Twitch: traxiongg
 Reddit: traxiongg

The contents of these websites and social media channels are not part of, nor will they be incorporated by reference into, this press release.

Contacts:
Investors:
investors@motorsportgames.com

Media:
pr@motorsportgames.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/305eebf4-97ab-4047-95a6-7169166efd66.

Release – Entravision Announces New Credit Facility

Posted on by aweinsoff@channelchek.com

Research News and Market Data on EVC

03/20/2023

SANTA MONICA, Calif.–(BUSINESS WIRE)– Entravision (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced that on March 17, 2023 the Company entered into a new $275 million credit facility, consisting of a $200 million term loan A and a $75 million revolving credit facility. Led by Bank of America, Wells Fargo, and J.P. Morgan Chase, the new credit facility replaces the Company’s existing credit facility entered into on November 30, 2017.

“The closing of this facility in this volatile financial market is a testament to the continued financial strength of our Company,” said Chris Young, Interim Chief Executive Officer and Chief Financial Officer of Entravision. “Our new facility extends the maturity of Entravision’s outstanding debt, while at the same time increases the flexibility of our strong balance sheet. We remain well-capitalized as we continue to execute on our long-term strategic plan and show leadership in the global digital media industry.”

Entravision anticipates it will use the proceeds from the new credit facility to fund its working capital needs, acquisitions and other general corporate purposes. Additional details on the new credit facility are outlined in the company’s Current Report on Form 8-K filed today with the Securities and Exchange Commission.

About Entravision

Entravision is a leading global advertising solutions, media and technology company connecting brands to consumers by representing top platforms and publishers. Our dynamic portfolio includes digital, television and audio offerings. Digital, our largest revenue segment, comprises four business units: our digital sales representation business; Smadex, our programmatic ad purchasing platform; our branding and mobile performance solutions business; and our digital audio business. Through our digital sales representation business, we connect global media companies such as Meta, Twitter, TikTok and Spotify with advertisers in primarily emerging growth markets worldwide. Smadex is our mobile-first demand side platform, enabling advertisers to execute performance campaigns using machine learning. We also offer a branding and mobile performance solutions business, which provides managed services to advertisers looking to connect with global consumers, primarily on mobile devices, and our digital audio business provides digital audio advertising solutions for advertisers in the Americas. In addition to digital, Entravision has 49 television stations and is the largest affiliate group of the Univision and UniMás television networks. Entravision also manages 45 primarily Spanish-language radio stations that feature nationally recognized, Emmy award-winning talent. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn.

Forward-Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the company disclaims any duty to update any forward-looking statements made by the company. From time to time, these risks, uncertainties and other factors are discussed in the company’s filings with the Securities and Exchange Commission.

Entravision

Investors:
Christopher T. Young
Interim Chief Executive Officer / Chief Financial Officer
310-447-3870

Kimberly Esterkin
Addo Investor Relations
evc@addo.com
310-829-5400

Source: Entravision

RCI Hospitality Holdings (RICK) – Baby Dolls and Chicas Locas Acquisition Closed

Posted on by cpereira@noblefcm.com


Friday, March 17, 2023

With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.

Joe Gomes, Managing Director – Generalist Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Acquisition. RCI Hospitality closed the previously announced acquisition of two Baby Dolls and three Chicas Locas nightclubs and their associated real estate in the Dallas-Fort Worth and Houston markets. The $65.5 million acquisition is expected to contribute approximately $11 million of adjusted EBITDA in the first year and, once expansion/renovation plans are completed, is expected to contribute $14-$16 million of adjusted EBITDA on an annual basis.

Financing Details. Payment consisted of: $25.0 million in cash, of which $10.0 million is being financed through a new unsecured bank line of credit; 10-year, 7% seller financing notes totaling $25.5 million; and 200,000 restricted shares of common stock of RCI valued at $16.0 million, subject to a lock-up, leak out agreement.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Release – Entravision Communications Corporation Reports Fourth Quarter and Full Year 2022 Results

Posted on by aweinsoff@channelchek.com

Research News and Market Data on EVC

03/09/2023

SANTA MONICA, Calif.–(BUSINESS WIRE)– Entravision Communications Corporation (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced financial results for the three- and twelve-month periods ended December 31, 2022.

Fourth Quarter and Full Year 2022 Highlights

  • Record fourth quarter and annual revenue
  • Record fourth quarter and annual consolidated adjusted EBITDA
  • Record political advertising revenue compared to prior election cycles, including presidential
  • Net loss attributable to common stockholders of $1.6 million in the fourth quarter compared to net income attributable to common stockholders of $3.9 million in the prior-year quarter
  • Net income attributable to common stockholders for the full year down 38% compared to the prior-year
  • Consolidated adjusted EBITDA up 11% and 17% compared to the prior-year quarter and full year, respectively
  • Operating cash flow down 93% and up 21% compared to the prior-year quarter and full year, respectively
  • Free cash flow down 37% and 20% compared to the prior-year quarter and full year, respectively
  • Quarterly cash dividend increase to $0.05 per share

“We are pleased with our 2022 performance, which marks a record year for Entravision for revenue and consolidated adjusted EBITDA,” said Entravision Interim Chief Executive Officer and Chief Financial Officer, Chris Young. “Our results demonstrate the resiliency and strength of our business through challenging macro conditions, and the successful execution of our strategic plan to create a leading global advertising solutions, media and technology company. We have enhanced our digital segment organically, as well as through strategic partnerships, geographic expansion and accretive acquisitions to bolster our suite of digital services in the large and growing advertising industry. Our complementary non-digital businesses, while a smaller percentage of our revenue portfolio, continue to be an important contributor to our growth. We will continue to leverage our tools, reach, technology and world-class team to meet our clients’ evolving needs and deliver enhanced shareholder value.”

Paul Zevnik, Interim Chair and co-founder said, “The Entravision team mourns the sudden and tragic loss of our late CEO, founder and dear friend, Walter Ulloa. Walter passed unexpectedly on the last day of the most successful year in the company’s history. Since we founded Entravision in 1996, we have developed a clear vision to build a leading global advertising solutions, media and technology company serving diverse demographics with diverse media. Through Walter’s leadership and with the support of a strong leadership team and dedicated entrepreneurs across each of Entravision’s business platforms, we have achieved tremendous growth and transformed the Company’s geographical breadth and media portfolio. Most importantly, we created a company that is a great place to work with a focus on engagement, trust, open communications, community service and involvement, and long-lasting relationships with our key partners. I miss our friend dearly, and the Board is committed to working with management to advance Walter’s vision and execute on our roadmap to deliver enhanced value for our stakeholders and partners.”

Quarterly Cash Dividend

As previously announced, the Company’s Board of Directors approved a quarterly cash dividend to shareholders of $0.05 per share on the Company’s Class A and Class U common stock, in an aggregate amount of approximately $4.4 million. This is double the Company’s previous quarterly dividend of $0.025 in 2022 and returns the dividend to its pre-pandemic level. The quarterly dividend will be payable on March 31, 2023 to shareholders of record as of the close of business on March 16, 2023, and the common stock will trade ex-dividend on March 15, 2023. The Company currently anticipates that future cash dividends will be paid on a quarterly basis; however, any decision to pay future cash dividends will be subject to approval by the Board.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a table reconciling each of these non-GAAP financial measures to its most directly comparable GAAP financial measure is included beginning on page 10.

Net revenue in the fourth quarter of 2022 totaled $296.3 million, up 27% from $233.9 million in the prior-year period. Of the overall increase, approximately $52.6 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business. In addition, the increase in net revenue in our digital segment was due to our investments in variable interest entities in 2022, which did not contribute to our results of operations in the comparable prior-year period. In addition, of the overall increase, approximately $5.6 million was attributable to our television segment, primarily due to an increase in political advertising revenue, partially offset by decreases in local and national advertising revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. Additionally, of the overall increase, approximately $4.2 million was attributable to our audio segment, primarily due to increases in political advertising revenue and national advertising revenue, partially offset by a decrease in local advertising revenue.

Cost of revenue in the fourth quarter of 2022 totaled $192.0 million, up 29% from $148.4 million in the prior-year period. The increase was primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our investments in variable interest entities in 2022, which did not contribute to our results of operations in the comparable prior-year period.

Operating expenses in the fourth quarter of 2022 totaled $57.2 million, up 19% from $48.1 million in the prior-year period. Of the overall increase, approximately $7.0 million was attributable to our digital segment and was primarily due to an increase in expenses associated with the increase in digital advertising revenue, an increase in salary expense and non-cash stock-based compensation, and an increase due to our investments in variable interest entities in 2022, which did not contribute to our results of operations in the comparable prior-year period. In addition, of the overall increase in operating expenses, approximately $1.1 million was attributable to our television segment primarily due to an increase in rent expense, an increase in bad debt expense and an increase in non-cash stock-based compensation, partially offset by a decrease in expenses associated with the decrease in local and national advertising revenue. Additionally, of the overall increase in operating expenses, approximately $1.0 million was attributable to our audio segment primarily due to an increase in expenses associated with the increase in national advertising revenue and an increase in rent expense.

Corporate expenses in the fourth quarter of 2022 totaled $22.6 million, up 101% from $11.2 million in the prior-year period. The increase was primarily due to $8.1 million of severance related expense incurred upon the passing of our late Chief Executive Officer, and due to increases in non-cash stock-based compensation and an increase in salaries.

Net revenue for the year ended December 31, 2022 totaled $956.2 million, up 26% from $760.2 million in the prior-year period. Of the overall increase, approximately $191.8 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business. In addition, the increase in net revenue in our digital segment was due to our investments in variable interest entities in 2022 and our acquisitions in 2021, which did not contribute to our results of operations for the full prior-year period. In addition, of the overall increase, approximately $6.4 million was attributable to our audio segment primarily due to increases in political advertising revenue and local advertising revenue, partially offset by a decrease in national advertising revenue. The overall increase was partially offset by a decrease of approximately $2.1 million attributable to our television segment, primarily due to decreases in local and national advertising revenue, a decrease in spectrum usage rights revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. The decrease in our television segment revenue was partially offset by an increase in political advertising revenue.

Cost of revenue for the year ended December 31, 2022 totaled $623.9 million, up 34% from $466.5 million in the prior-year period. The increase was primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our investments in variable interest entities in 2022 and our acquisitions in 2021, which did not contribute to our results of operations for the full prior-year period.

Operating expenses for the year ended December 31, 2022 totaled $197.8 million, up 14% from $173.0 million in the prior-year period. Of the overall increase, approximately $22.5 million was attributable to our digital segment and was primarily due to an increase in expenses associated with the increase in digital advertising revenue, an increase in salary expense and non-cash stock-based compensation, and an increase due to our investments in variable interest entities in 2022 and our acquisitions in 2021, which did not contribute to our results of operations for the full prior-year period. In addition, of the overall increase in operating expenses, approximately $0.6 million was attributable to our television segment primarily due to an increase in rent expense, an increase in bad debt expense and an increase in non-cash stock-based compensation, partially offset by a decrease in expenses associated with the decrease in local and national advertising revenue. Additionally, of the overall increase in operating expenses, approximately $1.7 million was attributable to our audio segment primarily due to an increase in expenses associated with the increase in local advertising revenue and an increase in rent expense.

Corporate expenses for the year ended December 31, 2022 totaled $49.4 million, up 50% from $33.0 million in the prior-year period. The increase was primarily due to $8.1 million of severance related expense incurred upon the passing of our late Chief Executive Officer, and due to increases in non-cash stock-based compensation and an increase in salaries.

Balance Sheet and Related Metrics

Cash and marketable securities as of December 31, 2022 totaled approximately $155.2 million. Total debt under the Company’s credit agreement was $209.3 million. Net of $75 million of cash and marketable securities, total leverage as defined in the Company’s credit agreement was 1.3 times as of December 31, 2022. Net of total cash and marketable securities, total leverage was 0.5 times.

Notice of Conference Call

Entravision Communications Corporation will hold a conference call to discuss its fourth quarter and full year 2022 results on Thursday, March 9, 2023 at 5:00 p.m. Eastern Time. To access the conference call, please dial (844) 836-8739 (U.S.) or (412) 317-5440 (Int’l) ten minutes prior to the start time and reference Conference ID number 10176187. The call will also be available via live webcast on the investor relations portion of the Company’s website located at www.entravision.com.

About Entravision Communications Corporation

Entravision is a leading global advertising, media and ad-tech solutions company connecting brands to consumers by representing top platforms and publishers. Our dynamic portfolio includes digital, television and audio offerings. Digital, our largest revenue segment, is comprised of four business units: our digital sales representation business; Smadex, our programmatic ad purchasing platform; our branding and mobile performance solutions business; and our digital audio business. Through our digital sales representation business, we connect global media companies such as Meta, Twitter, TikTok and Spotify with advertisers in primarily emerging growth markets worldwide. Smadex is our mobile-first demand side platform, enabling advertisers to execute performance campaigns using machine learning. We also offer a branding and mobile performance solutions business, which provides managed services to advertisers looking to connect with global consumers, primarily on mobile devices, and our digital audio business provides digital audio advertising solutions for advertisers in the Americas. In addition to digital, Entravision has 49 television stations and is the largest affiliate group of the Univision and UniMás television networks. Entravision also manages 45 primarily Spanish-language radio stations that feature nationally recognized, Emmy award-winning talent. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.

Forward-Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company’s filings with the Securities and Exchange Commission.

Christopher T. Young
Interim Chief Executive Officer,
and Chief Financial Officer and Treasurer
Entravision Communications Corporation
310-447-3870

Kimberly Esterkin
ADDO Investor Relations
310-829-5400
evc@kesterkinaddo-com

Source: Entravision Communications Corporation

Townsquare Media (TSQ) – Takes A Big Step To Return Capital To Shareholders

Posted on by cpereira@noblefcm.com


Friday, March 10, 2023

Townsquare is a community-focused digital media and digital marketing solutions company with market leading local radio stations, principally focused outside the top 50 markets in the U.S. Our assets include a subscription digital marketing services business, Townsquare Interactive, providing website design, creation and hosting, search engine optimization, social media and online reputation management as well as other digital monthly services for approximately 26,800 SMBs; a robust digital advertising division, Townsquare IGNITE, a powerful combination of a) an owned and operated portfolio of more than 330 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data, and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and a portfolio of 321 local terrestrial radio stations in 67 U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local media brands such as WYRK.com, WJON.com, and NJ101.5.com and premier national music brands such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com and Loudwire.com.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q4 results. The company reported Q4 revenue of $120.3 million, an increase of 8.8% from the prior year period, beating our estimate of $118.1 million by 1.8%. Adj. EBITDA of $28.4 million grew by 11% from the same period last year and beat our estimate of $28 million by 1.4%. Digital advertising grew $5.2 million to $36.8 million, up 16.3% from the prior year period.

Soft start to the year. Management guided Q1 revenue to be flat to modestly higher from the year earlier in the range of $100 million to $102 million. Adj. EBITDA to be down yoy in the range of $17.5 million to $18.5 million. National advertising is pacing down 30% in Q1, a decline of $3 million from prior year quarter, with sports accounting for 66%. Its Interactive business has softened and is pacing flat revenues in Q1, while digital advertising is pacing up 12% to 14%.


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Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Entravision Communications (EVC) – Its Digital Businesses On A Roll

Posted on by cpereira@noblefcm.com


Friday, March 10, 2023

Entravision Communications Corporation is a diversified Spanish-language media company utilizing a combination of television and radio operations to reach Hispanic consumers across the United States, as well as the border markets of Mexico. Entravision owns and/or operates 53 primary television stations and is the largest affiliate group of both the top-ranked Univision television network and Univision’s TeleFutura network, with television stations in 20 of the nation’s top 50 Hispanic markets. The Company also operates one of the nation’s largest groups of primarily Spanish-language radio stations, consisting of 48 owned and operated radio stations.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q4 results. The company reported quarterly revenue of $296.3 million, up 27% from the prior year period, surpassing our estimate of $265.4 million by 11.7%. Adj. EBITDA of $36.5 million increased 11% year over year and beat our estimate of $34.8 million by 5.1%. The quarter was driven by strong digital revenue growth of $52.6 million, up 30% year-over-year.

Capital allocation. The company announced a 100% increase in its quarterly cash dividend, from $0.025 per share to $0.05 per share. Given its favorable cash position of $ $110.7 million and robust free cash flow generation of $63.3 million in 2022, we expect the company to seek additional accretive acquisitions and comfortably pay the dividend. Notably, management highlighted a favorable pipeline of potential targets.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Salem Media Group (SALM) – A Year Of Investing

Posted on by cpereira@noblefcm.com


Thursday, March 09, 2023

Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 beats expectations. The company reported revenue of $68.8 million, beating our estimate of $66.6 million by 3.3%. Adj. EBITDA of $7.3 million exceeded our estimate of $6 million by 21.3%. The favorable surprise in operating results was attributed to stronger than expected, high margin, political revenue of $2.1 million.

Favorable refinancing.  The company is issuing $44.7 million new 7.125% notes that mature in 2028 to replace its 6.75% notes due in 2024. The agreement would allow the company to access $4 million to pay down its revolver. The agreement is expected to close by the end of the month.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Release – Salem Media Group, Inc. Announces Fourth Quarter 2022 Total Revenue of $68.8 Million

Posted on by aweinsoff@channelchek.com

Research News and Market Data on SALM

March 08, 2023 4:05pm EST

Related Documents

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Earnings Webcast

IRVING, Texas–(BUSINESS WIRE)– Salem Media Group, Inc. (Nasdaq: SALM) released its results for the three and twelve months ended December 31, 2022.

Fourth Quarter 2022 Results

For the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021:

Consolidated

  • Total revenue decreased 0.5% to $68.8 million from $69.1 million;
  • Total operating expenses increased 38.0% to $67.2 million from $48.7 million;
  • Operating expenses, excluding stock-based compensation expense, debt modification costs, gains and losses on the sale or disposition of assets, legal settlement, impairments, depreciation expense and amortization expense (1) increased 5.7% to $61.6 million from $58.3 million;
  • Operating income decreased 92.0% to $1.6 million from $20.5 million;
  • The company had a net loss of $2.2 million, or $0.08 net loss per share compared to net income of $16.8 million, or $0.61 net income per diluted share;
  • EBITDA (1) decreased 78.5% to $4.9 million from $22.7 million; and
  • Adjusted EBITDA (1) decreased 33.0% to $7.3 million from $10.8 million.

Broadcast

  • Net broadcast revenue increased 4.5% to $53.3 million from $51.0 million;
  • Station Operating Income (“SOI”) (1) decreased 17.4% to $10.1 million from $12.3 million;
  • Same Station (1) net broadcast revenue increased 4.5% to $53.3 million from $51.0 million; and
  • Same Station SOI (1) decreased 15.7% to $10.3 million from $12.2 million.

Digital Media

  • Digital media revenue decreased 10.3% to $10.4 million from $11.6 million; and
  • Digital Media Operating Income (1) decreased 44.3% to $1.7 million from $3.0 million.

Publishing

  • Publishing revenue decreased 21.3% to $5.2 million from $6.5 million; and
  • Publishing Operating Loss (1) was $0.6 million as compared to publishing operating income of $0.2 million.

Included in the results for the quarter ended December 31, 2022 are:

  • A $2.3 million ($1.7 million, net of tax, or $0.06 per share) impairment charge to the value of broadcast licenses in Columbus, Portland, and San Francisco;
  • A $0.1 million ($0.1 million, net of tax) loss on the disposal of assets;
  • A $0.1 million gain on the early retirement of long-term debt associated with the 2024 Notes; and
  • A $0.1 million non-cash compensation charge related to the expensing of stock options.

Included in the results for the quarter ended December 31, 2021 are:

  • A $13.0 million ($9.6 million, net of tax, or $0.35 per diluted share) net gain on the disposition of assets relates to a $12.9 million pre-tax gain on the sale of land in Tampa, Florida as well as various other fixed asset disposals;
  • The company repurchased an additional $38.6 million of the 6.75% senior secured notes due 2024 (“2024 Notes”) for $39.3 million in cash, recognizing a net loss of $1.0 million ($0.7 million, net of tax or $0.03 per share); and
  • A $0.1 million non-cash compensation charge ($0.1 million, net of tax) related to the expensing of stock options.

Per share numbers are calculated based on 27,216,787 diluted weighted average shares for the quarter ended December 31, 2022, and 27,534,329 diluted weighted average shares for the quarter ended December 31, 2021.

Year to Date 2022 Results

For the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021:

Consolidated

  • Total revenue increased 3.4% to $267.0 million from $258.2 million;
  • Total operating expenses increased 23.5% to $261.8 million from $212.0 million;
  • Operating expenses, excluding stock-based compensation expense, debt modification costs, gains and losses on the sale or disposition of assets, legal settlement, impairments, depreciation expense and amortization expense (1) increased 8.3% to $238.2 million from $219.9 million;
  • The company’s operating income decreased 88.9% to $5.2 million from $46.2 million;
  • The company recognized $4.1 million in film distribution income from an unconsolidated equity investment;
  • The company had a net loss of $3.2 million, or $0.12 net loss per share compared to net income of $41.5 million, or $1.52 net income per diluted share;
  • EBITDA (1) decreased 68.5% to $21.9 million from $69.4 million; and
  • Adjusted EBITDA (1) decreased 26.7% to $28.1 million from $38.3 million.

Broadcast

  • Net broadcast revenue increased 7.2% to $205.3 million from $191.4 million;
  • SOI (1) decreased 9.6% to $41.3 million from $45.7 million;
  • Same station (1) net broadcast revenue increased 7.2% to $204.9 million from $191.2 million; and
  • Same station SOI (1) decreased 9.1% to $41.7 million from $45.8 million.

Digital media

  • Digital media revenue decreased 1.2% to $41.7 million from $42.2 million; and
  • Digital media operating income (1) decreased 5.4% to $7.9 million from $8.4 million.

Publishing

  • Publishing revenue decreased 18.9% to $20.0 million from $24.6 million; and
  • Publishing Operating Loss (1) was $2.2 million compared to publishing operating income of $1.4 million.

Included in the results for the twelve months ended December 31, 2022 are:

  • A $14.0 million ($10.3 million, net of tax, or $0.38 per share) impairment charge to the value of broadcast licenses in Boston, Chicago, Columbus, Dallas, Greenville, Honolulu, Little Rock, Orlando, Philadelphia, Portland, Sacramento and San Francisco;
  • A $8.4 million ($6.2 million, net of tax, or $0.23 per diluted share) net gain on the disposition of assets relates primarily to the $6.5 million pre-tax gain on the sale of land used in the company’s Denver, Colorado broadcast operations, the $1.8 million pre-tax gain on sale of land used in the company’s Phoenix, Arizona broadcast operations, and $0.5 million pre-tax gain on the sale of the company’s radio stations in Louisville, Kentucky offset by various fixed asset disposals;
  • A $48,000 gain on the early retirement of long-term debt associated with the 2024 Notes;
  • A $4.8 million ($3.5 million, net of tax, or $0.13 per share) legal settlement expense;
  • A $0.1 million ($0.1 million, net of tax) goodwill impairment charge;
  • A $0.3 million ($0.2 million, net of tax, or $0.01 per share) charge for debt modification costs; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options.

Included in the results for the twelve months ended December 31, 2021 are:

  • A $2.5 million ($1.9 million, net of tax, or $0.07 per share) charge for debt modification costs. On September 10, 2021, the company refinanced $112.8 million of the 2024 Notes by exchanging into $114.7 million (reflecting a call premium of 1.688%) of 7.125% Senior Secured Notes due 2028 (“2028 Notes”). The transaction was assessed on a lender-specific level and was accounted for as a debt modification in accordance with ASC 470 with $2.5 million of fees paid to third parties included in operating expenses for the period;
  • A $23.6 million ($17.4 million, net of tax, or $0.64 per diluted share) net gain on the disposition of assets relates to $12.9 million pre-tax gain on the sale of land in Tampa, Florida, a $10.5 million pre-tax gain on the sale of land in Lewisville, Texas, a $0.5 million pre-tax gain on the sale of Singing News Magazine and Singing News Radio and a $0.1 million pre-tax gain on the sale of the Hilary Kramer Financial Newsletter and related assets that was offset by a $0.4 million of additional costs recorded upon closing on the radio station WKAT-AM and an FM translator in Miami, Florida as well as various other fixed asset disposals;
  • The company repurchased an additional $43.3 million of the 2024 Notes for $44.0 million in cash, recognizing a net loss of $1.0 million ($0.8 million, net of tax or $0.03 per share); and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax or $0.01 per share) related to the expensing of stock options.

Per share numbers are calculated based on 27,206,434 diluted weighted average shares for the twelve months ended December 31, 2022, and 27,296,618 diluted weighted average shares for the twelve months ended December 31, 2021.

Balance Sheet

As of December 31, 2022, the company had $114.7 million outstanding on the 7.125% senior secured notes due 2028 (“2028 Notes”), $39.0 million outstanding on 6.75% senior secured notes due 2024 (“2024 Notes”) and $9.0 million outstanding balance on the ABL facility.

Acquisitions and Divestitures

The following transactions were completed since October 1, 2022:

  • On February 1, 2023, the company acquired the George Gilder Report and other digital newsletters and related website assets. The company assumed the deferred subscription liabilities paying no cash at the time of closing. The purchase price is 25% of net revenue generated from sales of most Eagle Financial products during the next year to people who are on George Gilder subscriber lists that are not already on Eagle Financial lists.
  • On January 10, 2023 the company closed on the acquisition of radio stations WWFE-AM, WRHC-AM and two FM translators in Miami, Florida for $3.0 million. The Asset Purchase Agreement (“APA”) was amended for Salem to acquire only the radio stations and translators for $3.0 million, a related party to acquire the land directly from the seller for $2.0 million, and Salem to have an option to purchase the land from the related party pursuant to an option to purchase real estate agreement. Salem’s executive officers, who have no relationship with the related party, began negotiations for the related party lease agreements and option agreements, subject to final approval by Salem’s Audit Committee pursuant to its related party transaction policy. The option to purchase real estate agreement was approved by Salem’s Audit Committee on March 1, 2023.
  • On January 6, 2023 the company closed on the acquisition of radio station WMYM-AM and an FM translator in Miami, Florida for $3.2 million. The company began operating the radio station under a Time Brokerage Agreement beginning on November 16, 2022. The APA was amended for Salem to acquire only the radio station and translator for $3.2 million, a related party to acquire the land directly from the seller for $1.8 million, and Salem to have an option to purchase the land from the related party pursuant to an option to purchase real estate agreement. Salem’s executive officers, who have no relationship with the related party, began negotiations for the related party lease agreements and option agreements, subject to final approval by Salem’s Audit Committee pursuant to its related party transaction policy. The option to purchase real estate agreement was approved by Salem’s Audit Committee on March 1, 2023
  • On December 30, 2022, the company acquired the book inventory and publishing rights of ISI Publishing for $0.4 million of cash.
  • On December 1, 2022, the company acquired radio station KKOL-AM in Seattle, Washington for $0.5 million. The company paid $0.4 million of cash at closing and $0.1 million of cash into an escrow account and began operating the station under a Local Marketing Agreement on June 7, 2021.
  • On October 1, 2022, the company acquired websites and the related assets of DayTradeSPY, a financial publication, for $0.6 million in cash. As part of the purchase agreement, the company may pay up to an additional $1.0 million of cash in contingent earn-out consideration within one-year of the closing date based on the achievement of certain revenue benchmarks.

Conference Call Information

Salem will host a teleconference to discuss its results on March 8, 2023 at 4:00 p.m. Central Time. To access the teleconference, please dial (888) 770-7291, and then ask to be joined into the Salem Media Group Fourth Quarter 2022 call or listen via the investor relations portion of the company’s website, located at investor.salemmedia.com. A replay of the teleconference will be available through March 22, 2023 and can be heard by dialing (800) 770-2030, passcode 2413416 or on the investor relations portion of the company’s website, located at investor.salemmedia.com.

Follow us on Twitter @SalemMediaGrp.

First Quarter 2023 Outlook

For the first quarter of 2023, the company is projecting total revenue to be between flat and a decline of 2% from the first quarter 2022 total revenue of $62.6 million. The company is also projecting operating expenses before gains or losses on the sale or disposal of assets, stock-based compensation expense, legal settlement, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation expense and amortization expense (“Recurring Operating Expenses”) to increase between 7% and 10% compared to the first quarter of 2022 Recurring Operating Expenses of $55.8 million.

A reconciliation of Recurring Operating Expenses to the most directly comparable GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the potential high variability, complexity and low visibility with respect to the charges excluded from this non-GAAP financial measure, in particular, the change in the estimated fair value of earn-out consideration, impairments and gains or losses from the disposition of fixed assets. The company expects the variability of the above charges may have a significant, and potentially unpredictable, impact on its future GAAP financial results.

About Salem Media Group, Inc.

Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape. Learn more about Salem Media Group, Inc. at www.salemmedia.com, Facebook and Twitter.

Forward-Looking Statements

Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem’s radio station formats, competition from new technologies, inflation and other adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem’s reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

(1) Regulation G

Management uses certain non-GAAP financial measures defined below in communications with investors, analysts, rating agencies, banks and others to assist such parties in understanding the impact of various items on its financial statements. The company uses these non-GAAP financial measures to evaluate financial results, develop budgets, manage expenditures and as a measure of performance under compensation programs.

The company’s presentation of these non-GAAP financial measures should not be considered as a substitute for or superior to the most directly comparable financial measures as reported in accordance with GAAP.

Regulation G defines and prescribes the conditions under which certain non-GAAP financial information may be presented in this earnings release. The company closely monitors EBITDA, Adjusted EBITDA, Station Operating Income (“SOI”), Same Station net broadcast revenue, Same Station broadcast operating expenses, Same Station Operating Income, Digital Media Operating Income, Publishing Operating Income (Loss), and operating expenses excluding gains or losses on the disposition of assets, stock-based compensation, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation and amortization, all of which are non-GAAP financial measures. The company believes that these non-GAAP financial measures provide useful information about its core operating results, and thus, are appropriate to enhance the overall understanding of its financial performance. These non-GAAP financial measures are intended to provide management and investors a more complete understanding of its underlying operational results, trends and performance.

The company defines Station Operating Income (“SOI”) as net broadcast revenue minus broadcast operating expenses. The company defines Digital Media Operating Income as net Digital Media Revenue minus Digital Media Operating Expenses. The company defines Publishing Operating Income (Loss) as net Publishing Revenue minus Publishing Operating Expenses. The company defines EBITDA as net income before interest, taxes, depreciation, and amortization. The company defines Adjusted EBITDA as EBITDA before gains or losses on the disposition of assets, before debt modification costs, before changes in the estimated fair value of contingent earn-out consideration, before impairments, before net miscellaneous income and expenses, before (gain) loss on early retirement of long-term debt and before non-cash compensation expense. SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are commonly used by the broadcast and media industry as important measures of performance and are used by investors and analysts who report on the industry to provide meaningful comparisons between broadcasters. SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are not measures of liquidity or of performance in accordance with GAAP and should be viewed as a supplement to and not a substitute for or superior to its results of operations and financial condition presented in accordance with GAAP. The company’s definitions of SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.

The company defines Same Station net broadcast revenue as broadcast revenue from its radio stations and networks that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. The company defines Same Station broadcast operating expenses as broadcast operating expenses from its radio stations and networks that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. The company defines Same Station SOI as Same Station net broadcast revenue less Same Station broadcast operating expenses. Same Station operating results include those stations that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. Same Station operating results for a full calendar year are calculated as the sum of the Same Station-results for each of the four quarters of that year. The company uses Same Station operating results, a non-GAAP financial measure, both in presenting its results to stockholders and the investment community, and in its internal evaluations and management of the business. The company believes that Same Station operating results provide a meaningful comparison of period over period performance of its core broadcast operations as this measure excludes the impact of new stations, the impact of stations the company no longer owns or operates, and the impact of stations operating under a new programming format. The company’s presentation of Same Station operating results are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The company’s definition of Same Station operating results is not necessarily comparable to similarly titled measures reported by other companies.

For all non-GAAP financial measures, investors should consider the limitations associated with these metrics, including the potential lack of comparability of these measures from one company to another.

The Supplemental Information tables that follow the condensed consolidated financial statements provide reconciliations of the non-GAAP financial measures that the company uses in this earnings release to the most directly comparable measures calculated in accordance with GAAP. The company uses non-GAAP financial measures to evaluate financial performance, develop budgets, manage expenditures, and determine employee compensation. The company’s presentation of this additional information is not to be considered as a substitute for or superior to the directly comparable measures as reported in accordance with GAAP.

Company Contact:
Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com

Source: Salem Media Group, Inc.

Released March 8, 2023