Salem Media (SALM) – A Nice Political Boost; Raising Estimates

Friday, November 13, 2020

Salem Media (SALM)

A Nice Political Boost; Raising Estimates

Salem Media Group is America’s leading radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and family-themed content and conservative values. In addition to its radio properties, Salem owns Salem Radio Network, which syndicates talk, news and music programming to approximately 2700 affiliates; Salem Radio Representatives, a national radio advertising sales force; Salem Web Network, a leading Internet provider of Christian content and online streaming; and Salem Publishing, a leading publisher of Christian themed magazines. Salem owns and operates 115 radio stations, with 73 stations in the nation’s top 25 top markets – and 25 in the top 10. Each of our radio properties has a full portfolio of broadcast and digital marketing opportunities.

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

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

    A solid quarter. The company exceeded both revenue and cash flow expectations in its third quarter results, driven in part by strong Political advertising. Total company revenues were $60.6 million, 6% better than our $57.1 million estimate. Cash flow, as measured by adjusted EBITDA, was $9.6 million, a strong 25% above our $7.7 million estimate.

    A Political boost.  The latest results benefited from extraordinary Political advertising, which was $1.9 million. Political was well ahead of the mid term elections in Q3 2018 at $1.2 million and the last general election in Q3 2016 of $1.5 million. Management indicated that Q4 Political advertising will be north of $2 million, which will likely get another boost from the run-off Senate elections …



This 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. 

Harte-Hanks Inc. (HRTH) – A Nice Upside Surprise; Raise Full Year Estimates

Friday, November 13, 2020

Harte-Hanks Inc. (HRTH)

A Nice Upside Surprise; Raise Full Year Estimates

Harte-Hanks is a marketing services company that provides multichannel marketing solutions as well as consulting, data analytics, and strategic assessment. The company’s offerings focus on business-to-business, retail, finance, and automotive segments through digital, social, mobile, and print media offerings. Harte-Hanks strives to develop better customer relationships through its marketing and analytical services for clients. The majority of its revenue is derived from its marketing services in the retail, technology, and consumer brand segments.

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

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

    Q3 outperforms. Q3 revenues of $47.7 million was significantly better than our $43.8 million estimate driven by a one-time project in its customer care/call center. We estimate that the one-time project contributed roughly $5 million in the quarter, or the variance to our Q3 revenue estimate. Notably, Q3 represented a sequential quarterly revenue improvement from Q2. Due to earlier cost cuts, the company over achieved our cash flow estimate, with adjusted EBITDA of $3.2 million versus our $2.2 million estimate.

    Driving efficiencies.  While revenue trends appear to be improving, management continues to drive operating efficiencies, with facility consolidations and further cost cuts. We believe these measures should allow the company to show strong cash flow growth in 2021. At this time, we are maintaining our 2021 estimates, although we believe that the company could over achieve our cash flow estimate with …



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. 

Townsquare Media Inc (TSQ) – An Impressive Recovery; Raising Estimates

Tuesday, November 10, 2020

Townsquare Media Inc (TSQ)

An Impressive Recovery; Raising Estimates

Townsquare Media Inc is an entertainment and media company offering digital marketing solutions in the United States and Canada. It owns and operates radio stations, social media properties focusing the small and mid-cap companies. Services offered to the clients include live events, local advertising, digital advertising, e-commerce offerings, few others. The segments through which the company operates its businesses are classified into Local marketing solutions and Entertainment segments. Revenues are generated from commercials through broadcasts and sale of internet based advertisements.

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

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

    Outperforms highest expectations. Q3 revenues of $95.3 million was better than our recent upwardly revised revenue estimate of $92.1 million. Cash flow, as measured by adj. EBITDA, was $17.5 million, significantly better than our $11.3 million estimate. The results benefited from a large $4.4 million in Political advertising, above our upwardly revised $2.6 million estimate, and accounted for the large variance in our estimates.

    Improving results, even without Political.  Revenue trends appear to be moderating even without the benefit of Political advertising. Q4 advertising pacings are down 17%, a sequential improvement from the 21% decline in q3, ex Political. Its Digital Interactive business continues its double-digit revenue growth in Q4, up an expected 16%, a sequential acceleration from 14% growth in Q3 …



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. 

E.W. Scripps Company (SSP) – A Political Firestorm

Tuesday, November 10, 2020

E.W. Scripps Company (SSP)

A Political Firestorm

The E.W. Scripps Co. (www.scripps.com) serves audiences and businesses through a growing portfolio of television, print and digital media brands. After approval of its acquisition of two Granite Broadcasting stations later this year, Scripps will own 21 local television stations as well as daily newspapers in 13 markets across the United States. It also runs an expanding collection of local and national digital journalism and information businesses including digital video news service Newsy. Scripps also produces television programming, runs an award-winning investigative reporting newsroom in Washington, D.C., and serves as the longtime steward of one of the nation’s largest, most successful and longest-running educational programs, Scripps National Spelling Bee. Founded in 1879, Scripps is focused on the stories of tomorrow.

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

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

    Q3 exceeds expectations. Local Media revenues, boosted by better Political and Core advertising, lead the company to over achieve expectations. Total company revenues were $493.7 million versus our $458.9 million estimate. Political advertising was a strong $96.4 million versus our $82.0 million estimate. Core advertising was 15.6% better than our estimate, $151.5 million versus $131.0 million. National Media revenues were 4.1% above expectations, as well.

    Cash flow stronger than expected.  Cash flow, as measured by adjusted EBITDA, was $145.9 million, versus our estimate of $119.4 million. The results reflected expenses that were largely in line, given the strict cost control measures. As such, the stronger revenues fell to the bottom line. Given better than expected high margin Political advertising, management increased its free cash flow guidance …



This 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. 

Cumulus Media Inc. (CMLS) – Improving Revenue Trends Nice Liquidity

Friday, November 06, 2020

Cumulus Media Inc. (CMLS)

Improving Revenue Trends; Nice Liquidity

CUMULUS MEDIA, Inc. (NASDAQ: CMLS) is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month — wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 428 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the GRAMMYS, the American Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with local impact and national reach through on-air, digital, mobile, and voice-activated media solutions, as well as access to integrated digital marketing services, powerful influencers, and live event experiences. CUMULUS MEDIA is the only audio media company to provide marketers with local and national advertising performance guarantees.

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

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

    Overachieves Q3 expectations. Total company revenues of $196.4 million was slightly above our $193.0 million estimate, but below consensus. Cash flow, as measured by adj. EBITDA, was $20.3 million, significantly better than our $10.2 million estimate, reflecting cost cutting actions.

    Revenue outlook still cautious.  Management indicated that Q4 revenue pacings, while improving sequentially, are down in the mid teen range, in spite of a heavy influx of Political advertising. Political advertising is expected to be a record $12.5 million in Q4. We are tweaking slightly lower our Q4 revenue estimate from $240.0 million to $235.0 million to be more conservative …



This 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 Corporation (EVC) – An Ugly Duckling Digital Biz Turns Into A Swan Price Target Raised

Friday, November 06, 2020

Entravision Communications Corporation (EVC)

An Ugly Duckling Digital Biz Turns Into A Swan; Price Target Raised

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.

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

    Q3 Beats Expectations. Revenues were 11% higher than our estimate, $62.9 million versus our estimate of $56.9 million, on the strength of Political advertising. Full year 2020 Political advertising set to be a record $28 million, well above $16.6 million in 2012. Q4 cash flow exceeded expectations, $16.4 million versus our $10.4 million estimate.

    Completes Cisneros acquisition.  The company closed on its 51% interest in Cisneros in October. The digital advertising rep firm provides girth and attractive growth in its Digital segment. Management indicated that the business will make positive EBITDA contributions in Q4 …



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. 

Gray Television Inc. (GTN) – Georgia Is On Its Mind For an Extraordinary Political Year

Friday, November 06, 2020

Gray Television Inc. (GTN)

Georgia Is On Its Mind For an Extraordinary Political Year

Gray Television, Inc. operates as a television broadcast company in the United States. As of April 6, 2010, it operated 36 television stations in 30 markets, including 17 affiliated with CBS Inc.; 10 affiliated with the National Broadcasting Company, Inc.; 8 affiliated with the American Broadcasting Company (ABC); and 1 affiliated with FOX Entertainment Group, Inc. (FOX). The company also operated 39 digital second channels comprising 1 affiliated with ABC, 4 affiliated with FOX, 7 affiliated with CW Network, LLC, 18 affiliated with Twentieth Television, Inc., 2 affiliated with Universal Sports Network, and 7 local news/weather channels. Gray Television, Inc. was founded in 1897 and is headquartered in Atlanta, Georgia.

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

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

    Beats Q3 expectations. Revenues beat even the most recent company update, fueled by record Political advertising, $128 million in the latest quarter. As a result of this high margin advertising, cash flow, as measured by adjusted EBITDA, exceeded expectations, $261 million versus our $197 million estimate.

    Extraordinary Political year.  The company once again raised its Political expectations, from $300 million to north of $380 million for 2020. Notably, management believes that the Senate run-off in Georgia could further boost Political advertising into December and early 2021 …



This 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. 

Tribune Publishing Company (TPCO) – Raising Estimates And Our Price Target

Thursday, November 05, 2020

Tribune Publishing Company (TPCO)

Raising Estimates And Our Price Target

Tribune Publishing Co is a print and online media company that publishes various newspapers and websites. It creates and distribute content across its media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities. The company manages its business as two distinct segments, M and X. Segment M is comprised of the company’s media groups excluding their digital revenues and related digital expenses, except digital subscription revenues when bundled with a print subscription. Segment X includes the company’s digital revenues and related digital expenses from local Tribune websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency and BestReviews.

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

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

    Beats Q3 expectations. The company beats our cash flow (as measured by Adjusted EBITDA) estimate, $27.2 million versus our estimate of $15.7 million on in line revenues of $188.6 million.

    Strong expense reductions.  The pandemic highlighted the ability of the company to have a flexible, home-based workforce, which eliminated the need for expensive office space. For instance, over 1/2 of the company’s papers no longer have office based newsrooms, a significant savings. We believe that there are additional costs to cut …



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. 

How to Invest in Esports

 

What Investors Should Consider Before Investing in the Esports Industry

 

Stocks of esports companies are benefitting from rising investor attention. The dramatic growth of esports as a spectator sport, entertainment, and even a gaming outlet makes the attention they’re getting justified.

Recent statistics on electronic sports (sometimes written e-sports or esports) show the events attract more than 500 million viewers worldwide. For those less familiar, esports is defined as organized video gaming. The games may consist of individual or multiplayer teams. Participants train and compete against other players or teams in an organized contest under standard agreed upon rules. The competitions attract large audiences both at the venue and across social media sites such as Twitch.tv. A reported 1.8 billion hours of esports, were watched in 2019, this is a 125% increase from hours reported the previous year. The trend has been positively impacted by the closure of traditional gambling outlets and sports in 2020.

Like any fledgling market with fast-growing revenue, there’s a rush of companies vying for a slice.  Coverage of other people playing video games has demonstrated that it has tremendous and growing pull and is able to find an increasing number of followers —the audience is expanding rapidly and appears to have far more potential to the upside.

 

How Do Esports Profit?

Esports companies are primarily licensing companies, they sell access to branded events similar to other sports business models. This could include broadcast licensing deals, merchandise, live-event tickets, sponsorships, advertising, and clothing. Companies have also sold rights to operate esports teams and officiate organized leagues.  

As with many young industries gaining popularity, there is only so much room at the top. So, although this segment within sports entertainment is growing, investor evaluation of the individual companies and their prospects is highly recommended.

What to Look For

When evaluating if esports is a fit for your portfolio and what stock or stocks provide the best risk/return opportunity, start with the basics you look for in other industries and companies.

Measure trends – Data for a number of esports companies including GMBL,
GAME:CA,
MLLLF, and others can be found under the COMPANY Data section in Channelchek. This could serve as a good place to find key ratios, charts, insider activity, and other statistical trends.

Company strength relative to peers –  Every company has advantages and disadvantages relative to the others. Brand recognition, contractual agreements, unsettled legal disputes, and sheer size, to name a few. Learn about the competing companies. This is especially important when a market segment is new and the future looks positive for the segment there is always a swarm of companies elbowing their way in. There are usually fewer over time as survivors benefit from outcompeting other entrants. Familiarize yourself with the companies you may be interested in by catching up with the news on the tickers. The COMPANY Data section of Channelchek is also a source for news feeds on many of the stocks.

Management Effectiveness – Most investors don’t have the luxury of sitting down with management and understanding the merits of their strategy and ability to implement. Detailed information can still be garnered from the explosion of online conferences and roadshows, many of these can be accessed on “replay” on YouTube and other video sites. Professional research should not be overlooked when evaluating management. Up-to-date research and analysis by FINRA licensed analysts can be invaluable for understanding management and the well-being of a particular company. If research isn’t available on all the companies you’re comparing, it helps to read reports  that are available to best understand what a Wall Street professional looks for in this segment. A current example is Esports Entertainment Group (GMBL) covered by Noble Capital Markets.

Take-Away

The popularity of watching online and in-person (most venue events are on hiatus due to COVID-19) professionals play video games is on the rise. This segment of the sports licensing, gaming, and broadcasting industry is in its infancy and yet to be fully defined. Infancy is when the potential for reward is usually greatest, but at the same time risk of loss can also be high.  Know as much as you can before deciding to be involved and in which companies. Read what true research analysts think, predictions on where the segment is headed vary greatly. However, most expectations point to increased popularity and acceptance. Esports and gaming video content already have a large audience, the opportunity to further expand into more mainstream acceptance and becoming even more lucrative while other sports entertainment is struggling, make it an interesting business to evaluate, and perhaps weave into a diverse portfolio.

 

Suggested Reading:

Fintech Pirates are Looting Unsuspecting Trading Accounts

Workcations Add a New Class of Traveler

The Biggest COVID Winners are in the Business of Making Winners

Each event in our popular Virtual Road Shows Series has a maximum capacity of 100 investors online. To take part, listen to and perhaps get your questions answered, see which virtual investor meeting intrigues you here.

 

Sources:

Channelchek: Company Data

A Stake in fast Growing Esports

Which Media Companies Will Profit From Election Ad Spending?

 

The Industry that Benefits from a Close Election

 

Front-running the market by predicting election results and then further speculating on the industries that would benefit from those results, is valid. However, this strategy has many moving parts, and there is much uncertainty. Investors may want to alternatively look at what is going on right now and instead ask: Is there an industry that benefits more from an election that is too-close-to-call? Is there an industry prospering from the election contest itself?

Throwing Money Around

Over $7 billion has been spent on political advertising so far this cycle. This is equivalent to handing $21.50 to every man, woman, and child in the United States. Relative to past elections, $7 billion represents an 80% increase over the previous record-breaking cycle of 2018.  Most of the spending is on local TV spots (60%).  The data company Advertising Analytics provides real-time media intelligence in the advertising space. They’ve broken down where and how the campaigns are spending their money throughout the country.

 

Markets With the Most Political Ad Spending 2019-2020

 

 

It’s no surprise that a bulk of the spending is in the so-called battleground or swing states where the race outcomes are more difficult to predict as political leanings are relatively balanced.

These are some of the most noteworthy statistics that have been reported:

  • Political TV advertisement spending is primarily local. Currently, there has been $247 million spent on national TV ads (including cable). This is a drop in the bucket of the $5.1 billion spent locally ($4.1b broadcast and $1b cable).
  • Presidential advertising this cycle, as compared to other offices, is three times what it had been. $2.63B compared to $855M in the previous cycle.
  • Senate advertising this cycle tallies to $1.67B as compared to $989M in the previous cycle.
  • House seat election advertising is a bit lower than the previous cycle at $950M as compared to $1.03B.
  • Local broadcast TV still makes up most of the political advertising. Including other mediums, it is at 60%.
  • The second and third largest categories are digital and cable at a combined 18%.
  • As far as Digital spending, direct response advertising (fundraising and list-building) made up 73%, television-style digital persuasion ads made up 23%

 

The stakes are high. Between a very emotional presidential race, an effort by the Democrats to win a majority in the Senate along with the Presidency, and the Republicans’ desire for more seats in the House, it seems likely the pace of spending will remain well above average.

Is There Opportunity?

There is an enormous amount of money being spent on these contests. The stakes are high. And perhaps should be paid attention to. Many investors are closing out 2020, looking to see which pharmaceutical company will come through with a viable entrant in the battle against COVID, and others are benefitting from positions in tech companies. Other investors are placing their bets with infrastructure stocks, green energy, and other so-called “Biden-stocks.” On the “Trump-stock” side, investors may be looking at finance companies or industries that compete directly with China. However, the entire contest itself may be worth consideration.  In an industry report dated October 12, 2020, Noble Capital Markets Senior Media Analyst Michael Kupinski wrote: “Some companies have provided positive updated revenues/guidance, but the stocks have had little reaction. We ponder if investors are focused on the outcome of the upcoming elections and not on the positive, current fundamental developments.”  With so much distracting investors, it may be that the media and broadcast stocks have been largely overlooked.

Using conjecture on what the future will bring to a sector is risky and can provide more rewards than going with the known. Investing in media companies that had a rough time at the beginning of 2020 is not as “sexy” as buying a breakthrough drug company or owning high flying tech stocks, but we already know that we have a gangbuster election cycle. Those companies with markets concentrated in swing states and hotly contested House and Senate races have done well and may bring in much more revenue in the coming week leading to election day.

Take-Away

For most media companies, additional revenue is very impactful to the bottom line; compared to other industries, the variable costs to earn an extra dollar is minimal. It has been an exceedingly long election cycle. Early voting may have caused campaigns to turn up the spending early; they are likely to stay turned up all the way. By the time the last vote is cast, almost $8 billion dollars will have been spent trying to buy a single pull of the lever from each of us.

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading:

Quarterly Review: Has The Market Already Factored In The Elections?

Is the TV Rollup Strategy Over?

Do Analysts Price Targets Matter?

 

Each event in our popular Virtual Road Shows Series has a maximum capacity of 100 investors online. To take part, listen to and perhaps get your questions answered, see which virtual investor meeting intrigues you here.

 

 Sources:

Kantar Estimates 2020 Election Ads Will Cost $7 Billion

https://www.mediapost.com/publications/article/357135/us-ad-spending-lags-gdp-heading-in-coming-out-o.html

https://www.kiplinger.com/investing/stocks/stocks-to-buy/601170/best-stocks-to-buy-president-donald-trump

https://www.forbes.com/sites/kenrapoza/2020/07/29/where-to-invest-ahead-of-a-trump-2020-win-or-a-biden-victory/#6673d47e19b0

Financials, industrials, and oil and gas all outperformed the S&P 500 after Trump won in November 2016. 

Travelzoo (TZOO) – Moving Along The Road To Recovery

Thursday, October 22, 2020

Travelzoo (TZOO)

Moving Along The Road To Recovery

Travelzoo is a US-based company which acts as a publisher of travel and entertainment offers. The company informs a varied number of members in Asia Pacific, Europe, and North America, as well as millions of website users, about the best travel, entertainment and local deals available from various companies. It provides travel, entertainment, and local businesses in a flexible manner to the various customer. The company operates in three geographic segments namely Asia Pacific, Europe, and North America. Travelzoo derives its revenue through advertising fees including listing fees paid by travel, entertainment, and local businesses to advertise their offers on company’s media properties. Most of the company’s revenue is derived from the North America.

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

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

    Exceeds Q3 expectations. We believe that the company posted one of the best Q3 results in the travel industry, with revenues up a strong 96% from Q2 revenues and a swing toward positive cash flow. Q3 revenues of $10.9 million was above our $9.9 million estimate. In addition, Q3 cash flow from continuing operations, or adjusted EBITDA, was better than expected at a positive $1.17 million versus our loss estimate of $1.53 million.

    Strong voucher sales.  The company’s cash position increased to a significant $51.7 million as of Sept. 30, nearly double the $26.7 million as of June 30, 2020, reflecting strong voucher sales. While redemptions of vouchers are likely to step up in coming quarters, we believe that the company’s cash position could increase to $60 million or even $70 million by the end of the fourth quarter based on …



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 (TZOO) – Reports Third Quarter 2020 Results

Travelzoo Reports Third Quarter 2020 Results

 

NEW YORK, October 21, 2020 – Travelzoo® (NASDAQ: TZOO):

  • Consolidated revenue of $13.8 million, down 42% from $23.8 million year-over-year
  • Net loss of $1.2 million
  • Non-GAAP consolidated operating profit of $1.2 million
  • Earnings per share (EPS) of ($0.10) attributable to Travelzoo from continuing operations

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2020. Consolidated revenue was $13.8 million, down 42% from $23.8 million year-over-year. Revenue increased by 97% from $7.0 million in Q2 2020. Reported revenue excludes revenue from discontinued operations in Asia Pacific. 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 loss attributable to Travelzoo from continuing operations was $1.1 million for Q3 2020. At the consolidated level, including minority interests, the reported net loss from continuing operations was $1.2 million. EPS from continuing operations was ($0.10), down from $0.21 in the prior-year period.

Non-GAAP operating profit was $1.2 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.3 million), stock option expenses ($1.2 million), and severance-related expenses ($0.9 million). See section “Non-GAAP Financial Measures” below.

“A strong improvement in our business is evident compared to Q2. We are seeing irresistibly priced deals coming to the market, and Travelzoo, as the most trusted media brand publishing and recommending travel deals, is telling its members about the very best deals”, said Holger Bartel, Global CEO.

Cash Position

As of September 30, 2020, consolidated cash, cash equivalents and restricted cash were $51.7 million. In April 2020 and May 2020, Travelzoo received low-interest government loans under the Paycheck Protection Program (PPP) of $3.1 million and $535,000, respectively. No further applications for loans have been made since then and the company does not anticipate requiring any further loans.

Travelzoo North America

North America business segment revenue decreased 40% year-over-year to $9.1 million. North America business segment revenue increased by 118% from $4.2 million in Q2 2020. Operating loss for Q3 was $696,000, or (8%) of revenue, compared to an operating profit of $2.6 million, or 17% of revenue in the prior-year period.

Travelzoo Europe

Europe business segment revenue decreased 57% year-over-year to $3.7 million. In constant currencies, revenue decreased 62% year-over-year. Europe business segment revenue increased by 97% from $1.9 million in Q2 2020. Operating loss for Q3 was $757,000, or (21%) of revenue, compared to an operating profit of $815,000, or 10% of revenue in the prior-year period.

Jack’s Flight Club

On January 13, 2020, Travelzoo acquired 60% of Jack’s Flight Club, a subscription service. In Q3 2020, the Jack’s Flight Club business segment generated $1.1 million in revenue from subscriptions with operating profit of $731,000. After consolidation with Travelzoo, Jack’s Flight Club’s net income was $312,000, with $187,000 attributable to Travelzoo as a result of recording $333,000 of amortization of intangible assets related to the acquisition and a haircut of revenue (derived from deferred revenue sold prior to acquisition) of $148,000 due to purchase accounting in accordance with U.S. GAAP.

Members and Subscribers

As of September 30, 2020, we had 30.5 million members worldwide. In Europe, the unduplicated number of Travelzoo members was 8.9 million as of September 30, 2020, down 3% from September 30, 2019. In North America, the unduplicated number of Travelzoo members was 16.5 million as of September 30, 2020, down 7% from September 30, 2019. Jack’s Flight Club had 1.7 million subscribers as of September 30, 2020, up 9% from September 30, 2019. In June 2020, Travelzoo sold its subsidiary in Japan, Travelzoo Japan K.K., to Mr. Hajime Suzuki. In connection with the sale, Travelzoo and Travelzoo Japan K.K. entered into a royalty-bearing licensing agreement for the exclusive use of Travelzoo members in Japan. In August 2020, Travelzoo sold its Singapore subsidiary to Mr. Julian Rembrandt and entered into a royalty-bearing licensing agreement for, among other things, the exclusive use of Travelzoo’s members in Australia, New Zealand and Singapore. Under the licensing agreements, Travelzoo’s existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor.

Discontinued Operations

As announced in a press release on March 10, 2020, Travelzoo decided to exit its Asia Pacific business which in 2019 reduced EPS by $0.60. The Asia Pacific business was classified as discontinued operations at 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 benefit was $244,000 in Q3 2020, compared to an income tax expense of $860,000 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 and goodwill, amortization of intangibles, stock option expenses, 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

We currently see a trend of recovery of our revenue. We have been able to reduce our operating expenses significantly. As a result of recovery of revenue and substantially lower operating expenses, we currently expect to achieve for Q4 a result close to break-even or a profit.

Conference Call

Travelzoo will host a conference call to discuss third quarter results today at 11:00 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; and year-over-year
  • access the webcast.

About Travelzoo

Travelzoo® provides our 30 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. For over 20 years we have worked 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 and Top 20 are registered trademarks of Travelzoo.

 

 

 

 

E.W. Scripps Company (SSP) – A Legacy Of Creating Value

Wednesday, October 21, 2020

E.W. Scripps Company (SSP)

A Legacy Of Creating Value

The E.W. Scripps Co. (www.scripps.com) serves audiences and businesses through a growing portfolio of television, print and digital media brands. After approval of its acquisition of two Granite Broadcasting stations later this year, Scripps will own 21 local television stations as well as daily newspapers in 13 markets across the United States. It also runs an expanding collection of local and national digital journalism and information businesses including digital video news service Newsy. Scripps also produces television programming, runs an award-winning investigative reporting newsroom in Washington, D.C., and serves as the longtime steward of one of the nation’s largest, most successful and longest-running educational programs, Scripps National Spelling Bee. Founded in 1879, Scripps is focused on the stories of tomorrow.

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

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

    C-Suite Interview. This reports highlights a recent C-Suite interview with Adam Symson, President and Chief Executive Officer, and Lisa Knutson, Executive Vice President and Chief Financial Officer, of E.W. Scripps. Among the topics that were discussed included debt levels, Retransmission revenue, the new broadcast TV standard, and regulations in the industry, among others. We believe that the informative interview provides insights on its operating strategy and enforces our constructive view of the company.

    Historic high debt levels.  Management provided thoughts on the company’s historic high debt levels following recent and planned acquisitions, its path to bring debt levels down, and its comfort level with leverage. Based on our estimates, the company’s debt will be …



This 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.