Form 8-K
ENTERCOM COMMUNICATIONS CORP false 0001067837 0001067837 2020-05-14 2020-05-14

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 14, 2020

 

ENTERCOM COMMUNICATIONS CORP.

(Exact Name of Registrant as Specified in Charter)

 

Pennsylvania

 

001-14461

 

23-1701044

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

2400 Market Street, 4th Floor

Philadelphia, Pennsylvania

 

19103

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (610) 660-5610

(Former Address of Principal Executive Offices)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbols

 

Name of each exchange

on which registered

Class A Common Stock, par value $.01 per share

 

ETM

 

New York Stock Exchange

Series A Junior Participating Convertible Preferred Stock, par value $0.01 per share

 

 

Series B Junior Participating Convertible Preferred Stock, par value $0.01 per share

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


Item 2.02. Results of Operations and Financial Conditions

On May 14, 2020, Entercom Communications Corp. (the “Company”) issued a press release (the “Press Release”) announcing first quarter 2020 results. A copy of the Press Release is attached as Exhibit 99.1 to this Current Report on Form 8-K. 

The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference in any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01. Exhibits

  (d) Exhibits

The following exhibits are provided as part of this Current Report on Form 8-K:

Exhibit
No.

   

Title

         
 

99.1

   

Entercom Communications Corp.’s Press Release, issued May 14, 2020

         
 

104

   

Cover Page Interactive Data File (embedded within the XBRL file)

-2-


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Entercom Communications Corp.

     

    By:

 

/s/ Andrew P. Sutor, IV

 

Andrew P. Sutor, IV

 

Executive Vice President and Secretary

Dated: May 14, 2020

-3-

EX-99.1

Exhibit 99.1

 

For Immediate Release    Contacts:
May 14, 2020    Joseph Jaffoni, Jennifer                
   Neuman, Norberto Aja
   JCIR
   (212) 835-8500
   etm@jcir.com

ENTERCOM COMMUNICATIONS REPORTS

FIRST QUARTER RESULTS

Philadelphia, PA—Entercom Communications Corp. (NYSE: ETM) today reported financial results for the quarter ended March 31, 2020.

Key Highlights

 

   

After being up over 7% February YTD, net revenues for the quarter were down 4% to $297 million due to the impact of COVID-19

 

   

Digital revenues were up 41% YoY for the quarter, propelled by strong audience and revenue growth in podcasting and digital audio advertising

 

   

To mitigate the impact of the downturn in revenues and to preserve liquidity, the Company rapidly executed the following actions:

 

   

Reduced fixed costs by $150 million during the remainder of 2020. The Company will also realize reduced variable expenses tied to revenues.

 

   

Cut planned capital expenditures by over 40% to a revised range of between $25 -$30 million for 2020.

 

   

Due to benefits provided by the CARES Act, cash income tax payments now expected to be less than $10 million for 2020.

 

   

Realized $10.8 million of proceeds from the sale of WAAF-FM in Boston in April.

 

   

Strong liquidity position and no near term maturities

 

   

$189 million of cash on-hand at March 31st

 

   

98% of outstanding debt matures November 2024 or later

David J. Field, President and Chief Executive Officer, stated: “I want to salute the outstanding work and dedication of the Entercom team, which has risen to the unique challenges of these unprecedented times to serve the American public, our customers and our communities. Entercom began the year on a strong note driving revenues up over 7% through February before facing the impact of the COVID-19 pandemic. We have taken important actions to mitigate the impact of the pandemic and are well positioned financially to operate effectively through the crisis. Strategically, we are well positioned to fully participate in the recovery and the attractive growth opportunities in the audio space, with strong leadership positions in broadcast radio and podcasting, the fastest growing digital audio platform, unparalleled leadership in news and sports, and strong data and analytics capabilities.”


First Quarter Summary

 

   

Net revenues for the quarter were $297.0 million, down 4% compared to $309.0 million in the first quarter of 2019

 

   

Operating income for the quarter was $11.4 million, which included a non-cash impairment charge of $1.1 million, compared to $30.4 million in the first quarter of 2019

 

   

Adjusted EBITDA for the quarter was $34.5 million, down 19% compared to $42.7 million in the first quarter of 2019

 

   

Net loss per diluted share for the quarter was $0.07 compared to net income of $0.02 per diluted share in the first quarter of 2019

 

   

Adjusted net loss per diluted share for the quarter was $0.01 compared to adjusted net income of $0.03 per diluted share in the first quarter of 2019

Additional Information

In April, the Company completed its sale of Boston station WAAF-FM to Educational Media Foundation (“EMF”) for $10.8 million in cash. EMF began programming the station on February 22, 2020 under a network affiliation agreement.

In response to the negative impact of COVID-19 on the economy and advertising market, the Company fully drew its revolving credit facility to increase the amount of cash on its balance sheet. As of March 31, 2020, the Company had outstanding $1,002 million of senior debt under its credit facilities, $425 million in second-lien notes and $400 million in senior notes (the amounts of senior debt and senior notes both exclude unamortized premium). In addition, the Company had $189 million in cash on hand.    

Earnings Conference Call and Company Information

Entercom will hold a conference call and simultaneous webcast regarding the quarterly earnings release on Thursday, May 14, 2020, at 10:00 AM Eastern Time. The public may access the conference call by dialing Toll Free: (888) 889-0278 and Toll: (773) 799-3659, passcode: Entercom (domestic and international callers). Due to COVID-19, there may be a delay in joining the call, and so participants should consider dialing in 15 minutes early to ensure hearing the entire call. Participants may also listen to a live webcast of the call by visiting the “Investor Relations” section of Entercom’s website at www.entercom.com. A replay of the conference call will be available for one week by dialing (888) 566-0689. A webcast replay of the conference call will be available beginning six hours after the call on the Company’s website for a period of two weeks. Additional information is available on the Company’s website at www.entercom.com.

Certain Definitions

All references to per share data, unless stated otherwise, are presented as per diluted share. All references to shares outstanding, unless stated otherwise, are presented to exclude unvested restricted stock units. All references to net debt are outstanding debt net of cash on hand.

Station Expenses consist of station operating expenses excluding non-cash compensation expense.


Corporate Expenses consist of corporate general and administrative expenses excluding non-cash compensation expense.

Station Operating Income consists of operating income (loss) before: depreciation and amortization; time brokerage agreement fees (income); corporate general and administrative expenses; non-cash compensation expense (which is otherwise included in station operating expenses); impairment loss; merger and acquisition costs, restructuring and integration costs, other expenses related to the refinancing; non-recurring expenses otherwise included in corporate or station expenses; and gain or loss on sale or disposition of assets.

Adjusted EBITDA consists of net income (loss) available to common shareholders, adjusted to exclude: income taxes (benefit); income from discontinued operations, net of income taxes or benefit; total other income or expense; net interest expense; depreciation and amortization; time brokerage agreement fees (income); non-cash compensation expense (which is otherwise included in station operating expenses and corporate G&A expenses); other expenses related to the refinancing; impairment loss, merger and acquisition costs, restructuring and integration costs, preferred stock dividends; non-recurring expenses otherwise included in corporate or station expenses, loss on early extinguishment of debt, and gain or loss on sale or disposition of assets.    

Adjusted Free Cash Flow consists of operating income (loss): (i) plus depreciation and amortization; net (gain) loss on sale or disposal of assets; non-cash compensation expense (which is otherwise included in station operating expenses and corporate general and administrative expenses); impairment loss; merger and acquisition costs; restructuring and integration costs, other income and non-recurring expenses otherwise included in corporate or station expenses; income from discontinued operations (excluding income taxes or tax benefit); and (ii) less net interest expense (excluding amortization of deferred financing costs or debt premium), Adjusted Income Taxes Paid, and Net Capital Expenditures.

Net Capital Expenditures consists of capital expenditures, including amortizable intangibles, adjusted to subtract reimbursed tenant improvement allowances.

Adjusted Income Taxes Paid consist of income tax paid, adjusted to exclude taxes paid related to the gain/loss on sale or exchange of radio station assets; and taxes paid related to the gain/loss on the sale of redundant property.

Adjusted Net Income (Loss) consists of net income (loss) available to common shareholders adjusted to exclude: (i) income taxes (benefit) as reported, including income taxes otherwise included in income from discontinued operations; (ii) gain/loss on sale of assets, derivative instruments and investments; (iii) non-cash compensation expense; (iv) impairment loss; (v) merger and acquisition costs, restructuring and integration costs, and non-recurring expenses otherwise included in corporate or station expenses; (vi) other expenses related to refinancing; and (vii) gain/loss on early extinguishment of debt. For purposes of comparability, income taxes are reflected at the expected statutory federal and state income tax rate of 30% without discrete items of tax.

Adjusted Net Income (Loss) Per Share - Diluted includes any dilutive equivalent shares when not anti-dilutive. Convertible Preferred Stock is treated as if it never converted for the purposes of Adjusted Net Income (Loss) Per Share - Diluted.


Non-GAAP Financial Measures

It is important to note that station operating income, station expense, corporate expense, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income (Loss) Per Share – Diluted, Adjusted Free Cash Flow, Net Capital Expenditures and Adjusted Income Taxes Paid are not measures of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”). Management believes that these measures are useful as a way to evaluate the Company and the means for Management to evaluate our radio stations’ performance and operations. Management believes that these measures are useful to an investor in evaluating our performance because they are widely used in the broadcast industry as a measure of a radio company’s operating performance.

Certain adjusted non-GAAP financial measures are presented in this release (e.g., Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share - Diluted). The adjustments exclude gain/loss on sale of assets, derivative instruments, and investments; non-cash compensation expense, other income, impairment loss, merger and acquisition costs, other expenses related to the refinancing, and gain/loss on early extinguishment of debt and non-recurring expenses recognized for restructuring charges or similar costs, including transition and integration costs. For purposes of comparability, income taxes are reflected at the expected federal and state income tax rate of 30%, without adjustment for discrete tax adjustments.

Management believes these adjusted non-GAAP measures provide useful information to Management and investors by excluding certain income, expenses and gains and losses that may not be indicative of the Company’s core operating and financial results. Similarly, Management believes these adjusted measures are a useful performance measure because certain items included in the calculation of net income (loss) may either mask or exaggerate trends in the Company’s ongoing operating performance. Further, the reconciliations corresponding to these adjusted measures, by identifying the individual adjustments, provide a useful mechanism for investors to consider these adjusted measures with some or all of the identified adjustments.

Management uses these non-GAAP financial measures on an ongoing basis to help track and assess the Company’s financial performance. You, however, should not consider non-GAAP measures in isolation or as substitutes for net income (loss), operating income, or any other measure for determining our operating performance that is calculated in accordance with generally accepted accounting principles. These non-GAAP measures are not necessarily comparable to similarly titled measures employed by other companies. The accompanying financial tables provide reconciliations to the nearest GAAP measure of all non-GAAP measures provided in this release.

Note Regarding Forward-Looking Statements

The information in this news release is being widely disseminated in accordance with the Securities and Exchange Commission’s Regulation FD.

This news announcement contains certain forward-looking statements that are based upon current expectations and certain unaudited information that is presented for illustrative purposes only and involves certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Additional information and key risks are described in the Company’s filings on Forms S-4, 8-K, 10-Q and 10-K with the Securities and Exchange Commission. Readers should note that these statements might be impacted by several factors including changes in the economic and regulatory climate and the business of radio broadcasting, in general. The unaudited pro forma information and same station operating data reflect adjustments and are presented for comparative purposes only and do not purport to be indicative


of what has occurred or indicative of future operating results or financial position. Accordingly, the Company’s actual performance may differ materially from those stated or implied herein. The Company assumes no obligation to publicly update or revise any unaudited pro forma or forward-looking statements.

About Entercom Communications Corp.

Entercom Communications Corp. (NYSE: ETM) is a leading American media and entertainment company reaching and engaging 170 million people each month through its premier collection of highly rated, award winning radio stations, digital platforms and live events. As one of the country’s two largest radio broadcasters, Entercom offers integrated marketing solutions and delivers the power of local connection on a national scale with coverage of close to 90% of persons 12+ in the top 50 markets. Entercom is the #1 creator of live, original, local audio content and the nation’s unrivaled leader in news and sports radio. Learn more about Philadelphia-based Entercom at www.entercom.com, Facebook and Twitter (@Entercom).


(amounts in thousands, except per share data)             
(unaudited)             
     Three Months Ended  
     March 31,  
     2020     2019  

STATEMENTS OF OPERATIONS

    

Net Revenues

   $ 297,030     $ 309,005  
  

 

 

   

 

 

 

Station Expenses

     249,549       247,570  

Station Expense - Non-Cash Compensation

     502       1,415  

Corporate Expenses

     15,959       18,778  

Corporate Expenses - Non-Cash Compensation

     1,278       2,157  

Depreciation And Amortization

     12,498       11,104  

Time Brokerage Agreement Expense (Income)

     —         40  

Merger And Acquisition Costs

     —         9  

Impairment Loss

     1,050       —    

Restructuring Charges

     4,209       1,014  

Integration Costs

     622       1,135  

Net (Gain) Loss On Sale Or Disposition of Assets

     —         (4,600
  

 

 

   

 

 

 

Total Operating Expenses

     285,667       278,622  
  

 

 

   

 

 

 

Operating Income

     11,363       30,383  
  

 

 

   

 

 

 

Net Interest Expense

     23,621       25,220  
  

 

 

   

 

 

 

Income (Loss) Before Income Taxes

     (12,258     5,163  

Income Taxes (Benefit)

     (3,120     2,038  
  

 

 

   

 

 

 

Net Income (Loss)

   $ (9,138   $ 3,125  
  

 

 

   

 

 

 

Net Income (Loss) Per Share – Basic

   $ (0.07   $ 0.02  
  

 

 

   

 

 

 

Net Income (Loss) Per Share – Diluted

   $ (0.07   $ 0.02  
  

 

 

   

 

 

 

Dividends Declared And Paid Per Common Share

   $ 0.02     $ 0.09  
  

 

 

   

 

 

 

Weighted Common Shares Outstanding – Basic

     134,890       138,099  
  

 

 

   

 

 

 

Weighted Common Shares Outstanding – Diluted

     134,890       138,523  
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

    

Net Capital Expenditures

   $ 8,899     $ 20,510  

Adjusted Income Taxes Paid

   $ 1,297     $ 697  

Cash Dividends On Common Stock Declared And Paid

   $ 2,692     $ 12,430  
     March 31,
2020
    December31,
2019
 

SELECTED BALANCE SHEET DATA

    

Cash and Cash Equivalents

   $ 189,238     $ 20,393  

Senior Debt - Term B-1 Loan (Includes Current Portion)

   $ 758,122     $ 770,000  

Senior Debt - Revolver (Includes Current Portion)

   $ 243,749     $ 117,000  

Senior Secured Notes

   $ 425,000     $ 425,000  

Senior Notes

   $ 400,000     $ 400,000  

Total Shareholders’ Equity

   $ 870,187     $ 881,443  


OTHER FINANCIAL DATA

 

     Three Months Ended  
     March 31,  
     2020     2019  

Reconciliation Of GAAP Operating Income To Station Operating Income

    

Operating Income

   $ 11,363     $ 30,383  

Corporate Expenses

     15,959       18,778  

Corporate Expenses - Non-Cash Compensation

     1,278       2,157  

Station Expenses - Non-Cash Compensation

     502       1,415  

Depreciation And Amortization

     12,498       11,104  

Merger And Acquisition Costs

     —         9  

Restructuring Charges

     4,209       1,014  

Impairment Loss

     1,050       —    

Integration Costs

     622       1,135  

Net Time Brokerage Agreement Expense (Income)

     —         40  

Net Gain (Loss) On Sale Or Disposition of Assets

     —         (4,600
  

 

 

   

 

 

 

Station Operating Income

   $ 47,481     $ 61,435  
  

 

 

   

 

 

 

Reconciliation Of GAAP Net Income (Loss) To Adjusted EBITDA

    

Net (Income) Loss

   $ (9,138   $ 3,125  

Income Taxes (Benefit)

     (3,120     2,038  

Net Interest Expense

     23,621       25,220  

Corporate Expenses - Non-Cash Compensation

     1,278       2,157  

Station Expenses - Non-Cash Compensation

     502       1,415  

Depreciation And Amortization

     12,498       11,104  

Time Brokerage Agreement Expense (Income)

     —         40  

Merger And Acquisition Costs

     —         9  

Restructuring Charges

     4,209       1,014  

Integration Costs

     622       1,135  

Non-Recurring Expenses Otherwise Included in Station Expenses

     3,000       —    

Impairment Loss

     1,050       —    

Net Gain (Loss) On Sale Or Disposition of Assets

     —         (4,600
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 34,522     $ 42,657  
  

 

 

   

 

 

 

Reconciliation of GAAP Net Income (Loss) To Adjusted Free Cash Flow

    

Net Income (Loss)

   $ (9,138   $ 3,125  

Depreciation And Amortization

     12,498       11,104  

Deferred Financing Costs Included In Interest Expense

     946       801  

Amortization Debt Premium Included In Interest Expense

     (849     (715

Non-Cash Compensation Expense

     1,780       3,572  

Merger And Acquisition Costs

     —         9  

Integration Costs

     622       1,135  

Restructuring Charges

     4,209       1,014  

Non-Recurring Expenses Otherwise Included in Station Expenses

     3,000       —    

Impairment Loss

     1,050       —    

Net (Gain) Loss On Sale Or Disposition of Assets

     —         (4,600

Income Taxes (Benefit)

     (3,120     2,038  

Net Capital Expenditures, Including Amortizable Intangibles

     (8,899     (20,510

Adjusted Income Taxes Paid

     (1,297     (697
  

 

 

   

 

 

 

Adjusted Free Cash Flow

   $ 802     $ (3,724
  

 

 

   

 

 

 


Reconciliation Of Capital Expenditures, Including Amortizable Intangibles, To Net Capital Expenditures

    

Capital Expenditures, Including Amortizable Intangibles

   $ (9,744   $ (20,510

Reimbursed Tenant Improvement Allowance

     845       —    
  

 

 

   

 

 

 

Net Capital Expenditures

   $ (8,899   $ (20,510
  

 

 

   

 

 

 

Reconciliation Of Income Taxes Paid To Adjusted Income Taxes Paid

    

Income Taxes Paid

   $ (1,297   $ (1,790

Income Taxes Paid Related to Gain/Loss On Sale Or Exchange Of Radio Station Assets

     —         894  

Income Taxes Paid Related to Gain/Loss On Sale Of Redundant Properties

     —         199  
  

 

 

   

 

 

 

Adjusted Income Taxes Paid

   $ (1,297   $ (697
  

 

 

   

 

 

 

Reconciliation of GAAP Net Income (Loss) To Adjusted Net Income

    

Net Income (Loss)

   $ (9,138   $ 3,125  

Income Taxes (Benefit)

     (3,120     2,038  

Merger And Acquisition Costs

     —         9  

Non-Recurring Expenses Otherwise Included in Station Expenses

     3,000       —    

Impairment Loss

     1,050       —    

Integration Costs

     622       1,135  

Restructuring Charges

     4,209       1,014  

Net (Gain) Loss On Sale Or Disposition of Assets

     —         (4,600

Non-Cash Compensation Expense

     1,780       3,572  
  

 

 

   

 

 

 

Adjusted Net Income Before Income Taxes

     (1,597     6,293  

Income Taxes

     (479     1,888  
  

 

 

   

 

 

 

Adjusted Net Income

   $ (1,118   $ 4,405  
  

 

 

   

 

 

 

Weighted Average Diluted Shares Outstanding For Purposes Of Computing Adjusted Net Income Per Share - Diluted

    

Weighted Common Shares Outstanding - Diluted As Reported

     134,890       138,523  

Diluted Shares Excluded When Reporting A Net Loss

     —         —    
  

 

 

   

 

 

 
     134,890       138,523  
  

 

 

   

 

 

 

Adjusted Net Income (Loss) Per Share - Diluted

   $ (0.01   $ 0.03  
  

 

 

   

 

 

 
v3.20.1
Document and Entity Information
May 14, 2020
Cover [Abstract]  
Entity Registrant Name ENTERCOM COMMUNICATIONS CORP
Amendment Flag false
Entity Central Index Key 0001067837
Document Type 8-K
Document Period End Date May 14, 2020
Entity Incorporation State Country Code PA
Entity File Number 001-14461
Entity Tax Identification Number 23-1701044
Entity Address, Address Line One 2400 Market Street
Entity Address, Address Line Two 4th Floor
Entity Address, City or Town Philadelphia
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19103
City Area Code (610)
Local Phone Number 660-5610
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Class A Common Stock, par value $.01 per share
Trading Symbol ETM
Security Exchange Name NYSE
Entity Emerging Growth Company false