Updated at 6:15pm Pacific
Cumulus Media revealed its Q2 2018 financial results right after the Closing Bell on Wall Street Monday afternoon.
CEO Mary Berner discussed much of the highlights from the company’s earnings report — its first following its emergence from Chapter 11 bankruptcy protection — in a call with financial analysts and shareholders at 4:30pm Eastern.
With a lightly traded stock at $18.20, following an eight-cent gain, the results arrived.
Cumulus offered predecessor company and combined successor and predecessor numbers.
On this basis, net revenue slipped by 1.8%, to $285.85 million from $290.5 million, while net income came in at $706.1 million. This Q2 2018 net income performance compares to net income of $5.7 million (19 cents) seen a year ago, prior to the evolution of Cumulus; this is required as Cumulus today as a “successor company” and thus comparisons to last year are a bit complex.
Total debt is now $1.3 billion; a year ago it was $2.33 billion.
While Berner was pleased with EBITDA of $66.4 million, a 1.5% decrease, it was $4.8 million in write-offs tied to nonpayment from US Traffic Network (USTN) that was perhaps the biggest news from Cumulus regarding its second-quarter financial performance.
Berner made the reveal, and Cumulus EVP/CFO John Abbott offered more detail.
“Given a number of indicators, we had no choice but to take a full reserve of our USTN exposure” Abbott said. This meant a $4.1 million bad debt provision, and recording a $700,000 revenue negation in June for Cumulus’ national radio arm, Westwood One.
This $4.8 million Q2 impact, Abbott said, “is a limited duration event,” he noted.
Why? A new multi-year deal with “another provider” in this space has been signed by Cumulus, and it is expected to start in September.
Abbott did not reveal who the new partner is. However, Total Traffic & Weather Network, an iHeartMedia-owned entity, disclosed later Monday evening that it is the party that has inked the deal with Cumulus.
In addition to an existing weather content partnership, TTWN will also provide real-time traffic reports and data to Cumulus’s 441 radio stations nationwide. Additionally, TTWN’s 24/7 News division will provide news support, including anchored news and reporting services.
TTWN SVP/Affiliate Sales Jack Dunkle said, “Our partnership with Cumulus Media brings together two industry leaders to provide radio listeners best-in-class traffic, news and weather information. We appreciate Cumulus’s trust in us as a content provider, and are thrilled to continue to grow our long-term partnership.”
Meanwhile, Abbott offered details of a second appeal filed by residents who live near a property in the Washington, D.C., market sold to Toll Brothers in 2015. The D.C. land sale is something Cumulus hopes will happen, as it will provide greater free cash flow. However, the sale isn’t final until the last unappealable approval is granted.
SOUR APPLES TO RIPE ORANGES
Berner noted that she was very pleased that Cumulus was “back” and that it had a “new start,” engineered under her tenure.
With $1 billion less debt, “we are well positioned for the path ahead,” he said.
Substantial Free Cash Flow is being realized, and this will pay down debt.
Further, digital revenue is rising, and up 30% so far this year, Berner added.
While Cumulus is no longer “a broken company,” which is how she describes the radio station owner as it was when she was named its chief executive, Berner did note that local revenue “in particular is challenging.”
For Q3, pacings are down 1%, she said. Berner then touted radio’s benefits to advertisers, including its “10-to-1 return on investment” to advertisers and how radio remains the most resilient of all media.
Breaking out the consolidated net revenue, Cumulus’ radio station group saw Q2 net revenue of $203.45 million. That’s down 2.5% year-over-year.
Westwood One — the impacted company suffering from USTN’s financial woes — registered Q2 net revenue of $81.3 million. That is statistically flat from Q2 2017.
Now, here comes the tricky part of the financial results.
A net loss of $488.45 million was seen in Q2 2018 for Cumulus Radio Station Group.
On the contrary, Westwood One saw net income in the most recent quarter of $259.4 million.
“Corporate and other” net income was $935.17 million.
This is the reason why Cumulus’ consolidated net revenue came in at $706.14 million — up from $700.47 million in Q2 2017.