Entercom ‘SOI’ Slip, Net Income Dip OK With Analysts

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Here’s the good news for Entercom Communications shareholders: the pure-play owner of broadcast radio stations saw its net revenues jump to $125 million in Q2, from $121.6 million in the year-ago period.


Unfortunately, the company set to usher in the CBS Radio stations saw its Station Operating Income (SOI) and Adjusted Net Income fall. Much higher station expenses may be to blame.

The all-important SOI fell to $34.3 million in Q2, from $38.2 million a year ago. At the same time, Entercom’s Adjusted Net Income — factoring in merger and acquisition costs and income tax benefit — came in at $10.3 million (26 cents per diluted share), down from $11.1 million (28 cents).

Nevertheless, the results are good: The 26 cents per share ANI is in-line with analysts polled by SeekingAlpha, while revenue beat the street by $3.75 million.

Adjusted EBITDA fell to $26.7 million, from $30.9 million.

The Q2 results include $5.8 million in merger and acquisition costs related to the pending acquisition of CBS Radio, which were primarily for legal and consulting services.

Entercom’s non-adjusted net income fell to $5.9 million (15 cents per diluted share), from $10.4 million (26 cents).

In prepared comments made before a Friday morning post-Opening Bell conference call with analysts to discuss Entercom’s Q2 results, President/CEO David J. Field said, “We continue to make great progress in our planning for our transformational merger with CBS Radio that will make us the No. 1 provider of original, local audio content in the U.S., and create the scale to compete with other media for a larger share of ad spending. As we meet with clients, agencies, and strategic partners, we are more confident than ever about the value-creating opportunities ahead.”

He added that Q2 revenue is up 1% on a same-station basis ex-political.

Why the jump in expenses? The Charlotte station acquisitions are the key reason, along with “some significant one time only expenses and additional costs related to building the organization in anticipation of the merger” with CBS Radio.

Field expects expense growth to recede in Q3, allowing the company to “look for meaningful margin expansion post-closing.”

SPECIAL DIVIDEND APPROVED

Additionally, Entercom said that, as permitted under its merger agreement with CBS Radio, it will pay a special one-time dividend of 20 cents per share on Aug. 30 to shareholders of record on Aug. 15.

This dividend will be in addition to the company’s regular quarterly dividend of $0.075 per share, which will be paid on Sept. 15 to shareholders of record on Aug. 15.


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