How do you do that – improve the operating margin while revenues are toeing the line at par? Simple – reduce expenses. The formula looks like this: Flat revenues adjusted by a 5% decrease in expenses equals a 10% increase in operating income.
President/CEO David J. Field commented, “I am pleased to report that Entercom generated solid growth in Station Operating Income and Adjusted EBITDA during the second quarter as our ongoing focus on business model reinvention enabled us to expand operating margins. At the same time, our investments in new local brands and content, expanded distribution, enhanced digital platforms, stronger operating systems and sales product development are meaningfully enhancing our competitive position and growth potential. We are increasingly excited about our future opportunities as we continue to deepen our audience engagement and deliver enhanced multi-platform marketing solutions to our customers.”
Entercom released the following Q2 highlights:
* Net revenues for the quarter were flat at $104.6 million
* Station expenses decreased 5% to $67.6 million
* Station operating income increased 10% to $37.0 million
* Adjusted EBITDA increased 12% to $32.0 million
* Adjusted net income per share decreased 23% to $0.24
* Free cash flow decreased 15% to $19.3 million
Major events during the quarter included the takeover of operations for KBLX-FM in San Francisco, adding both revenue and TBA expense into the financial mix; and the beginning of an alliance with the TuneIn digital platform.
Wells Fargo analyst Marci Ryvicker said that the flat topline revenue number was actually an excellent result, given that Wall Streeters were expecting it to be approximately $1M less that that figure.