Entercom Excels In EPS, But Misses On Revenue


Here’s something interesting that investors may not be sure how to react to: Entercom Communications saw its net income available to common shareholders dip from $13.68 million to $10.85 million in Q4 2016, while its net revenue jumped to $123.2 million from $117.7 million.

However, when you adjust the net income for one-time gains and costs, Entercom saw a dip to $13.44 million (34 cents per diluted share), from $13.87 million (36 cents).

That beat Wall Street forecasts by a good 6 cents per diluted share, even though there was a decrease.

At the same time, Entercom missed its net revenue estimate — by just $200,000.

As RBR + TVBR reported Wednesday morning ahead of Entercom’s Q4 and FY2016 earnings release, Entercom is followed by just two analysts. One analyst expected Entercom’s adjusted diluted EPS it to come in at 19 cents; the second analyst believed it would be 36 cents per share.

Entercom suffered from increased operational expenses (growing to $81.09 million, from $76.7 million) during Q4, contributing to lower operating income of $30.04 million, from $32.56 million.

Still, the all-important Station Operating Income for Entercom increased to $42.12 million, from $40.98 million.

But … adjusted EBITDA was statistically flat, shifting to $35.16 million from $35.24 million.

Free Cash Flow decreased to $22.73 million, from $25.46 million.

Meanwhile, Entercom in its Q4 recorded a one-time $4.7 million income tax benefit, which lowered income tax expense for the quarter. “The company simplified its corporate organizational structure during the quarter, allowing it to better utilize its existing state net operating loss carry-forwards,” Entercom explained. “As a result, the company reduced the valuation allowance it had previously established for these state tax assets and this adjustment decreased its income tax expense by $4.7 million.”

Entercom in November entered into a new $540 million credit facility, including a $60 million revolver and $480 million term loan. The proceeds of the refinancing were used to repay its prior credit facility and to call its $220 million of outstanding 10.5% Senior Notes. The refinancing will generate approximately $10 million in pro forma annual interest expense savings, Entercom says.

For the full-year 2016, net revenue increased to $460.25 million from $411.38 million. Adjusted net income grew to $38.82 million (98 cents per adjusted diluted share), from $33.82 million (87 cents).

In a prepared statement ahead of his company’s Wednesday morning conference call with Wall Street analysts, Entercom President/CEO David Field said of his company’s Q4 performance, “Entercom posted another solid quarter of organic growth, completing an excellent year. Since the start of Q4, we have acquired a great new cluster of stations in Charlotte and successfully refinanced our credit facility to drive our interest expense down.”

Of course, Entercom’s biggest news is its recently announced plan to merge with CBS Radio. Field called the tax-free merger, to be completed through a Reverse Morris Trust transaction, a “transformational event that will create scale-driven opportunities to compete more effectively with other media to accelerate growth. The combined company will be exceedingly well positioned to serve its listeners, advertisers, communities, shareholders, and employees and we are very excited about the opportunities that lie ahead.”

— Adam R Jacobson, in Fort Lauderdale