It’s been one year since a major management transition at Townsquare Media — a move that led many radio industry observers and media brokers to question the company’s future as an owner of radio stations.
With an Election Day release of its Q3 2018 results, it is clear that Townsquare has elected to become one of the strongest operators of small- and mid-market radio stations in the U.S.
That said, one of the company’s co-CEOs made it clear that Townsquare Interactive (TSI) is a major focus of anticipated growth in 2019.
On October 16, 2017, Townsquare revealed that Dhruv Prasad and Bill Wilson had been promoted to the roles of co-CEOs. Townsquare Media founder and CEO Steven Price transitioned to the role of Executive Chairman of the Board.
At the time, Townsquare’s stock was in the midst of a significant dip, falling from $9.75 on Sept. 5, and finally bottoming out at $6.64 on Oct. 26, 2017. Q3 2017 results saw both net revenue and net income down, as Townsquare missed Street estimates with its disappointing report. Hints of the sale of its money-losing events division first emerged.
What a difference a year makes. On May 24, Townsquare completed its sale of North American Midway Entertainment (NAME) to Danny Huston’s North American Fairs for $23.5 million plus a 15% residual interest in any future proceeds of a sale of NAME in the next ten years.
With no more NAME to blame for net income challenges, Townsquare is rocking and rolling, and Prasad said in the company’s Q3 2018 earnings call early Tuesday (11/6) that he is “exceptionally pleased” with the company’s results.
The results were at the top end of Townsquare’s previously issued guidance and, said Wilson, “are reflective of the strong performance we have generated with our ‘local first’
Much of the growth in Q3, and what Townsquare hopes will bring further riches in 2019, is attributed to TSI and Townsquare Ignite, the company’s Social, Paid Search and Programmatic digital ad solutions arm.
In fact, it is something that largely sets Townsquare apart from several in-market competitors.
THE BIG PICTURE
On an overall basis, Townsquare’s Q3 2018 revenue climbed to $114.07 million, from $111.9 million.
Net income from continuing operations increased to $9.83 (35 cents per diluted share), from $7.09 million (25 cents).
That’s good news for investors, as three analysts surveyed by Zacks Investment Research anticipated revenue of $112.6 million.
Adjusted EBITDA increased by 6.9%, to $27.8 million from $26 million.
Further, Adjusted Net Income was $9.56 million (36 cents per diluted share), rising from $7.34 million (26 cents). Four analysts surveyed by Zacks expected EPS of 35 cents.
BUT … HOW IS RADIO?
If there is one thing curious about Townsquare’s Q3 earnings results, it is this: How did its radio stations perform in the quarter?
A press release containing the results, filed as an 8-K with the Securities and Exchange Commission, doesn’t break out the dollars by segment.
In fact, the lone mention of radio on the conference call was the July 2 closing of its acquisition of three properties in Central New Jersey and the suburban Philadelphia market from Connoisseur Media for approximately $17 million.
With Wilson speaking at length about TSI and noting its net revenue and adjusted EBITDA were driven by “the continued impressive growth of our digital businesses,” some may question just how healthy — or challenged — Townsquare’s 321 radio stations are.
The lone hint that they are actually strong came during the Q3 call, in which Townsquare revealed that it expects between $5.5 million and $5.6 million in political revenue in Q3. Further, Townsquare “shattered records” with political advertising in Montana, where it owns properties in Billings, Bozeman, Missoula and Shelby.
And, with the strong performance in Q3, Townsquare’s Board of Directors on Tuesday approved a quarterly cash dividend of $0.075 per share. The dividend will be payable on February 15, 2019 to shareholders of record as of the close of business on December 27.
That’s another sign that every revenue-generating component of a very different Townsquare from 12 months ago is on track for a strong finish to 2018 — and visions of an equally pleasing 2019.