Company Announcements

iHeartMedia, Inc. Reports Results for 2022 Third Quarter

NEW YORK--(BUSINESS WIRE)--Nov. 3, 2022-- iHeartMedia, Inc. (Nasdaq: IHRT) today reported financial results for the quarter ended September 30, 2022.

Financial Highlights:

Q3 2022 Consolidated Results

  • Q3 Revenue of $989 million, up 7% YoY; at high end of guidance of up approximately 3%-7%
  • GAAP Operating loss of $211 million vs. GAAP Operating income of $80 million in Q3 2021
    • Includes FCC license non-cash impairment charge of $302 million driven by increase in interest rates
  • Consolidated Adjusted EBITDA of $252 million increased 10% YoY; at high end of guidance of $240 million to $255 million
    • Consolidated Adjusted EBITDA margin of 25.5%, up 70 bps from 24.8% in Q3 2021
  • Cash Flows from operating activities of $103 million
  • Free Cash Flow of $63 million; Free Cash Flow including $8 million of net proceeds from real estate sales was $70 million

Q3 2022 Digital Audio Group Continues Strong Growth

  • Digital Audio Group Revenue of $254 million up 23% YoY
    • Podcast Revenue of $91 million up 42% YoY
    • Digital Revenue excluding Podcast of $163 million up 15% YoY
  • Segment Adjusted EBITDA of $78 million increased 17% YoY
    • Digital Audio Group Adjusted EBITDA margin of 30.8%

Q3 2022 Multiplatform Group Demonstrates Resilience

  • Multiplatform Group Revenue of $660 million flat YoY
  • Segment Adjusted EBITDA of $207 million decreased 1% YoY
    • Multiplatform Group Adjusted EBITDA margin of 31.4%

Strong Free Cash Flow Generation, Proactive Capital Structure Improvement and Debt Paydown

  • Free Cash Flow of $63 million; including $8 million of net proceeds from real estate sales, Free Cash Flow including net proceeds from real estate sales was $70 million
  • Cash balance and total available liquidity1 of $295 million and $718 million, respectively, as of September 30, 2022
  • Repurchased $75 million in principal balance of 8.375% Senior Unsecured Notes (at a discount to par) for $68 million in cash; expected to generate approximately $6 million of annualized interest savings
    • As of September 30th combined Notes repurchases of $189 million at a discount to par of $173 million; expected to generate approximately $16 million of annualized interest savings

Guidance

  • Q4 Consolidated Revenue expected to increase by approximately 2%-6% YoY
  • October Consolidated Revenue up approximately 8% YoY impacted by strong political spend
  • Q4 Consolidated Adjusted EBITDA expected to be $305 million to $325 million
  • Expect to make significant progress in 2022 towards the previously announced Net Debt to Adjusted EBITDA ("net leverage") target of approximately 4x

_________________________________

1

Total available liquidity is defined as cash and cash equivalents plus available borrowings under our ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

Statement from Senior Management

“We’re pleased to report another quarter of solid operating results for iHeart, and our performance in the midst of the current climate of economic uncertainty is a strong indication of the successful transformation this company has undergone in which our high-growth digital revenues comprises 26% of total company revenues,” said Bob Pittman, Chairman and CEO of iHeartMedia, Inc. “Our Digital Audio Group continues to deliver industry-leading growth, and our Multiplatform Group has again demonstrated its resiliency during a difficult economic environment. We believe the strong positions of both of these groups with both consumers and advertisers give us the ability to both navigate through this period of economic uncertainty and position us for continued growth through the recovery and beyond.”

“This quarter our Adjusted EBITDA of $252 million, and our consolidated revenues, up approximately 7% year over year, were both at the high end of our guidance range – a solid performance despite the uncertain macroeconomic environment,” said Rich Bressler, President, Chief Operating Officer and Chief Financial Officer of iHeartMedia, Inc. “We also continue to keep profitability and Free Cash Flow Generation at the forefront, and despite this uncertain environment, our business has continued to achieve year over year growth in users, revenues, Adjusted EBITDA and Free Cash Flow.”

Consolidated Results of Operations

Third Quarter 2022 Consolidated Results

Our consolidated revenue increased $60.9 million, or 6.6%, during the three months ended September 30, 2022 compared to the same period of 2021. Digital Audio revenue increased $48.2 million, or 23.4%, driven primarily by continuing increases in demand for digital advertising and the continued growth of podcasting. Multiplatform revenue increased $0.9 million, or 0.1%, primarily resulting from increased political advertising revenue as 2022 is midterm election year, partially offset by a decrease in revenue due to a more challenging macroeconomic environment. Audio & Media Services revenue increased $11.7 million due to the increase in political advertising revenue.

Consolidated direct operating expenses increased $46.0 million, or 14.1%, during the three months ended September 30, 2022 compared to the same period of 2021. The increase in direct operating expenses was primarily driven by higher variable content, talent and profit sharing expenses in our Digital Audio Group and our Multiplatform Group.

Consolidated Selling, General & Administrative ("SG&A") expenses increased $9.8 million, or 2.5%, during the three months ended September 30, 2022 compared to the same period of 2021. The increase in Consolidated SG&A expenses was driven primarily by costs incurred in connection with executing on our cost reduction initiatives as well as increased sales commission expenses as a result of higher revenue. These increases were partially offset by lower variable bonus expense.

Our consolidated GAAP Operating loss was $211.2 million compared to Operating income of $80.1 million in the third quarter of 2021, which was driven primarily by a non-cash impairment charge of $302.1 million attributable to our FCC licenses as a result of increased interest rates.

Adjusted EBITDA increased to $252.2 million compared to $230.2 million in the prior-year period.

The Company generated $103.1 million of cash from operating activities, compared to $95.7 million in the prior-year period, and Free Cash Flow was $62.8 million, compared to $45.5 million in the prior-year period primarily due to an increase in cash flows from operations due to political advertising revenue as 2022 is a midterm election year and the continued growth of our Digital Audio Group business.

Business Segments: Results of Operations

Third Quarter 2022 Multiplatform Group Results

(In thousands)

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Revenue

$ 659,896

 

$ 658,979

 

0.1 %

 

$ 1,864,356

 

$ 1,762,726

 

5.8 %

Operating expenses1

452,631

 

450,549

 

0.5 %

 

1,328,688

 

1,268,107

 

4.8 %

Segment Adjusted EBITDA

$ 207,265

 

$ 208,430

 

(0.6) %

 

$ 535,668

 

$ 494,619

 

8.3 %

Segment Adjusted EBITDA margin

31.4 %

 

31.6 %

 

 

 

28.7 %

 

28.1 %

 

 

 

1 Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring Expenses.

Revenue from our Multiplatform Group increased $0.9 million, or 0.1% YoY, as a result of increased political advertising revenue as 2022 is a midterm election year, partially offset by a decrease in revenue due to a more challenging macroeconomic environment. Broadcast revenue grew $2.1 million, or 0.4% YoY, driven by higher political advertising revenue and an increase in trade and barter revenue, partially offset by lower spot revenue, while Networks declined $(0.7) million, or 0.5% YoY. Revenue from Sponsorship and Events decreased by $(0.1) million, or 0.2% YoY.

Operating expenses increased $2.1 million, or 0.5% YoY, driven primarily by higher content, talent and profit sharing expenses, partially offset by a decrease in variable bonus expense which was lower in the third quarter of 2022 compared to the prior year based on financial performance compared to targets.

Segment Adjusted EBITDA Margin modestly decreased YoY to 31.4% from 31.6%.

Third Quarter 2022 Digital Audio Group Results

(In thousands)

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Revenue

$ 253,953

 

$ 205,769

 

23.4 %

 

$ 720,733

 

$ 561,252

 

28.4 %

Operating expenses1

175,636

 

138,646

 

26.7 %

 

511,025

 

399,828

 

27.8 %

Segment Adjusted EBITDA

$ 78,317

 

$ 67,123

 

16.7 %

 

$ 209,708

 

$ 161,424

 

29.9 %

Segment Adjusted EBITDA margin

30.8 %

 

32.6 %

 

 

 

29.1 %

 

28.8 %

 

 

 

1 Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring Expenses.

Revenue from our Digital Audio Group increased $48.2 million compared to the prior year, including growth from Digital, excluding Podcast revenue, which grew $21.1 million, or 14.9%, YoY, to $162.7 million, driven by increased demand for digital advertising as well as Podcast revenue which increased by $27.1 million, or 42.1%, YoY, to $91.3 million, driven by higher revenues from the development of new podcasts as well as growth from existing podcasts. Digital Audio Group revenue increased as a result of general increased demand for digital advertising and the growing popularity of podcasting.

Operating expenses increased $37.0 million, or 26.7% YoY, due to higher variable content and production costs primarily resulting from the development of new podcasts and higher third-party digital costs and profit share expenses primarily resulting from higher revenue.

Segment Adjusted EBITDA Margin decreased YoY to 30.8% from 32.6%.

Third Quarter 2022 Audio & Media Services Group Results

(In thousands)

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Revenue

$ 77,794

 

$ 66,078

 

17.7 %

 

$ 209,716

 

$ 182,390

 

15.0 %

Operating expenses1

48,044

 

43,656

 

10.1 %

 

141,509

 

124,148

 

14.0 %

Segment Adjusted EBITDA

$ 29,750

 

$ 22,422

 

32.7 %

 

$ 68,207

 

$ 58,242

 

17.1 %

Segment Adjusted EBITDA margin

38.2 %

 

33.9 %

 

 

 

32.5 %

 

31.9 %

 

 

 

1 Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring Expenses.

Revenue from our Audio & Media Services Group increased $11.7 million, or 17.7% YoY, due to an increase in political advertising revenue as 2022 is a midterm election year.

Operating expenses increased $4.4 million, or 10.1% YoY, primarily as a result of higher employee compensation related to seasonal (political) staffing, higher merchandising costs and a new purchase agreement with third-parties for specific inventory spots.

Segment Adjusted EBITDA Margin increased YoY to 38.2% from 33.9%.

GAAP and Non-GAAP Measures: Consolidated

(In thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

988,930

 

 

$

928,051

 

$

2,786,393

 

 

$

2,496,321

 

Operating income (loss)

$

(211,187

)

 

$

80,111

 

$

(115,983

)

 

$

31,881

 

Adjusted EBITDA1

$

252,242

 

 

$

230,213

 

$

634,645

 

 

$

516,968

 

Net income (loss)

$

(309,776

)

 

$

3,673

 

$

(343,333

)

 

$

(270,343

)

Cash provided by operating activities2

$

103,110

 

 

$

95,736

 

$

206,699

 

 

$

196,593

 

Free cash flow1,2

$

62,753

 

 

$

45,462

 

$

94,132

 

 

$

95,258

 

Free cash flow including net proceeds from real estate sales1,2

$

70,453

 

 

$

54,072

 

$

125,667

 

 

$

116,309

 

_________________________________

1

See the end of this press release for reconciliations of (i) Adjusted EBITDA to Operating income, (ii) Adjusted EBITDA to net income (loss), (iii) Free Cash Flow and Free cash flow including net proceeds from real estate sales to cash provided by (used for) operating activities, (iv) revenue, excluding political advertising revenue, to revenue, and (v) Net Debt to Total Debt. See also the definitions of Adjusted EBITDA, Free Cash Flow, Free cash flow including net proceeds from real estate sales, Adjusted EBITDA margin, and Net Debt under the Supplemental Disclosure Regarding Non-GAAP Financial Information section in this release.

2

We made cash interest payments of $89.9 million in the three months ended September 30, 2022, compared to $79.2 million in the three months ended September 30, 2021. We made cash interest payments of $249.9 million in the nine months ended September 30, 2022, compared to $247.5 million in the nine months ended September 30, 2021.

Certain prior period amounts have been reclassified to conform to the 2022 presentation of financial information throughout the press release.

Liquidity and Financial Position

As of September 30, 2022, we had $295.4 million of cash on our balance sheet. For the nine months ended September 30, 2022, cash provided by operating activities was $206.7 million, cash used for investing activities was $82.8 million and cash used for financing activities was $179.7 million.

Capital expenditures for the nine months ended September 30, 2022 were $112.6 million compared to $101.3 million in the nine months ended September 30, 2021. Capital expenditures during the nine months ended September 30, 2022 increased primarily due to our real estate consolidation initiatives aimed at reducing our structural cost base.

As of September 30, 2022, the Company had $5,553.7 million of total debt and $5,258.3 million of Net Debt. The terms of our capital structure include no material maintenance covenants, and there are no material debt maturities prior to 2026, providing structural resilience. During the three months ended September 30, 2022, we repurchased $75.0 million in aggregate principal amount of iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027 (at a discount to par) for $68.1 million in cash.

Cash balance and total available liquidity2 were $295.4 million and $718.4 million, respectively, as of September 30, 2022.

The Company believes its previously announced modernization initiatives and other cost saving actions - in combination with the Company’s resilient capital structure - have substantially expanded the Company’s financial flexibility and liquidity while positioning the Company for further margin improvement over time.

_________________________________

2

Total available liquidity is defined as cash and cash equivalents plus available borrowings under our ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

Revenue Streams

The tables below present the comparison of our historical revenue streams (including political revenue) for the periods presented:

(In thousands)

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Broadcast Radio

$

485,571

 

 

$

483,456

 

 

0.4

%

 

$

1,365,356

 

 

$

1,293,134

 

 

5.6

%

Networks

 

127,239

 

 

 

127,920

 

 

(0.5

)%

 

 

372,329

 

 

 

366,592

 

 

1.6

%

Sponsorship and Events

 

42,562

 

 

 

42,663

 

 

(0.2

)%

 

 

114,226

 

 

 

93,641

 

 

22.0

%

Other

 

4,524

 

 

 

4,940

 

 

(8.4

)%

 

 

12,445

 

 

 

9,359

 

 

33.0

%

Multiplatform Group 1,2

 

659,896

 

 

 

658,979

 

 

0.1

%

 

 

1,864,356

 

 

 

1,762,726

 

 

5.8

%

Digital ex. Podcast

 

162,700

 

 

 

141,573

 

 

14.9

%

 

 

475,254

 

 

 

405,276

 

 

17.3

%

Podcast

 

91,253

 

 

 

64,196

 

 

42.1

%

 

 

245,479

 

 

 

155,976

 

 

57.4

%

Digital Audio Group

 

253,953

 

 

 

205,769

 

 

23.4

%

 

 

720,733

 

 

 

561,252

 

 

28.4

%

Audio & Media Services Group 1,2

 

77,794

 

 

 

66,078

 

 

17.7

%

 

 

209,716

 

 

 

182,390

 

 

15.0

%

Eliminations

 

(2,713

)

 

 

(2,775

)

 

 

 

 

(8,412

)

 

 

(10,047

)

 

 

Revenue, total

$

988,930

 

 

$

928,051

 

 

6.6

%

 

$

2,786,393

 

 

$

2,496,321

 

 

11.6

%

1

Excluding the impact of political revenue, Revenue from the Multiplatform Group and Revenue, total increased by 1.8% and 3.8% for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, respectively. Excluding the impact of political revenue, Revenue from Audio & Media Services increased by 0.1% for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. See the end of this press release for a reconciliation of revenue, excluding political advertising revenue, to revenue.

2

Excluding the impact of political revenue, Revenue from the Multiplatform Group and Revenue, total increased by 4.4% and 9.8% for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, respectively. Excluding the impact of political revenue, Revenue from Audio & Media Services increased by 4.8% for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. See the end of this press release for a reconciliation of revenue, excluding political advertising revenue, to revenue.

Conference Call
iHeartMedia, Inc. will host a conference call to discuss results and business outlook on November 3, 2022, at 4:30 p.m. Eastern Time. The conference call number is (888) 330-2446 (U.S. callers) and +1 (240) 789-2732 (International callers) and the passcode for both is 71596. A live audio webcast of the conference call will also be available on the Investors homepage of iHeartMedia's website investors.iheartmedia.com. After the live conference call, a replay will be available for a period of thirty days. The replay numbers are (800) 770-2030 (U.S. callers) and +1 (647) 362-9199 (International callers) and the passcode for both is 71596. An archive of the webcast will be available beginning 24 hours after the call for a period of thirty days.

About iHeartMedia, Inc.

iHeartMedia (Nasdaq: IHRT) is the number one audio company in the United States, reaching nine out of 10 Americans every month. It consists of three business groups.

With its quarter of a billion monthly listeners, the iHeartMedia Multiplatform Group has a greater reach than any other media company in the U.S. Its leadership position in audio extends across multiple platforms, including more than 860 live broadcast stations in over 160 markets nationwide; its National Sales organization; and the company’s live and virtual events business. It also includes Premiere Networks, the industry’s largest Networks business, with its Total Traffic and Weather Network (TTWN); and BIN: Black Information Network, the first and only 24/7 national and local all news audio service for the Black community. iHeartMedia also leads the audio industry in analytics, targeting and attribution for its marketing partners with its SmartAudio suite of data targeting and attribution products using data from its massive consumer base.

The iHeartMedia Digital Audio Group includes the company’s fast-growing podcasting business -- iHeartMedia is the number one podcast publisher in downloads, unique listeners, revenue and earnings -- as well as its industry-leading iHeartRadio digital service, available across more than 250 platforms and 2,000 devices; the company’s digital sites, newsletters, digital services and programs; its digital advertising technology companies; and its audio industry-leading social media footprint.

The company’s Audio & Media Services reportable segment includes Katz Media Group, the nation’s largest media representation company, and RCS, the world's leading provider of broadcast and webcast software.

Certain statements herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which may cause the actual results, performance or achievements of iHeartMedia, Inc. and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The words or phrases “guidance,” “believe,” “expect,” “anticipate,” “estimates,” “forecast” and similar words or expressions are intended to identify such forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances, such as statements about expectations regarding economic recovery and the recovery of advertising revenue, our expectations about future continued growth, expectations regarding the Company's digital transformation, financial performance of our segments, our capital and operating expense reduction initiatives, our business plans, strategies and initiatives, expected interest rates and interest expense savings, our expectations about certain markets and our anticipated financial performance, liquidity, and net leverage are forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other important factors, some of which are beyond our control and are difficult to predict. Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: risks related to weak or uncertain global economic conditions; the impact of the COVID-19 pandemic; increased competition; dependence upon the performance of on-air talent, program hosts and management; fluctuations in operating costs; technological changes and innovations; shifts in population and other demographics; impact of our substantial indebtedness; impact of acquisitions, dispositions and other strategic transactions; information technology and cyber-security risks; risks related to our indebtedness; legislative or regulatory requirements; impact of legislation, ongoing litigation or royalty audits on music licensing and royalties; regulations and concerns regarding privacy and data protection; risks related to our Class A common stock; and regulations impacting our business and the ownership of our securities. Other unknown or unpredictable factors also could have material adverse effects on the Company’s future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date hereof. Additional risks that could cause future results to differ from those expressed by any forward-looking statement are described in the Company’s reports filed with the U.S. Securities and Exchange Commission, including in the section entitled “Item 1A. Risk Factors” of iHeartMedia, Inc.’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. The Company does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

APPENDIX

TABLE 1 - Comparison of operating performance

(In thousands)

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Revenue

$

988,930

 

 

$

928,051

 

6.6

%

 

$

2,786,393

 

 

$

2,496,321

 

11.6

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses (excludes depreciation and amortization)

 

371,719

 

 

 

325,766

 

14.1

%

 

 

1,067,625

 

 

 

939,094

 

13.7

%

Selling, general and administrative expenses (excludes depreciation and amortization)

 

399,892

 

 

 

390,086

 

2.5

%

 

 

1,163,293

 

 

 

1,105,056

 

5.3

%

Depreciation and amortization

 

109,305

 

 

 

108,100

 

 

 

 

334,144

 

 

 

343,408

 

 

Impairment charges

 

309,750

 

 

 

11,647

 

 

 

 

311,329

 

 

 

49,391

 

 

Other operating expense, net

 

9,451

 

 

 

12,341

 

 

 

 

25,985

 

 

 

27,491

 

 

Operating income (loss)

$

(211,187

)

 

$

80,111

 

 

 

$

(115,983

)

 

$

31,881

 

 

Depreciation and amortization

 

109,305

 

 

 

108,100

 

 

 

 

334,144

 

 

 

343,408

 

 

Impairment charges

 

309,750

 

 

 

11,647

 

 

 

 

311,329

 

 

 

49,391

 

 

Other operating expense, net

 

9,451

 

 

 

12,341

 

 

 

 

25,985

 

 

 

27,491

 

 

Share-based compensation expense

 

10,437

 

 

 

5,993

 

 

 

 

24,582

 

 

 

17,581

 

 

Restructuring expenses

 

24,486

 

 

 

12,021

 

 

 

 

54,588

 

 

 

47,216

 

 

Adjusted EBITDA1

$

252,242

 

 

$

230,213

 

9.6

%

 

$

634,645

 

 

$

516,968

 

22.8

%

Certain prior period amounts have been reclassified to conform to the 2022 presentation of financial information throughout the press release.

1

See the end of this press release for reconciliations of (i) Adjusted EBITDA to Operating income, (ii) Adjusted EBITDA to net income (loss), (iii) Free Cash Flow and Free cash flow including net proceeds from real estate sales to cash provided by (used for) operating activities, (iv) revenue, excluding political advertising revenue, to revenue, and (v) Net Debt to Total Debt. See also the definitions of Adjusted EBITDA, Free Cash Flow, Free cash flow including net proceeds from real estate sales, Adjusted EBITDA margin and Net Debt under the Supplemental Disclosure section in this release.

TABLE 2 - Statements of Operations

(In thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

988,930

 

 

$

928,051

 

 

$

2,786,393

 

 

$

2,496,321

 

Operating expenses:

 

 

 

 

 

 

 

Direct operating expenses (excludes depreciation and amortization)

 

371,719

 

 

 

325,766

 

 

 

1,067,625

 

 

 

939,094

 

Selling, general and administrative expenses (excludes depreciation and amortization)

 

399,892

 

 

 

390,086

 

 

 

1,163,293

 

 

 

1,105,056

 

Depreciation and amortization

 

109,305

 

 

 

108,100

 

 

 

334,144

 

 

 

343,408

 

Impairment charges1

 

309,750

 

 

 

11,647

 

 

 

311,329

 

 

 

49,391

 

Other operating expense, net

 

9,451

 

 

 

12,341

 

 

 

25,985

 

 

 

27,491

 

Operating income (loss)

 

(211,187

)

 

 

80,111

 

 

 

(115,983

)

 

 

31,881

 

Interest expense, net

 

87,890

 

 

 

82,481

 

 

 

248,603

 

 

 

252,489

 

Gain on investments, net

 

(3,466

)

 

 

(10,367

)

 

 

4,359

 

 

 

39,468

 

Equity in loss of nonconsolidated affiliates

 

(132

)

 

 

(1,056

)

 

 

(190

)

 

 

(1,115

)

Gain on extinguishment of debt

 

6,892

 

 

 

(7,896

)

 

 

15,095

 

 

 

(7,896

)

Other expense, net

 

(581

)

 

 

(1,785

)

 

 

(3,026

)

 

 

(2,955

)

Income (loss) before income taxes

 

(296,364

)

 

 

(23,474

)

 

 

(348,348

)

 

 

(193,106

)

Income tax benefit (expense)

 

(13,412

)

 

 

27,147

 

 

 

5,015

 

 

 

(77,237

)

Net income (loss)

 

(309,776

)

 

 

3,673

 

 

 

(343,333

)

 

 

(270,343

)

Less amount attributable to noncontrolling interest

 

587

 

 

 

493

 

 

 

1,211

 

 

 

486

 

Net income (loss) attributable to the Company

$

(310,363

)

 

$

3,180

 

 

$

(344,544

)

 

$

(270,829

)

1

Impairment charges in nine months ended September 30, 2022 includes $302.1 million related to the impairment of FCC licenses, $8.5 million related to impairments of right-of-use assets and $0.7 million related to leasehold improvements (in the latter two cases, related to leasehold improvements as a result of proactive decisions by management to exit and sublease a number of operating leases in connection with strategic actions to streamline the Company's real estate footprint as part of the Company's modernization initiatives). Impairment charges of $49.4 million in the nine months ended September 30, 2021 related to $38.0 million of impairments of right-of-use assets and $11.4 million related to leasehold improvements as a result of proactive decisions by management to abandon and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives.

TABLE 3 - Selected Balance Sheet Information

Selected balance sheet information for September 30, 2022 and December 31, 2021:

(In millions)

September 30, 2022

 

December 31, 2021

Cash

$

295.4

 

 

$

352.1

 

Total Current Assets

 

1,408.6

 

 

 

1,472.9

 

Net Property, Plant and Equipment

 

692.3

 

 

 

782.1

 

Total Assets

 

8,329.7

 

 

 

8,881.3

 

Current Liabilities (excluding current portion of long-term debt)

 

739.4

 

 

 

848.7

 

Long-term Debt (including current portion of long-term debt)

 

5,553.7

 

 

 

5,738.9

 

Stockholders' Equity

 

592.8

 

 

 

915.8

 

Supplemental Disclosure Regarding Non-GAAP Financial Information

The following tables set forth the Company’s Adjusted EBITDA, Adjusted EBITDA margin, revenues excluding political advertising revenue, and Free Cash Flow and Free cash flow including net proceeds from real estate sales for the three and nine months ended September 30, 2022 and 2021, and Net Debt as of September 30, 2022. Adjusted EBITDA is defined as consolidated Operating income (loss) adjusted to exclude restructuring expenses included within Direct operating expenses and SG&A expenses, and share-based compensation expenses included within SG&A expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges and Other operating expense, net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Loss (gain) on investments, net, (Gain) loss on extinguishment of debt, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense, net, Share-based compensation expense, and restructuring expenses. Restructuring expenses primarily include expenses incurred in connection with cost-saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

The Company uses Adjusted EBITDA and Adjusted EBITDA margin, among other measures, to evaluate the Company’s operating performance. Adjusted EBITDA is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of the Company’s operational strength and performance of its business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets.

The Company believes the presentation of these measures is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company’s management. The Company believes it helps improve investors’ ability to understand the Company’s operating performance and makes it easier to compare the Company’s results with other companies that have different capital structures or tax rates. In addition, the Company believes this measure is also among the primary measures used externally by the Company’s investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry.

Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of the Company’s ability to fund its cash needs. As it excludes certain financial information compared with operating income, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded.

We define Free Cash Flow as Cash provided by (used for) operating activities less capital expenditures, which is disclosed as Purchases of property, plant and equipment in the Company's Consolidated Statements of Cash Flows. We define Free cash flow including net proceeds from real estate sales as Free Cash Flow further adjusted to include proceeds from real estate sales. We use Free Cash Flow and Free cash flow including net proceeds from real estate sales, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow and Free cash flow including net proceeds from real estate sales are meaningful to investors because they provide them with a view of the Company's liquidity after deducting capital expenditures, which are considered to be a necessary component of ongoing operations; and include proceeds from real estate sales in the case of Free cash flow including net proceeds from real estate sales. In addition, we believe that Free Cash Flow and Free cash flow including net proceeds from real estate sales helps improve investors' ability to compare our liquidity with that of other companies.

Since Free Cash Flow and Free cash flow including net proceeds from real estate sales are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, Cash provided by operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow and Free cash flow including net proceeds from real estate sales is not necessarily a measure of our ability to fund our cash needs.

The Company presents revenue, excluding the effects of political revenue. Due to the cyclical nature of the electoral system and the seasonality of the related political revenue, management believes presenting revenue, excluding the effects of political revenue, provides additional information to investors about the Company’s revenue growth from period to period.

We define Net Debt as Total Debt less Cash and cash equivalents. We define the Net Debt to Adjusted EBITDA ratio as Net Debt divided by Adjusted EBITDA. The Company uses the Net Debt to Adjusted EBITDA ratio to evaluate the Company's leverage. We believe this measure is an important indicator of the Company's ability to service its long-term debt obligations.

Since these non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, the most directly comparable GAAP financial measures as an indicator of operating performance or liquidity.

As required by the SEC rules, the Company provides reconciliations below to the most directly comparable measures reported under GAAP, including (i) Adjusted EBITDA to Operating income, (ii) Adjusted EBITDA to net income (loss), (iii) Free Cash Flow and Free cash flow including net proceeds from real estate sales to cash provided by (used for) operating activities, (iv) revenue, excluding political advertising revenue, to revenue, and (v) Net Debt to Total Debt.

We have provided forecasted Revenue and Adjusted EBITDA guidance for the quarter ending December 31, 2022 and net leverage guidance for December 31, 2022, which reflects anticipated Adjusted EBITDA for the year ending December 31, 2022 and net debt as of December 31, 2022. Our Earnings Call on November 3, 2022 may present guidance that includes Adjusted EBITDA and Free Cash Flow. A full reconciliation of the forecasted Adjusted EBITDA, Free Cash Flow and net debt on a non-GAAP basis to its most-directly comparable GAAP metrics cannot be provided without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliations.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(In thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Operating income (loss)

$

(211,187

)

 

$

80,111

 

$

(115,983

)

 

$

31,881

Depreciation and amortization

 

109,305

 

 

 

108,100

 

 

334,144

 

 

 

343,408

Impairment charges1

 

309,750

 

 

 

11,647

 

 

311,329

 

 

 

49,391

Other operating expense, net2

 

9,451

 

 

 

12,341

 

 

25,985

 

 

 

27,491

Share-based compensation expense

 

10,437

 

 

 

5,993

 

 

24,582

 

 

 

17,581

Restructuring expenses

 

24,486

 

 

 

12,021

 

 

54,588

 

 

 

47,216

Adjusted EBITDA

$

252,242

 

 

$

230,213

 

$

634,645

 

 

$

516,968

1

Impairment charges in nine months ended September 30, 2022 includes $302.1 million related to the impairment of FCC licenses, $8.5 million related to impairments of right-of-use assets and $0.7 million related to leasehold improvements (in the latter two cases, related to leasehold improvements as a result of proactive decisions by management to exit and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives). Impairment Charges of $49.4 million in the nine months ended September 30, 2021 related to $38.0 million of impairments of right-of-use assets and $11.4 million related to leasehold improvements as a result of proactive decisions by management to abandon and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives aimed at reducing our structural cost base.

2

Increase in Other operating expense, net is driven by non-cash net book losses recognized in relation to sales of real estate.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(In thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Net income (loss)

$

(309,776

)

 

$

3,673

 

 

$

(343,333

)

 

$

(270,343

)

Income tax (benefit) expense

 

13,412

 

 

 

(27,147

)

 

 

(5,015

)

 

 

77,237

 

Interest expense, net

 

87,890

 

 

 

82,481

 

 

 

248,603

 

 

 

252,489

 

Depreciation and amortization

 

109,305

 

 

 

108,100

 

 

 

334,144

 

 

 

343,408

 

EBITDA

$

(99,169

)

 

$

167,107

 

 

$

234,399

 

 

$

402,791

 

(Gain) loss on investments, net

 

3,466

 

 

 

10,367

 

 

 

(4,359

)

 

 

(39,468

)

(Gain) loss on extinguishment of debt

 

(6,892

)

 

7,896

 

 

(15,095

)

 

7,896

 

Other expense, net

 

581

 

 

 

1,785

 

 

 

3,026

 

 

 

2,955

 

Equity in loss of nonconsolidated affiliates

 

132

 

 

 

1,056

 

 

 

190

 

 

 

1,115

 

Impairment charges

 

309,750

 

 

 

11,647

 

 

 

311,329

 

 

 

49,391

 

Other operating expense, net

 

9,451

 

 

 

12,341

 

 

 

25,985

 

 

 

27,491

 

Share-based compensation expense

 

10,437

 

 

 

5,993

 

 

 

24,582

 

 

 

17,581

 

Restructuring expenses

 

24,486

 

 

 

12,021

 

 

 

54,588

 

 

 

47,216

 

Adjusted EBITDA

$

252,242

 

 

$

230,213

 

 

$

634,645

 

 

$

516,968

 

Reconciliation of Cash Provided By Operating Activities to Free Cash Flow and Free cash flow including net proceeds from real estate sales

(In thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Cash provided by operating activities

$

103,110

 

 

$

95,736

 

 

$

206,699

 

 

$

196,593

 

Purchases of property, plant and equipment

 

(40,357

)

 

 

(50,274

)

 

 

(112,567

)

 

 

(101,335

)

Free cash flow

 

62,753

 

 

 

45,462

 

 

 

94,132

 

 

$

95,258

 

Net proceeds from real estate sales1

 

7,700

 

 

 

8,610

 

 

 

31,535

 

 

 

21,051

 

Free cash flow including net proceeds from real estate sales

$

70,453

 

 

$

54,072

 

 

$

125,667

 

 

$

116,309

 

1

During the three and nine months ended September 30, 2022 and September 30, 2021, we continued to deploy capital expenditures to accelerate the proactive streamlining of our real estate footprint aimed at reducing our structural cost base. This initiative has succeeded in making certain real estate assets redundant, enabling the Company to sell such assets to partially fund the initiative’s gross capital expenditures.

Reconciliation of Revenue to Revenue excluding Political Advertising

(In thousands)

Three Months Ended

September 30,

 

%

Change

 

Nine Months Ended

September 30,

 

%

Change

 

2022

 

2021

 

 

2022

 

2021

 

Consolidated revenue

$

988,930

 

 

$

928,051

 

 

6.6

%

 

$

2,786,393

 

 

$

2,496,321

 

 

11.6

%

Excluding: Political revenue

 

(33,968

)

 

 

(7,837

)

 

 

 

 

(66,215

)

 

 

(19,521

)

 

 

Consolidated revenue, excluding political

$

954,962

 

 

$

920,214

 

 

3.8

%

 

$

2,720,178

 

 

$

2,476,800

 

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Multiplatform Group revenue

$

659,896

 

 

$

658,979

 

 

0.1

%

 

$

1,864,356

 

 

$

1,762,726

 

 

5.8

%

Excluding: Political revenue

 

(18,283

)

 

 

(5,858

)

 

 

 

 

(37,418

)

 

 

(13,491

)

 

 

Multiplatform Group revenue, excluding political

$

641,613

 

 

$

653,121

 

 

(1.8

)%

 

$

1,826,938

 

 

$

1,749,235

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Digital Audio Group revenue

$

253,953

 

 

$

205,769

 

 

23.4

%

 

$

720,733

 

 

$

561,252

 

 

28.4

%

Excluding: Political revenue

 

(2,270

)

 

 

(367

)

 

 

 

 

(4,942

)

 

 

(1,034

)

 

 

Digital Audio Group revenue, excluding political

$

251,683

 

 

$

205,402

 

 

22.5

%

 

$

715,791

 

 

$

560,218

 

 

27.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Audio & Media Group Services revenue

$

77,794

 

 

$

66,078

 

 

17.7

%

 

$

209,716

 

 

$

182,390

 

 

15.0

%

Excluding: Political revenue

 

(13,415

)

 

 

(1,612

)

 

 

 

 

(23,855

)

 

 

(4,997

)

 

 

Audio & Media Services Group revenue, excluding political

$

64,379

 

 

$

64,466

 

 

(0.1

)%

 

$

185,861

 

 

$

177,393

 

 

4.8

%

Reconciliation of Total Debt to Net Debt

(In thousands)

September 30,
2022

Current portion of long-term debt

$

665

 

Long-term debt

 

5,553,049

 

Total debt

$

5,553,714

 

Less: Cash and cash equivalents

 

295,399

 

Net debt

$

5,258,315

 

Segment Results

The following tables present the Company's segment results for the Company for the periods presented:

 

Segments

 

 

 

 

 

 

(In thousands)

Multiplatform Group

 

Digital Audio Group

 

Audio & Media Services Group

 

Corporate and other reconciling items

 

Eliminations

 

Consolidated

Three Months Ended September 30, 2022

Revenue

$

659,896

 

 

$

253,953

 

 

$

77,794

 

 

$

 

 

$

(2,713

)

 

$

988,930

 

Operating expenses(1)

 

452,631

 

 

 

175,636

 

 

 

48,044

 

 

 

63,090

 

 

 

(2,713

)

 

 

736,688

 

Adjusted EBITDA

$

207,265

 

 

$

78,317

 

 

$

29,750

 

 

$

(63,090

)

 

$

 

 

$

252,242

 

Adjusted EBITDA margin

 

31.4

%

 

 

30.8

%

 

 

38.2

%

 

 

 

 

 

 

25.5

%

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(109,305

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

(309,750

)

Other operating expense, net

 

 

 

 

 

 

 

 

 

 

 

(9,451

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(10,437

)

Restructuring expenses

 

 

 

 

 

 

 

 

 

 

 

(24,486

)

Operating loss

 

 

 

 

 

 

 

 

 

 

$

(211,187

)

Operating margin

 

 

 

 

 

 

 

 

 

 

 

(21.4

)%

(1)

Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses and share-based compensation expenses.

 

Segments

 

 

 

 

 

 

(In thousands)

Multiplatform Group

 

Digital Audio Group

 

Audio & Media Services Group

 

Corporate and other reconciling items

 

Eliminations

 

Consolidated

Three Months Ended September 30, 2021

Revenue

$

658,979

 

 

$

205,769

 

 

$

66,078

 

 

$

 

 

$

(2,775

)

 

$

928,051

 

Operating expenses(1)

 

450,549

 

 

 

138,646

 

 

 

43,656

 

 

 

67,762

 

 

 

(2,775

)

 

 

697,838

 

Adjusted EBITDA

$

208,430

 

 

$

67,123

 

 

$

22,422

 

 

$

(67,762

)

 

$

 

 

$

230,213

 

Adjusted EBITDA margin

 

31.6

%

 

 

32.6

%

 

 

33.9

%

 

 

 

 

 

 

24.8

%

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(108,100

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

(11,647

)

Other operating expense, net

 

 

 

 

 

 

 

 

 

 

 

(12,341

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(5,993

)

Restructuring expenses

 

 

 

 

 

 

 

 

 

 

 

(12,021

)

Operating income

 

 

 

 

 

 

 

 

 

 

$

80,111

 

Operating margin

 

 

 

 

 

 

 

 

 

 

 

8.6

%

(1)

Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses and share-based compensation expenses.

Segments

 

 

 

 

 

 

(In thousands)

Multiplatform Group

 

Digital Audio Group

 

Audio & Media Services Group

 

Corporate and other reconciling items

 

Eliminations

 

Consolidated

Nine Months Ended September 30, 2022

Revenue

$

1,864,356

 

 

$

720,733

 

 

$

209,716

 

 

$

 

 

$

(8,412

)

 

$

2,786,393

 

Operating expenses(1)

 

1,328,688

 

 

 

511,025

 

 

 

141,509

 

 

 

178,938

 

 

 

(8,412

)

 

 

2,151,748

 

Adjusted EBITDA

$

535,668

 

 

$

209,708

 

 

$

68,207

 

 

$

(178,938

)

 

$

 

 

$

634,645

 

Adjusted EBITDA margin

 

28.7

%

 

 

29.1

%

 

 

32.5

%

 

 

 

 

 

 

22.8

%

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(334,144

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

(311,329

)

Other operating expense, net

 

 

 

 

 

 

 

 

 

 

 

(25,985

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(24,582

)

Restructuring expenses

 

 

 

 

 

 

 

 

 

 

 

(54,588

)

Operating loss

 

 

 

 

 

 

 

 

 

 

$

(115,983

)

Operating margin

 

 

 

 

 

 

 

 

 

 

 

(4.2

)%

(1)

Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses and share-based compensation expenses.

 

Segments

 

 

 

 

 

 

(In thousands)

Multiplatform Group

 

Digital Audio Group

 

Audio & Media Services Group

 

Corporate and other reconciling items

 

Eliminations

 

Consolidated

Nine Months Ended September 30, 2021

Revenue

$

1,762,726

 

 

$

561,252

 

 

$

182,390

 

 

$

 

 

$

(10,047

)

 

$

2,496,321

 

Operating expenses(1)

 

1,268,107

 

 

 

399,828

 

 

 

124,148

 

 

 

197,317

 

 

 

(10,047

)

 

 

1,979,353

 

Adjusted EBITDA

$

494,619

 

 

$

161,424

 

 

$

58,242

 

 

$

(197,317

)

 

$

 

 

$

516,968

 

Adjusted EBITDA margin

 

28.1

%

 

 

28.8

%

 

 

31.9

%

 

 

 

 

 

 

20.7

%

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

(343,408

)

Impairment charges

 

 

 

 

 

 

 

 

 

 

 

(49,391

)

Other operating expense, net

 

 

 

 

 

 

 

 

 

 

 

(27,491

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

(17,581

)

Restructuring expenses

 

 

 

 

 

 

 

 

 

 

 

(47,216

)

Operating income

 

 

 

 

 

 

 

 

 

 

$

31,881

 

Operating margin

 

 

 

 

 

 

 

 

 

 

 

1.3

%

(1)

Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses and share-based compensation expenses.

 

Media
Wendy Goldberg
Chief Communications Officer
(212) 377-1105
wendygoldberg@iheartmedia.com

Investors
Mike McGuinness
EVP, Deputy CFO, and Head of Investor Relations
(212) 377-1336
mbm@iheartmedia.com

Source: iHeartMedia, Inc.