Spanish Broadcasting System, Inc. (the “Company” or “SBS”)
(NASDAQ:SBSA) today reported financial results for the three- and
nine-months ended September 30, 2016.
Financial Highlights
(in
thousands) |
|
Three-Months
EndedSeptember 30, |
|
|
% |
|
|
Nine-Months
EndedSeptember 30, |
|
|
% |
|
|
|
2016 |
|
|
2015 |
|
|
Change |
|
|
2016 |
|
|
2015 |
|
|
Change |
|
Net
revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
32,055 |
|
|
$ |
33,476 |
|
|
|
(4 |
)% |
|
$ |
92,009 |
|
|
$ |
97,195 |
|
|
|
(5 |
)% |
Television |
|
|
3,580 |
|
|
|
2,905 |
|
|
|
23 |
% |
|
|
10,499 |
|
|
|
9,428 |
|
|
|
11 |
% |
Consolidated |
|
$ |
35,635 |
|
|
$ |
36,381 |
|
|
|
(2 |
)% |
|
$ |
102,508 |
|
|
$ |
106,623 |
|
|
|
(4 |
)% |
OIBDA, a non-GAAP
measure*: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
13,490 |
|
|
$ |
14,342 |
|
|
|
(6 |
)% |
|
$ |
36,497 |
|
|
$ |
37,366 |
|
|
|
(2 |
)% |
Television |
|
|
98 |
|
|
|
(769 |
) |
|
|
(113 |
)% |
|
|
(217 |
) |
|
|
(758 |
) |
|
|
(71 |
)% |
Corporate |
|
|
(2,505 |
) |
|
|
(2,870 |
) |
|
|
(13 |
)% |
|
|
(8,047 |
) |
|
|
(7,442 |
) |
|
|
8 |
% |
Consolidated |
|
$ |
11,083 |
|
|
$ |
10,703 |
|
|
|
4 |
% |
|
$ |
28,233 |
|
|
$ |
29,166 |
|
|
|
(3 |
)% |
* Please refer to the Non-GAAP Financial
Measures section for a definition of OIBDA and a reconciliation
from OIBDA to the most directly comparable GAAP financial
measure.
Discussion and Results
“During the third quarter, we continued to
execute our multi-platform strategy aimed at growing our total
audience share,” commented Raúl Alarcón, Chairman and CEO. “We
further expanded our digital platform, particularly in mobile where
we recently added a full video channel line-up to our LaMusica app.
Today LaMusica is a robust video and audio platform that delivers a
unique entertainment experience to users while offering advertisers
opportunities to reach a highly engaged Hispanic millennial
audience. The continued strengthening of our digital capabilities
builds upon our leading station brands in the largest Hispanic
media markets and strengthens our ability to deliver targeted
multi-platform audiences to our advertising partners.”
Quarter End Results
For the quarter-ended September 30, 2016,
consolidated net revenues totaled $35.6 million compared to $36.4
million for the same prior year period, resulting in a decrease of
$0.7 million or 2%. Our radio segment net revenues decreased
$1.4 million or 4%, due to decreases in national, network, barter
and internet revenue, which were partially offset by increases in
local sales and special events. Our local sales increased in
our San Francisco, Miami, Los Angeles and Puerto Rico markets,
while our national sales decreased in our New York, Chicago, San
Francisco and Los Angeles markets. Our special events revenue
increased in our Los Angeles, San Francisco and Puerto Rico markets
due to an increase in scheduled events. Our television
segment net revenues increased $0.7 million or 23%, due to the
increases in national, local and barter sales.
Consolidated OIBDA, a non-GAAP measure, totaled
$11.1 million compared to $10.7 million for the same prior year
period, representing an increase of $0.4 million or 4%. Our radio
segment OIBDA decreased $0.9 million primarily due to a decrease in
net revenues of $1.4 million partially offset by a decrease in
operating expenses of $0.6 million. Radio station operating
expenses decreased mainly due to decreases in commissions,
advertising, promotion and prize expenses, affiliate compensation,
bad debt and facilities expenses offset by increases in rating
service, special events and digital programming content
expenses. Our television segment OIBDA improved $0.9 million,
due to the increase in net revenues of $0.7 million and the
decrease in operating expenses of $0.2 million. Television
station operating expenses decreased primarily due to decreases
professional fees and barter expenses offset by increases in
originally produced programming costs. Our corporate expenses
decreased $0.4 million or 13%, mostly due to a decrease in
professional fees offset by an increase in compensation and
benefits, and stock-based compensation.
Operating income totaled $9.9 million compared
to $8.8 million for the same prior year period, representing an
increase of $1.1 million or 13%. This increase in operating
income was primarily due to the decrease in net revenues offset by
the decrease in operating expenses and the prior period recognition
of an impairment of our FCC license.
Nine-Months Ended Results
For the nine-months ended September 30, 2016,
consolidated net revenues totaled $102.5 million compared to $106.6
million for the same prior year period, resulting in a decrease of
$4.1 million or 4%. Our radio segment net revenues decreased
$5.2 million or 5%, due to decreases in national, network, barter,
special events and internet revenue, which were partially offset by
an increase in local sales. Our local sales increased in our
Los Angeles, New York, Miami and San Francisco markets, while our
national sales decreased in our Chicago, New York, Miami and San
Francisco markets. Our special events revenue decreased in
our Los Angeles, New York, Miami, and Puerto Rico markets due to a
decrease in scheduled events. Our television segment net
revenues increased $1.1 million or 11%, due to the increases in
national, local and barter sales.
Consolidated OIBDA, a non-GAAP measure, totaled
$28.2 million compared to $29.2 million for the same prior year
period, representing a decrease of $1.0 million or 3%. Our
radio segment OIBDA decreased $0.9 million due to offsetting
decreases in net revenues and operating expenses. Radio
station operating expenses decreased mainly due to decreases in
special events, facilities, commissions, personnel compensation and
benefits, and bonus expenses, which were offset by increases in
rating services. professional fees, transmission facility related
taxes, and the acquisition of digital programming content.
Our television segment OIBDA improved $0.5 million, due to
the increase in net revenues of $1.1 million offset by the increase
station operating expenses of $0.6 million. Television
station operating expenses increased primarily due to increases in
commissions, rating services, bad debt and barter expenses offset
by decreases in special event expense, professional fees, and
reductions of acquired and originally produced programming
costs. Our corporate expenses increased by $0.6 million or
8%, mostly due to an increase in compensation and benefits, and
stock-based compensation offset by a decrease in professional
fees.
Operating income totaled $24.7 million compared
to $25.0 million for the same prior year period, representing a
decrease of $0.3 million or 1%. This decrease in operating
income was primarily due to the decrease in net revenues offset by
the decrease in operating expenses and the prior period recognition
of an impairment of our FCC license.
Third Quarter 2016 Conference
Call
We will host a conference call to discuss our
third quarter 2016 financial results on Wednesday, November 16,
2016 at 11:00 a.m. Eastern Time. To access the
teleconference, please dial 412-317-5441 ten minutes prior to the
start time.
If you cannot listen to the teleconference at
its scheduled time, there will be a replay available through
Wednesday, November 30, 2016, which can be accessed by dialing
877-344-7529 (U.S.) or 412-317-0088 (Int’l), passcode:
10095829.
There will also be a live webcast of the
teleconference, located on the investor portion of our corporate
Web site, at www.spanishbroadcasting.com/webcasts.shtml. A seven
day archived replay of the webcast will also be available at that
link.
About Spanish Broadcasting System,
Inc.
Spanish Broadcasting System, Inc. owns and
operates 17 radio stations located in the top U.S. Hispanic markets
of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto
Rico, airing the Spanish Tropical, Regional Mexican, Spanish Adult
Contemporary, Top 40 and Latin Rhythmic format genres. SBS also
operates AIRE Radio Networks, a national radio platform which
creates, distributes and markets leading Spanish-language radio
programming to over 100 affiliated stations reaching 90% of the
U.S. Hispanic audience. SBS also owns MegaTV, a television
operation with over-the-air, cable and satellite distribution and
affiliates throughout the U.S. and Puerto Rico. SBS also produces
live concerts and events and owns multiple bilingual websites,
including www.LaMusica.com, an online destination and mobile app
providing content related to Latin music, entertainment, news and
culture. For more information, visit us online at
www.spanishbroadcasting.com.
This press release contains certain
forward-looking statements. These forward-looking statements,
which are included in accordance with the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, may involve
known and unknown risks, uncertainties and other factors that may
cause the Company’s actual results and performance in future
periods to be materially different from any future results or
performance suggested by the forward-looking statements in this
press release. Although the Company believes the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that actual
results will not differ materially from these expectations.
Forward-looking statements, which are based upon certain
assumptions and describe future plans, strategies and expectations
of the Company, are generally identifiable by use of the words
“may,” “will,” “expect,” “believe,” “anticipate,” “intend,”
“could,” “estimate,” “might,” or “continue” or the negative or
other variations thereof or comparable terminology. Factors
that could cause actual results, events and developments to differ
are included from time to time in the Company’s public reports
filed with the Securities and Exchange Commission. All
forward-looking statements made herein are qualified by these
cautionary statements and there can be no assurance that the actual
results, events or developments referenced herein will occur or be
realized. The Company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results.
(Financial Table Follows)
Below are the Unaudited Condensed
Consolidated Statements of Operations for the three- and
nine-months ended September 30, 2016 and 2015.
|
|
Three-Months
EndedSeptember 30, |
|
|
Nine-Months
EndedSeptember 30, |
|
Amounts in thousands,
except per share amounts |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net revenue |
|
$ |
35,635 |
|
|
$ |
36,381 |
|
|
$ |
102,508 |
|
|
$ |
106,623 |
|
Station operating
expenses |
|
|
22,047 |
|
|
|
22,808 |
|
|
|
66,228 |
|
|
|
70,015 |
|
Corporate expenses |
|
|
2,505 |
|
|
|
2,870 |
|
|
|
8,047 |
|
|
|
7,442 |
|
Depreciation and
amortization |
|
|
1,133 |
|
|
|
1,152 |
|
|
|
3,548 |
|
|
|
3,622 |
|
(Gain) loss on the
disposal of assets, net |
|
|
— |
|
|
|
1 |
|
|
|
(3 |
) |
|
|
(77 |
) |
Impairment charges and
restructuring costs |
|
|
— |
|
|
|
735 |
|
|
|
(26 |
) |
|
|
598 |
|
Operating
income |
|
|
9,950 |
|
|
|
8,815 |
|
|
|
24,714 |
|
|
|
25,023 |
|
Interest expense, net |
|
|
(10,020 |
) |
|
|
(9,951 |
) |
|
|
(30,109 |
) |
|
|
(29,879 |
) |
Dividends on Series B
preferred stock classified as interest expense |
|
|
(2,433 |
) |
|
|
(2,433 |
) |
|
|
(7,300 |
) |
|
|
(7,300 |
) |
Loss before income
taxes |
|
|
(2,503 |
) |
|
|
(3,569 |
) |
|
|
(12,695 |
) |
|
|
(12,156 |
) |
Income tax expense
(benefit) |
|
|
2,259 |
|
|
|
4,123 |
|
|
|
7,162 |
|
|
|
7,736 |
|
Net
loss |
|
|
(4,762 |
) |
|
|
(7,692 |
) |
|
|
(19,857 |
) |
|
|
(19,892 |
) |
Net loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted |
|
$ |
(0.66 |
) |
|
$ |
(1.06 |
) |
|
$ |
(2.73 |
) |
|
$ |
(2.74 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted |
|
|
7,267 |
|
|
|
7,267 |
|
|
|
7,267 |
|
|
|
7,267 |
|
Non-GAAP Financial Measures
Operating Income (Loss) before Depreciation and
Amortization, (Gain) Loss on the Disposal of Assets, net, and
Impairment Charges and Restructuring Costs (“OIBDA”) is not a
measure of performance or liquidity determined in accordance with
Generally Accepted Accounting Principles (“GAAP”) in the United
States. However, we believe that this measure is useful in
evaluating our performance because it reflects a measure of
performance for our stations before considering costs and expenses
related to our capital structure and dispositions. This
measure is widely used in the broadcast industry to evaluate a
company’s operating performance and is used by us for internal
budgeting purposes and to evaluate the performance of our stations,
segments, management and consolidated operations. However,
this measure should not be considered in isolation or as a
substitute for Operating Income, Net Income, Cash Flows from
Operating Activities or any other measure used in determining our
operating performance or liquidity that is calculated in accordance
with GAAP. In addition, because OIBDA is not calculated in
accordance with GAAP, it is not necessarily comparable to similarly
titled measures used by other companies.
Included below are tables that reconcile OIBDA
to operating income (loss) for each segment and consolidated
operating income (loss), which is the most directly comparable GAAP
financial measure.
|
|
For the Three-Months Ended September 30,
2016 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
11,083 |
|
|
|
13,490 |
|
|
|
98 |
|
|
|
(2,505 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
1,133 |
|
|
|
457 |
|
|
|
568 |
|
|
|
108 |
|
(Gain) loss
on the disposal of assets, net |
|
|
- |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Impairment
charges and restructuring costs |
|
|
- |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Operating Income
(Loss) |
|
$ |
9,950 |
|
|
|
13,033 |
|
|
|
(470 |
) |
|
|
(2,613 |
) |
|
|
For the Three-Months Ended September 30,
2015 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
10,703 |
|
|
|
14,342 |
|
|
|
(769 |
) |
|
|
(2,870 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
1,152 |
|
|
|
432 |
|
|
|
630 |
|
|
|
90 |
|
(Gain) loss
on the disposal of assets, net |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Impairment
charges and restructuring costs |
|
|
735 |
|
|
|
925 |
|
|
|
— |
|
|
|
(190 |
) |
Operating Income
(Loss) |
|
$ |
8,815 |
|
|
|
12,985 |
|
|
|
(1,400 |
) |
|
|
(2,770 |
) |
|
|
For the Nine-Months Ended September 30,
2016 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
28,233 |
|
|
|
36,497 |
|
|
|
(217 |
) |
|
|
(8,047 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
3,548 |
|
|
|
1,420 |
|
|
|
1,815 |
|
|
|
313 |
|
(Gain) loss
on the disposal of assets, net |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
Impairment
charges and restructuring costs |
|
|
(26 |
) |
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
Operating Income
(Loss) |
|
$ |
24,714 |
|
|
|
35,080 |
|
|
|
(2,032 |
) |
|
|
(8,334 |
) |
|
|
For the Nine-Months Ended September 30,
2015 |
|
(Unaudited and in
thousands) |
|
Consolidated |
|
|
Radio |
|
|
Television |
|
|
Corporate |
|
OIBDA |
|
$ |
29,166 |
|
|
|
37,366 |
|
|
|
(758 |
) |
|
|
(7,442 |
) |
Less expenses excluded
from OIBDA but included in operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
3,622 |
|
|
|
1,363 |
|
|
|
1,977 |
|
|
|
282 |
|
(Gain) loss
on the disposal of assets, net |
|
|
(77 |
) |
|
|
(68 |
) |
|
|
2 |
|
|
|
(11 |
) |
Impairment
charges and restructuring costs |
|
|
598 |
|
|
|
925 |
|
|
|
— |
|
|
|
(327 |
) |
Operating Income
(Loss) |
|
$ |
25,023 |
|
|
|
35,146 |
|
|
|
(2,737 |
) |
|
|
(7,386 |
) |
Unaudited Segment Data
We have two reportable segments: radio and
television. The following summary table presents separate
financial data for each of our operating segments:
|
|
Three-Months
EndedSeptember 30, |
|
|
Nine-Months
EndedSeptember 30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(In thousands) |
|
|
(In thousands) |
|
Net
revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
32,055 |
|
|
$ |
33,476 |
|
|
$ |
92,009 |
|
|
$ |
97,195 |
|
Television |
|
|
3,580 |
|
|
|
2,905 |
|
|
|
10,499 |
|
|
|
9,428 |
|
Consolidated |
|
$ |
35,635 |
|
|
$ |
36,381 |
|
|
$ |
102,508 |
|
|
$ |
106,623 |
|
Engineering and
programming expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
5,853 |
|
|
$ |
5,551 |
|
|
$ |
17,997 |
|
|
$ |
17,113 |
|
Television |
|
|
1,983 |
|
|
|
1,942 |
|
|
|
5,587 |
|
|
|
5,984 |
|
Consolidated |
|
$ |
7,836 |
|
|
$ |
7,493 |
|
|
$ |
23,584 |
|
|
$ |
23,097 |
|
Selling, general
and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
12,712 |
|
|
$ |
13,583 |
|
|
$ |
37,515 |
|
|
$ |
42,716 |
|
Television |
|
|
1,499 |
|
|
|
1,732 |
|
|
|
5,129 |
|
|
|
4,202 |
|
Consolidated |
|
$ |
14,211 |
|
|
$ |
15,315 |
|
|
$ |
42,644 |
|
|
$ |
46,918 |
|
Corporate
expenses: |
|
$ |
2,505 |
|
|
$ |
2,870 |
|
|
$ |
8,047 |
|
|
$ |
7,442 |
|
Depreciation and
amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
457 |
|
|
$ |
432 |
|
|
$ |
1,420 |
|
|
$ |
1,363 |
|
Television |
|
|
568 |
|
|
|
630 |
|
|
|
1,815 |
|
|
|
1,977 |
|
Corporate |
|
|
108 |
|
|
|
90 |
|
|
|
313 |
|
|
|
282 |
|
Consolidated |
|
$ |
1,133 |
|
|
$ |
1,152 |
|
|
$ |
3,548 |
|
|
$ |
3,622 |
|
(Gain) loss on the
disposal of assets, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(3 |
) |
|
$ |
(68 |
) |
Television |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
Consolidated |
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
(3 |
) |
|
$ |
(77 |
) |
Impairment charges
and restructuring costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
— |
|
|
$ |
925 |
|
|
$ |
— |
|
|
$ |
925 |
|
Television |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Corporate |
|
|
— |
|
|
|
(190 |
) |
|
|
(26 |
) |
|
|
(327 |
) |
Consolidated |
|
$ |
— |
|
|
$ |
735 |
|
|
$ |
(26 |
) |
|
$ |
598 |
|
Operating income
(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio |
|
$ |
13,033 |
|
|
$ |
12,985 |
|
|
$ |
35,080 |
|
|
$ |
35,146 |
|
Television |
|
|
(470 |
) |
|
|
(1,400 |
) |
|
|
(2,032 |
) |
|
|
(2,737 |
) |
Corporate |
|
|
(2,613 |
) |
|
|
(2,770 |
) |
|
|
(8,334 |
) |
|
|
(7,386 |
) |
Consolidated |
|
$ |
9,950 |
|
|
$ |
8,815 |
|
|
$ |
24,714 |
|
|
$ |
25,023 |
|
Selected Unaudited Balance Sheet
Information and Other Data:
|
|
As of |
|
(Amounts in
thousands) |
|
September 30, 2016 |
|
Cash and cash
equivalents |
|
$ |
27,423 |
|
Total assets |
|
$ |
451,714 |
|
12.5% Senior Secured Notes
due 2017, net |
|
$ |
271,862 |
|
Other debt |
|
|
4,692 |
|
Total
debt |
|
$ |
276,554 |
|
Series B preferred
stock |
|
$ |
90,549 |
|
Accrued Series B preferred
stock dividends payable |
|
|
62,865 |
|
Total |
|
$ |
153,414 |
|
Total stockholders'
deficit |
|
$ |
(117,696 |
) |
Total capitalization |
|
$ |
312,272 |
|
|
|
For the Nine-Months Ended
September 30, |
|
|
2016 |
|
|
2015 |
Capital expenditures |
|
$ |
2,130 |
|
|
$ |
1,384 |
Cash paid for income
taxes |
|
$ |
168 |
|
|
$ |
321 |
Contacts:
Analysts and Investors
Joseph A. Garcia
Chief Financial Officer
(305) 441-6901
Analysts, Investors or Media
Brad Edwards
Brainerd Communicators, Inc.
(212) 986-6667
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