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| 8-K - 8-K - CUMULUS MEDIA INC | cmls20161231investorrelati.htm |
March 16, 2017
CUMULUS MEDIA INC.
2016 Fourth Quarter & Full Year
Earnings Call Presentation
Safe Harbor Statement
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this presentation may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. Such statements are statements other than historical fact and relate to our intent, belief or current
expectations, primarily with respect to our future operating, financial and strategic performance. Any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual results may differ from those contained in or implied by the forward-
looking statements as a result of various factors including, but not limited to, risks and uncertainties relating to the need for additional funds to
service our debt and to execute our business strategy; our ability to access borrowings under our revolving credit facility; our ability from time to
time to renew one or more of our broadcast licenses; changes in interest rates; changes in the fair value of our investments; the timing of, and our
ability to complete, any acquisitions or dispositions pending from time to time; costs and synergies resulting from the integration of any completed
acquisitions; our ability to effectively manage costs; our ability to effectively drive and manage growth; the popularity of radio as a broadcasting and
advertising medium; changing consumer tastes; the impact of general economic conditions in the United States or in specific markets in which we
currently do business; industry conditions, including existing competition and future competitive technologies and cancellation, disruptions or
postponements of advertising schedules in response to national or world events; our ability to generate revenues from new sources, including local
commerce and technology-based initiatives; the impact of regulatory rules or proceedings that may affect our business or any acquisitions; our
ability to continue to meet the listing standards for our Class A common stock to be listed for trading on the NASDAQ stock market; the write-off of
a material portion of the fair value of our FCC broadcast licenses and goodwill from time to time; or other risk factors described from time to time in
our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).
Many of these risks and uncertainties are beyond our control, and the unexpected occurrence or failure to occur of any such events or matters
could significantly alter the actual results of our operations or financial condition. Cumulus Media Inc. assumes no responsibility to update any
forward-looking statement as a result of new information, future events or otherwise.
2
CUMULUS MEDIA INC.
2016 Fourth Quarter & Full Year
Earnings Call Presentation
3
2016 Full Year Financial Highlights
$1,168.7 $1,141.4
$-
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
FY2015 FY2016
N
e
t
R
e
v
e
n
u
e
(
$
m
m
)
Net Revenue Performance
4
2016 Full Year Financial Highlights
Net Income / (Loss) Performance
$(546.5)
$(510.7)
$(600.0)
$(500.0)
$(400.0)
$(300.0)
$(200.0)
$(100.0)
$-
FY2015 FY2016
N
e
t
I
n
c
o
m
e
/
(
l
o
s
s
)
(
$
m
m
)
5
2016 Full Year Financial Highlights
(1) Excluding one-time expenses, including $3.2 mm of 2015 out-of-period music
licensing fees in Q2 2016 and $14.6 mm for resolution of CBS contract disputes
in Q3 2016, 2016 Adjusted EBITDA would have been $223.7 mm
(1)
$259.1
$205.9
$-
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
FY2015 FY2016
A
d
j
u
s
t
e
d
E
B
I
T
D
A
(
$
m
m
)
Adjusted EBITDA Performance
Excluding one-time
expenses, Adjusted
EBITDA would have
been $223.7 mm
6
Drive Ratings
Growth
1
Institute Culture
Initiatives
2
Enhance
Operational
Blocking & Tackling
3
2016’s Three Key Initiatives:
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Drive Ratings Growth1
PPM Ratings Growth Year-Over-Year
Cumulus Growth Over Prior Year Total PPM Radio Growth Over Prior Year
15 Straight Months of Outperformance vs. Industry
8
Source: June 2015-January
2017 Nielsen Audio (% Change
YoY from Prior Year), AQH
Persons, P25-54, M-F 6a-7p
Drive Ratings Growth1
Diary Ratings Growth Year-Over-Year
Cumulus Growth Over Prior Year Total Diary Radio Growth Over Prior Year
Meaningful
Outperformance
in Fall 2016
9
Source: Spring 2011-Fall 2016
Nielsen Audio (% Change YOY
from Prior Year), AQH Persons,
P25-54, M-F 6a-7p
Institute Culture Initiatives2
Numerous Initiatives to Address Culture
48-Hour Turnaround Response Time
Enhanced Communication From The Top
Revised Vacation & Leave Policies
First Merit Increase in Nearly a Decade
10
Institute Culture Initiatives2
“Excited for the future”85%
“Proud to work at Cumulus”93%
“Plan on staying at Cumulus for next 12 months”97%
November 2016 Employee Culture Survey Results
“Changing for the better”93%
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Institute Culture Initiatives2
“Excited for the future”85%
“Proud to work at Cumulus”93%
“Plan on Staying at Cumulus for Next 12 Months”97%
November 2016 Employee Culture Survey Results
“Changing for the better”93%
“…Employees are happy
again and working
towards goals.”
“I rarely get a
complaint about
Cumulus these days
whereas I used to
get many, many –
one seemingly more
bizarre than the
others.”
Source: Industry Blogger
12
Institute Culture Initiatives2
Year-to-Date Turnover (Through December 2016)
34%
30%
36%
24%
20%
23%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Total Turnover Full-Time Turnover Voluntary Sales Turnover
A
n
n
u
a
l
i
z
e
d
T
u
r
n
o
v
e
r
2015 Full Year 2016 Full Year
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• Logical realignment of authority and accountability
• Recruitment of accomplished senior executives
• Alignment of senior executive compensation
• Deliberate shift of decision-making to local leaders
• Commencement of overhaul of legacy systems
• Mitigation of built-in cost escalation
3
Key Operational Blocking & Tackling Successes in 2016
Operational Blocking & Tackling
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Year Ended Dec-31,
($ in millions) 2015 2016
Content Costs 396.4$ 427.8$
Selling, General & Administrative Expenses 477.3 472.9
Corporate Expenses 35.8 34.9
less: CBS Dispute Resolution Expenses - (14.6)
less: Out-of Period Music License Fees - (3.2)
Total Operating Expenses 909.5$ 917.7$
% Change Year-Over-Year 0.9%
• Reduction of unnecessary expenses
and non-EBITDA-producing ventures
• Significant one-time expenses in 2016
• Reallocation of resources to invest in
under-resourced parts of the business
• Renegotiation of large contracts to
reduce cost / mitigate escalation
3
Significant Focus on Reducing Expense Increases
Operational Blocking & Tackling
(1) Excludes stock-based compensation expense, franchise taxes and state taxes
(1)
Drive Ratings
Growth
1
Institute Culture
Initiatives
2
Enhance
Operational
Blocking & Tackling
3
2016’s Three Key Initiatives:
16
Revenue Market Share Performance
Measured by Miller Kaplan
53 reporting markets
representing 80%+ of 2016
Station Group Net Revenue
17
Revenue Market Share Performance
Source: Data for all Cumulus Miller Kaplan rated
markets for March 2016 to February 2017
National Spot
11 of 12 Months
Local Spot
Last 6 Months
in a Row
Station Group Digital
11 of 12 Months
Revenue Market Share Performance
Source: Data for all Cumulus Miller Kaplan rated markets
Total Station Group Revenue
in 8 of Last 12 Months
in Fourth Quarter 2016
in Full Year 2016
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20
Sales
Execution
4 Sales Execution Strategy
Areas
Of
Focus
Training &
Tools2Talent1
Sales
Analytics3
Platform
Growth
Products
4
Digital5
21
4 Sales Execution Strategy
22
4 Sales Execution Strategy
WHEN YOU DECIDE TO
SUBMIT A LEAD
EVERYONE WINS!
GET A LEAD. PASS IT ON. REPEAT!
23
CUMULUS
DIGITAL
SOLUTIONS
4 Sales Execution Strategy
24
• Operational and P&L impact from our over-levered capital structure is
real and will continue to limit our turnaround potential
• As a result of the recent adverse court ruling, we have terminated our
pursuit of the exchange transaction that we launched in 2016
• Continuing dialogue with key stakeholders to explore strategies
intended to reduce debt and secure runway
Continued focus on addressing our debt…
25
Fourth Quarter &
Full Year 2016
Financial Results
See Press Release and 10-K for More Detail
www.cumulus.com/investors
26
Q&A
27
28
APPENDIX:
Financial Summary &
Reconciliation to Non-GAAP Term
29
Non-GAAP Financial Measure
Definition of Adjusted EBITDA
Adjusted EBITDA is the financial metric utilized by management to analyze the cash flow generated by our business. This measure isolates the
amount of income generated by our core operations before the incurrence of corporate expenses. Management also uses this measure to
determine the contribution of our core operations to the funding of our corporate resources utilized to manage our operations and our non-operating
expenses including debt service. In addition, Adjusted EBITDA is a key metric for purposes of calculating and determining our compliance with
certain covenants contained in our credit facility. We define Adjusted EBITDA as net income (loss) before any non-operating expenses, including
depreciation and amortization, stock-based compensation expense, gain or loss on sale of assets or stations (if any), gain or loss on derivative
instruments (if any), impairment of assets (if any), acquisition-related and restructuring costs (if any) and franchise and state taxes. In deriving this
measure, management excludes depreciation, amortization, and stock-based compensation expense, as these do not represent cash payments for
activities directly related to our core operations. Management excludes any gain or loss on the exchange or sale of any assets or stations and any
gain or loss on derivative instruments as they do not represent cash transactions nor are they associated with core operations. Expenses relating
to acquisitions and restructuring costs are also excluded from the calculation of Adjusted EBITDA as they are not directly related to our core
operations. Management excludes any non-cash costs associated with impairment of assets as they do not require a cash outlay. Management
believes that Adjusted EBITDA, although not a measure that is calculated in accordance with GAAP, nevertheless is commonly employed by the
investment community as a measure for determining the market value of media companies. Management has also observed that Adjusted EBITDA
is routinely employed to evaluate and negotiate the potential purchase price for media companies and is a key metric for purposes of calculating
and determining compliance with certain covenants in our credit facility. Given the relevance to our overall value, management believes that
investors consider the metric to be extremely useful.
Adjusted EBITDA should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities or
any other measure for determining the Company’s operating performance or liquidity that is calculated in accordance with GAAP. In addition,
Adjusted EBITDA may be defined or calculated differently by other companies and comparability may be limited.
30
Year Ended December 31, 2016
($ in thousands)
Radio Station
Group Westwood One
Corporate and
Other Consolidated
GAAP net loss (356,198)$ (11,071)$ (143,451)$ (510,720)$
Income tax expense - - (26,154) (26,154)
Non-operating expense, including net interest expense 13 122 135,967 136,102
LMA fees 12,824 - - 12,824
Depreciation and amortization 54,071 31,178 2,018 87,267
Stock-based compensation expense - - 2,948 2,948
Gain on sale of assets or stations (95,667) - (28) (95,695)
Impairment of intangible assets and goodwill 603,149 1,816 - 604,965
Acquisition-related and restructuring costs - 939 878 1,817
Franchise and state taxes - - 530 530
Gain on early extinguishment of debt - - (8,017) (8,017)
Adjusted EBITDA 218,192$ 22,984$ (35,309)$ 205,867$
plus: CBS dispute resolution expenses - 14,560 - 14,560
plus: Out-of-period music license fee adjustment 3,248 - - 3,248
Adjusted EBITDA, Excluding One-Time Expenses 221,440$ 37,544$ (35,309)$ 223,676$
Full Year 2016 Adjusted EBITDA
Reconciliation Table
The table shown reconciles net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to
Adjusted EBITDA for the year ended December 31, 2016
Year Ended December 31, 2015
($ in thousands)
Radio Station
Group Westwood One
Corporate and
Other Consolidated
GAAP net loss (265,263)$ (141,179)$ (140,052)$ (546,494)$
Income tax benefit - - (45,840) (45,840)
Non-operating (income) expense, including net interest expense (6) 1,247 125,800 127,041
LMA fees 10,127 - 2 10,129
Depreciation and amortization 63,342 36,538 2,225 102,105
Stock-based compensation expense - - 21,035 21,035
Loss on sale of assets or stations 668 2,081 107 2,856
Impairment of intangible assets and goodwill 432,805 132,671 104 565,580
Impairment charges -- equity interest in Pulser Media Inc. - 19,364 - 19,364
Acquisition-related and restructuring costs - 2,236 14,405 16,641
Franchise and state taxes - - (50) (50)
Gain on early extinguishment of debt - - (13,222) (13,222)
Adjusted EBITDA 241,673$ 52,958$ (35,486)$ 259,145$
Full Year 2015 Adjusted EBITDA
Reconciliation Table
The table shown reconciles net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to
Adjusted EBITDA for the year ended December 31, 2015
32