Audacy, Inc.

Thank you, Amber. And good morning and welcome to Entercom's second quarter earnings conference call.

This call is being recorded. A replay will be available on our company Web site shortly after the conclusion of today's call, and available by telephone at the replay number noted in our release.

Should the company make any forward-looking statements, such statements are based upon current expectations and involve risks and uncertainties. The company's actual results could differ materially from those projected.

Additional information concerning factors that could cause actual results to differ materially are described in the company's SEC filings on Forms 10-Q, 10-K and 8-K. We assume no obligation to update any forward-looking statements.

During this call, we may make reference to certain non-GAAP financial measures. We refer you to our Web site at entercom.com for a reconciliation of such measures and other pro forma financial information.

I will now turn the call to the David Field, President and CEO.

Thanks, Rich. Good morning.

Thanks everybody for joining us for our second quarter earnings call. This morning, we announced a major extension of our podcasting business with the acquisition of Pineapple Street Media, one of the top creators of leading podcasts and branded podcasts in the country, as well as an agreement in principle to complete the acquisition of Cadence13 by acquiring the remaining shares in that company that we don't own.

We also announced the launch of our new RADIO.COM Sports digital network. As you know, we are one of the country's two largest radio broadcasters with over 235 with the nation's top radio brands, the unrivaled leader in news and sports radio, the home of RADIO.COM and Entercom audio network and the number one creator of original live local audio content, reaching over 170 million Americans each month.

And now by virtue of the moves we were announcing this morning, we are poised to become one of the three largest podcast enterprises in the United States, and believe we are extremely well positioned for sustainable success in the fastest growing area of the audio market. We are also making great progress in a number of other key areas in our transformative scale driven growth initiatives, which we will share later on the call.

But let's begin with our second quarter financial results. Second quarter revenues and EBITDA were up 2.3% and 7% respectively, driven by strong growth in national network and digital, partially offset by declines in political and events.

Excluding political, revenues were up 3% for the quarter. As you may recall, our revenues were pacing up better than 4% at the time of our Q1 earnings call, but declined over the remainder of the quarter due to a combination of slowing local sales and weaker than expected ticket sales at some of our largest events to some degree attributable to weather issues.

April was the strongest month of the quarter with revenues up high single digits, May was down low single digits and June was up low single digits. During the second quarter, our best-performing markets were Denver, Orlando, Philadelphia, Sacramento, St.

Louis, Seattle and Washington DC. Our strongest advertising categories included consumer products, which continued to surge along with telecom, TV, cable, entertainment, convenient stores, home furnishings and education, and e-commerce.

Our second quarter expenses were up 1%, and are down slightly June year-to date. In the third quarter, we expect our expenses will be flat to down low single digits.

And for the full year, we expect that our expenses will be down around 2% as we complete executing our integration program, and are also implementing other cost-saving actions as we capitalize on new technologies and other best practices, while at the same time, fueling our investments across a number of growth initiatives. As I mentioned this morning, we announced the acquisition of leading podcast creator, Pineapple Street Media, and also announced that we have an agreement in principle to acquire the remaining equity in Cadence13 that we don't already own.

As a reminder, we acquired roughly 45% interest in Cadence13 on July 25, 2017, but have not recorded any financial contribution from this investment to-date. Together, these two acquisitions will propel Entercom into a leading position in the podcast space with a stellar content lineup, strong monetization capabilities and excellent distribution and discovery platforms across the company's radio stations and RADIO.COM.

Combining Entercom, Cadence13 and Pineapple, creates a business which develops, or exclusively sells podcasts that currently generate more than 150 million monthly downloads. As a point of reference, Podtrac listed NPR as the number one publisher with 144 million monthly downloads.

Entercom will operate a best in class portfolio of top-rated podcasts, including Pineapple Street Media as the clearing, which recently launched as the number one podcasts on the Apple Charts. The network will also include over half of the titles named Apple's 10 best so far podcast lists in 2019 with notable titles, such as Root of Evil, Against The Rules, To Live and Die in LA, Running from Cops, Billy Balls, among many others.

In addition, our lineup will include top shows as Malcolm Gladwell's Revisionist History, Michael Lewis's Breaking the Rules, Crooked Media's Pod Save America and Preet Bharara's Stay Tuned with Preet and much more. Entercom is ideally suited to compete effectively in this space due to the symbiotic cross-platform opportunities enabled by our position as the country's number one creator of local premium spoken-word radio, including news sports talk and other highly rated local personalities with an audience 170 million Americans monthly across our various platforms.

In addition, this morning, we announced the launch of the RADIO.COM Sports digital network, which will debut later this month with a compelling lineup of daily live and weekly podcasts that will augment our existing status as the country's unrivaled leader in local audio sports. Among our new live daily shows will be You Better You Bet, which will be hosted by a top-notch group of sports gambling experts, providing insights to interested fans across the country and creating new inventory for us to serve the rapidly growing sports gambling advertising category.

Together, these moves will make Entercom a powerful leading player in this rapidly growing segment of the audio market. We also are continuing to make good progress in our other areas of strategic focus.

RADIO.COM remains the fastest growing digital audio app in the U.S. Total platform monthly active users are up 82% over prior year.

And our digital audio ad revenues are growing strongly. That said, we are still a very small participant in the space, but believe we are well-positioned to become a more meaningful player in the fast-growing roughly $3 billion digital audio market.

Today's podcasting announcements, along with other enhancements to the RADIO.COM platform that will be implemented during the second half of 2019, should further enhance our RADIO.COM growth. On a related note, in June, Apple and Entercom announced a strategic integration to bring all of Entercom stations to the Apple Music platforms, and enable a number of significant collaborative features that will bolster listening levels to our brands and provide a number of other benefits.

Apple's selection of Entercom is one of its partners for the launch of the expanded radio experience in its enhanced Apple Music platforms, is a telling reflection of a strategic significance of our leading platform of outstanding local brands, personality and content. I'd also like to very briefly touch on a few important areas of development across the company.

We are continuing to roll out new analytics and attribution products for our customers under the Entercom advanced audio banner as a result of the significant investment we are making in our data-driven capabilities. For example, we now offer an attribution product that enables us to demonstrate the impact of over the air radio advertising on foot traffic, web traffic, app downloads, brand awareness and more.

Our national client partnership team continues to make progress in our work to elevate our relationships with many of the country's largest blue-chip national advertisers. Radio remains a highly undervalued component of the media mix, and more and more advertisers are recognizing that they are under invested in radio, the nation's number reach medium, offering superior ROI outstanding local activation and more.

Advertisers are increasingly receptive to rethinking their media mix to increase the radio spending. Although, the timeline of the annual planning cycle and the work of changing perceptions and mindsets on media, means that these types of changes take time.

We expect these efforts to become increasingly significant growth driver in 2020 and beyond. Our Entercom Audio Network launch continues to perform well.

As you may recall, we launched this new business on July 1 of last year, and have been very happy with our progress. In the most recent quarter, we added a number of new clients, including Clorox, Fidelity, GlaxoSmithKline and Skechers.

Our balance sheet is in good shape. And during the second quarter, it was enhanced by two important moves we made to capitalize on attractive market conditions.

Rich will elaborate on that a bit further. Turning to an update on performance.

Our practice has been to provide pacing information, but not to provide guidance. Frankly, that approach has made us vulnerable to deceleration, such as occurred during second quarter.

Starting now, we will begin to provide revenue guidance, so we can provide better information to our investors by incorporating our market insights rather than just passing along a data point. Third quarter comps will be more challenging, as we had significant traffic related revenue recoveries during the third quarter 2018, plus healthy political spending.

Currently third quarter is pacing up low single digits, and we expect to finish the quarter up low single digits as well. We are continuing to see local sales improving sequentially with national, digital and network revenues each up significantly.

In fact, our spot radio business overall is having its healthiest quarter in sometime. However, events in political as mentioned a moment ago are both down in third quarter versus last year.

A few closing summary thoughts before turning it over to Rich. This morning's announcements headline a series of strategic initiatives and investments that we have been making to position Entercom to capitalize broadly on the exciting growth opportunities in the audio space, fueled by new catalysts, such as podcasting, smart speakers and audio search.

At the same time as advertisers are becoming more receptive to increasing radio share of their media mix, in light of radios' compelling and growing relative value proposition. Entercom stands today as a unique leader in the audio universe with one of the two leading broadcast radio station groups, the best collection of premium original local audio content and now, a top three player in podcasting with what is arguably the best national podcast content.

The country's fastest-growing digital audio app with RADIO.COM and Entercom Advanced Audio, bringing to market a burgeoning set of data analytics and attribution capabilities. We are growing, and audio is in the midst of an emerging renaissance, and we are well-positioned to participate in that opportunity.

Frankly, it is remarkable than in the light of all this, our stock continues to trade where it does. Obviously, we don't control that but for whatever it is worth, we see our stock valuation as a complete disconnect with where we see the business and the strength of our platforms, and assets and capabilities, and the opportunities for growth and value creation that we believe lie in front of us.

Thanks. With that, I will turn it over to Rich.

Thanks, David. Our first quarter net revenues were up 2.3%, and were up about 3% ex-political.

As discussed by David, pacing softened over the last two months of the second quarter and national plus local spot revenues ended close to flat for the quarter, and our digital revenue growth came in at 19%. For 3Q, we expect revenues will be up low single digits and ex-political, we will be up 1 percentage point more.

Traffic advertising revenues are expected to be about a push versus prior year in 3Q and thus, the USTN matter is now officially behind us. Turning to our integration program.

We had a great productive second quarter. The last couple miles of this program took somewhat longer to complete than we expected.

But we have completed or are near completing all of our integration program initiatives. And we are on track to achieve total cost synergies that are in excess of $170 million, and net cost synergies after ongoing operating expense investments in our growth initiatives of $125 million, or $15 million greater than our previously stated target.

We have a number of further integration cost reduction actions that are scheduled to occur in the third quarter, and a few more that will wrap things up in the fourth quarter. As a result, we will continue to see restructuring and integration charges in the third and fourth quarter.

And the full year total for such costs, are expected to be less than $12 million, the upper end of our guidance range. For the second quarter, after excluding one-time costs and adjusting out non-cash items, like D&A and miscellaneous income, our total cash operating expenses came in at $293.1 million, or up 1% versus $290 million in the second quarter of 2018.

And our total cash operating expenses are down slightly, June year-to-date. For third quarter, we expected our total cash operating expenses will be flat to down low single digits.

And we continue to expect that for the full-year, our total cash operating expenses will be down around 2%. We now expect that net cost synergies for the full year will range between $40 million and $45 million, and that we will realize another $25 million or so of net cost synergies in 2020.

Looking at our financial position. Our net debt at quarter end was about $1.67 billion.

And calculated in accordance with our amended credit agreement, our first lien leverage was 2.6 times and our total net leverage was 4.6 times. As previously reported, on April 30th, we issued 325 million of second lien 8 non-call 3 secured notes at 6.5% and used the proceeds, cash on hand and a draw against our revolver to pay down $425 million of our term loan B.

We also amended in our financial covenant to make it a first lien test. As a result of this transaction, our first lien leverage declined by over three quarters of a turn and the ratings on our first lien debt were notched up by both Moody's and S&P.

In order to further mitigate our floating rate exposure, in June, we executed $516 million amortizing interest rate caller that caps LIBOR at 2.75% and has a floor of 0.4%, and results in a fixed cap rate for 76% of our outstanding debt at quarter end. This caller allows us to enjoy the floating rate benefit of an over 80% decrease from the current one month LIBOR rate, while initially capping our term loan B floating rate exposure for $560 million of principal at 5.5%.

This notional amount amortizes over the five-year life of this instrument based on our projected debt repayments. Our net capital expenditures for the second quarter were $16.9 million.

And for the full year, we now expect our capital expenditures net of tenant installation allowances will be about $70 million. This is up from our prior guidance range of between $55 million and $60 million due to added expenditures related to our acquisition of NASH from Cumulus in New York City, and a few overruns on several facilities projects, which will be fully completed by the end of this year.

With that, we will now go to your questions. Amber?

We did our call in early May. We were pacing up mid force at that point in time.

We presented that data point, business slowed down a bit after that. And obviously, we were disappointed with that, the events in question.

We had terrible weather at one or two of them and that didn't help. But overall, ticket sales slowed down and events costs us about a point for the quarter and the remainder due to local slowing down.

And then just looking ahead to Q3. Do you have any line of sight into maybe the back end of the quarter just seeing what happened in Q2?

What gives you confidence in the Q3 hanging in there at atht pacing?

Well, what I said, Aaron, was that wrapping up the program definitely took longer than expected. A number of significant actions that were enacted during the course of the second quarter, we will start seeing the benefit of those actions in the third quarter.

We have a few things that are scheduled to be enacted in the third quarter and the fourth quarter. But for the full year, we do expect to get to our previous guidance of about down 2% for the full year.

So its timing and we do anticipate catching up rest of the year.

Thank you, Amber. And thank you everyone for joining our second quarter call.

Thank you, all. Bye, Bye.