AUDACY, INC. (AUDA)·Q3 2019 Earnings Summary

Executive Summary

• Q3 2019 delivered steady top-line growth and strong profit leverage: net revenues +2.0% YoY to $386.1M, operating income +1.0% YoY to $79.5M, and Adjusted EBITDA +13% YoY to $98.0M . GAAP diluted EPS was $0.28 vs $0.26 YoY; Adjusted diluted EPS rose 23% to $0.32 .
• Mix shifted toward higher-growth channels; management cited digital, national and network as primary drivers, with ex-political revenue growth “just under 3%” .
• Strategic audio expansion advanced: RADIO.COM launched DVR-like live radio functionality, and the company completed the Cadence13 acquisition in October, consolidating podcast scale (150M monthly downloads; deal ~1x 2019 revenue per management commentary on the call) .
• Initial Q4 2019 outlook: as-reported net revenues down 1% to up 1% (ex-political +2% to +4%) including $10–$12M podcast revenue; FY19 capex now expected ~ $75M; 2020 capex ~3% of net revenues .

What Went Well and What Went Wrong

• What Went Well

  • Mix-led growth in higher-quality channels: “Revenues increased 2% (just under 3% ex-political) driven by digital, national and network” (CEO David Field) .
  • Operating leverage: Adjusted EBITDA up 13% YoY to $98.0M; Adjusted EPS +23% to $0.32, outpacing revenue growth .
  • Strategic product and content advances: RADIO.COM added DVR-like live functionality, and podcast scale expanded via Cadence13 completion in October (management highlighted scale and accretion trajectory) .

• What Went Wrong

  • September softness: management said July/August were stronger with a “bit softer” September, indicating month-to-month volatility within the quarter .
  • Category weakness in auto and entertainment: among top-15 ad verticals, auto and concert/movies were down, partially offset by strength in financials, insurance, professional services and telecom .
  • One-time disruptor: approximately $1M of costs tied to a September cyberattack were included in Q3 operating expenses (management disclosure on the call) .

Financial Results

Revenue disaggregation (Q3):

Additional balance sheet and cash flow items (Q3 2019 snapshot):

• Debt: $1.0B Term B-1 + $134M revolver + $325M 6.50% second-lien notes + $400M 7.25% senior notes; cash $45M .
• Shareholders’ equity: $1,367.9M .
• Adjusted Free Cash Flow (Q3): $52.1M .

KPIs and operating bridges:

• Station Operating Income (SOI): $114.1M in Q3 2019 vs $100.5M in Q3 2018 .
• Corporate expense (ex-stock comp): $17.2M in Q3 2019 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Revenues increased 2% (just under 3% ex-political) driven by digital, national and network.” – David Field, Chairman, President & CEO .
• “Adjusted EBITDA up 13% and Adjusted Net Income Per Share up 23%.” – David Field .
• “In October, we announced the launch of DVR-like functionality for live radio on our RADIO.COM app…” – David Field .
• “We completed our Cadence13 acquisition in mid-October… total cost of both acquisitions… approximately one-time projected 2019 revenues… ~150 million downloads per month.” – Management on the earnings call .

Q&A Highlights

• Outlook and revenue cadence: Q4 as-reported net revenues guided to down 1% to up 1% (ex-political +2% to +4%), including $10–$12M of podcast revenue; July/August stronger with a softer September .
• Capital intensity: FY19 capex “now expected” ~ $75M due to cyberattack-related spend, Nash acquisition costs and facility projects; 2020 capex ~3% of net revenues .
• Category mix: Among top ad verticals, professional services, financial services, insurance, telecom, pharma, and home improvement were strong; auto and concerts/movies were weak .

Estimates Context

• We attempted to retrieve S&P Global consensus EPS and revenue estimates for Q3 2019 and the prior two quarters; however, AUDA mapping was unavailable in S&P Global CIQ for this ticker at this time, so comparisons vs consensus are not presented [Values retrieved from S&P Global unavailable due to mapping error].

Key Takeaways for Investors

• Profit leverage intact: Adjusted EBITDA and Adjusted EPS grew well ahead of revenue as mix shifted toward digital, national and network, and cost discipline held; this supports the deleveraging and cash generation narrative into year-end .
• Strategic audio flywheel strengthening: RADIO.COM feature upgrades and Cadence13 consolidation expand audience reach and monetization potential; management expects podcasts to be breakeven in Q4 and accretive in 2020, with $10–$12M of Q4 revenue contribution .
• Near-term guide is balanced: Q4 revenue guide brackets flat growth ex-political (+2% to +4%), with some monthly volatility acknowledged; execution in weaker categories (auto/entertainment) is a watch item .
• Capex resets higher in 2019 but normalizes in 2020: Elevated FY19 spend tied to discrete items should fade, with 2020 capex guided to ~3% of revenue .
• Balance sheet: Cash of $45M and term/revolver/notes detail provide visibility into the capital structure; rate hedge in place on variable debt via interest rate collar .
• Trading implications: Expect the stock to react to podcast monetization traction and Q4 execution vs the flat revenue guide; category mix shifts and any additional cyber/IT spend are swing factors for near-term margin prints .

Appendix: Prior Quarters (for trend)

• Q1 2019: Revenues $309.0M; Adjusted EBITDA $42.7M; GAAP diluted EPS $0.02; Adjusted diluted EPS $0.03 .
• Q2 2019: Revenues $380.7M; Adjusted EBITDA $87.6M; GAAP diluted EPS $0.19; Adjusted diluted EPS $0.26 .

Additional transaction/context:

• Pineapple Street Media assets acquired July 19, 2019 for ~$14.0M; Cadence13 remaining equity acquired October 16, 2019 for $24.3M cash (total Cadence13 investment including initial 2017 stake $34M) .
• Bylaw and governance updates (clawback policy and stock ownership guidelines) approved Oct 22, 2019 (administrative, not operational) .