Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
Investor Presentation August 2019
1 © Townsquare Media, Inc. 1
Forward-Looking Statements and Non-GAAP Financial Measures
This presentation contains, and our other communications may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements, written, oral or otherwise made, represent the Company’s expectation or belief concerning future events. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control.
By nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in the sections entitled “Risk Factors” and “Forward-Looking Statements” included in our Annual Report on Form 10-K filed on March 12, 2019, or other applicable documents that are filed or furnished with the Securities and Exchange Commission (“SEC”). We do not undertake to update any forward- looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC, or in any document posted to the “Equity Investors” section of the Company’s website.
The unaudited estimates and statements included herein are the opinion of management and represent estimates and expectations based on the most current information available. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors and it is impossible for us to anticipate all factors that could affect our actual results. Our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results for our fourth quarter are finalized. This preliminary financial data has been prepared by and is the responsibility of management. Our independent registered public accounting firm, BDO USA, LLP, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, BDO USA, LLP does not express an opinion or any other form of assurance with respect thereto. As a result of the foregoing considerations and limitations, investors are cautioned not to place undue reliance on this projected financial information.
This presentation includes non-GAAP financial measures within the meaning of the federal securities laws, including Adjusted Operating Income, Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes. We define Adjusted Operating Income as operating income before the deduction of depreciation and amortization, stock-based compensation, corporate expenses, transaction costs, business realignment costs, impairment loss of goodwill and intangible assets, impairment loss on investment and net loss (gain) on sale and retirement of assets. Adjusted EBITDA is defined as net income (loss) before the deduction of income taxes, interest expense, net, repurchase of debt, transaction costs, depreciation and amortization, stock-based compensation, business realignment costs, impairment of goodwill and intangible assets, impairment loss on investment, net (income) loss from discontinued operations, net of income taxes, net (loss) gain on sale and retirement of assets, other expense (income) net, and gain (loss) on foreign exchange. Adjusted EBITDA Less Interest, Capex and Taxes is defined as Adjusted EBITDA less net cash interest expense, capital expenditures and cash paid for taxes. Adjusted Operating Income, Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes do not represent, and should not be considered as alternatives to, net (loss) income or cash flows from operations as determined under U.S. generally accepted accounting principles, or GAAP. For a reconciliation of these measures to net income, see Exhibit 99.1 to our Current Reports on Form 8-K filed with the SEC on August 6, 2019.
2 © Townsquare Media, Inc. 2
Introduction to Townsquare (NYSE: TSQ)
Owns and operates market-leading branded media
platforms: broadcast radio, digital, video, social, and
streaming
Brings national scale and expertise to 67 local markets
321
~12M 200
#1 or #2 radio position in 65 of 67 markets
radio listeners (1)
radio stations
Local live events per year
Townsquare Interactive
SMB customers (4)
Highly complementary media, marketing, and entertainment platforms Move customers and audience across platforms
Subscription-based revenue model
Organically built in 2012
Web and mobile sites
SEO, social media management
Reputation management and directory listings
Proprietary analytics and insights
~17M local website UVs (2)
Proprietary digital programmatic technology platform
Organically built in 2014
Precision customer targeting solutions
In-house Demand Supply Platform (DSP) and media buying and optimization
Townsquare Ignite
~17,300
300+ local websites /
local station apps
__________________________________________________ Note: UVs is defined as unique visitors. Branded Media and Digital Advertising Technology (Townsquare Ignite) make up our Advertising segment. 1. Represents the average of Townsquare’s Spring 2018 and Fall 2018 nationwide cume, P12+ M-Su 12a -12a, per Act 1 Systems (based on Nielsen data). 2. Represents average monthly global UVs on our local owned and operated websites in the six months ended June 30, 2019 per Google Analytics. 3. Average monthly campaigns in 1H 2019. 4. As of June 30, 2019.
We are the leading multi-platform branded media, digital marketing, and live events company focused primarily on small to mid-sized markets in America’s heartland
Diversified multi-channel growth strategy
Provides cutting edge digital marketing and advertising technology
solutions to a broad base of ~50,000 local and national advertisers
and SMBs
active campaigns per month (3) ~2,600
Annual recurring heritage events (e.g. WYRK’s Taste of Country is celebrating its 20th anniversary)
Focused on providing family friendly entertainment
Monetizes the audience relationship
3 © Townsquare Media, Inc. 3
Investment Highlights
#1 or #2 radio position in 65 of 67 markets
Stable cities with attractive fundamentals: lower economic volatility and competition
Reaches millions of people in the “Heartland” and connects this audience to local and national advertisers
Sales are generated through largely local and direct-to-client relationships
Local advertising spend is large (~$88 billion) and projected to grow at a ~8% CAGR (1)
Radio audience continues to grow, while digital is growing rapidly and taking share from traditional print-based mediums (e.g., newspaper and yellow pages)
Radio is the #1 reach medium in the U.S., reaching more than 90% of Adults 12+ each week (2)
Track record of successfully driving value through organic product development
Well-positioned to leverage in-market teams, digital DNA, local salesforce and first-party data insights to lead growth within its markets
Significant scale with diversified revenue streams built through successful organic initiatives and strategic M&A
Steady growth of ~5% 1H 2019 PF revenue and ~12% 1H 2019 PF Adjusted EBITDA (3)
Strong and stable cash flow, providing fuel for product development and innovation (24% LTM 6/30/19 PF Adjusted EBITDA margin (3))
Valuable tax benefits, including tax deductible amortization and net operating loss carryforwards
Deep local audience engagement through longstanding and powerful brands on the air, online and experiential
Demonstrable success leveraging traditional media core to build growth businesses through intimate understanding of audience and advertiser needs (e.g., live events, Townsquare Interactive, Townsquare Ignite etc.)
_____________________________________ 1. Source: SNL Kagan. 2018-2023 CAGR. 2. Nielsen Audio, RADAR Report 139, Mon-Sun, 12M-12M. 3. Pro forma for the acquisition of three radio stations in Princeton, New Jersey on July 2, 2018 as if it had occurred on January 1, 2018.
Market-leading position in small & mid-sized markets
Platform for growth and innovation
Strong financial profile
Diversified, multi-platform
products and audiences
Attractive industry dynamics reinforce growth
opportunity
4 © Townsquare Media, Inc. 4
Small and Mid-Sized Market Strategy is a Competitive Advantage
Townsquare Markets
More attractive competitive landscape
Limited focus from larger media players
Starved for high quality media and entertainment experiences
Limited competition from advertising technology and digital marketing solutions providers
Healthy, stable markets with lower economic volatility and stabilizing institutions such as universities, military installations and state capitals
We reach a majority of the population in our markets
We have trusted relationships between our heritage brands and our audience and strong local relationships with our advertisers
Our ability to bring national products, technology and practices to small and mid-sized markets is unique
Our national scale and expertise allows us to develop market leading products and services, and provide training and support to our local markets
The Heartland is as much a mindset as it is a geographical definition, and many of our brands are significant influential institutions in this landscape that can help shape trends
“So many marketing programs are oriented toward metro elite imagery… Marketing needs to reflect less of New York and Los Angeles culture… and more of Des Moines and Scranton.”
— Wall Street Journal, November 21, 2016
Advertisers Seek Middle America Consumers
Townsquare operates in 67 small and mid-sized markets across the US, with virtually no presence in the top 50 markets
Average Townsquare market population ~300K (50K – 1M)
5 © Townsquare Media, Inc. 5
The Power of Our Brands and Talent
5
___________________________________________________ 1. Represents the average of Townsquare’s Spring 2018 and Fall 2018 nationwide cume, P12+ M-Su 12a -12a, per Act 1 Systems (based on Nielsen data). 2. Represents average monthly global UVs on our local owned and operated websites in the six months ended June 30, 2019 per Google Analytics. 3. Represents live and local morning shows that are ranked first in-format according to Nielsen’s A25-54 ratings.
Original content and influential local media personalities drive deep, multi-platform audience engagement and create compelling advertising and marketing solutions for clients
Strength in Country, News/Talk/Sports and Rock formats
Live and local personalities with strong ties to the community
Proprietary mobile radio app, radioPup, and individual station apps reach our audience on the go
We supplement our local content with national content from our portfolio of 9 music and entertainment focused websites, including Taste of Country, XXL, Loudwire, Ultimate Classic Rock, PopCrush, The Boot, The Boombox, Diffuser and ScreenCrush
Select Radio and Digital Media Brands
Townsquare owns and operates market leading media platforms: broadcast radio, digital, video, social and streaming
321 radio stations
330+ local, community websites
300+ local station apps
12M listeners (1)
17M UVs (2) per month
#1 or #2 share of radio revenue in 65 of 67 markets
77 top-rated live and local morning shows (3)
Key Stats
6 © Townsquare Media, Inc. 6
Townsquare Ignite (Programmatic Digital Advertising)
Townsquare Ignite is our proprietary advertising technology platform that enables us to fulfill our client’s entire audience demand, using:
TSQ digital inventory (on our owned and operated websites) AND
Third party advertising inventory across the Internet
Hyper-targeted online audiences are delivered across desktop, mobile, apps, connected TV, email, paid search, and social media platforms utilizing display, video and native executions
Clients paying for highly effective ads, delivered to the right people at the right time
Deliver far more precision and personalization of messaging and media, resulting in more efficiently targeted ad campaigns
____________________________ 1. For the six months ended June 30, 2019. 2. Represents management estimates.
Townsquare Ignite is an effective and efficient advertising solution that enhances our local market presence, brands and trusted relationships with sophisticated precision in-house audience targeting solutions
Targeting Methods
Advanced Audience
Contextual
Re-targeting
Video
Social
Geolocation
Hyper-local Mobile
Foot Attribution
Search
Native
In-house buying platform (DSP) integrated with 1,000+ exchanges accessing >250 billion impressions/day
~2,600 Ignite campaigns live each month (1)
Up ~72% from the prior year
2019 net revenue approaching $50M; $100M of revenue expected in 3-5 years (2)
Key Stats
7 © Townsquare Media, Inc. 7
11,750 13,650
17,300
Jun-17 Jun-18 Jun-19
Townsquare Interactive (TSI) (Digital Marketing Solutions)
TSI provides a wide array of digital services for a recurring monthly subscription fee, including:
Website design and management
Search engine optimization
Re-Targeting
Business listing
TSI targets SMBs in our 67 small and mid-sized markets leveraging our local sales teams, as well as small to mid-sized markets with demographics consistent with TSQ markets via our Inside Sales Team of over 100 sellers
Approximately half of our subscribers are outside of our local media market footprint
TSI is a leading provider of digital marketing solutions to SMBs
___________________________________________________ 1. As of June 30, 2019. 2. Represents management estimates.
~17,300 subscribers
~$300 average monthly subscriber fee
~$62M annual run-rate net revenue
$100M of revenue expected in 3-5 years (2)
Key Stats (1)
Social media marketing
Mobile optimization
E-commerce
Reputation monitoring
TSI Subscribers
+1,900 +3,650
Charlotte Business Journal’s “2018 Best
Places to Work” Winner
4 years in a row
8 © Townsquare Media, Inc. 8
Leading Research Firm, Borrell Associates, Singles out Townsquare as Top Digital Performer
Borrell points to Townsquare as a top digital performer among all local media companies. He bases that on what he calls “addressable” digital ad dollars, meaning those that are readily available to in-market media companies, like radio, TV, and newspapers
Companies like Townsquare Media should no longer be thought of as radio companies, he says, a belief shared by numerous broadcasters that have replaced the word “radio” in their company names with “media”
“Its digital ventures are fast-growing and quite impressive,” Borrell says, pointing to the company’s 300-person Townsquare Interactive workforce that focuses exclusively on digital ventures at the division’s base in Charlotte, NC
Townsquare Media has taken an approach “where the reps are truly marketing consultants, not radio reps who also have some digital products to sell,” Borrell says
Across its 67 markets, the company “holds a phenomenal share of addressable digital advertising”
9 © Townsquare Media, Inc. 9
Leading Research Firm, Borrell Associates, Singles out Townsquare as Top Digital Performer
__________________________ Sources: SEC Documents, company statements and Borrell Associates estimates, April 2019. Some data for Q1-Q3 2018 only. *Includes Salem’s non-radio ventures; radio-only percentage is 10.2%. Note: Represents Borrell estimates, and may make certain adjustments. According to the Company, In 2018, digital revenue represented nearly 30% of TSQ’s total net revenue.
© 2019 Borrell Associates Inc.
Percentage of Ad Revenue from Digital Sales for U.S. & Canadian Local Media Companies, 2018
10 © Townsquare Media, Inc. 10
Radio is a Stable Foundation
___________________________________________ 1. Nielsen Audio RADAR reports (127, 131, 135, 139), Mon-Sun, 12M-12M. 2. Edison Research, “Share of Ear,” Q2 2017, Q4 2017, Q1 2018 P18+. 3. Nielsen Total Audience Report Q2 2018. 4. Nielsen studies from 2014-2016, including Nielsen’s Catalina Radio Return on Advertising Spend studies.
Radio Reaches Everyone Radio’s Audience is Growing
Radio Delivers Results at an Attractive Price Radio Delivers a Local Connection
Radio megaphone with proven ability to activate audience to action
Large, local salesforce with direct relationships with local advertisers
Compelling live and local content on heritage brands
First party audience data collection and insights
Ability to produce curated local content absent from national and social media platforms
Radio is still one of the most cost-effective and efficient ways for local advertisers to reach the masses and local communities
Reaches all the key demographics advertisers want (>90% reach among P18+, P18-34, P35-49, P50-64)(3)
Drives consumer action and positive ROI (~10x return on advertiser spend) (4)
Lower CPM than other forms of traditional media
New attribution tools, such as Analytic Owl, are providing ways to measure broadcast campaigns that have historically not existed
Unlike certain other traditional media, radio’s audience is growing
The introduction of streaming, mobile apps and smart speakers have helped to increase radio’s total audience
Radio usage has remained substantially unchanged since 1970, reaching >90% of Americans 12+ (1)
Radio dominates listening hours, with 47% vs. SiriusXM’s 7%, Pandora’s 5%, and Spotify’s 4% share of listening (2)
Radio reaches more people per week than any other media
Radio
PC
TV
Smartphone
Tablet
227M
216M
192M
112M
133M
Weekly Reach (P18+) (3) Radio’s Weekly Reach (P12+) (1)
244M 247M 247M 248M
2015 2016 2017 2018
11 © Townsquare Media, Inc. 11
Live Events
Live events are a natural extension of Townsquare’s core advertising offerings
Expands our audience and reinforces media brands through association
Unrivaled local presence and marketing strength
Complementary advertiser offering without cannibalizing other revenue streams
Monetizes the listener/consumer relationship
Expertise in local markets and ability to syndicate events across Townsquare markets
Townsquare creates, promotes and produces approximately 200 live events per year that are local, family oriented and community based in nature
Our events are largely perennial with strong customer loyalty
Low ongoing fixed cost, principally driven by innovation and human capital
Include concerts, expositions and other experiential events
Townsquare monetizes our audience relationships with profitable, recurring local live events brands
Select Local Live Event Brands
12 © Townsquare Media, Inc. 12
Key Financial Metrics
24.0%
LTM 6/30/19 PF Adjusted
EBITDA Margin
Steady Growth Strong Profit Margins
~$49M LTM 6/30/19
PF Adjusted EBITDA Less
Interest, Capex and Taxes /
$1.75 Per Share (2)
Stable Capital Structure Cash Generation
5.0%
YTD 2019 PF Net Revenue Growth
11.9%
YTD 2019 PF Adjusted EBITDA
Growth
____________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2018. 1. Based on current LIBOR rates as of August 5, 2019. 2. Based on 27.9 million shares and warrants outstanding as of August 5, 2019.
5.9%
Weighted Average
Interest Rate (1)
No Maturities until 2022
$0.30
Annualized Dividend Per
Share, $0.075 Quarterly
Dividend Per Share
Current Equity Return
13 © Townsquare Media, Inc. 13
August 6, 2019 Earnings Call Highlights
_______________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. All growth rates as compared to the prior year period. 1. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2018.
YTD June 2019 net revenue increased 7.0%, and 5.0% on a pro forma basis (1)
Excluding political, net revenue increased 7.7%, and 5.7% on a pro forma basis (1)
YTD June 2019 Adjusted EBITDA increased 14.6%, and 11.9% on a pro forma basis (1)
YTD June 2019 Townsquare Interactive net revenue increased 31.2%
Townsquare Interactive’s subscriber base grew by 1,100 subscribers in Q2, to ~17,300
YTD June 2019 Townsquare Interactive Adjusted Operating Income increased 40.9%
Adjusted Operating Income margin of 31.9%
YTD June 2019 Advertising net revenue increased 5.0%, and 2.8% on a pro forma basis (1)
Excluding political, net revenue increased 5.9%, and 3.6% on a pro forma basis (1)
Declared next quarterly dividend payment of $0.075 per share, payable on November 15, 2019 to shareholders of record as of September 26, 2019
14 © Townsquare Media, Inc. 14
Q2 2019 Segment Financial Results
____________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2018.
Actual Pro Forma
$ in millions Q2 2018 Q2 2019 Growth % Q2 2018 Q2 2019 Growth %
Advertising net revenue $86.3 $91.5 6.0% $88.3 $91.5 3.6%
Advertising net revenue ex. political
$85.0 $91.0 7.1% $86.9 $91.0 4.6%
Advertising Adj. Operating Income $27.7 $30.9 11.3% $28.5 $30.9 8.5%
Advertising Margin % 32.1% 33.7% 32.2% 33.7%
TSI net revenue $11.7 $15.3 30.8% $11.7 $15.3 30.8%
TSI Adj. Operating Income $3.4 $5.0 46.8% $3.4 $5.0 46.8%
TSI Margin % 29.2% 32.8% 29.2% 32.8%
Live Events net revenue $7.3 $6.3 -13.8% $7.4 $6.3 -14.9%
Live Events Adj. Operating Income $1.5 $1.6 10.9% $1.5 $1.6 9.5%
Live Events Margin % 19.9% 25.6% 19.9% 25.6%
15 © Townsquare Media, Inc. 15
YTD June 2019 Segment Financial Results
____________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2018.
Actual Pro Forma
$ in millions YTD 2018 YTD 2019 Growth % YTD 2018 YTD 2019 Growth %
Advertising net revenue $157.8 $165.8 5.0% $161.3 $165.8 2.8%
Advertising net revenue ex. political
$155.8 $165.0 5.9% $159.3 $165.0 3.6%
Advertising Adj. Operating Income $46.6 $50.3 7.9% $47.6 $50.3 5.6%
Advertising Margin % 29.5% 30.3% 29.5% 30.3%
TSI net revenue $22.5 $29.5 31.2% $22.5 $29.5 31.2%
TSI Adj. Operating Income $6.7 $9.4 40.9% $6.7 $9.4 40.9%
TSI Margin % 29.7% 31.9% 29.7% 31.9%
Live Events net revenue $13.0 $11.5 -11.5% $13.1 $11.5 -12.4%
Live Events Adj. Operating Income $2.9 $2.9 -2.6% $3.0 $2.9 -3.1%
Live Events Margin % 22.7% 25.0% 22.6% 25.0%
16 © Townsquare Media, Inc. 16
Balance Sheet, Liquidity & Ownership
Capital Allocation Priorities Ownership (as of 8/5/19)
6/30/19 Balance Sheet & Liquidity
Invest in organic growth opportunities
Reduce net leverage
Prudently pursue attractively valued acquisition opportunities
$ in millions Maturity Pricing
Cash $62.8
Revolver ($50 million) 0.0 2022 (1) L +250bps
Term Loans 282.3 2022 L +300bps, 1% Floor
Capitalized Obligations 0.0
Total Secured Debt $282.3
Senior Unsecured Notes 278.1 2023 6.500%
Total Debt $560.5
Secured Debt Leverage (2) 2.8x
Total Debt Leverage (2) 5.5x
Net Debt Leverage (2) 4.9x
__________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. 1. On April 30, 2019, the Company entered into an amendment under its existing credit agreement to extend the maturity date of the existing Revolver to April 1, 2022, with a springing maturity six months inside of the Term Loan maturity date. 2. Pro forma Adjusted EBITDA for the twelve months ended June 30, 2019 was $101.3 million. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2018. 3. Each warrant is exercisable for one share of Class A common stock, at an exercise price of $0.0001 per share. The aggregate exercise price for all warrants currently outstanding is $898.
(shares in millions) # of
Votes Primary Holders
Class A Common Stock 14.3 1 Public & MSG
Class B Common Stock 3.0 10 Oaktree & Management
Class C Common Stock 1.6 0 MSD
Class A Warrants (3) 9.0 0 Oaktree
Total Shares + Warrants 27.9 ~$113M of liquidity (including cash and undrawn revolver)
Extended revolver maturity from April 2020 to April 2022 Townsquare’s multi-class structure is driven largely by FCC considerations
Class B (high vote) and Class C (no vote) shares revert to Class A (1 vote) shares upon a sale
Equity Ownership
Others 31%
Mgmt 6% MSD
Capital 6%
MSG 12%
Oaktree Capital
Management 45%