iHeartMedia Q1 Consolidated Revs Off 2.4%, Debt Service Payments Continue To Incur Net Losses

Bob Pittman

iHEARTMEDIA has reported financial results for the first quarter ended FRIDAY, MARCH 31st, 2017. The company also addressed debt service payments that "continue to incur net losses."

"For the year ended FRIDAY, DECEMBER 31st, 2016," iHEART explains, "we adopted a new accounting standard that requires us to evaluate on a quarterly basis whether there is substantial doubt about our ability to continue as a going concern for a period of 12 months following the date our financial statements are issued. A substantial amount of our cash requirements are for debt service obligations.

Our current operating plan indicates we will continue to incur net losses and generate negative cash flows from operating activities given iHeartCommunications’ indebtedness and related interest expense.

"Although we have generated operating income, we incurred net losses and had negative cash flows from operations for the years ended DECEMBER 31st, 2016 and 2015, as well as for the quarter ended MARCH 31st, 2017. Our current operating plan indicates we will continue to incur net losses and generate negative cash flows from operating activities given iHEARTCOMMUNICATIONS’ indebtedness and related interest expense.

"During the quarter ended MARCH 31st, 2017, we spent $570.4 million of cash on payments of principal and interest on our debt, net of facility draws and proceeds received, and anticipate having approximately $1.7 billion of cash interest payment obligations for the full year 2017. At MARCH 31st, 2017, we had debt maturities totaling $316.5 million, $324.2 million and $8,369.0 million in 2017, 2018 and 2019, respectively. Our debt maturities at MARCH 31st, 2017 include $305.0 million outstanding under our receivables based credit facility, which matures on DECEMBER 24th, 2017, and $112.1 million of 10% Senior Notes due JANUARY 15th, 2018. Based on the significance of the forecasted future negative cash flows, including the maturities of the $305.0 million receivables based credit facility and the $112.1 million 10% Senior Notes due JANUARY 15th, 2018, and the uncertainty of the outcomes of the notes exchange offers and term loan offers, management has determined that there is substantial doubt as to our ability to continue as a going concern for a period of 12 months following MAY 4th, 2017 as a result of uncertainty around our ability to refinance or extend the maturity of our receivables based credit facility, to achieve our forecasted results and to achieve sufficient cash interest savings from the pending notes exchange offers and term loan offers."

Q1 Highlights

• Consolidated revenue decreased $32.5 million, or 2.4%, during the first quarter of 2017 as compared to the first quarter of 2016. 
• Consolidated direct operating and SG&A expenses increased $29.6 million, or 3.0%, during the first quarter of 2017 as compared to the first quarter of 2016.
• Consolidated operating income decreased $306.7 million, or 72.9%, during the first quarter of 2017 as compared to the first quarter of 2016, primarily due to the net gain of $278.3 million on the sale of non-strategic AMERICAS OUTDOOR markets in the first quarter of 2016 compared to the net gain of $28.6 million on the sale of AMERICAS OUTDOOR INDIANAPOLIS market in the first quarter of 2017.
• The Company's OIBDAN )Operating Income Before Depreciation And Amortization) decreased 21.3% to $232.1 million during the first quarter of 2017 as compared to the first quarter of 2016.

“We are a true multi-platform, 21st-century media company, leveraging our leading broadcast radio, digital, outdoor, mobile, social, live events and data businesses to continue to innovate for the benefit of our marketing partners,” said Chairman/CEO BOB PITTMAN. “This quarter the iHEARTMEDIA segment improved its innovative programmatic solution by introducing SMARTAUDIO -- a digital data product for advertisers that combines the massive scale of broadcast radio with the power of digital data and more informed audience targeting. At Outdoor, we continue to enhance our data analytics capabilities and automated ad-buying while staying focused on building out our digital networks.”

COO/CFO RICH BRESSLER added, “Our consolidated revenues, operating income and OIBDAN declined in the first quarter. Adjusting for sales and foreign exchange, however, our revenues increased. At the iHEARTMEDIA segment, this quarter marked the sixteenth consecutive quarter of year-over-year increases in revenue. We remain focused on balancing financial discipline with investments to grow our businesses while continuing to work on our capital structure.”

Other Financial Highlights

• Consolidated revenue decreased $32.5 million (2.4%). Consolidated revenue increased 1.6%, after adjusting for a $12.8 million impact from movements in foreign exchange rates and the $40.6 million impact of the outdoor markets and businesses sold.
• iHM revenues increased $18.3 million, or 2.5%. Revenues increased $27.3 million, or 3.8%, excluding political revenue.
• AMERICAS OUTDOOR revenues decreased $3.1 million, or 1.1%. Revenues increased $0.7 million, or 0.2%, after adjusting for a $1.4 million impact from movements in foreign exchange rates and a $5.2 million impact from the sale of non-strategic markets.
• International outdoor revenues decreased $41.2 million, or 13.4%. Revenues increased $8.3 million, or 3.1%, after adjusting for a $14.2 million impact from movements in foreign exchange rates and a $35.4 million impact from the sale of businesses in AUSTRALIA and TURKEY.
• Operating income decreased $306.7 million, or 72.9%, primarily due to the net gain of $278.3 million on the sale of non-strategic AMERICAS OUTDOOR markets in the first quarter of 2016 compared to the net gain of $28.6 million on the sale of our Americas outdoor Indianapolis market in the first quarter of 2017.
• OIBDAN decreased 21.3% and decreased 19.0%, excluding the impact from movements in foreign exchange rates and the impact of the outdoor markets and businesses sold.

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