Townsquare Media(TSQ) - 2020 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Townsquare Media's unaudited consolidated financial statements and accompanying notes for the periods ended September 30, 2020, and December 31, 2019 Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of September 30, 2020, and December 31, 2019 | Metric (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :-------------------- | :----------- | :----------- | | Total Assets | $757,167 | $880,399 | | Total Liabilities | $661,422 | $697,963 | | Total Stockholders' Equity | $95,745 | $182,436 | - Cash and cash equivalents decreased from $84.7 million at December 31, 2019, to $79.1 million at September 30, 2020. Accounts receivable, net, also saw a significant decrease from $67.5 million to $54.2 million[10] Consolidated Statements of Operations Details the company's revenues, expenses, and net income or loss for the three and nine months ended September 30, 2020 and 2019 | Metric (in Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net Revenue | $95,356 | $112,561 | $262,844 | $319,331 | | Operating Income (Loss) | $9,535 | $20,183 | $(96,231) | $54,289 | | Net Income (Loss) | $1,311 | $7,268 | $(85,088) | $12,625 | | Basic EPS (Continuing Operations) | $0.03 | $0.29 | $(4.68) | $0.70 | - The company experienced a significant decline in net income and operating income for both the three and nine months ended September 30, 2020, primarily due to the impact of the COVID-19 pandemic and substantial impairment charges[13] Consolidated Statements of Stockholders' Equity Outlines changes in stockholders' equity, including accumulated deficit, for the periods ended September 30, 2020, and December 31, 2019 | Metric (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :-------------------- | :----------- | :----------- | | Total Stockholders' Equity | $95,745 | $182,436 | | Accumulated Deficit | $(276,669) | $(188,034) | - The accumulated deficit significantly increased from $(188.0) million at January 1, 2020, to $(276.7) million at September 30, 2020, reflecting net losses during the period[15] Consolidated Statements of Cash Flows Presents the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019 | Metric (in Thousands) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------- | :---------------------------- | :---------------------------- | | Net Cash Provided by Operating Activities | $23,448 | $25,403 | | Net Cash Used in Investing Activities | $(10,129) | $(3,850) | | Net Cash Used in Financing Activities | $(18,874) | $(7,877) | | Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash | $(5,555) | $13,676 | - Net cash provided by operating activities slightly decreased, while net cash used in investing and financing activities significantly increased in 2020 compared to 2019, leading to a net decrease in cash and cash equivalents[20] Notes to Unaudited Consolidated Financial Statements Provides detailed disclosures on accounting policies, revenue recognition, acquisitions, debt, and segment performance, supporting the unaudited financial statements Note 1. Organization and Basis of Presentation Describes the company's business, operational focus, and the significant impact of the COVID-19 pandemic on its financial performance and strategic responses - Townsquare Media, Inc. is a radio, digital media, entertainment, and digital marketing solutions company focused on local advertising in small and mid-sized U.S. markets, operating 321 radio stations, over 330 local websites, a digital marketing solutions company (Townsquare Interactive), a programmatic advertising platform (Townsquare Ignite), and local live events[24] - The COVID-19 pandemic significantly impacted operations, leading to advertising cancellations, declines in new advertising purchases, cancellation of live events, and impairment charges on FCC licenses[24] - The company implemented cost-cutting measures including reducing non-essential capital expenditures, workforce reductions (approx. 135 full-time employees), wage reduction efforts, and ceasing quarterly cash dividends after May 15, 2020[25] Note 2. Summary of Significant Accounting Policies Outlines the company's adoption of new accounting standards and its assessment of the impact of recently issued standards on its financial statements - The company adopted ASU 2018-15 (Internal-Use Software) and ASU No. 2018-13 (Fair Value Measurements) effective January 1, 2020, neither of which had a material impact on its financial statements[32][33] - The company is assessing the impact of recently issued standards, including ASU 2020-04 (Reference Rate Reform), ASU 2020-01 (Investments-Equity Securities), ASU 2019-12 (Income Taxes), and ASU 2016-13 (Credit Losses), with adoption of ASU 2016-13 expected in Q1 2023[34][35][36][37] Note 3. Revenue Recognition Details the disaggregation of net revenue by segment and provides insights into changes in revenue streams, receivables, and bad debt expense | Revenue Segment (in Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :----------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Townsquare Advertising | $77,109 | $93,086 | $208,780 | $258,884 | | Townsquare Interactive | $18,181 | $15,880 | $51,595 | $45,376 | | Live Events | $66 | $3,595 | $2,469 | $15,071 | | Total Net Revenue | $95,356 | $112,561 | $262,844 | $319,331 | - Revenue is disaggregated into Advertising, Townsquare Interactive, and Live Events. Advertising and Live Events saw significant declines in 2020, while Townsquare Interactive continued its growth. Political advertising revenue was $4.45 million for Q3 2020, up from $0.63 million in Q3 2019[38][40][42] | Metric (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :-------------------- | :----------- | :----------- | | Receivables | $54,235 | $67,463 | | Short-term contract liabilities (deferred revenue) | $9,169 | $8,086 | | Contract Acquisition Costs | $4,704 | $4,037 | - Bad debt expense increased to $1.2 million for Q3 2020 and $3.5 million for the nine months ended September 30, 2020, compared to $0.6 million and $1.6 million for the respective periods in 2019[49] Note 4. Acquisitions, Divestitures & Discontinued Operations Summarizes the company's radio station acquisition and the divestiture of its music festivals and Arizona Bridal Shows businesses, including related gains and liabilities - In May 2019, the Company acquired a radio broadcast station in Tuscaloosa, AL for $0.7 million[55] - The company exited its music festivals business in Q1 2019, selling it to Live Nation for $10.0 million, resulting in a net gain of $0.2 million (Q3 2019) and $0.6 million (9M 2019) from discontinued operations[56] - The Arizona Bridal Shows business was sold in March 2019 for $2.0 million, realizing a gain of $1.4 million[57] | Discontinued Operations Liabilities (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :----------------------------------------------- | :----------- | :----------- | | Accounts payable | $1 | $31 | | Accrued expenses and other current liabilities | $32 | $392 | | Total Current Liabilities of Discontinued Operations | $33 | $423 | Note 5. Property and Equipment, net Presents the net carrying amount of property and equipment, along with associated depreciation, amortization, and impairment charges for the periods presented | Property and Equipment (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :------------------------------------ | :----------- | :----------- | | Total property and equipment, gross | $255,119 | $243,162 | | Less accumulated depreciation and amortization | $(142,805) | $(129,020) | | Total property and equipment, net | $112,314 | $114,142 | - Depreciation and amortization expense for property and equipment was $5.0 million (Q3 2020) and $14.6 million (9M 2020), down from $6.9 million (Q3 2019) and $19.4 million (9M 2019)[61] - The Company recorded $0.6 million in non-cash impairment charges related to the disposal of long-lived assets in the Live Events business for Q3 2020, and $1.2 million for 9M 2020 related to assets in San Angelo, TX and Live Events[61] Note 6. Lease Commitments Describes the company's lease agreements for facilities, land, radio towers, and equipment, and details an impairment charge on a right-of-use asset - The company's lease agreements are primarily for facilities, land, radio towers, and equipment, mostly operating leases with renewal options through 2088[62] - A $0.7 million impairment charge was recognized on operating lease right-of-use assets for a Princeton, NJ facility due to operations consolidation in Q3 2020[63] Note 7. Goodwill and Other Intangible Assets Discusses the company's indefinite-lived assets, including FCC licenses and goodwill, and details significant impairment charges recognized due to the COVID-19 pandemic - Indefinite-lived assets include FCC broadcast licenses and goodwill. The company performed quantitative impairment assessments for reporting units as of March 31, 2020, due to COVID-19, finding fair values exceeded carrying amounts for National Digital, Townsquare Ignite, Analytical Services, Townsquare Interactive, and Live Events[64] | Goodwill by Segment (in Thousands) | Sep 30, 2020 | | :--------------------------------- | :----------- | | Townsquare Advertising | $76,964 | | Townsquare Interactive | $77,000 | | Live Events | $3,983 | | Total Goodwill | $157,947 | - Impairment charges of $28.7 million (Q2 2020) and $78.4 million (Q1 2020) were incurred for FCC licenses in 35 and 46 local markets, respectively, primarily due to declines in forecasted broadcast revenue and increased weighted average cost of capital driven by COVID-19[69] | Intangible Assets (in Thousands) | Sep 30, 2020 Net Carrying Amount | Dec 31, 2019 Net Carrying Amount | | :------------------------------- | :------------------------------- | :------------------------------- | | FCC licenses | $276,652 | $383,738 | | Customer and advertising relationships | $1,910 | $2,401 | | Trademarks | $1,588 | $1,716 | | Total | $281,078 | $388,029 | Note 8. Investments Details the company's long-term investments in synergistic companies, measured at cost, and new investments made during the nine months ended September 30, 2020 - Long-term investments consist of minority holdings in synergistic companies, measured at cost minus impairment due to unreadily determinable fair values[75] - During the nine months ended September 30, 2020, the Company made new investments totaling $2.3 million in three small businesses and an additional $0.4 million in an existing investee. No impairment charges or fair value adjustments were recorded for the periods presented[76] Note 9. Long-Term Debt Provides details on the company's outstanding debt, including 2023 Notes and Term Loans, and reports on voluntary repurchases and covenant compliance | Debt Outstanding (in Thousands) | Sep 30, 2020 | Dec 31, 2019 | | :------------------------------ | :----------- | :----------- | | 2023 Notes | $273,416 | $278,148 | | Term Loans | $272,381 | $282,332 | | Revolver | $— | $— | | Total Debt (net of deferred finance costs) | $543,079 | $556,640 | - The company voluntarily repurchased $4.7 million of its 2023 Notes in May 2020 at a market price below par, recognizing a gain of $1.2 million[81] - The company was in compliance with all covenants under the 2023 Notes indenture and Senior Secured Credit Facility as of September 30, 2020[82] | Annual Maturities of Long-Term Debt (in Thousands) | Amount | | :------------------------------------------------- | :----- | | 2022 | $272,381 | | 2023 | $273,416 | | Total | $545,797 | Note 10. Income Taxes Presents the effective tax rates for the three and nine months ended September 30, 2020 and 2019, and explains the factors influencing the 2020 rate | Period | Effective Tax Rate | | :----- | :----------------- | | Q3 2020 | 25.6% | | Q3 2019 | 26.4% | | 9M 2020 | 28.0% | | 9M 2019 | 27.2% | - The effective tax rate for 9M 2020 was 28.0%, compared to the federal statutory rate of 21%, primarily due to non-deductible items, state and local income taxes, and valuation allowance for deferred tax assets[84] Note 11. Stockholders' Equity Details the authorized and outstanding shares for each class of common stock and warrants, outlining their respective voting and economic rights | Security Type | Par Value Per Share | Number Authorized | Number Outstanding (Sep 30, 2020) | Voting Rights | | :------------ | :------------------ | :---------------- | :-------------------------------- | :------------ | | Class A Common Stock | $0.01 | 300,000,000 | 14,330,220 | One vote per share | | Class B Common Stock | $0.01 | 50,000,000 | 3,011,634 | Ten votes per share | | Class C Common Stock | $0.01 | 50,000,000 | 1,636,341 | No votes | | Warrants | N/A | N/A | 8,977,676 | N/A | | Total | N/A | 400,000,000 | 27,955,871 | N/A | - All common stock classes and warrants have equal economic rights. Class B shares convert to Class A upon transfer or at holder's option, subject to FCC rules. Warrants are exercisable for Class A common stock at $0.0001 per share[86] Note 12. Net Income (Loss) Per Share Presents basic and diluted earnings per share for continuing operations for the three and nine months ended September 30, 2020 and 2019 | EPS Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS (Continuing Operations) | $0.03 | $0.29 | $(4.68) | $0.70 | | Diluted EPS (Continuing Operations) | $0.03 | $0.29 | $(4.68) | $0.70 | - The company uses the two-class method for EPS calculation, considering warrants as participating securities. Stock options and restricted stock were anti-dilutive and excluded from diluted EPS computation for the periods presented[88][91] Note 13. Segment Reporting Provides disaggregated net revenue and operating income (loss) for the company's Advertising, Townsquare Interactive, and Live Events segments - The company operates three reportable segments: Advertising (broadcast and digital advertising), Townsquare Interactive (digital marketing solutions), and Live Events (concerts, expositions)[92] | Segment Net Revenue (in Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Advertising | $77,109 | $93,086 | $208,780 | $258,884 | | Townsquare Interactive | $18,181 | $15,880 | $51,595 | $45,376 | | Live Events | $66 | $3,595 | $2,469 | $15,071 | | Total Net Revenue | $95,356 | $112,561 | $262,844 | $319,331 | | Segment Operating Income (Loss) (in Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Advertising | $14,213 | $26,532 | $(79,086) | $69,608 | | Townsquare Interactive | $5,340 | $4,845 | $14,720 | $13,935 | | Live Events | $(1,082) | $151 | $(895) | $2,716 | | Total Operating Income (Loss) | $9,535 | $20,183 | $(96,231) | $54,289 | Note 14. Related Party Transactions Describes the strategic partnership with a venture studio affiliated with two directors, including the services provided and payments received - The company has a strategic partnership with a venture studio affiliated with two directors, providing professional and administrative services for a monthly fee of $15,000 and direct expense reimbursement[97] - Payments received for these services were approximately $0.01 million (Q3 2020) and $0.1 million (9M 2020)[97] Note 15. Subsequent Events Reports on the acquisition of a radio broadcast station in Duluth, Minnesota, subsequent to the reporting period - On October 9, 2020, the company acquired a radio broadcast station in Duluth, Minnesota, for $0.4 million in cash[98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes the company's financial condition, results of operations, cash flows, and liquidity, including the impact of the COVID-19 pandemic and critical accounting estimates Note About Forward-Looking Statements Highlights that the report contains forward-looking statements subject to risks and uncertainties, and past performance is not indicative of future results - The report contains forward-looking statements regarding financial condition, results of operations, and future performance, which are subject to various risks and uncertainties, including the impact of general economic conditions, the COVID-19 pandemic, and competitive technologies[100][101] - Past financial performance should not be relied upon as an indication of future performance, and the company undertakes no obligation to update or revise forward-looking statements except as required by law[101] Format of Presentation Describes Townsquare Media's business operations, including its radio stations, digital platforms, and live events, and its strategy for revenue maximization - Townsquare Media operates 321 radio stations, over 330 local websites, a digital marketing solutions company (Townsquare Interactive), a proprietary digital programmatic advertising platform (Townsquare Ignite), and numerous local live events[102] - The company's business is segmented into Advertising, Townsquare Interactive, and Live Events, aiming to maximize net revenue by managing advertising inventory, adjusting prices, and broadening its advertiser base across multiple platforms[104][109] Highlights of Our Financial Performance Summarizes key financial performance metrics, including net revenue and operating income, for the three and nine months ended September 30, 2020 and 2019 | Metric (in Thousands) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Net Revenue | $95,356 | $112,561 | $(17,205) | (15.3)% | | Advertising Net Revenue | $77,109 | $93,086 | $(15,977) | (17.2)% | | Townsquare Interactive Net Revenue | $18,181 | $15,880 | $2,301 | 14.5% | | Live Events Net Revenue | $66 | $3,595 | $(3,529) | (98.2)% | | Operating Income | $9,535 | $20,183 | $(10,648) | (52.8)% | | Metric (in Thousands) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change | % Change | | :-------------------- | :---------------------------- | :---------------------------- | :----- | :------- | | Net Revenue | $262,844 | $319,331 | $(56,487) | (17.7)% | | Advertising Net Revenue | $208,780 | $258,884 | $(50,104) | (19.4)% | | Townsquare Interactive Net Revenue | $51,595 | $45,376 | $6,219 | 13.7% | | Live Events Net Revenue | $2,469 | $15,071 | $(12,602) | (83.6)% | | Operating Income (Loss) | $(96,231) | $54,289 | $(150,520) | ** | - The company experienced a significant operating loss for the nine months ended September 30, 2020, primarily due to a $56.5 million decrease in net revenue and $109.1 million in total impairment charges, largely attributable to the COVID-19 pandemic[125] Consolidated Results of Operations (Three months ended September 30, 2020 compared to three months ended September 30, 2019) Analyzes the company's financial performance for Q3 2020 versus Q3 2019, highlighting changes in net revenue, operating expenses, and net income | Metric (in Thousands) | Q3 2020 | Q3 2019 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Net Revenue | $95,356 | $112,561 | $(17,205) | (15.3)% | | Direct Operating Expenses | $71,088 | $77,239 | $(6,151) | (8.0)% | | Operating Income | $9,535 | $20,183 | $(10,648) | (52.8)% | | Net Income | $1,311 | $7,268 | $(5,957) | (82.0)% | - Net revenue decreased by 15.3% due to advertising cancellations and declines in new advertising purchases, and a 98.2% decrease in Live Events revenue, both primarily caused by the COVID-19 pandemic. Townsquare Interactive revenue increased by 14.5%[128] - Operating income decreased by 52.8%, influenced by lower net revenue, partially offset by a decrease in direct operating expenses (8.0%) due to lower compensation and reduced live event expenses[126][129] Consolidated Results of Operations (Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019) Analyzes the company's financial performance for 9M 2020 versus 9M 2019, focusing on net revenue, operating expenses, and the significant impact of impairment charges | Metric (in Thousands) | 9M 2020 | 9M 2019 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Net Revenue | $262,844 | $319,331 | $(56,487) | (17.7)% | | Direct Operating Expenses | $207,046 | $221,597 | $(14,551) | (6.6)% | | Operating (Loss) Income | $(96,231) | $54,289 | $(150,520) | ** | | Net (Loss) Income | $(85,088) | $12,625 | $(97,713) | ** | - Net revenue decreased by 17.7%, driven by a 19.4% decline in Advertising and an 83.6% decline in Live Events revenue due to the COVID-19 pandemic, partially offset by a 13.7% increase in Townsquare Interactive revenue[143] - The company reported an operating loss of $96.2 million, a significant decrease from operating income of $54.3 million in 2019, primarily due to the revenue decline and $109.1 million in impairment charges for intangible and long-lived assets[140][150] | Interest Expense, Net (in Thousands) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :----------------------------------- | :---------------------------- | :---------------------------- | | Unsecured Senior Notes | $13,449 | $13,560 | | Term Loans | $9,178 | $11,851 | | Revolver | $351 | $— | | Total Interest Expense, Net | $23,713 | $25,645 | Supplemental Pro Forma Net Revenue Presents pro forma net revenue, adjusting for the Arizona Bridal Show divestment, to provide a comparable view of revenue performance | Pro Forma Net Revenue (in Thousands) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :----------------------------------- | :---------------------------- | :---------------------------- | | Townsquare net revenue | $262,844 | $319,331 | | Arizona Bridal Show divestment | $— | $(726) | | Total Pro forma net revenue | $262,844 | $318,605 | - On a pro forma basis (excluding the Arizona Bridal Show divestment), net revenue for the nine months ended September 30, 2020, decreased by 17.5%, primarily due to COVID-19 impacts on Advertising and Live Events, partially offset by growth in Townsquare Interactive and higher political advertising[157] Liquidity and Capital Resources Assesses the company's ability to meet its financial obligations, detailing cash flow activities, financing facilities, and management's outlook on liquidity | Cash Flow Summary (in Thousands) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------------------- | :---------------------------- | :---------------------------- | | Cash provided by operating activities | $23,448 | $25,403 | | Cash used in investing activities | $(10,129) | $(3,850) | | Cash used in financing activities | $(18,874) | $(7,877) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(5,555) | $13,676 | - The company believes its cash on hand, cash flows, and revolving credit facility will meet working capital, capital expenditures, and debt service needs for at least one year, despite COVID-19 impacts[159] - As of September 30, 2020, total outstanding indebtedness was $543.1 million, with expected debt service requirements of approximately $28.9 million over the next twelve months[159] COVID-19 Response Details the company's proactive financial and operational measures taken in response to the COVID-19 pandemic, including borrowing, repayment, and cost reductions - The company borrowed $50.0 million from its Revolving Credit Facility on March 17, 2020, as a precautionary measure, and repaid the full amount on June 5, 2020, restoring available borrowing capacity[165] - Implemented immediate actions including significantly reducing non-essential capital expenditures, workforce reductions (approx. 135 full-time employees), wage reduction efforts, and ceasing quarterly cash dividends[166] Operating Activities Analyzes the change in net cash provided by operating activities, attributing it to net loss, impairment charges, and deferred taxes - Net cash provided by operating activities decreased to $23.4 million for 9M 2020 from $25.4 million for 9M 2019, primarily due to net loss in 2020 (including $109.1 million impairment charges) and a decrease in net deferred taxes, partially offset by working capital changes[167] Investing Activities Explains the increase in net cash used in investing activities, primarily due to the absence of cash provided by discontinued operations in 2019 - Net cash used in investing activities increased to $10.1 million for 9M 2020 from $3.9 million provided in 9M 2019, mainly due to cash provided by discontinued operations in 2019 from the sale of music festivals and bridal shows[168] Financing Activities Details the increase in net cash used in financing activities, driven by debt payments and voluntary repurchases of 2023 Notes - Net cash used in financing activities increased to $18.9 million for 9M 2020 from $7.9 million for 9M 2019, driven by a $9.9 million excess free cash flow payment on Term Loans and a $3.6 million voluntary repurchase of 2023 Notes[169] Financing Facilities Provides an overview of the company's debt instruments, including 2023 Unsecured Senior Notes and the Senior Secured Credit Facility 2023 Unsecured Senior Notes Details the issuance, repurchase, and outstanding principal amount of the 6.5% Unsecured Senior Notes due in 2023, along with covenant compliance - The company issued $300.0 million of 6.5% Unsecured Senior Notes due in 2023. $4.7 million of these notes were voluntarily repurchased and canceled in May 2020[171] - As of September 30, 2020, the aggregate principal amount outstanding was $273.4 million, and the company was in compliance with all covenants[175] Senior Secured Credit Facility Describes the components of the Senior Secured Credit Facility, including term loans and the revolving credit facility, and details borrowing and repayment activities - The facility includes a $275.0 million term loan facility (maturing April 1, 2022) and a $50.0 million Revolving Credit Facility (maturing April 1, 2022)[176][177][179] - A $9.9 million excess free cash flow payment on Term Loans was made on June 15, 2020. The Term Loans had a balance of $272.4 million and an interest rate of 4.0% as of September 30, 2020[178] - The $50.0 million Revolving Credit Facility was fully drawn on March 17, 2020, as a precautionary measure, and fully repaid on June 5, 2020, with no outstanding borrowings as of September 30, 2020[180] Off-Balance Sheet Arrangements States that the company has no material off-balance sheet arrangements or transactions to report - The company has no material off-balance sheet arrangements or transactions[183] Critical Accounting Policies and Estimates Emphasizes the importance of management's estimates and judgments in financial reporting and confirms no material changes to critical accounting policies - Management's estimates and judgments are crucial for financial statements, particularly for fair value of acquired assets/liabilities, impairment testing of intangible and long-lived assets, leasing arrangements, share-based payment expense, and income taxes[184] - There have been no material changes to the critical accounting policies and estimates as filed in the 2019 Annual Report on Form 10-K[185] Recent Accounting Standards Refers to Note 2 for a detailed discussion of recent accounting standards updates and their potential impact - For a discussion of accounting standards updates, refer to Note 2, Summary of Significant Accounting Policies, within Item 1 of this report[186] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective as of September 30, 2020, due to material weaknesses in internal control over financial reporting, with ongoing but incomplete remediation efforts Evaluation of Disclosure Controls and Procedures States management's conclusion that disclosure controls and procedures were ineffective as of September 30, 2020, due to material weaknesses - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of September 30, 2020, due to material weaknesses in internal control over financial reporting[188] Material Weakness Identifies specific material weaknesses in internal control over financial reporting, including issues with entity-level controls and control activities - Identified material weaknesses include not maintaining appropriately designed entity-level controls (impacting control environment, risk assessment, and monitoring) and a lack of adequate selection and development of effective control activities, general controls over technology, and policies/procedures[189][192] Remediation Plans Outlines ongoing remediation efforts for identified material weaknesses, noting that full remediation was not achieved by the reporting date, but financial statements are fairly presented - Management is actively implementing remediation plans, as outlined in the 2019 Annual Report on Form 10-K, but the material weaknesses were not fully remediated as of September 30, 2020[190] - Despite the material weaknesses, management believes the Consolidated Financial Statements in this report fairly present the company's financial position and results of operations[191] Changes in Internal Control Over Financial Reporting Confirms no material changes in internal control over financial reporting during the quarter ended September 30, 2020 - There were no changes in internal control over financial reporting during the quarter ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[192] Inherent Limitations on Effectiveness of Controls Acknowledges that all control systems have inherent limitations, providing reasonable rather than absolute assurance of achieving control objectives - All control systems have inherent limitations, including human error, circumvention, and faulty judgments, meaning they can only provide reasonable, not absolute, assurance of meeting control objectives[193] PART II OTHER INFORMATION Item 1. Legal Proceedings No material pending litigation or legal proceedings were terminated or resolved during the period, and routine matters are not expected to materially impact financial position or operations - No current material pending litigation or material legal proceedings were terminated, settled, or resolved during the three and nine months ended September 30, 2020[196] - The company does not believe the ultimate resolution of routine regulatory proceedings, lawsuits, and claims will have a material adverse effect on its financial position or results of operations[196] Item 1A. Risk Factors Refers to the 2019 Annual Report on Form 10-K for known material risks, noting that other immaterial or unknown risks could also adversely impact future business - Readers should refer to Part I, Item 1A, "Risk Factors," in the 2019 Annual Report on Form 10-K for known material risks[197] - Other risks not currently considered material, or unknown risks, could materially adversely impact the business, financial condition, and results of operations in a future period[197] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - None[198] Item 3. Defaults upon Senior Securities There were no defaults upon senior securities to report for the period - None[198] Item 4. Mine Safety Disclosures There were no mine safety disclosures to report for the period - None[198] Item 5. Other Information There is no other information to report for the period - None[199] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Financial Officer and Chief Executive Officer, XBRL instance documents, and taxonomy extension documents - The exhibits include certifications from the CFO and CEO (31.1, 31.2, 32.1, 32.2) and various XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[203] SIGNATURES The report is signed on behalf of Townsquare Media, Inc. by Stuart Rosenstein, Executive Vice President & Chief Financial Officer, on November 9, 2020 - The report was signed by Stuart Rosenstein, Executive Vice President & Chief Financial Officer, on November 9, 2020[206]