Cumulus Media(CMLS) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements and management's analysis of Cumulus Media Inc Item 1. Financial Statements (Unaudited) This section presents Cumulus Media Inc.'s unaudited condensed consolidated financial statements for the period ended September 30, 2021 Condensed Consolidated Balance Sheets As of September 30, 2021, total assets decreased to $1.72 billion from $1.86 billion, while total liabilities decreased to $1.32 billion from $1.46 billion Condensed Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $152,917 | $271,761 | | Total current assets | $392,097 | $502,964 | | Total assets | $1,722,471 | $1,859,738 | | Liabilities & Equity | | | | Total current liabilities | $136,904 | $129,036 | | Term loan due 2026, net | $353,710 | $460,311 | | Total liabilities | $1,321,976 | $1,462,147 | | Total stockholders' equity | $400,495 | $397,591 | Condensed Consolidated Statements of Operations Q3 2021 net income reached $27.4 million from a $15.8 million loss in Q3 2020, driven by a 21% revenue increase and asset sales Q3 2021 vs Q3 2020 Statement of Operations (in thousands of US dollars) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net Revenue | $237,716 | $196,385 | | Operating Income (Loss) | $47,808 | $(4,943) | | Net Income (Loss) | $27,448 | $(15,803) | | Diluted EPS | $1.32 | $(0.78) | Nine Months 2021 vs 2020 Statement of Operations (in thousands of US dollars) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | Net Revenue | $664,163 | $570,321 | | Operating Income (Loss) | $51,854 | $(29,026) | | Net Income (Loss) | $(360) | $(59,470) | | Diluted EPS | $(0.02) | $(2.93) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased slightly to $400.5 million as of September 30, 2021, from $397.6 million at year-end 2020 - Total stockholders' equity increased from $397.6 million at the end of 2020 to $400.5 million as of September 30, 2021[18] Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $33.2 million from $61.2 million for the nine months ended September 30, 2021, with $157.4 million used in financing activities primarily for debt repayments Cash Flow Summary for Nine Months Ended Sep 30 (in thousands of US dollars) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $33,219 | $61,237 | | Net cash provided by investing activities | $5,375 | $68,774 | | Net cash (used in) provided by financing activities | $(157,438) | $206,704 | | (Decrease) increase in cash | $(118,844) | $336,715 | Notes to Condensed Consolidated Financial Statements Notes provide detailed disclosures on business operations, accounting policies, revenue sources, debt, fair value measurements, and contingencies - The company is an audio-first media company with 412 owned-and-operated stations, the Westwood One audio network, and the CUMULUS Podcast Network[29] - In Q3 2021, the company recorded a gain of $20.8 million from the sale of land and a building in its Nashville, TN market[35] Revenue by Source (in thousands of US dollars) | Revenue Source | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Advertising revenues | $233,816 | $192,823 | $651,016 | $560,236 | | Non-advertising revenues | $3,900 | $3,562 | $13,147 | $10,085 | | Total revenue | $237,716 | $196,385 | $664,163 | $570,321 | - Certain subsidiaries received $20.0 million in Paycheck Protection Program (PPP) loans during the first half of 2021, which were fully forgiven in October 2021[78][80] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting COVID-19 recovery, revenue and expense drivers, Adjusted EBITDA reconciliation, and liquidity Recent Events and Company Outlook Operating results remain impacted by COVID-19, with Q3 2021 revenue exceeding prior year but not pre-pandemic levels, alongside significant cost reductions - Net revenue for Q3 2021 exceeded the comparable period in 2020, but overall results remain lower than pre-COVID-19 results, with Q4 2021 revenue expected to continue increasing over the same 2020 period[112] - The company has taken actions to significantly reduce permanent fixed costs compared to a 2019 baseline and has limited discretionary spending[117] Consolidated Results of Operations Q3 2021 net revenue increased 21.0% to $237.7 million, leading to $47.8 million operating income and $45.8 million Adjusted EBITDA Q3 2021 vs Q3 2020 Performance (in thousands of US dollars) | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | Net revenue | $237,716 | $196,385 | 21.0% | | Operating income (loss) | $47,808 | $(4,943) | N/A | | Net income (loss) | $27,448 | $(15,803) | N/A | | Adjusted EBITDA | $45,828 | $20,331 | 125.4% | - The increase in Q3 net revenue was driven by stronger national and local broadcast advertising, growth in streaming and podcasting, and the return of events that were canceled in 2020 due to COVID-19[127] - Q3 expenses increased primarily due to higher broadcast rights fees for sporting events, higher personnel costs as temporary 2020 cost-saving actions did not recur, and increased commissions tied to higher revenue[128][129] Liquidity and Capital Resources As of September 30, 2021, cash and equivalents totaled $152.9 million, with $157.4 million used in financing activities primarily for debt repayments - The company held $152.9 million of cash and cash equivalents as of September 30, 2021[160] - For the nine months ended September 30, 2021, net cash used in financing activities was $157.4 million, primarily due to mandatory and voluntary debt repayments, partially offset by proceeds from PPP loans[172] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021[177] - No changes to internal control over financial reporting occurred during Q3 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[178] PART II. OTHER INFORMATION This section provides information on legal proceedings, risk factors, and exhibits filed with the report Item 1. Legal Proceedings This section details significant legal matters, including a settled NCAA dispute, a dismissed 401(k) class action, and ongoing pre-1972 sound recording litigation - A lawsuit concerning public performance rights for pre-1972 sound recordings is noted, with a recent Ninth Circuit ruling stating no such right exists under California law, and the ultimate impact on the company is still being determined[181] - A putative class action lawsuit alleging breaches of fiduciary duty under ERISA related to the company's 401(k) plan was dismissed by the court on October 15, 2021, though plaintiffs retain appeal rights[182] - On August 1, 2021, the company and the NCAA settled competing lawsuits regarding radio broadcast rights fees for events cancelled in 2020 due to the COVID-19 pandemic, concluding the litigation[185] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the 2020 Annual Report on Form 10-K are reported - The report refers readers to the Risk Factors section of the company's 2020 Form 10-K for information on material risks affecting the business[187] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including amended bylaws, Sarbanes-Oxley certifications, and Inline XBRL data - A list of exhibits filed with the report is provided, including amended bylaws, Sarbanes-Oxley certifications, and interactive data files (XBRL)[191]