iHeartMedia(IHRT) - 2023 Q1 - Quarterly Report

Part I – Financial Information Financial Statements Q1 2023 saw total assets decrease to $8.04 billion, a $222.4 million net loss, and $94.0 million cash used for operations Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $8,035,191 | $8,335,887 | | Cash and cash equivalents | $187,933 | $336,236 | | Total Current Liabilities | $656,696 | $831,818 | | Long-term debt | $5,394,932 | $5,413,503 | | Total Stockholders' Equity | $471,904 | $684,506 | Consolidated Statement of Comprehensive Loss Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue | $811,239 | $843,458 | | Operating income (loss) | $(48,862) | $12,335 | | Net loss attributable to the Company | $(222,260) | $(48,582) | | Basic and Diluted EPS | $(1.50) | $(0.33) | Consolidated Cash Flow Highlights (Unaudited) | (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Cash used for operating activities | $(93,983) | $(52,212) | | Cash used for investing activities | $(38,421) | $(19,690) | | Cash used for financing activities | $(15,938) | $(461) | | Net decrease in cash | $(148,303) | $(72,446) | Note 1 – Basis of Presentation U.S. GAAP statements cover three segments, facing macroeconomic headwinds impacting Q1 2023 advertising revenue, with $601 million liquidity - The company's advertising revenue is correlated to economic conditions, and the challenging macroeconomic environment that began in Q3 2022 continued to impact revenue in Q1 2023[20] - As of March 31, 2023, total available liquidity was approximately $601 million, comprising $187.9 million in cash and $413.3 million in borrowing availability under the ABL Facility[22] - The company reports its business in three segments: Multiplatform Group (Broadcast radio, Networks, Sponsorships), Digital Audio Group (Digital, Podcasting), and Audio & Media Services Group (Katz Media, RCS)[19][22] Note 2 – Revenue Q1 2023 total revenue decreased to $811.2 million, with Multiplatform Group declining and Digital Audio Group growing via podcasting Revenue by Segment (Three Months Ended March 31) | (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Multiplatform Group | $529,013 | $571,160 | | Digital Audio Group | $223,396 | $214,219 | | Audio & Media Services Group | $61,351 | $60,857 | | Total Revenue | $811,239 | $843,458 | Key Revenue Streams (Three Months Ended March 31) | (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Broadcast Radio | $383,238 | $415,242 | | Digital, excluding Podcast | $145,396 | $144,406 | | Networks | $107,954 | $117,558 | | Podcast | $76,811 | $68,544 | Note 5 – Long-Term Debt Total long-term debt was $5.4 billion at 7.1% weighted average interest, with $20.0 million notes repurchased for a $4.6 million gain Long-Term Debt Composition | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total consolidated secured debt | $4,319,548 | $4,319,714 | | 8.375% Senior Unsecured Notes | $1,100,366 | $1,120,366 | | Total long-term debt | $5,394,932 | $5,413,503 | - In Q1 2023, the company repurchased $20.0 million of its 8.375% Senior Unsecured Notes at a discount, realizing a gain of $4.6 million[50] - The ABL Facility had no outstanding borrowings and $413.3 million of availability as of March 31, 2023[49] Note 9 – Segment Data Q1 2023 Multiplatform Group Adjusted EBITDA declined significantly, Digital Audio Group's slightly increased, and corporate expenses rose Segment Performance (Three Months Ended March 31) | (In thousands) | Revenue 2023 | Revenue 2022 | Segment Adjusted EBITDA 2023 | Segment Adjusted EBITDA 2022 | | :--- | :--- | :--- | :--- | :--- | | Multiplatform Group | $529,013 | $571,160 | $87,052 | $133,907 | | Digital Audio Group | $223,396 | $214,219 | $54,119 | $52,508 | | Audio & Media Services Group | $61,351 | $60,857 | $15,344 | $16,387 | | Consolidated Adjusted EBITDA | | | $93,424 | $145,218 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2023 revenue decreased 3.8% due to macroeconomic factors, resulting in a $48.9 million operating loss and $222.4 million net loss, despite $601 million liquidity - Consolidated revenue decreased by 3.8% in Q1 2023, primarily due to lower spending on radio advertising in the Multiplatform Group, which was impacted by uncertain market conditions[90][92] - Digital Audio Group revenue grew 4.3%, driven by a 12.1% increase in Podcast revenue[92][94] Key Financial Metrics (Q1 2023 vs Q1 2022) | (In thousands) | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $811,239 | $843,458 | | Operating income (loss) | $(48,862) | $12,335 | | Net loss | $(222,363) | $(48,739) | | Adjusted EBITDA | $93,424 | $145,218 | - The company believes its available liquidity of approximately $601 million is sufficient to fund operations for at least the next twelve months despite market uncertainty[123][126] Results of Operations Q1 2023 revenue declined 3.8% (Multiplatform -7.4%, Digital Audio +4.3%), with increased operating and interest expenses, leading to a $222.3 million net loss Revenue Stream Comparison (Q1 2023 vs Q1 2022) | (In thousands) | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Multiplatform Group | $529,013 | $571,160 | (7.4)% | | Digital Audio Group | $223,396 | $214,219 | 4.3% | | Audio & Media Services Group | $61,351 | $60,857 | 0.8% | | Total Revenue | $811,239 | $843,458 | (3.8)% | - Direct operating expenses increased by $14.1 million, primarily due to higher variable content costs related to digital revenue growth[95] - SG&A expenses increased by $18.5 million, driven by higher share-based compensation, employee compensation, and costs for cost reduction initiatives[96] - Interest expense increased by $16.2 million primarily due to higher LIBOR borrowing rates[99] Liquidity and Capital Resources Total liquidity is $601 million (cash and ABL), with cash used for operations increasing to $94.0 million, deemed sufficient for the next year - Total available liquidity as of March 31, 2023, was approximately $601 million, consisting of $187.9 million in cash and $413.3 million of borrowing availability under the ABL Facility[123] - Cash used for operating activities increased to $94.0 million in Q1 2023 from $52.2 million in Q1 2022, primarily due to decreased broadcast radio revenue and higher interest payments[118] Net Debt Summary | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Debt | $5,395,457 | $5,414,167 | | Less: Cash and cash equivalents | $187,933 | $336,236 | | Net Debt | $5,207,524 | $5,077,931 | Quantitative and Qualitative Disclosures About Market Risk Market risks include interest rates, foreign currency, and inflation; 42% of debt is variable, with a 100 basis point LIBOR change impacting interest expense by $5.7 million - As of March 31, 2023, approximately 42% of the company's long-term debt bore interest at floating rates[139] - A 100 basis point change in LIBOR is estimated to change interest expense by $5.7 million for the three months ended March 31, 2023[139] - Inflation has increased costs for employee compensation, equipment, and third-party services, but management believes the overall impact remains immaterial[141] Controls and Procedures Management confirmed effective disclosure controls and procedures as of March 31, 2023, with no material changes to internal financial reporting controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[148] - No material changes were made to the internal control over financial reporting during the quarter ended March 31, 2023[149] Part II – Other Information Legal Proceedings The company is involved in ordinary course legal proceedings, accruing for probable costs, with potential material impact on future results - The company is involved in a variety of legal proceedings arising in the ordinary course of business and has accrued for estimated probable costs[152] Risk Factors No material changes to risk factors were reported since the December 31, 2022 Annual Report on Form 10-K - No material changes in risk factors were reported since the last Annual Report on Form 10-K[153] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 3,043 Class A common shares at $7.77 per share from employees for tax withholding related to restricted stock vesting Class A Common Stock Purchases (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31 | 712 | $6.92 | | Feb 1 - Feb 28 | 2,331 | $8.03 | | Mar 1 - Mar 31 | — | — | | Total | 3,043 | $7.77 | - The share purchases were made from employees to cover tax withholding obligations upon the vesting of restricted stock[154]