Townsquare Media(US:TSQ)2023-03-09 17:27Financial Data and Key Metrics Changes - In 2022, net revenue increased by 11% year-over-year, reaching an all-time high of $463 million [5] - Adjusted EBITDA also reached an all-time high of $113.7 million, growing by 8% year-over-year [5][21] - Fourth quarter net revenue increased by 8.8% year-over-year to $120.3 million, which was within the guidance range [20] - Fourth quarter adjusted EBITDA increased by 11% year-over-year to a record high of $28.4 million [21] Business Line Data and Key Metrics Changes - Townsquare Interactive, the subscription digital marketing solutions segment, contributed nearly 20% of total net revenue and adjusted operating income, with net revenue increasing by 10.5% year-over-year to $90.4 million [8][22] - Digital Advertising Solutions segment saw net revenue increase by 20.2% year-over-year for the full year, with profit increasing by 15.7% [22] - Broadcast Advertising net revenue increased approximately 4% year-over-year, but faced significant headwinds in 2023 [23] Market Data and Key Metrics Changes - Digital revenue grew by 16% year-over-year to $231 million, generating $69 million of profit, representing a 30% profit margin [13] - Digital advertising in the U.S. is projected to increase at a CAGR of 8.5% through 2027, growing from 65% of all advertising spend in 2022 to nearly 75% by 2027 [12] Company Strategy and Development Direction - The company is transitioning from a traditional broadcast radio company to a digital-first local media company, with 50% of revenue and profit now coming from digital sources [6][29] - The focus remains on creating high-quality local content and providing effective marketing solutions for local clients [5][29] - The company plans to continue investing in digital product technology and marketing solutions to maintain a competitive advantage [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather economic downturns better than most due to its digital-first strategy [6][29] - The company anticipates challenges in 2023, particularly in the broadcast segment, but expects digital advertising to continue to drive growth [23][28] - Management highlighted the importance of creating opportunities and adapting to changing market conditions [31] Other Important Information - The Board of Directors approved a dividend of $0.1875 per share, equating to an annual yield of approximately 10% [16][26] - The company ended the year with $43 million in cash and the lowest net leverage in its history at 4.29 times [24][26] Q&A Session Summary Question: Can you break down your thoughts on digital pacings in the first quarter between Ignite and your subscription business? - Management expects Townsquare Interactive revenue to be flat in Q1, while Ignite is projected to grow in the 12% to 14% range [33][34] Question: Are you seeing more competition in the interactive business? - Management indicated that the competition is primarily due to the market environment, and they are continuously working to improve their offerings [35][36] Question: What is the rationale behind the aggressive dividend increase? - The dividend reflects the company's strong cash flow generation and aims to reward shareholders despite the stock price not reflecting the company's performance [53][57]