Spanish Broadcasting System, Inc. Reports Results For The Second Quarter 2013

MIAMI, Aug. 14, 2013 (GLOBE NEWSWIRE) -- Spanish Broadcasting System, Inc. (the "Company" or "SBS") (Nasdaq:SBSA) today reported financial results for the three- and six-months ended June 30, 2013.

Financial Highlights
(in thousands) Quarter Ended June 30, % Six-Months Ended June 30, %
  2013 2012 Change 2013 2012 Change
     
Net revenue:            
Radio   $ 32,247  30,288 6%  $ 65,206  58,066 12%
Television   3,820  4,323  (12%)  9,964  8,639 15%
Consolidated   $ 36,067  34,611 4%  $ 75,170  66,705 13%
             
OIBDA, a non-GAAP measure*:            
Radio   $ 15,189  14,294 6%  $ 27,458  23,807 15%
Television   130  (1,192) 111%  (49)  (2,021) 98%
Corporate   (2,612)  (1,636) 60%  (5,042)  (3,988) 26%
Consolidated   $ 12,707  11,466 11%  $ 22,367  17,798 26%

* Please refer to the Non-GAAP Financial Measures section for a definition and a reconciliation from a non-GAAP to GAAP financial measure.

Discussion and Results

"We generated healthy gains in our operating profitability during the second quarter, leading to a 26 percent increase in our OIBDA for the first half of the year," commented Raul Alarcón, Jr., Chairman and CEO. "We are encouraged with the overall advertising environment across our markets, and we are confident in our ability to continue to convert our audience shares into financial gains. We are benefiting from the strategic investments we have made in our content, distribution and sales resources. At the same time, we have maintained a disciplined approach to managing our expenses, as reflected in our improving profitability. As advertisers increasingly recognize Spanish-language media as a highly effective channel to promote their brands, we remain focused on leveraging our diversified media platform to garner a greater share of advertising budgets."

Quarter Results

For the quarter-ended June 30, 2013, consolidated net revenues totaled $36.1 million compared to $34.6 million for the same prior year period, resulting in an increase of $1.5 million or 4%. Our radio segment net revenues increased $2.0 million or 6%, primarily due to national sales, barter sales, interactive sales and special events revenue. The increase in national sales was mainly in our New York, Los Angeles and San Francisco markets. The increases in barter and interactive sales occurred throughout most of our markets. The special events revenue increase took place in our San Francisco, Miami and Los Angeles markets. Our television segment net revenues decreased $0.5 million or 12%, due to the decreases in national and local spot sales and integrated sales.    

OIBDA, a non-GAAP measure, totaled $12.7 million compared to $11.5 million for the same prior year period, representing an increase of $1.2 million or 11%. Our radio segment OIBDA increased $0.9 million or 6%, primarily due to the increase in net revenues of $2.0 million, offset by the increase of station operating expenses of $1.1 million.  Radio station operating expenses increased mainly due to compensation and benefits, and barter expense, which were offset by a decrease in local commissions.  Our television segment OIBDA increased $1.3 million, largely due to the decrease in station operating expenses of $1.8 million, offset by the decrease in net revenues of $0.5 million. Television station operating expenses decreased primarily due to the decrease in originally produced programming costs, facilities expenses, barter expense and the elimination of broadcasting rights fees related to our former Chicago and Puerto Rico outlets. Our corporate expenses increased $1.0 million or 60%, mostly due to increases in professional fees and compensation and benefits.   Please refer to the Non-GAAP Financial Measures section for a definition of OIBDA and a reconciliation from a non-GAAP to GAAP financial measure.

Operating income totaled $11.4 million compared to $9.8 million for the same prior year period, representing an increase of $1.6 million or 16%.  This increase in operating income was primarily due to the increase in revenue.

Six-Months Ended Results

For the six-months ended June 30, 2013, consolidated net revenues totaled $75.2 million compared to $66.7 million for the same prior year period, resulting in an increase of $8.5 million or 13%. Our radio segment net revenues increased $7.1 million or 12%, primarily due to special events revenue, national, barter and interactive sales. The increases in special events revenue, barter and interactive sales occurred throughout most of our markets. The increase in national sales took place in our Los Angeles, New York, San Francisco and Puerto Rico markets. Our television segment net revenues increased $1.3 million or 15%, largely due to the increase in special events revenue, offset by the decreases in national and local spot sales and integrated sales.

OIBDA, a non-GAAP measure, totaled $22.4 million compared to $17.8 million for the same prior year period, representing an increase of $4.6 million or 26%. Our radio segment OIBDA increased $3.6 million or 15%, primarily due to the increase in net revenues of $7.1 million, offset by the increase of station operating expenses of $3.5 million.  Radio station operating expenses increased mainly due to increases in special events expenses and barter expense, which were offset by decreases in local commissions and music license fees. Our television segment OIBDA (loss) decreased $2.0 million, due to the increase in net revenues of $1.3 million and the decrease in station operating expenses of $0.7 million. Television station operating expenses increased primarily due to the increase in special events expenses, offset by decreases in compensation and benefits, originally produced programming costs, facilities expenses and the elimination of broadcasting rights fees related to our former Chicago and Puerto Rico outlets. Our corporate expenses increased by $1.1 million or 26%, mostly due to an increase in professional fees. Please refer to the Non-GAAP Financial Measures section for a definition of OIBDA and a reconciliation from a non-GAAP to GAAP financial measure.

Operating income totaled $18.7 million compared to $14.6 million for the same prior year period, representing an increase of $4.1 million or 28%. This increase in operating income was primarily due to the increase in revenue.

Second Quarter 2013 Conference Call

We will host a conference call to discuss our second quarter 2013 financial results on Thursday, August 15, 2013 at 11:00 a.m. Eastern Time. To access the teleconference, please dial 412-317-6789 ten minutes prior to the start time.

If you cannot listen to the teleconference at its scheduled time, there will be a replay available through Thursday, August 29, 2013 which can be accessed by dialing 877-344-7529 (U.S.) or 412-317-0088 (Int'l), passcode: 10032476.

There will also be a live webcast of the teleconference, located on the investor portion of our corporate Web site, at www.spanishbroadcasting.com/webcasts.shtml . A seven day archived replay of the webcast will also be available at that link. 

About Spanish Broadcasting System, Inc.

Spanish Broadcasting System, Inc. is the largest publicly traded Hispanic-controlled media and entertainment company in the United States.  SBS owns and/or operates 21 radio stations located in the top U.S. Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico, airing the Tropical, Mexican Regional, Spanish Adult Contemporary and Hurban format genres. The Company also owns and operates MegaTV, a television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico. SBS also produces live concerts and events and owns 21 bilingual websites, including www.LaMusica.com, a bilingual Spanish-English online site providing content related to Latin music, entertainment, news and culture. The Company's corporate Web site can be accessed at www.spanishbroadcasting.com.

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations. Forward-looking statements, which are based upon certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," "might," or "continue" or the negative or other variations thereof or comparable terminology. Factors that could cause actual results, events and developments to differ are included from time to time in the Company's public reports filed with the Securities and Exchange Commission. All forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

 (Financial Table Follows)

Below are the Unaudited Condensed Consolidated Statements of Operations for the three- and six-months ended June 30, 2013 and 2012.
  Three-Months Ended June 30, Six-Months Ended June 30,
Amounts in thousands, except per share amounts 2013 2012 2013 2012
         
  (Unaudited) (Unaudited)
Net revenue  $ 36,067  34,611  $ 75,170  66,705
Station operating expenses  20,748  21,509  47,761  44,919
Corporate expenses  2,612  1,636  5,042  3,988
Depreciation and amortization  1,316  1,304  2,674  2,757
(Gain) loss on the disposal of assets, net  (9)  (5)  (22)  (5)
Impairment charges and restructuring costs  25  368  1,025  424
Operating income  11,375  9,799  18,690  14,622
Interest expense, net  (9,939)  (9,844)  (19,870)  (16,682)
Loss on early extinguishment of debt  --   --   --   (391)
         
Income (loss) before income taxes  1,436  (45)  (1,180)  (2,451)
Income tax expense  186  256  323  1,513
Net income (loss)  1,250  (301)  (1,503)  (3,964)
         
Dividends on Series B preferred stock  (2,482)  (2,482)  (4,964)  (4,964)
Net loss applicable to common stockholders  $ (1,232)  (2,783)  $ (6,467)  (8,928)
         
Net loss per common share:        
 Basic & Diluted  $ (0.17)  (0.38)  $ (0.89)  (1.23)
         
Weighted average common shares outstanding:        
Basic & Diluted  7,267  7,267  7,267  7,267

Non-GAAP Financial Measures

Operating Income (Loss) before Depreciation and Amortization, (Gain) Loss on the Disposal of Assets, net, and Impairment Charges and Restructuring Costs ("OIBDA") is not a measure of performance or liquidity determined in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States. However, we believe that this measure is useful in evaluating our performance because it reflects a measure of performance for our stations before considering costs and expenses related to our capital structure and dispositions. This measure is widely used in the broadcast industry to evaluate a company's operating performance and is used by us for internal budgeting purposes and to evaluate the performance of our stations, segments, management and consolidated operations. However, this measure should not be considered in isolation or as a substitute for Operating Income, Net Income, Cash Flows from Operating Activities or any other measure used in determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, because OIBDA is not calculated in accordance with GAAP, it is not necessarily comparable to similarly titled measures used by other companies. 

Included below are tables that reconcile OIBDA to operating income (loss) for each segment and consolidated net income (loss), which is the most directly comparable GAAP financial measure.    

  Quarter Ended June 30, 2013
(Unaudited and in thousands) Consolidated Radio Television Corporate
         
OIBDA  $ 12,707  15,189  130  (2,612)
Less expenses excluded from OIBDA but included in operating income (loss):        
Depreciation and amortization  1,316  481  761  74
(Gain) loss on the disposal of assets, net  (9)  (9)  --   -- 
Impairment charges and restructuring costs  25  86  --   (61)
Operating Income (Loss)  $ 11,375  14,631  (631)  (2,625)
         
  Quarter Ended June 30, 2012
(Unaudited and in thousands) Consolidated Radio Television Corporate
         
OIBDA  $ 11,466  14,294  (1,192)  (1,636)
Less expenses excluded from OIBDA but included in operating income (loss):        
Depreciation and amortization  1,304  526  666  112
(Gain) loss on the disposal of assets, net  (5)  (5)  --   -- 
Impairment charges and restructuring costs  368  71  11  286
Operating Income (Loss)  $ 9,799  13,702  (1,869)  (2,034)
         
  Quarter Ended June 30,    
(Unaudited and in thousands) 2013 2012    
Operating Income  $ 11,375  9,799    
Other (expense) income:        
Interest expense, net  (9,939)  (9,844)    
Income (loss) before income taxes  1,436  (45)    
Income tax expense  186  256    
Net income (loss)  $ 1,250  (301)    
   
  Six-Months Ended June 30, 2013
(Unaudited and in thousands) Consolidated Radio Television Corporate
         
OIBDA  $ 22,367  27,458  (49)  (5,042)
Less expenses excluded from OIBDA but included in operating income (loss):        
Depreciation and amortization  2,674  992  1,535  147
(Gain) loss on the disposal of assets, net  (22)  (9)  --   (13)
Impairment charges and restructuring costs  1,025  86  1,000  (61)
Operating Income (Loss)  $ 18,690  26,389  (2,584)  (5,115)
         
  Six-Months Ended June 30, 2012
(Unaudited and in thousands) Consolidated Radio Television Corporate
         
OIBDA  $ 17,798  23,807  (2,021)  (3,988)
Less expenses excluded from OIBDA but included in operating income (loss):        
Depreciation and amortization  2,757  1,077  1,446  234
(Gain) loss on the disposal of assets, net  (5)  (5)  --   -- 
Impairment charges and restructuring costs  424  71  11  342
Operating Income (Loss)  $ 14,622  22,664  (3,478)  (4,564)
         
  Six-Months Ended June 30,    
(Unaudited and in thousands) 2013 2012    
Operating Income  $ 18,690  14,622    
Other (expense) income:        
Interest expense, net  (19,870)  (16,682)    
Loss on early extinguishment of debt  --   (391)    
Loss before income taxes  (1,180)  (2,451)    
Income tax expense  323  1,513    
Net loss  $ (1,503)  (3,964)    

Non-GAAP Reporting Requirement under our Senior Secured Notes Indenture

Under our Senior Secured Notes Indenture, we are to provide our Senior Secured Noteholders a statement of our "Station Operating Income for the Television Segment," as defined by the Indenture, for the twelve-month period ended June 30, 2013 and 2012, and a reconciliation of "Station Operating Income for the Television Segment" to the most directly comparable financial measure calculated in accordance with GAAP.  In addition, we are to provide our "Secured Leverage Ratio," as defined by the Indenture, as of June 30, 2013. 

Included below is the table that reconciles "Station Operating Income for the Television Segment" to the most directly comparable GAAP financial measure. Also included is our "Secured Leverage Ratio" as of June 30, 2013. 

  Twelve-Months Ended Quarters Ended
(Unaudited and in thousands) June 30, 2013 June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012
           
Station Operating Income for the Television Segment, as defined by the Indenture  $ 392  251  (140)  370  $ (89)
Less expenses excluded from Station Operating Income for the Television Segment, as defined by the Indenture, but included in operating income (loss):          
Depreciation and amortization  3,088  761  774  777  776
Non-cash barter (income) expense  (183)  5  2  28  (218)
Other   1,160  116  1,037  7  -- 
GAAP Operating Loss for the Television Segment  $ (3,673)  (631)  (1,953)  (442)  $ (647)
           
  Twelve-Months Ended Quarters Ended
  June 30, 2012 June 30, 2012 March 31, 2012 Dec. 31, 2011 Sept. 30, 2011
           
Station Operating Income for the Television Segment, as defined by the Indenture  $ (4,330)  (1,028)  (835)  (1,319)  $ (1,148)
Less expenses excluded from Station Operating Income for the Television Segment, as defined by the Indenture, but included in operating income (loss):          
Depreciation and amortization  2,925  666  780  740  739
Non-cash barter (income) expense  (61)  164  (6)  (110)  (109)
Other   17  11  --   6  -- 
GAAP Operating Loss for the Television Segment  $ (7,211)  (1,869)  (1,609)  (1,955)  $ (1,778)
           
As of June 30, 2013          
Secured Leverage Ratio, as defined by the Indenture 5.7        

Unaudited Segment Data

We have two reportable segments: radio and television. The following summary table presents separate financial data for each of our operating segments:
  Quarter Ended June 30, Six-Months Ended June 30,
  2013 2012 2013 2012
  (In thousands) (In thousands)
Net revenue:        
Radio   $ 32,247  30,288  65,206  58,066
Television   3,820  4,323  9,964  8,639
Consolidated   $ 36,067  34,611  75,170  66,705
Engineering and programming expenses:        
Radio   $ 4,605  4,422  9,709  9,729
Television   1,639  3,193  4,038  6,290
Consolidated   $ 6,244  7,615  13,747  16,019
Selling, general and administrative expenses:        
Radio   $ 12,453  11,572  28,039  24,530
Television   2,051  2,322  5,975  4,370
Consolidated   $ 14,504  13,894  34,014  28,900
         
Corporate expenses:  $ 2,612  1,636  5,042  3,988
         
Depreciation and amortization:        
Radio   $ 481  526  992  1,077
Television   761  666  1,535  1,446
Corporate   74  112  147  234
Consolidated   $ 1,316  1,304  2,674  2,757
(Gain) loss on the disposal of assets, net:        
Radio   $ (9)  (5)  (9)  (5)
Television   --   --   --   -- 
Corporate   --   --   (13)  -- 
Consolidated   $ (9)  (5)  (22)  (5)
Impairment charges and restructuring costs:        
Radio   $ 86  71  86  71
Television   --   11  1,000  11
Corporate   (61)  286  (61)  342
Consolidated   $ 25  368  1,025  424
Operating income (loss):        
Radio   $ 14,631  13,702  26,389  22,664
Television   (631)  (1,869)  (2,584)  (3,478)
Corporate   (2,625)  (2,034)  (5,115)  (4,564)
Consolidated   $ 11,375  9,799  18,690  14,622

Selected Unaudited Balance Sheet Information and Other Data:
(Amounts in thousands) As of  June 30, 2013
   
Cash and cash equivalents  $ 24,166
   
Total assets  $ 464,659
   
12.5% Senior Secured Notes due 2017, net  $ 268,450
Other debt  11,100
Total debt  $ 279,550
   
Series B preferred stock  $ 92,349
Accrued Series B preferred stock dividends payable  31,851
Total   $ 124,200
   
Total stockholders' deficit  $ (52,158)
   
Total capitalization  $ 351,592
   
   For the Fiscal Year Ended June 30, 
   2013   2012 
     
Capital expenditures  $ 992  734
Cash paid for income taxes  $ --   23
CONTACT: Analysts and Investors         Jose I. Molina         Vice President of Finance         (305) 441-6901                  Analysts, Investors or Media         Brad Edwards         Brainerd Communicators, Inc.         (212) 986-6667