• Adjusted EBITDA: $205 million for Q3 2024, within the guidance range of $200 million to $220 million.
• Consolidated Revenue: Up 5.8% year-over-year for Q3 2024.
• Digital Audio Group Revenue: $301 million, up 12.7% year-over-year.
• Digital Audio Group Adjusted EBITDA: $100 million, up 6.8% year-over-year with a margin of 33.2%.
• Podcast Revenue: Grew 11% year-over-year.
• Multiplatform Group Revenue: $620 million, down 1.1% year-over-year.
• Multiplatform Group Adjusted EBITDA: $130 million, down from $162 million in the prior year quarter.
• Audio and Media Services Group Revenue: $90 million, up 45.3% year-over-year.
• Audio and Media Services Group Adjusted EBITDA: $44 million, up 162% from $17 million in the prior year.
• Net Debt: Approximately $4.79 billion at quarter end.
• Total Liquidity: $858 million at quarter end, including a cash balance of $432 million.
• Free Cash Flow: $73 million for Q3 2024, compared to $68 million in the prior year quarter.
• Q4 2024 Revenue Guidance: Expected to be up high single digits.
• Full Year 2024 Adjusted EBITDA Guidance: Approximately $750 million.

• Warning! GuruFocus has detected 5 Warning Signs with IHRT.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• iHeartMedia Inc (NASDAQ:IHRT) has entered into a transaction support agreement with debt holders representing approximately 80% of its outstanding debt, which will extend debt maturities by three years and slightly reduce overall debt levels.
• The company reported third-quarter revenues up 5.8% year-over-year, in line with guidance, indicating a recovery in advertising revenues.
• The Digital Audio Group's revenues increased by 12.7% year-over-year, with podcast revenues growing by 11%, showcasing strong momentum in digital and podcast businesses.
• iHeartMedia Inc (NASDAQ:IHRT) is implementing modernization initiatives expected to reduce annual expenses by approximately $150 million in 2025, contributing to a total of $200 million in cost savings compared to 2024.
• The company maintains a leadership position in podcasting, ranked as the number one podcast publisher in the US, leveraging its broadcast radio assets to enhance its digital offerings.

Negative Points

• The Multiplatform Group's revenues declined by 1.1% year-over-year, with adjusted EBITDA decreasing from $162 million to $130 million, partly due to non-cash marketing expenses.
• Despite cost-saving initiatives, the company's guidance for 2025 projects only a slight increase in adjusted EBITDA, raising concerns about the full impact of cost efficiencies on the bottom line.
• The company faces challenges in political advertising revenues, which are expected to be only slightly better than the last Presidential election cycle, impacting Q4 expectations.
• There is a slowdown in non-political advertising leading up to election day, creating uncertainty about the resumption of prior spending levels post-election.
• iHeartMedia Inc (NASDAQ:IHRT) has a high net debt to adjusted EBITDA ratio of 7.2x, with plans to reduce it to 6x by year-end, indicating ongoing leverage concerns.

Q & A Highlights

Q: Bob, your guidance for next year for revenue implies some nice growth in the underlying business, excluding political. What are you hearing from your advertising partners that gives you confidence in the ad market improving next year? A: Robert Pittman, Chairman and CEO: We feel good about next year as a continuation of this year's recovery. There's a positive sentiment post-election, which is seen as good for business. Our consumer reach remains strong, and ad tech is enhancing our ability to integrate broadcast radio into digital buys, which we expect to progress further next year.

Q: Rich, your guidance for adjusted EBITDA is up $20 million year-over-year for next year, even with $150 million in cost efficiencies. Why isn't more of that flowing to the bottom line? A: Richard Bressler, President, CFO, COO: Despite the non-political year, we're projecting an up year for EBITDA. We are conservative in our projections due to recent advertising slowdowns, but we have confidence in our numbers. The cost efficiencies and technology will continue to improve our margins.

Q: How do you address concerns that cuts in management and on-air talent might erode the quality of your radio offerings? A: Robert Pittman, Chairman and CEO: We're not reducing talent; we're using technology to enhance it. We can now place the best talent in any market, improving quality and companionship for listeners. Technology allows us to break down silos and streamline processes, enhancing both listener engagement and revenue growth.

Q: What is the expected future mix between multi-platform and Digital Audio sales? A: Richard Bressler, President, CFO, COO: We project multi-platform to grow at low single digits and Digital Audio, including podcasting, at mid to upper single digits. Our strategy allows any of our salespeople to sell across platforms, supported by our audio tech stack, which enhances cross-selling opportunities.

Q: Regarding the transaction support agreement, how much cash is allocated to debt reduction, and how will you utilize excess cash? A: Richard Bressler, President, CFO, COO: We haven't detailed specific cash allocations, but we're pleased with extending maturities and keeping cash interest expenses flat. Our net leverage is expected to decrease significantly by 2028, reflecting our focus on financial flexibility and strategic growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.