Salem Communications Announces First Quarter 2012 Total Revenue of $54.3 Million

CAMARILLO, CA -- (Marketwire) -- 05/03/12 -- Salem Communications Corporation (NASDAQ: SALM), a leading U.S. radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and conservative opinion content, released its results for the three months ended March 31, 2012.

First Quarter 2012 Results

For the quarter ended March 31, 2012 compared to the quarter ended March 31, 2011:

Consolidated

  • Total revenue increased 6.1% to $54.3 million from $51.2 million;
  • Operating expenses increased 18.1% to $46.4 million from $39.2 million;
  • Operating expenses excluding gain or loss on disposal of assets increased 6.3% to $46.5 million from $43.8 million;
  • Operating income decreased 33.5% to $7.9 million from $11.9 million;
  • Net income decreased to $0.8 million, or $0.03 net income per diluted share, from $2.6 million, $0.10 net income per diluted share in the prior year;
  • EBITDA decreased 26.4% to $11.5 million from $15.6 million; and
  • Adjusted EBITDA increased 2.9% to $11.7 million from $11.4 million.

Broadcast

  • Net broadcast revenue increased 2.9% to $44.0 million from $42.7 million;
  • Station operating income ("SOI") decreased 0.8% to $14.8 million from $14.9 million;
  • Same station net broadcast revenue increased 3.0% to $43.5 million from $42.2 million;
  • Same station SOI increased 0.7% to $14.8 million from $14.7 million; and
  • Same station SOI margin decreased to 33.9% from 34.7%.

Internet

  • Internet revenue increased 32.9% to $7.4 million from $5.6 million; and
  • Internet operating income increased 99.7% to $1.5 million from $0.8 million.

Publishing

  • Publishing revenue increased 1.8% to $2.9 million from $2.8 million; and
  • Publishing operating loss increased to $80,000 from $40,000 in the prior year.

Included in the results for the quarter ended March 31, 2012 are:

  • A $0.2 million gain ($0.1 million, net of tax) on disposal of assets related to the gain from the sale of WBZS-AM, Pawtucket, Rhode Island; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of:
    • $0.2 million non-cash compensation included in corporate expenses; and
    • $0.1 million non-cash compensation included in broadcast operating expenses.

Included in the results for the quarter ended March 31, 2011 are:

  • A $4.5 million gain ($2.7 million, net of tax, or $0.11 per diluted share) on disposal of assets comprised of a $2.4 million pre-tax gain from the sale of KKMO-AM in Seattle, Washington and a $2.1 million pre-tax gain from the sale of KXMX-AM in Los Angeles, California, partially offset by losses from various fixed asset and equipment disposals; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of:
    • $0.2 million non-cash compensation included in corporate expenses; and
    • $0.1 million non-cash compensation included in broadcast operating expenses.

These results reflect the reclassification of the operations of Samaritan Fundraising to discontinued operations for the three months ended March 31, 2012 and 2011.

Per share numbers are calculated based on 24,753,671 diluted weighted average shares for the quarter ended March 31, 2012, and 24,759,253 diluted weighted average shares for the quarter ended March 31, 2011.

Balance Sheet

As of March 31, 2012, the company had $235.0 million of 95/8% senior secured second lien notes outstanding and $36.3 million drawn on its revolver. The company was in compliance with the covenants of its credit facility and bond indenture. The company's bank leverage ratio was 5.02 versus a compliance covenant of 6.25.

Cash Distribution

Salem paid a cash distribution of $0.035 per share on its Class A and Class B common stock on March 30, 2012 to shareholders of record as of March 23, 2012. The distribution totaled approximately $0.9 million.

Acquisitions and Divestitures

The following transactions were completed since January 1, 2012:

  • On January 13, 2012, we completed the acquisition of KTNO-AM, Dallas, Texas for $2.2 million;
  • On March 16, 2012, we sold radio station WBZS-AM in Pawtucket, Rhode Island for $0.8 million; and
  • On April 10, 2012, we completed the acquisition of WKDL-AM in Warrenton, Virginia for $30,000.

Conference Call Information

Salem will host a teleconference to discuss its results on May 3, 2012 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (719) 325-2289, passcode 7084153 or listen via the investor relations portion of the company's website, located at www.salem.cc. A replay of the teleconference will be available through May 17, 2012 and can be heard by dialing (719) 457-0820, passcode 7084153 or on the investor relations portion on the company's website, located at www.salem.cc.

Second Quarter 2012 Outlook

For the second quarter of 2012, Salem is projecting total revenue to increase 1% to 3% over second quarter 2011 total revenue of $55.4 million. Salem is also projecting operating expenses before gain or loss on disposal of assets, terminated transaction costs and abandoned license upgrades and impairments to increase 2% to 5% as compared to the second quarter of 2011 operating expenses of $45.4 million.

Salem Communications Corporation is the largest commercial U.S. radio broadcasting company that provides programming targeted at audiences interested in Christian and conservative opinion radio content, as measured by the number of stations and audience coverage. Upon completion of all announced transactions, the company will own and/or operate a national portfolio of 96 radio stations in 37 markets, including 60 stations in 22 of the top 25 markets. We also program the Family Talk™ Christian-themed talk format on SiriusXM Channel 131.

Salem also owns Salem Radio Network, a national radio network that syndicates talk, news and music programming to approximately 2,000 affiliated radio stations and Salem Media Representatives, a national media advertising sales firm with offices across the country.

In addition to its radio broadcast business, Salem owns an Internet and a publishing division. Salem Web Network is a provider of online Christian and conservative-themed content and streaming and includes websites such as Christian faith focused Christianity.com, Questions and Answers about Jesus Christ at Jesus.org, Christian living focused Crosswalk.com®, online Bible at BibleStudyTools.com, Christian videos at GodTube.com, a leading website providing church media at WorshipHouseMedia.com and Christian radio ministries online at OnePlace.com. Additionally Salem owns conservative news leader Townhall.com® and conservative political blog HotAir.com, providing conservative commentary, news and blogging. Salem Publishing™ circulates Christian and conservative magazines such as Homecoming® The Magazine, YouthWorker Journal™, The Singing News, FaithTalk Magazine, Preaching and Townhall Magazine™. Xulon Press™ is a provider of self publishing services targeting the Christian audience.

Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem's radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem's reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

Regulation G
Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). Station operating income is defined as net broadcast revenues minus broadcast operating expenses. Non-broadcast operating income is defined as non-broadcast revenue minus non-broadcast operating expenses. EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before gain or loss on the disposal of assets and non-cash compensation expense. In addition, Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company's operating performance.

Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are generally recognized by the broadcast industry as important measures of performance and are used by investors as well as analysts who report on the industry to provide meaningful comparisons between broadcast. Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company's results of operations presented on a GAAP basis such as operating income and net income. In addition, Salem's definitions of station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.


Salem Communications Corporation
Condensed Consolidated Statements of Operations
(in thousands, except share, per share and margin data)
                                                    Three Months Ended
                                                         March 31,
                                               ----------------------------
                                                    2011           2012
                                               -------------  -------------
                                                        (Unaudited)
Net broadcast revenue                          $      42,730  $      43,957
Net Internet revenue                                   5,592          7,434
Net publishing revenue                                 2,841          2,893
                                               -------------  -------------
Total revenue                                         51,163         54,284
Operating expenses:
  Broadcast operating expenses                        27,802         29,142
  Internet operating expenses                          4,836          5,924
  Publishing operating expenses                        2,880          2,971
  Corporate expenses                                   4,551          4,867
  Depreciation and amortization                        3,701          3,619
  Gain on disposal of assets                          (4,525)          (169)
                                               -------------  -------------
Total operating expenses                              39,245         46,354
                                               -------------  -------------
Operating income from continuing operations           11,918          7,930
Other income (expense):
  Interest income                                         43             31
  Interest expense                                    (7,235)        (6,396)
  Other (income) expense, net                            (11)             7
                                               -------------  -------------
Income from continuing operations before
 income taxes                                          4,715          1,572
Provision for income taxes                             2,156            687
                                               -------------  -------------
Income from continuing operations                      2,559            885
                                               -------------  -------------
Income (loss) from discontinued operations,
 net of tax                                               28            (42)
                                               -------------  -------------
Net income                                     $       2,587  $         843
                                               =============  =============

Basic income per share before discontinued
 operations                                    $        0.10  $        0.04
Income (loss) from discontinued operations,
 net of tax                                                -              -
Basic income per share after discontinued
 operations                                    $        0.11  $        0.03

Diluted income per share before discontinued
 operations                                    $        0.10  $        0.04
Income (loss) from discontinued operations,
 net of tax                                                -              -
Diluted income per share after discontinued
 operations                                    $        0.10  $        0.03

Dividends per share                            $           -  $        0.04
Basic weighted average shares outstanding         24,520,858     24,564,947
                                               =============  =============
Diluted weighted average shares outstanding       24,759,253     24,753,671
                                               =============  =============

Other Data:
Station operating income                       $      14,928  $      14,815
Station operating margin                                34.9%          33.7%



Salem Communications Corporation
Condensed Consolidated Balance Sheets
(in thousands)
                                                 December 31,    March 31,
                                                     2011           2012
                                               -------------- --------------
                                                                (Unaudited)

Assets
Cash                                           $           67 $          312
Restricted cash                                           110              -
Trade accounts receivable, net                         31,001         30,502
Deferred income taxes                                   6,403          6,812
Other current assets                                    4,385          4,509
Property, plant and equipment, net                    111,222        111,761
Intangible assets, net                                399,942        400,119
Deferred financing costs                                5,489          5,175
Other assets                                            2,691          2,750
                                               -------------- --------------
Total assets                                   $      561,310 $      561,940
                                               ============== ==============

Liabilities and Stockholders' equity
Current liabilities                                    36,515         30,411
Long-term debt and capital lease obligations          265,679        271,001
Deferred income taxes                                  48,077         49,130
Other liabilities                                       7,991          8,019
Stockholders' equity                                  203,048        203,379
                                               -------------- --------------
Total liabilities and stockholders' equity     $      561,310 $      561,940
                                               ============== ==============




Salem Communications Corporation
Supplemental Information
(in thousands)
                                                    Three Months Ended
                                                         March 31,
                                               ----------------------------
                                                      2011         2012
                                               ----------------------------
                                                        (Unaudited)
Capital expenditures
Acquisition related / income producing         $         954  $         920
Maintenance                                            1,458          1,841
                                               -------------  -------------
Total capital expenditures                     $       2,412  $       2,761
                                               =============  =============

Reconciliation of Same Station Net Broadcast
 Revenue to Total Net Broadcast Revenue

Net broadcast revenue - same station           $      42,244  $      43,524
Net broadcast revenue - acquisitions                     117            286
Net broadcast revenue - dispositions                     222              6
Net broadcast revenue - format changes                   147            141
                                               -------------  -------------
Total net broadcast revenue                    $      42,730  $      43,957
                                               =============  =============

Reconciliation of Same Station Broadcast
 Operating Expenses to Total Broadcast
 Operating Expenses

Broadcast operating expenses - same station    $      27,578  $      28,756
Broadcast operating expenses - acquisitions              109            172
Broadcast operating expenses - dispositions              (42)            69
Broadcast operating expenses - format changes            157            145
                                               -------------  -------------
Total broadcast operating expenses             $      27,802  $      29,142
                                               =============  =============

Reconciliation of Same Station Operating
 Income to Total Station Operating Income

Station operating income - same station        $      14,666  $      14,768
Station operating income - acquisitions                    8            114
Station operating income - dispositions                  264            (63)
Station operating income - format changes                (10)            (4)
                                               -------------  -------------
Total station operating income                 $      14,928  $      14,815
                                               =============  =============



Salem Communications Corporation
Supplemental Information
(in thousands)                                      Three Months Ended
                                                         March 31,
                                               ----------------------------
                                                    2011           2012
                                               -------------  -------------
                                                        (Unaudited)
Reconciliation of Station Operating Income,
 Internet Operating Income and Publishing
 Operating Loss to Operating Income
Station operating income                       $      14,928  $      14,815
Internet operating income                                756          1,510
Publishing operating loss                                (39)           (78)
Less:
  Corporate expenses                                  (4,551)        (4,867)
  Depreciation and amortization                       (3,701)        (3,619)
  Gain on disposal of assets                           4,525            169
                                               -------------  -------------
Operating income                               $      11,918  $       7,930
                                               =============  =============

Reconciliation of Adjusted EBITDA to EBITDA to
 Net Income
Adjusted EBITDA                                $      11,389  $      11,714
Less:
  Stock-based compensation                              (306)          (327)
  Discontinued operations, net of tax                     28            (42)
  Gain on disposal of assets                           4,525            169
                                               -------------  -------------
                                                      15,636         11,514
EBITDA
Plus:
  Interest income                                         43             31
Less:
  Depreciation and amortization                       (3,701)        (3,619)
  Interest expense                                    (7,235)        (6,396)
  Provision for income taxes                          (2,156)          (687)
                                               -------------  -------------
Net income                                     $       2,587  $         843
                                               =============  =============

Reconciliation of Adjusted EBITDA to Free Cash
 Flow
Adjusted EBITDA                                $      11,389  $      11,714
Less:
  Cash interest                                         (354)          (410)
  Cash taxes                                             (13)            (8)
  Capital expenditures                                (2,412)        (2,761)
                                               -------------  -------------
Free Cash Flow                                 $       8,610  $       8,535
                                               =============  =============

                                                 Outstanding
                                                     at         Applicable
                                                  March 31,      Interest
                                                    2012           Rate
                                                ------------  -------------
Selected Debt Data
  95/8% senior subordinated notes              $     235,000           9.63%
  Revolving credit facility                    $      36,310           3.36%

Company Contact:
Evan D. Masyr
Salem Communications
(805) 384-4512
Email Contact

Source: Salem Communications Corporation