On November 9, 2023, iHeartMedia Inc (IHRT, Financial) released its financial results for the third quarter ended September 30, 2023. The company reported a slight revenue decline, with consolidated revenue down 3.6% to $953 million, which was slightly better than the anticipated mid-single-digit decrease. Excluding political revenue, the decline was 1%. Despite the revenue dip, IHRT achieved a GAAP operating income of $69 million, a significant improvement from the operating loss of $211 million in the same quarter of the previous year, which included a $302 million non-cash impairment charge.
Financial Performance Overview
The company's consolidated Adjusted EBITDA was $204 million, within the guidance range and compared to $252 million in Q3 2022. Cash flows from operating activities amounted to $96 million, and free cash flow was reported at $68 million. Additionally, IHRT received $45 million from the sale of radio broadcast towers.
Segment Highlights
The Digital Audio Group's revenue increased by 5% to $267 million, with Podcast revenue up by 13% to $103 million. The segment's Adjusted EBITDA rose by 20% to $94 million, reflecting a strong Adjusted EBITDA margin of 35.1%. Conversely, the Multiplatform Group faced a 5% revenue decline to $626 million, with its Adjusted EBITDA down by 22% to $162 million, resulting in an Adjusted EBITDA margin of 25.9%.
Capital Structure and Liquidity
IHRT continued to improve its capital structure by repurchasing $89 million in principal balance of 8.375% Senior Unsecured Notes for $65 million in cash, which is expected to save approximately $7 million in annualized interest. The company's cash balance and total available liquidity were $213 million and $625 million, respectively, as of September 30, 2023.
Management Commentary
“We’re pleased to report that our third quarter results were at the high end of our Adjusted EBITDA and Revenue guidance ranges. Our Digital Audio Group’s performance reflects the strong flow-through characteristics of the business and Podcasting continues to be a strong growth engine for the Company; additionally, while the Multiplatform Group does continue to be impacted by advertising industry uncertainty, we’ve seen sequential gradual quarter to quarter improvement throughout the year and we remain confident that the Multiplatform Group will be an additional growth engine for the company as the advertising marketplace recovers,” said Bob Pittman, Chairman and CEO of iHeartMedia, Inc.
Outlook and Guidance
For Q4, IHRT expects consolidated revenue to decline in the high-single digits, with revenue excluding political impact anticipated to decline in the low-single digits. The company remains committed to a long-term target of approximately 4x Net Debt to Adjusted EBITDA.
Investor Relations
iHeartMedia, Inc. will host a conference call to discuss the results and business outlook on the same day of the earnings release. Details for the conference call and webcast are available on the company's investor relations website.
While iHeartMedia Inc (IHRT, Financial) faces challenges in the advertising market, the company's proactive approach to capital structure improvement and the robust performance of its Digital Audio Group provide a balanced view of its financial health. Investors and stakeholders will be watching closely to see how the company navigates the uncertain advertising landscape in the coming quarters.
Explore the complete 8-K earnings release (here) from iHeartMedia Inc for further details.
