MediaCo Holding Inc. — Q1 2022 Form 10-Q
Business context and period. Unaudited results for the three months ended March 31, 2022, compared with Q1 2021. MediaCo operates two New York radio stations and approximately 3,500 outdoor advertising displays across Southeast and Mid-Atlantic markets; it earns revenue mainly from radio, outdoor and digital advertising.
Financial performance and liquidity
Unless noted, dollar amounts are in millions.
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Net revenue | $11.535 | $9.743; up 18.4% |
| Operating loss | $(1.232) | $(0.634); operating margin was approximately (10.7)% versus (6.5)% |
| Interest expense | $2.998 | $2.538 |
| Consolidated net loss | $(4.293) | $(3.253) |
| Preferred dividends; loss attributable to common shareholders | $0.838; $(5.131), or $(0.68) per share | $0.634; $(3.887), or $(0.55) per share |
| Operating cash flow | $4.661 | $0.578 |
| Cash and cash equivalents | $8.757 at March 31, 2022 | $6.121 at December 31, 2021 |
| Net working capital | $3.5 | $7.7 at December 31, 2021 |
Revenue by source: radio advertising $6.177 million (up from $4.955 million); outdoor advertising $3.124 million (up from $2.972 million); nontraditional $0.168 million; digital $0.730 million; and other $1.336 million. Radio segment operating income was $1.389 million, while Outdoor Advertising reported an operating loss of $0.134 million; corporate expenses were $2.487 million.
Cash from operations rose mainly with increased revenue and substantial accounts-receivable collections. Investing cash use was $0.816 million, primarily for a new digital platform project; financing cash use was $1.209 million for tax-withholding settlements. The filing does not report a gross margin or a company-defined EBITDA measure.
Debt, material changes and outlook
- Debt included $68.514 million outstanding under the senior credit facility, $6.154 million owed to Emmis and $27.574 million under SG Broadcasting notes. Balance-sheet debt, net of current maturities and unamortized discount, was $100.610 million. Senior facility borrowing rate was 9.5% at quarter-end; the facility matures November 2024, while the related notes mature in 2024 and 2025.
- Management estimated $10.4 million of senior-facility debt service over the next 12 months: $3.7 million principal and $6.7 million interest. The senior facility has a variable interest rate and restrictive covenants; a 1% incremental paid-in-kind rate applied under the amended borrowing-base terms. SG Broadcasting extended the deadline to draw up to $3.0 million of remaining note availability from June 2022 to June 2023.
- Revenue growth reflected recovery in advertising from the pandemic: radio revenue increased 24.8% and outdoor revenue 5.6%. Management cited sports betting and state and local vaccination-awareness campaigns as radio demand drivers. Costs also rose: operating expenses excluding depreciation and amortization increased 20.2%, corporate expenses increased 51.6%, and interest expense increased 18.1%. Higher corporate costs reflected building functions previously provided under the Emmis management agreement, which ended in November 2021.
- Management noted Q1 is usually the lowest-revenue quarter due partly to post-holiday advertising cutbacks. It described radio-industry competition from digital media and audience fragmentation, and warned that renewed COVID-19 spread or persistent supply-chain disruption could weigh on advertising and results. No quantitative earnings or revenue guidance was provided.
- On April 1, 2022, Nasdaq notified the company it failed the minimum net-income listing requirement and the alternative market-value and stockholders’-equity standards. MediaCo said it intended to submit a compliance plan; the notice did not immediately affect trading. Management reported no pending legal proceedings believed likely to have a material adverse effect, and no impairment indicators requiring an interim test as of quarter-end.
Important facts for investors to verify
- Whether MediaCo’s Nasdaq compliance plan was accepted and whether it regained compliance within the applicable period.
- Liquidity and covenant headroom, including the ability to meet variable-rate debt service and access remaining SG Broadcasting funding.
- Whether advertising recovery continues and offsets higher operating, corporate and financing costs.
- Whether the digital-platform spending produces expected benefits and whether future impairment testing identifies any loss in value.
- The effects of the controlling shareholder relationship, convertible related-party debt and preferred stock on governance, potential dilution and future cash obligations.