Townsquare Announces Repurchase of Just Under 10% of Outstanding Shares Reaffirms Q1’24 and FY’24 Guidance

Rhea-AI Summary

Townsquare Media, Inc. (TSQ) announces the repurchase and retirement of 1.5 million shares of Class A common stock from MSG National Properties, at $9.76 per share, reflecting an 11% discount. The transaction was funded with cash on hand and follows previous repurchases in 2023 and 2021. Townsquare's Cash Flow from Operations increased by 35% in 2023, reaching $68 million. The company now has 15.2 million shares outstanding, with plans to enhance shareholder value through future growth, dividends, and share repurchases.

Positive

• Townsquare Media, Inc. repurchases 1.5 million shares of Class A common stock from MSG National Properties, at $9.76 per share, representing an 11% discount from the closing price.
• The repurchase was funded with cash on hand and follows previous repurchases in 2023 and 2021, totaling 16.2 million shares at an average price of $7.19.
• Townsquare's Cash Flow from Operations increased by 35% in 2023, reaching $68 million, leading to an accretion of approximately 10% per basic share after the recent transaction.
• The company now has 15.2 million shares outstanding and a strong cash balance of $40 million, providing financial flexibility for future growth initiatives.
• Q1'24 and Full Year 2024 guidance for net revenue and Adjusted EBITDA have been reaffirmed, showcasing confidence in the company's medium and long-term business plan.
• Townsquare's CEO, Bill Wilson, expressed confidence in the company's ability to enhance shareholder value through revenue and profit growth, net leverage reduction, dividends, and potential future share repurchases.

Negative

• None.

Insights

Financial Analyst

The transaction of repurchasing shares at a discount is a strategic financial move, which suggests that the management believes the stock is undervalued. The immediate accretive effect on Cash Flow from Operations per share indicates a positive impact on shareholder value. This action, combined with the history of share repurchases at progressively higher prices, reflects a strong confidence in the company's financial health and future prospects.

Moreover, the ability to fund this transaction with cash on hand, without increasing leverage, is a testament to the company's robust cash generation capabilities. The reported 35% year-over-year increase in Cash Flow from Operations in 2023 is a significant indicator of operational efficiency and financial discipline.

Investors should note the balance between returning capital to shareholders through dividends and share repurchases and retaining enough cash to maintain financial flexibility. The increase in the dividend payout, coupled with a high yield, could make the stock more attractive to income-focused investors, potentially supporting the stock price.

Market Research Analyst

From a market perspective, Townsquare Media's consistent performance and reaffirmed guidance for Q1'24 and the full year 2024 provide a stable outlook for investors. The company's focus on digital growth and the introduction of a dividend in 2023, which has already seen an increase, positions it well within the media sector, which is increasingly transitioning to digital platforms.

The market could react positively to the company's commitment to shareholder value, as evidenced by the share repurchase program and the enhanced dividend policy. This could potentially attract a broader investor base, including value and dividend investors. However, the media industry is highly competitive and the company's ability to sustain its growth and profitability in the long term will be critical for maintaining investor confidence.

Economist

Looking at the broader economic context, share repurchase programs can be influenced by macroeconomic conditions such as interest rates and corporate tax policies. The decision to repurchase shares instead of pursuing alternative investments could signal a lack of attractive investment opportunities within the company's core business areas or a strategic move to consolidate ownership.

Additionally, the emphasis on reducing net leverage is a prudent approach in a potentially rising interest rate environment, which could increase borrowing costs and impact profit margins. The company's financial strategy appears to be aligned with conservative fiscal management, which could be advantageous if the economy faces headwinds.

PURCHASE, N.Y., April 01, 2024 (GLOBE NEWSWIRE) -- Townsquare Media, Inc. (NYSE: TSQ) (the “Company” or “Townsquare”) announced that today we are repurchasing and retiring 1.5 million shares of Class A common stock held by MSG National Properties, LLC (“MSG”), for $9.76 per share. The purchase price reflects an 11% discount from the closing price of the Class A common stock on March 28, 2024. This transaction follows Townsquare’s June 2023 repurchase of 1.5 million shares from MSG at $9.70 per share, and March 2021 repurchase of 12.6 million shares and warrants from Oaktree Capital Management, L.P. at $6.40 per share. The purchase price of $14.6 million was funded entirely with cash on hand. In 2023, Townsquare’s Cash Flow from Operations increased 35% year-over-year to $68 million, or approximately $4.07 per basic share based on shares outstanding as of March 28, 2024. Pro forma for this transaction, Cash Flow from Operations per basic share increased to approximately $4.47, representing accretion of approximately 10%. Following the transaction, the Company has 15.2 million shares outstanding.  

“We are very pleased to share that we have repurchased just under 10% of our total shares outstanding in an immediately accretive transaction for our shareholders. Since 2021, we have repurchased 16.2 million shares at an average price of $7.19, while simultaneously reducing leverage. The strong cash generation characteristics of our business model, which produced $68 million of cash flow from operations in 2023, has afforded us the opportunity to accretively repurchase equity and debt, while also investing internally in our digital growth engine. In addition, we introduced a high-yielding dividend in 2023, and recently increased it by 5%. Our dividend has a yield of 7% as of March 28, 2024,” commented Bill Wilson, Townsquare’s Chief Executive Officer. “With a strong cash balance of $40 million following this transaction, we will retain financial flexibility moving forward and we are confident in our ability to build shareholder value for our investors through long-term net revenue, Adjusted EBITDA and cash flow growth, net leverage reduction, future dividend payments, and potential future share repurchases.”

Q1’24 and Full Year 2024 Guidance Reaffirmed
For the first quarter of 2024, net revenue guidance is reaffirmed to be between $98.5 million and $100 million, and Adjusted EBITDA guidance is reaffirmed to be between $17.5 million and $18.5 million.

For the full year 2024, net revenue guidance is reaffirmed to be between approximately $440 million and $460 million, and Adjusted EBITDA guidance is reaffirmed to be between $100 million and $110 million.

“We thank our Board of Directors for their vote of confidence in our medium and long-term business plan to grow revenue and profits, and MSG for their long-term support of our Company,” concluded Mr. Wilson.
About Townsquare Media, Inc.
Townsquare is a community-focused digital media and digital marketing solutions company with market leading local radio stations, principally focused outside the top 50 markets in the U.S. Our assets include a subscription digital marketing services business, Townsquare Interactive, providing website design, creation and hosting, search engine optimization, social media and online reputation management as well as other digital monthly services for approximately 24,000 SMBs; a robust digital advertising division, Townsquare Ignite, a powerful combination of a) an owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and a portfolio of 350 local terrestrial radio stations in 74 U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local media brands such as WYRK.com, WJON.com and NJ101.5.com, and premier national music brands such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com. For more information, please visit www.townsquaremedia.com, www.townsquareinteractive.com and www.townsquareignite.com.

Forward Looking Statements

Except for the historical information contained in this Press Release, the matters addressed are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often discuss the Company’s current expectations. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “could,” “would,” “will,” “plan,” the negatives thereof and other words and terms. The forward-looking statements contained in this Press Release include, but are not limited to, statements related to the Company’s long-term business plan. By nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof or as of the date specified herein. See “Risk Factors” and “Forward-Looking Statements” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024, and subsequent filings with the SEC, for a discussion of factors that could cause the Company’s actual results to differ from those expressed or implied by forward-looking statements. The Company assumes no responsibility to update any forward-looking statement as a result of new information, future events or otherwise.

Investor Relations
Claire Yenicay
(203) 900-5555
investors@townsquaremedia.com

 

FAQ

How many shares of Class A common stock did Townsquare Media, Inc. repurchase from MSG National Properties, ?

Townsquare Media, Inc. repurchased 1.5 million shares of Class A common stock from MSG National Properties,

At what price per share did Townsquare Media, Inc. repurchase the shares from MSG National Properties, ?

Townsquare Media, Inc. repurchased the shares from MSG National Properties, at $9.76 per share, reflecting an 11% discount.

How was the purchase funded?

The purchase of 1.5 million shares was funded entirely with cash on hand.

What was Townsquare Media, Inc.'s Cash Flow from Operations in 2023?

Townsquare Media, Inc.'s Cash Flow from Operations in 2023 increased by 35% year-over-year to $68 million.

How many shares outstanding does Townsquare Media, Inc. have after the transaction?

Townsquare Media, Inc. now has 15.2 million shares outstanding.

What are the net revenue and Adjusted EBITDA guidance for Q1'24 and Full Year 2024?

For Q1'24, net revenue guidance is between $98.5 million and $100 million, and Adjusted EBITDA guidance is between $17.5 million and $18.5 million. For Full Year 2024, net revenue guidance is between approximately $440 million and $460 million, and Adjusted EBITDA guidance is between $100 million and $110 million.