Regent Communications Reports Third Quarter 2007 Results

Regent Communications Reports Third Quarter 2007 Results

CINCINNATI, Nov. 6 /PRNewswire-FirstCall/ -- Regent Communications, Inc. (NASDAQ:RGCI) announced today financial results for the quarter and nine months ended September 30, 2007.

For the third quarter of 2007, net broadcast revenues increased 24.9% to $25.7 million from $20.6 million during the third quarter of 2006. For the same period, station operating expenses increased 18.3% to $16.2 million in 2007 from $13.7 million in 2006. The Company reported a net loss of $1.3 million for the quarter, or $0.03 per share loss, compared with reported net income of $0.8 million, or $0.02 per share, in the same period last year.

For the first nine months of 2007, net broadcast revenues increased 26.5% to $73.0 million compared to $57.7 million in the same period of 2006. For the same period, station operating expenses increased 19.9% to $47.8 million in 2007 from $39.9 million in 2006. The Company reported net income of $0.6 million for the first nine months of 2007, or $0.01 per share, compared with reported net income of $2.9 million, or $0.07 per share, in 2006.

"During the third quarter, we continued to execute on our strategic plan in a challenging environment," said Bill Stakelin, President and CEO of Regent Communications. "Our station results from continuing operations were in line with our guidance. While we were impacted by industry-wide weak advertising demand, we made considerable progress in building our audience shares and advancing our digital initiatives. Our fully integrated web platform continues to take shape across our group as we build out our sites, train our sales teams and begin to cross promote our enhanced platform to our listeners. In line with our focus on maximizing our assets, we also recently entered into agreements to divest several non-core stations, including our smallest market cluster. The proceeds from these sales will strengthen our financial flexibility as we continue to invest in our content, promotion and digital infrastructure, with the goal of increasing the value of our portfolio to the benefit of our stockholders."

Below are the Company's condensed consolidated statements of operations prepared in accordance with generally accepted accounting principles ("GAAP") (in thousands, except per share amounts).

                                         Three Months Ended Nine Months Ended                                            September 30,     September 30,                                            2007     2006     2007     2006   Broadcast revenues, net of agency    commissions                           $25,729  $20,606  $72,973  $57,669   Station operating expenses              16,194   13,686   47,788   39,857   Corporate general and administrative    expenses                                1,489    1,633    5,551    5,058   Activist defense costs                     599        -      599        -   Depreciation and amortization            1,032      973    3,942    3,150   Loss on sale of stations                     -    1,843             1,843   Gain on disposal of long-lived assets      (49)      (4)     (50)     (29)   Operating income                         6,464    2,475   15,143    7,790   Interest expense                        (4,283)  (1,786) (12,630)  (4,291)   Realized gain and unrealized loss on     derivative transactions               (3,728)       -   (1,227)       -   Other income (expense), net                 36      (10)     135       53   (Loss) income from continuing    operations before income taxes         (1,511)     679    1,421    3,552   Income tax benefit (expense)               160      (79)  (1,039)  (1,093)   (Loss) income from continuing    operations                             (1,351)     600      382    2,459   Income from discontinued operations,    net of income tax                          62      237      170      454   Net (loss) income                      ($1,289)    $837     $552   $2,913   Basic net (loss) income per common    share:     (Loss) income from continuing      operations                           ($0.03)   $0.01    $0.01    $0.06     Income from discontinued operations    $0.00    $0.01    $0.00    $0.01     Net (loss) income                     ($0.03)   $0.02    $0.01    $0.07   Diluted net (loss) income per common    share:     (Loss) income from continuing      operations                           ($0.03)   $0.01    $0.01    $0.06     Income from discontinued operations    $0.00    $0.01    $0.00    $0.01     Net (loss) income                     ($0.03)   $0.02    $0.01    $0.07    Common shares for basic calculation     38,342   39,021   38,277   40,375   Common shares for diluted calculation   38,342   39,027   38,305   40,379      Non-GAAP Financial Measures  

Regent utilizes certain financial measures that are not calculated in accordance with GAAP to assess its financial performance. The non-GAAP performance and liquidity measures presented in this release are station operating income, same station net revenue, same station operating income, and free cash flow. Regent's management believes these non-GAAP measures provide useful information to investors, as discussed in more detail below, regarding Regent's financial condition and results of operations and liquidity; however, these measures should not be considered as an alternative to net broadcast revenue, operating income, net (loss) income, or cash provided by operating activities as an indicator of Regent's performance or liquidity.

Station operating income

Third quarter 2007 station operating income increased 37.8% to $9.5 million from $6.9 million in the same period in 2006. For the nine months ended September 30, 2007, station operating income increased 41.4% to $25.2 million from $17.8 million reported for the same period in 2006.

The Company believes that station operating income is a performance measure that helps investors better understand the financial health of our radio stations. Further, Regent and other media companies have traditionally been measured by analysts and other investors on their ability to generate station operating income. The following table reconciles operating income, which the Company believes is the most directly comparable GAAP financial measure, to station operating income (in thousands):

                                   Three Months Ended      Nine Months Ended   Station operating income            September 30,         September 30,                                    2007         2006     2007          2006    Operating income                $6,464       $2,475  $15,143        $7,790    Plus:   Corporate general and    administrative expenses         1,489        1,633    5,551         5,058   Activist defense costs             599            -      599             -   Loss on sale of stations             -        1,843        -         1,843   Depreciation and    amortization                    1,032          973    3,942         3,150   Less:   Gain on disposal of long-    lived assets                       49            4       50            29    Station operating income        $9,535       $6,920  $25,185       $17,812      Same station results  

On a same station basis, which includes results from stations owned and operated in continuing operations during the entire third quarter for both the 2007 and 2006 periods and excludes barter, net broadcast revenue for the third quarter of 2007 decreased 0.8% to $19.6 million from $19.8 million in the third quarter of 2006. Same station operating income was up slightly in the third quarter of 2007 compared to the third quarter of 2006. The Company believes that a same station presentation is important to investors as it provides a measure of performance of radio stations that were owned and operated by Regent in the third quarter of 2006 as well as the current quarter, and eliminates the effect of acquisitions and dispositions on comparability. Additionally, the Company has excluded barter in this comparison as barter customarily results in volatility between quarters, although differences over the full year are not material. The following tables reconcile net broadcast revenue and operating income to same station net broadcast revenue and same station operating income (in thousands).

                                                    Three Months Ended   Same Station Net Broadcast Revenue                 September 30,                                                   2007           2006    Net broadcast revenue                         $25,729        $20,606   Add:    Less:   Net results of stations not included    in same station category                       5,223             39   Barter transactions                               900            798    Same station net broadcast revenue            $19,606        $19,769                                                      Three Months Ended   Same Station Operating Income                      September 30,                                                   2007           2006    Operating income                               $6,464         $2,475    Plus:   Corporate general and administrative expenses   1,489          1,633   Activist defense costs                            599              -   Loss on sale of stations                            -          1,843   Depreciation and amortization                   1,032            973    Less:   Gain on sale of long-lived assets                  49              4    Station operating income                        9,535          6,920    Adjustments:   Net results of stations not included    in same station category                      (2,530)           101   Barter transactions                                19            (27)    Same station operating income                  $7,024         $6,994      Free cash flow  

Free cash flow is defined as net income plus depreciation, amortization, and other non-cash expenses, less maintenance capital expenditures and net gains on the sale of stations and disposal of long-lived assets. Free cash flow decreased 1.4% to $3.3 million in the third quarter of 2007, from $3.4 million in the third quarter of 2006. For the nine months ended September 30, 2007, free cash flow decreased 23.8% to $6.2 million in 2007 from $8.1 million in 2006. Free cash flow in the third quarter and year-to-date periods of 2007 were negatively impacted by approximately $0.6 million of shareholder activist costs, as well as increased interest rates and increased borrowings related to acquisitions in the fourth quarter of 2006. The Company believes that free cash flow is a liquidity measure that helps investors evaluate the ability of the Company to generate excess cash flow for investing and financing uses. The following table displays how the Company calculates free cash flow (in thousands).

                                  Three Months Ended     Nine months ended                                     September 30,          September 30,   Free Cash Flow                 2007          2006     2007           2006    Net (loss) income            ($1,289)        $837     $552         $2,913    Add:   Depreciation and    amortization (1)              1,054        1,019    4,033          3,458   Non-cash interest expense        134           92      419            276   Non-cash taxes expense (2)         -          214    1,110          1,352   Non-cash loss on sale of    radio stations                    -        1,843        -          1,843   Non-cash unrealized loss    on derivatives                3,985            -    1,986              -   Other items, net (3)             202          217      744            695    Less:   Non cash tax benefit (2)         132            -        -              -   Maintenance capital    expenditures                    485          433    1,700          1,469   Digital upgrade capital    expenditures                    135          408      953            947    Free cash flow                $3,334       $3,381   $6,191         $8,121    (1) Includes depreciation and amortization reclassified to discontinued       operations   (2) Includes taxes reclassified to discontinued operations   (3) Includes: non-cash compensation; barter; and gain on the disposal of       long-lived assets     

The most directly comparable GAAP measure to free cash flow is net cash provided by operating activities. The following table reconciles net cash provided by operating activities to free cash flow (in thousands):

                                        Three Months Ended Nine Months Ended                                           September 30,      September 30,   Free Cash Flow                          2007     2006     2007      2006   Net cash provided by operating    activities                            $3,807   $5,021   $7,403   $10,451    Less:   Changes in operating assets and    liabilities                                -      774        -         -   Bad debt expense                           85       25      482       369    Plus:   Changes in operating assets and    liabilities                              232        -    1,923       455    Less:   Maintenance capital expenditures          485      433    1,700     1,469   Digital upgrade capital expenditures      135      408      953       947    Free cash flow                         $3,334   $3,381   $6,191    $8,121      Selected Data  

As of September 30, 2007, outstanding credit facility debt was approximately $211.1 million and cash was approximately $0.3 million. Total capital expenditures in the third quarter ended September 30, 2007 were approximately $0.6 million.

Outlook

Regent has adopted a policy to provide guidance to investors regarding our financial prospects. The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. Regent undertakes no obligation to update these statements.

Regent projects fourth quarter 2007 reported consolidated net broadcast revenues and station operating income of approximately $24.6 to $25.0 million and $8.9 to $9.1 million, respectively. Regent expects earnings of approximately $0.03 per share. However, earnings are subject to non-cash volatility as a result of changes in the market value of our interest rate swaps which are marked to market each quarter. The following table reconciles projected operating income, which the Company believes is the most directly comparable GAAP measure, to station operating income (in millions):

                                                      Three Months Ending                                                           12/31/2007   Station Operating Income                              Guidance Range                                                     Lower             Upper    Operating income                                  $5.9              $6.1    Plus:   Corporate general and administrative expenses      1.9               1.9   Depreciation and amortization                      1.1               1.1    Station operating income                          $8.9              $9.1     

The Company expects same station net broadcast revenue to be up in the low single digits for the fourth quarter of 2007 compared to the fourth quarter of 2006. The Company expects capital expenditures for the fourth quarter to be approximately $0.7 million, of which approximately $0.2 million is maintenance capital expenditures and approximately $0.5 million is related to consolidation capital expenditures pertaining to a facilities build-out in our Evansville market.

Teleconference

The Company will host a teleconference to discuss its third quarter results on Tuesday, November 6th at 9:00 a.m. Eastern Time. To access the teleconference, please dial 973-582-2734 ten minutes prior to the start time. The teleconference will also be available via live webcast on the Company's website, located at www.regentcomm.com under Investor Relations. If you cannot listen to the teleconference at its scheduled time, there will be a replay available through Tuesday, November 13, 2007, which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080 (Int'l), passcode 9337829. The webcast will also be archived on the Company's website for 30 days.

Regent Communications is a radio broadcasting company focused on acquiring, developing and operating radio stations in mid-sized markets. Following completion of all announced transactions, Regent will own and operate 62 stations located in 13 markets. Regent Communications, Inc. shares are traded on the Nasdaq under the symbol "RGCI."

This press release includes certain forward-looking statements with respect to Regent Communications, Inc. for which it claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties and include statements preceded by, followed by or that include words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project" and other similar expressions. Although Regent believes expectations reflected in these forward-looking statements are based on reasonable assumptions, such statements are influenced by financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations. Actual results and developments may differ materially from those conveyed in the forward-looking statements based on various factors including, but not limited to: changes in economic, business and market conditions affecting the radio broadcast industry, the markets in which we operate, and nationally; increased competition for attractive radio properties and advertising dollars; fluctuations in the cost of operating radio properties; the ability to manage growth; the ability to integrate these and other acquisitions; and changes in the regulatory climate affecting radio broadcast companies, including uncertainties surrounding recent Federal Communication Commission rules regarding broadcast ownership limits. Further information on other factors that could affect the financial results of Regent Communications, Inc. is included in Regent's filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission's website at http://www.sec.gov/ and/or from Regent Communications, Inc.

Source: Regent Communications, Inc.

CONTACT: Tony Vasconcellos, Executive Vice President and Chief Financial
Officer, Regent Communications, Inc., +1-859-292-0030; or Dan Harris, Brainerd
Communicators, Inc., +1-212-986-6667

Web site: http://www.regentcomm.com/

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Profile: International Entertainment