Townsquare Reports Strong Conclusion To 2020 Powered By Digital Revenue

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Townsquare Reports Strong Conclusion To 2020 Powered By Digital Revenue, Growing +6% Year Over Year To $162 Million And Representing 44% Of Total 2020 Net Revenue

Q4 2020 Adjusted EBITDA +8.4%

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Townsquare Media, Inc. (NYSE: TSQ) (“Townsquare”, the “Company,” “we,” “us,” or “our”) announced today financial results for the fourth quarter and full year ended December 31, 2020.

“As I look back over the past year, I am extremely proud of Townsquare’s performance, driven by our passionate and committed employees, our loyal audience and communities, and our resilient “Local First” operating strategy.

Our fourth quarter financial results reflect that performance as they exceeded our goals and expectations, and as we look at 2021, we believe that we will continue to see strong improvement and strong results in our business. In the fourth quarter, year over year net revenue declines significantly narrowed to -3%, from a low of -35% in the second quarter and -15% in the third quarter, and I am so proud to report that Adjusted EBITDA returned to growth, increasing +8% year over year.

Townsquare Interactive, our digital monthly subscription business, excelled throughout the year, accelerating year over year net revenue growth in Q4 to +16% and generating over $70 million of revenue for the full year (+14% YoY) at a profit margin of approximately 30%.

In total, digital net revenue increased +6% year over year, driven by both Townsquare Interactive and Townsquare Ignite (our digital programmatic advertising platform), which grew net revenue by +11% year over year. With $162 million of 2020 digital net revenue, digital now accounts for approximately 44% of our total net revenue, further differentiating us in the local media marketplace.

I am also pleased to reaffirm our expectation that Townsquare Interactive and Townsquare Ignite will each generate $100 million in revenue in two to three years. 2020 served to accelerate Townsquare’s transformation into a premier local media and digital marketing solutions company proudly super-serving markets outside the top 50 markets.

Although we are proud of our roots and DNA in local radio and we continue to love local radio, 2020 was the year Townsquare became a “Digital First” company,” commented Bill Wilson, Chief Executive Officer of Townsquare Media, Inc.

Mr. Wilson continued, “Over the past year we have worked hard to position ourselves for success in 2021 and beyond, and that included addressing our balance sheet. In early January, we closed on $550.0 million in aggregate principal amount of 6.875% senior secured notes due 2026.

This offering – which replaced our existing debt in its entirety – was significantly oversubscribed, which allowed us to exceed our pricing expectations, locking in long-term capital at an attractive rate. I believe that our successful refinancing was due to our differentiated marketing and advertising solutions and “Local First” strategy, our large and growing digital platform, and our strong cash generation ability.

We ended 2020 with over $83 million of cash on our balance sheet, only a slight decline from 2019’s cash balance of $85 million, and generated $32 million of cash flow from continuing operations in a year where Adjusted EBITDA declined (due to the pandemic) by $40 million.

In addition, we repaid $15 million of debt (prior to the refinancing) and made $4 million of dividend payments. Additionally, we recently announced that we repurchased all of Oaktree Capital’s shares of Townsquare at $6.40 per security, a significant discount to the current share price.

We are confident that this is a great transaction for Townsquare and our investors. The buyback is accretive on a cash flow per share and adjusted earnings per share basis in excess of 70%, and this resolves the significant overhang of Oaktree’s long-dated investment which we have often heard from current and prospective investors is an impediment to investing and building a position in Townsquare.”

Mr. Wilson concluded, “I am very proud of the results we delivered in 2020 in the face of unprecedented challenges and turbulent times. Our Townsquare Team worked tirelessly and with great passion throughout the pandemic to help our Company, by helping local advertisers and businesses as well as by keeping local communities informed and entertained at a time when both needed it the most.

Our team kept moving forward, although at times it did not always feel like it. As we close out Q1 and move into Q2 2021, we believe our Flywheel is moving forward and gaining greater momentum each month and each quarter. We will continue to execute our “Local First” strategy in 2021, and we remain confident about the future of Townsquare and our revenue and profit growth prospects.”

Fourth Quarter Highlights

As compared to the fourth quarter of 2019:
Net revenue decreased 3.2%, and 10.2% excluding political revenue
Net income increased $82.8 million to net income of $4.5 million
Adjusted EBITDA increased 8.4% to $27.0 million
Townsquare Interactive net subscription revenue increased 16.3% to $18.8 million
Townsquare Interactive Adjusted Operating Income increased 24.0% to $5.9 million
Advertising net revenue decreased 4.5% and 12.9% excluding political revenue
Live Events net revenue decreased 99.5%
Diluted income per share from continuing operations was $0.15, and Adjusted Net Income per diluted share was $0.18
Townsquare Interactive added approximately 850 net subscribers
Full Year Highlights*

As compared to the year ended December 31, 2019:
Net revenue decreased 13.9%, and 17.0% excluding political revenue
Net loss increased 22.7%
Adjusted EBITDA decreased 39.3% to $62.1 million
Digital net revenue increased 6.2% to represent 43.6% of total net revenue
Townsquare Interactive net subscription revenue increased 14.4% to $70.4 million
Townsquare Interactive Adjusted Operating Income increased 10.1% to $21.1 million
Advertising net revenue decreased 15.4%, and 19.2% excluding political revenue
Live Events net revenue decreased 85.5%
Pro forma net revenue decreased 13.8%, and 16.9% excluding political revenue
Pro forma net loss increased 22.0%
Pro forma Adjusted EBITDA decreased 39.1%
Pro forma Live Events net revenue decreased 84.8%
Diluted loss per share was $4.46, and Adjusted Net Income per diluted share was $0.28
Generated Cash Flow from Continuing Operations of $31.9 million
Repurchased $4.7 million of our 2023 Unsecured Senior Notes at a market price below par, plus accrued interest
Repaid $9.9 million of our Term Loans due 2022
Townsquare Interactive added approximately 3,750 net subscribers, ending the year with approximately 22,750 subscribers
*See below for discussion of non-GAAP measures. As used in this release, the term “pro forma” means pro forma for the divestiture of our Arizona Bridal Shows business (consisting of two expositions) on March 18, 2019, giving effect to such divestitures as if they had occurred on January 1, 2019.

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