Investor Presentation NobleConXVtownsquare-media-ir.prod-use1.investis.com/~/media/Files/... ·...

Investor Presentation NobleConXV

January 29, 2019

1 © Townsquare Media, Inc. 1

Forward-Looking Statements and Non-GAAP Financial Measures

This presentation contains, and our other communications may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements, written, oral or otherwise made, represent the Company’s expectation or belief concerning future events. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control.

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 statement. 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. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in the sections entitled “Risk Factors” and “Forward-Looking Statements” included in our Annual Report on Form 10-K filed on March 13, 2018, or other applicable documents that are filed or furnished with the Securities and Exchange Commission (“SEC”). We do not undertake to update any forward- looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC, or in any document posted to the “Equity Investors” section of the Company’s website.

The unaudited estimates and statements included herein are the opinion of management and represent estimates and expectations based on the most current information available. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors and it is impossible for us to anticipate all factors that could affect our actual results. Our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results for our fourth quarter are finalized. This preliminary financial data has been prepared by and is the responsibility of management. Our independent registered public accounting firm, RSM US LLP, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, RSM US LLP does not express an opinion or any other form of assurance with respect thereto. As a result of the foregoing considerations and limitations, investors are cautioned not to place undue reliance on this projected financial information.

This presentation includes non-GAAP financial measures within the meaning of the federal securities laws, including Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes. We define Adjusted EBITDA as net income (loss) before the deduction of income taxes, interest expense, net, transaction costs, depreciation and amortization, stock-based compensation, business realignment costs, goodwill and other intangible impairment charges, net (loss) income from discontinued operations, net of income taxes, net gain (loss) on sale and retirement of assets, and other expense (income) net. Adjusted EBITDA Less Interest, Capex and Taxes is defined as Adjusted EBITDA less net cash interest expense, capital expenditures and cash paid for taxes. Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes do not represent, and should not be considered as alternatives to, net (loss) income or cash flows from operations as determined under U.S. generally accepted accounting principles, or GAAP. For a reconciliation of these measures to net income, see Exhibit 99.1 to our Current Reports on Form 8-K filed with the SEC on November 6, 2018.


Introduction to Townsquare (NYSE: TSQ)

Owns and operates market-leading branded media

platforms: broadcast radio, digital, video, social, and

streaming

Brings national scale and expertise to 67 local markets

321

~12M

200

>1M

#1 or #2 radio position in 65 of 67 markets

radio listeners (1)

radio stations

live events per year

annual attendees

Townsquare Interactive

SMB customers (3)

4 major multi-day music festivals

Highly complementary media, marketing, and entertainment platforms

Subscription-based revenue model

Organically built in 2012

Web and mobile sites

SEO, social media management

Reputation management and directory listings

Proprietary analytics and insights

~12M local website UVs (2)

Proprietary digital programmatic technology platform

Organically built in 2014

Precision customer targeting solutions

In-house Demand Supply Platform (DSP) and media buying and optimization

Townsquare Ignite

~14,500

300+ local websites /

local station apps

__________________________________________________ Note: UVs is defined as unique visitors. 1. Represents the average of Townsquare’s Spring 2018 nationwide cume, P12+ M-Su 12a -12a, per Act 1 Systems (based on Nielsen data). 2. Represents average monthly global UVs on our local owned and operated websites for the three months ending September 30, 2018 per Google Analytics. 3. As of September 30, 2018.

We are the leading multi-platform branded media, digital marketing, and live events company focused primarily on small to mid-sized markets in America’s heartland

Diversified multi-channel growth strategy

Provides cutting edge digital marketing and advertising technology

solutions to a broad base of ~50,000 local and national advertisers

and SMBs

active campaigns per month (3) >1,700

Move customers and audience across platforms


Investment Highlights

#1 or #2 radio position in 65 of 67 markets

Stable cities with attractive fundamentals: lower economic volatility and competition

Reaches millions of people in the “Heartland” and connects this audience to local and national advertisers

Sales are generated through largely local and direct-to-client relationships

Local advertising spend is large (~$81 billion) and projected to grow at a ~4% CAGR (1)

Radio audience continues to grow, while digital is growing rapidly and taking share from traditional print-based mediums (e.g., newspaper and yellow pages)

Radio is the #1 reach medium in the U.S., reaching more than 90% of Adults 12+ each week (2)

Track record of successfully driving value through organic product development

Well-positioned to leverage in-market teams, digital DNA, local salesforce and first-party data insights to lead growth within its markets

Significant scale with diversified revenue streams built through successful organic initiatives and strategic M&A

Steady growth of ~2% YTD 2018 PF revenue and ~6% YTD 2018 PF Adjusted EBITDA (3)

Strong and stable cash flow, providing fuel for product development and innovation (~23% PF Adjusted EBITDA margin)

Valuable tax benefits, including tax deductible amortization and net operating loss carryforwards

Deep local audience engagement through longstanding and powerful brands on the air, online and experiential

Demonstrable success leveraging traditional media core to build growth businesses through intimate understanding of audience and advertiser needs (e.g., live events, Townsquare Interactive, Townsquare Ignite etc.)

_____________________________________ 1. Source: SNL Kagan. 2017-2022 CAGR. 2. Nielsen Comparable Metrics Reports (Q2 2015-2017), P18+. 3. Pro forma for the acquisition of three radio stations in Princeton, New Jersey on July 2, 2018 as if it had occurred on January 1, 2017.

Market-leading position in small & mid-sized markets

Platform for growth and innovation

Strong financial profile

Diversified, multi-platform

products and audiences

Attractive industry dynamics reinforce growth

opportunity


Radio is a Stable Foundation

___________________________________________ 1. Nielsen Comparable Metrics Reports (Q2 2015-2017), P18+. 2. Edison Research, “Share of Ear,” Q2 2017, Q4 2017, P18+. 3. Nielsen studies from 2014-2016, including Nielsen’s Catalina Radio Return on Advertising Spend studies.

Radio Reaches Everyone Radio’s Audience is Growing

Radio Delivers Results at an Attractive Price Radio Delivers a Local Connection

Radio megaphone with proven ability to activate audience to action

Large, local salesforce with direct relationships with local advertisers

Compelling live and local content on heritage brands

First party audience data collection and insights

Ability to produce curated local content absent from national and social media platforms

Radio is still one of the most cost-effective and efficient ways for local advertisers to reach the masses and local communities

Reaches all the key demographics advertisers want (>90% reach among P18+, P18-34, P35-49, P50+)(2)

Drives consumer action and positive ROI (~10x return on advertiser spend) (3)

Lower CPM than other forms of traditional media

New attribution tools, such as Analytic Owl, are providing ways to measure broadcast campaigns that have historically not existed

Unlike certain other traditional media, radio’s audience is growing

The introduction of streaming, mobile apps and smart speakers have helped to increase radio’s total audience

Radio usage has remained substantially unchanged since 1970, reaching >90% of Americans 12+ (1)

Radio dominates listening hours, with 48% vs. Pandora’s 6%, SiriusXM’s 6% and Spotify’s 4% share of listening (2)

Radio reaches more people per week (~229M)(1) than any other media

Radio

PC

TV

Smartphone

Tablet

229M

217M

204M

91M

122M

Weekly Reach (1)

221M 222M 225M

229M

2014 2015 2016 2017

Radio’s Weekly Reach (1)


Small and Mid-Sized Market Strategy is a Competitive Advantage

Townsquare Markets

More attractive competitive landscape

Limited focus from larger media players

Starved for high quality media and entertainment experiences

Limited competition from advertising technology and digital marketing solutions providers

Healthy, stable markets with lower economic volatility and stabilizing institutions such as universities, military installations and state capitals

We reach a majority of the population in our markets

We have trusted relationships between our heritage brands and our audience and strong local relationships with our advertisers

Our ability to bring national products, technology and practices to small and mid-sized markets is unique

Our national scale and expertise allows us to develop market leading products and services, and provide training and support to our local markets

The Heartland is as much a mindset as it is a geographical definition, and many of our brands are significant influential institutions in this landscape that can help shape trends

“So many marketing programs are oriented toward metro elite imagery… Marketing needs to reflect less of New York and Los Angeles culture… and more of Des Moines and Scranton.”

— Wall Street Journal, November 21, 2016

Advertisers Seek Middle America Consumers

Townsquare operates in 67 small and mid-sized markets across the US, with virtually no presence in the top 50 markets

Average Townsquare market population ~300K (50K – 1M)


The Power of Our Brands and Talent

6

___________________________________________________ 1. Represents the average of Townsquare’s Spring 2018 nationwide cume, P12+ M-Su 12a -12a, per Act 1 Systems (based on Nielsen data). 2. Represents average monthly global UVs on our local owned and operated websites for the three months ending September 30, 2018 per Google Analytics. 3. Represents morning shows that are ranked first in-format based on Nielsen’s A25-54 ratings.

Original content and influential local media personalities drive deep, multi-platform audience engagement and create compelling advertising and marketing solutions for clients

Strength in Country, News/Talk/Sports and Rock formats

Live and local personalities with strong ties to the community

Proprietary mobile radio app, radioPup, and individual station apps reach our audience on the go

We supplement our local content with national content from our portfolio of 9 music and entertainment focused websites, including Taste of Country, XXL, Loudwire, Ultimate Classic Rock, PopCrush, The Boot, The Boombox, Diffuser and ScreenCrush

Select Radio and Digital Media Brands

Townsquare owns and operates market leading media platforms: broadcast radio, digital, video, social and streaming

321 radio stations

330+ local, community websites

300+ local station apps

12M listeners (1)

12M UVs (2) per month

#1 or #2 share of radio revenue in 65 of 67 markets

51 top-rated live and local morning shows (3)

Key Stats


Local Live Events & Music Festivals

Live events are a natural extension of Townsquare’s core advertising offerings

Expands our audience and reinforces media brands through association

Unrivaled local presence and marketing strength

Complementary advertiser offering without cannibalizing other revenue streams

Monetizes the listener/consumer relationship

Expertise in local markets and ability to syndicate events across Townsquare markets (and beyond)

Townsquare creates, promotes and produces approximately 200 live events per year that are local, family oriented and community based in nature

Our events are largely perennial with strong customer loyalty

Attract over 1 million attendees per year

Low ongoing fixed cost, principally driven by innovation and human capital

Include music festivals, concerts, expositions and other experiential events

Townsquare monetizes our audience relationships with profitable, recurring live events brands

Select Live Event Brands


Programmatic Digital Advertising: Townsquare Ignite

Townsquare Ignite is our proprietary advertising technology platform that enables us to fulfill our client’s entire audience demand, using:

TSQ digital inventory (on our owned and operated websites) AND

Third party advertising inventory across the Internet

Hyper-targeted online audiences are delivered across desktop, mobile, apps, connected TV, email, paid search, and social media platforms utilizing display, video and native executions

Clients paying for highly effective ads, delivered to the right people at the right time

Deliver far more precision and personalization of messaging and media, resulting in more efficiently targeted ad campaigns

____________________________ 1. As of September 2018.

Townsquare Ignite is an effective and efficient advertising solution that maximizes our local market presence, brands and trusted relationships with precision sophisticated in-house audience targeting solutions

Targeting Methods

Advanced Audience

Contextual

Re-targeting

Video

Social

Geolocation

Hyper-local Mobile

Foot Attribution

Search

Native

In-house buying platform (DSP) integrated with 1,000+ exchanges accessing >250 billion impressions/day

>1,700 Ignite campaigns live each month (1)

Up from 1,200 (+40%) the prior year

Key Stats


Digital Marketing Solutions: Townsquare Interactive (TSI)

TSI provides a wide array of digital services for a recurring monthly subscription fee, including:

Website design and management

Search engine optimization

Re-Targeting

Business listing

TSI targets SMBs in our 67 small and mid-sized markets leveraging our local sales teams, as well as small to mid-sized markets with demographics consistent with TSQ markets via our Inside Sales Team of over 100 sellers

TSI is a leading provider of digital marketing solutions to SMBs

___________________________________________________ 1. As of September 30, 2018.

~14,500 subscribers

~$300 average monthly subscriber fee

~$50M annual run-rate net revenue

Key Stats (1)

Social media marketing

Mobile optimization

E-commerce

Reputation monitoring

TSI Subscribers

10,200 12,000

14,500

Q3'16 Q3'17 Q3'18

+1,800 +2,500

Charlotte Business Journal’s “2018 Best

Places to Work” Winner

4 years in a row


Leading Research Firm, Borrell Associates, Singles out Townsquare as Top Digital Performer

Borrell points to Townsquare as a top digital performer among all local media companies. He bases that on what he calls “addressable” digital ad dollars, meaning those that are readily available to in-market media companies, like radio, TV, and newspapers

Companies like Townsquare Media should no longer be thought of as radio companies, he says, a belief shared by numerous broadcasters that have replaced the word “radio” in their company names with “media”

“Its digital ventures are fast-growing and quite impressive,” Borrell says, pointing to the company’s 300-person Townsquare Interactive workforce that focuses exclusively on digital ventures at the division’s base in Charlotte, NC

Townsquare Media has taken an approach “where the reps are truly marketing consultants, not radio reps who also have some digital products to sell,” Borrell says

Across its 67 markets, the Greenwich, CT-based company “holds a phenomenal share of addressable digital advertising”


Leading Research Firm, Borrell Associates, Singles out Townsquare as Top Digital Performer

__________________________ Sources: SEC Documents, company statements and Borrell Associates estimates, April 2018. *Salem digital revenues include e-commerce, RadioOne includes digital revenue from some national sites. Note: Represents TSQ’s 2017 total digital revenue (local and national digital revenue) as a percent of Local Marketing Solutions revenue.

© 2018 Borrell Associates Inc.


Key Financial Metrics

22.6%

LTM 9/30/18

PF Adjusted EBITDA Margin

Steady Growth Strong Profit Margins

~$46M LTM 9/30/18

PF Adjusted EBITDA Less

Interest, Capex and Taxes /

$1.65 Per Share (2)

Stable Capital Structure Cash Generation

1.8%

YTD 2018 PF Net Revenue Growth

5.8%

YTD 2018 PF Adjusted EBITDA

Growth

____________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2017. 1. Based on current LIBOR rates as of November 5, 2018. 2. Based on 27.9 million shares and warrants outstanding as of November 5, 2018.

5.9%

Weighted Average

Interest Rate (1)

No Maturities until 2022

$0.30

Annualized Dividend Per

Share, $0.075 Quarterly

Dividend Per Share

Current Equity Return


November 6, 2018 Earnings Call Highlights

_______________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. All growth rates as compared to the prior year period. 1. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2017.

YTD September 2018 net revenue increased 2.4%, or 6.5% excluding live events net revenue

On a pro forma basis, net revenue increased 1.8%, or 5.7% excluding live events net revenue (1)

Strong political revenue, with $2.3 million in Q3, and $4.3 million YTD, exceeding the 2014 political cycle by $1.1 million in the year to date period

YTD September 2018 Adjusted EBITDA increased 6.7%, and 5.8% on a pro forma basis (1)

YTD September 2018 Townsquare Interactive net revenue increased 18.8%

YTD September 2018 net income from continuing operations increased 46.1%

Townsquare Interactive’s subscriber base grew by 850 subscribers in Q3, to ~14,500

Declared next quarterly dividend payment of $0.075 per share, payable on February 15, 2019 to shareholders of record as of December 27, 2018


Balance Sheet, Liquidity & Ownership

Capital Allocation Priorities Ownership (as of 11/5/18)

9/30/18 Balance Sheet & Liquidity

Invest in organic growth opportunities

Prudently pursue attractively valued acquisition opportunities

Reduce net leverage

$ in millions Maturity Pricing

Cash $49.6

Revolver ($50 million) 0.0 2020 L +250bps

Term Loans 282.3 2022 L +300bps, 1% Floor

Capitalized Obligations 0.0

Total Secured Debt $282.3

Senior Unsecured Notes 280.1 2023 6.500%

Total Debt $562.4

Secured Debt Leverage (1) 2.9x

Total Debt Leverage (1) 5.8x

Net Debt Leverage (1) 5.3x

__________________________________________________ Note: Please refer to page 1 for definitions of non-GAAP measures. 1. Pro forma Adjusted EBITDA for the twelve months ended September 30, 2018 was $96.2 million. Pro forma for the acquisition of three radio stations in Princeton, NJ on July 2, 2018 as if it had occurred on January 1, 2017. 2. Each warrant is exercisable for one share of Class A common stock, at an exercise price of $0.0001 per share. The aggregate exercise price for all warrants currently outstanding is $898.

(shares in millions) # of

Votes Primary Holders

Class A Common Stock 14.3 1 Public & MSG

Class B Common Stock 3.0 10 Oaktree & Management

Class C Common Stock 1.6 0 MSD

Class A Warrants (2) 9.0 0 Oaktree

Total Shares + Warrants 27.9 ~$100M of liquidity (including cash and undrawn revolver)

Townsquare’s multi-class structure is driven largely by FCC considerations

Class B (high vote) and Class C (no vote) shares revert to Class A (1 vote) shares upon a sale

Equity Ownership

Others 31%

Mgmt 6% MSD

Capital 6%

MSG 12%

Oaktree Capital

Management 45%

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