What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-05 · 163 added, 102 removed, 292 unchanged (48% of the section changed)

29 unchanged sentences

This metric gauges how well our formats are attracting and retaining listeners.

Management also monitors revenue generated through our programmatic ad-buying platform, Soundpoint, and our data analytics advertising product, SmartAudio, to measure the success of our enhanced marketing optimization tools.

Management also monitors revenue generated through our programmatic ad-buying platform, and our data analytics advertising product, SmartAudio, to measure the success of our enhanced marketing optimization tools.

We have made significant investments so we can provide the same ad-buying experience that once was only available from digital-only companies and enable our clients to better understand how our assets can successfully reach their target audiences.

20 unchanged sentences

As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide.

Economic Conditions

Our advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP.

2 unchanged sentences

Beginning in March 2020 and continuing in the following months, we saw a sharp decline in each of our Broadcast radio, Networks and Sponsorships revenue streams as a result of the impact of the coronavirus pandemic ("COVID-19") and the resulting impact on the U.S.

Our Multiplatform Group revenues significantly increased for the first quarter of 2022 compared to the first quarter of 2021 as a result of continued recovery from the impact of the COVID-19 pandemic.

Our Digital Audio Group revenues, including podcasting, have continued to grow each quarter

during the COVID-19 pandemic.

Our Audio & Media Services Group revenues have increased for the first quarter of 2022 compared to the first quarter of 2021 mainly due to the continued recovery from the impact of the COVID-19 pandemic.

Our Multiplatform Group revenues significantly increased during 2021, and continued to increase in the first half of 2022 compared to the first half of 2021 as a result of continued recovery from the impact of COVID-19.

Our Digital Audio Group revenues, including podcasting, have continued to grow each quarter during COVID-19 and throughout the recovery.

Our Audio & Media Services Group revenues have increased for the first half of 2022 compared to the first half of 2021 mainly due to the continued recovery from the impact of COVID-19.

Refer to Note 1, Basis of Presentation, for more information regarding COVID-19 and its impact on our financial statements.

Cost Savings Initiatives

We have implemented key modernization initiatives and operating-expense-saving initiatives to take advantage of the significant investments we have made in new technologies to deliver incremental cost efficiencies, including initiatives to streamline our real estate footprint.

We believe these initiatives position the Company for sustainable growth and value creation for stockholders.

Impairment Charges

1 unchanged sentence

These strategic actions typically result in impairment charges due to the write-down of the affected right-of-use assets and related fixed assets, including leasehold improvements.

For the three months ended March 31, 2022 and 2021, we recognized non-cash impairment charges of $1.3 million and $37.7 million, respectively, as a result of these cost-savings initiatives.

For the six months ended June 30, 2022 and 2021, we recognized non-cash impairment charges of $1.6 million and $37.7 million, respectively, as a result of these cost-savings initiatives.

Executive Summary

Our revenues for the first quarter of 2022 increased significantly across our Multiplatform Group, Digital Audio Group and Audio & Media Services Group segments as a result of the continued recovery from the impacts of the COVID-19 pandemic and the continued increased demand for digital advertising, including podcasting.

Our revenues for the second quarter of 2022 increased across our Multiplatform Group, Digital Audio Group and Audio & Media Services Group segments as a result of the continued recovery from the impacts of the COVID-19 pandemic and the continued increased demand for digital advertising, including podcasting.

The key developments that impacted our business during the quarter are summarized below:

• Consolidated Revenue of $843.5 million increased $136.8 million, or 19.4% during the quarter ended March 31, 2022 compared to Revenue of $706.7 million in the prior year's first quarter.

• Revenue and Segment Adjusted EBITDA from our Multiplatform Group increased $73.3 million and $29.1 million compared to the prior year's first quarter, respectively.

• Revenue and Segment Adjusted EBITDA from our Digital Audio Group increased $56.7 million and $12.5 million compared to the prior year's first quarter, respectively.

• Revenue and Segment Adjusted EBITDA from our Audio & Media Services Group increased $5.7 million and $1.0 million compared to the prior year's first quarter, respectively.

• Operating income of $12.3 million was up from an Operating loss of $76.4 million in the prior year’s first quarter.

• Net loss of $48.7 million compared to a Net loss of $242.1 million in the prior year's first quarter.

• Cash flows used for operating activities of $(52.2) million decreased from Cash flows provided by operating activities of $71.7 million in the prior year's first quarter.

• Adjusted EBITDA (1) of $145.2 million, was up $43.0 million from $102.2 million in prior year's first quarter.

• Free cash flow (2) of $(74.8) million decreased from $52.8 million in the prior year's first quarter.

• Consolidated Revenue of $954.0 million increased $92.4 million, or 10.7% during the quarter ended June 30, 2022 compared to Consolidated Revenue of $861.6 million in the prior year's second quarter.

• Revenue and Segment Adjusted EBITDA from our Multiplatform Group increased $27.5 million and $13.1 million compared to the prior year's second quarter, respectively.

• Revenue and Segment Adjusted EBITDA from our Digital Audio Group increased $54.6 million and $24.6 million compared to the prior year's second quarter, respectively.

• Revenue and Segment Adjusted EBITDA from our Audio & Media Services Group increased $9.9 million and $1.6 million compared to the prior year's second quarter, respectively.

• Operating income of $82.9 million increased $54.8 million from $28.1 million in the prior year’s second quarter.

• Net income of $15.2 million increased $47.2 million from a Net loss of $32.0 million in the prior year's second quarter.

• Cash flows provided by operating activities of $155.8 million increased from $29.1 million in the prior year's second quarter.

• Adjusted EBITDA (1) of $237.2 million, was up $52.7 million from $184.5 million in prior year's second quarter.

• Free cash flow (2) of $106.1 million increased from $(3.0) million in the prior year's second quarter.

The table below presents a summary of our historical results of operations for the periods presented:

1 unchanged sentence

Revenue $ 954,005 $ 861,605

Operating income (loss) $ 12,335 $ (76,356)

Net loss $ (48,739) $ (242,056)

Cash provided by (used for) operating activities $ (52,212) $ 71,728

Operating income 82,869 28,126

Net income (loss) 15,182 (31,960)

Cash provided by operating activities 155,801 29,129

Adjusted EBITDA (1)

2 unchanged sentences

106,148 (2,982)

(1) For a definition of Adjusted EBITDA and a reconciliation to Operating income (loss), the most closely comparable GAAP measure, and to Net loss, please see "Reconciliation of Operating Income (Loss) to Adjusted EBITDA" and "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA" in this MD&A.

(1) For a definition of Adjusted EBITDA and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Income (Loss) to Adjusted EBITDA" and "Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA" in this MD&A.

(2) For a definition of Free cash flow and a reconciliation to Cash provided by operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities to Free cash flow” in this MD&A.

Results of Operations

The tables below present the comparison of our historical results of operations for the three months ended March 31, 2022 to the three months ended March 31, 2021:

The tables below present the comparison of our historical results of operations for the three and six months ended June 30, 2022 to the three and six months ended June 30, 2021:

(In thousands) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenue $ 954,005 $ 861,605 $ 1,797,463 $ 1,568,270

9 unchanged sentences

Interest expense, net 81,494 84,887 160,713 170,008

Gain (loss) on investments, net (1,765) 191

Gain on investments, net 9,590 49,644 7,825 49,835

Equity in loss of nonconsolidated affiliates (29) (31) (58) (59)

Gain on extinguishment of debt 8,203 — 8,203 —

Other expense, net (2,175) (363) (2,445) (1,170)

Loss before income taxes (68,948) (162,121)

Income (loss) before income taxes 16,964 (7,511) (51,984) (169,632)

Income tax benefit (expense) (1,782) (24,449) 18,427 (104,384)

Net loss (48,739) (242,056)

Net income (loss) 15,182 (31,960) (33,557) (274,016)

Less amount attributable to noncontrolling interest

Net loss attributable to the Company $ (48,582) $ (241,723)

The tables below present the comparison of our revenue streams for the three months ended March 31, 2022 to the three months ended March 31, 2021:

781 326 624 (7)

Net income (loss) attributable to the Company $ 14,401 $ (32,286) $ (34,181) $ (274,009)

The tables below present the comparison of our revenue streams for the three and six months ended June 30, 2022 to the three and six months ended June 30, 2021:

(In thousands) Three Months Ended

2022 2021 Change

June 30, % Six Months Ended

2022 2021 Change 2022 2021 Change

Broadcast Radio $ 463,304 $ 451,142 2.7 % $ 879,785 $ 809,678 8.7 %

9 unchanged sentences

Revenue, total $ 954,005 $ 861,605 10.7 % $ 1,797,463 $ 1,568,270 14.6 %

Consolidated results for the three months ended March 31, 2022 compared to the consolidated results for the three months ended March 31, 2021 were as follows:

Consolidated revenue increased $136.8 million during the three months ended March 31, 2022 compared to the same period of 2021.

Consolidated results for the three and six months ended June 30, 2022 compared to the consolidated results for the three and six months ended June 30, 2021 were as follows:

Consolidated revenue increased $92.4 million during the three months ended June 30, 2022 compared to the same period of 2021.

The increase in Consolidated revenue is attributable to the continued recovery from the macroeconomic effects of COVID-19 and the continuing growth of our operating businesses.

Multiplatform Group revenue increased $73.3 million, or 14.7%, primarily resulting from strengthening demand for broadcast advertising and the return of live events compared to the first quarter of 2021.

Multiplatform Group revenue increased $27.5 million, or 4.5%, primarily resulting from strengthening demand for broadcast advertising, the return of live events and an increase in political advertising revenue as 2022 is a midterm election year.

Digital Audio Group revenue increased $54.6 million, or 27.6%, driven primarily by continuing increases in demand for digital advertising and the continued growth of podcasting.

Audio & Media Services revenue increased $5.7 million primarily due to the continued recovery from the impact of COVID-19.

Audio & Media Services revenue increased $9.9 million primarily due to the increase in political advertising revenue as 2022 is a midterm election year and the continued recovery from the impact of COVID-19.

Consolidated revenue increased $229.2 million during the six months ended June 30, 2022 compared to the same period of 2021.

The increase in Consolidated revenue is attributable to the continued recovery from the macroeconomic effects of COVID-19 and the continuing growth of our operating businesses.

Multiplatform Group revenue increased $100.7 million, primarily resulting from strengthening demand for broadcast advertising, the return of live events during the six months ended June 30, 2022 compared to the same period of 2021, and an increase in political advertising revenue as 2022 is a midterm election year.

Digital Audio Group revenue increased $111.3 million, driven primarily by continuing increases in demand for digital advertising, including continued growth in podcasting.

Audio & Media Services revenue increased $15.6 million primarily due to the continued recovery from the impact of COVID-19 and an increase in political advertising revenue as 2022 is a midterm election year.

Direct Operating Expenses

Consolidated direct operating expenses increased $37.7 million during the three months ended March 31, 2022 compared to the same period of 2021.

Consolidated direct operating expenses increased $44.9 million during the three months ended June 30, 2022 compared to the same period of 2021.

The increase in direct operating expenses was primarily driven by higher variable content costs resulting from our significant increase in revenue, including profit sharing expenses, third-party digital costs, and production costs related to the return of local and national live events.

Consolidated direct operating expenses increased $82.6 million during the six months ended June 30, 2022 compared to the same period of 2021.

Selling, General and Administrative (“SG&A”) Expenses

Consolidated SG&A expenses increased $42.0 million during the three months ended March 31, 2022 compared to the same period of 2021.

The increase in Consolidated SG&A expenses was driven primarily by higher national trade and barter expenses, including the impact of the timing of the iHeartRadio Music Awards, increased sales commission expenses as a result of higher revenue, and increased employee compensation costs related to increased workforce due to the investments in key infrastructure to support our growing digital operations.

Consolidated SG&A expenses increased $6.4 million during the three months ended June 30, 2022 compared to the same period of 2021.

The increase in Consolidated SG&A expenses was driven primarily by increased employee compensation costs related to increased workforce due to the investments in key infrastructure to support our growing digital operations, increased sales commission expenses as a result of higher revenue, and increased bad debt expense.

These increases were partially offset by lower variable bonus accruals and a decrease in national trade and barter expenses primarily related to the timing of the iHeartRadio Music Awards show.

Consolidated SG&A expenses increased $48.4 million during the six months ended June 30, 2022 compared to the same period of 2021.

The increase in SG&A expenses was driven primarily by higher employee compensation costs related to increased workforce due to the investments in key infrastructure to support our growing digital operations, increased sales commission expenses as a result of higher revenue, increased bad debt and higher trade and barter expense.

These increases were partially offset by lower variable bonus accruals.

Depreciation and Amortization

Depreciation and amortization increased $6.7 million during the three months ended March 31, 2022 compared to the same period of 2021, primarily as a result of acquired businesses and increased capital expenditures including IT and real estate optimization-related expenditures.

Depreciation and amortization decreased $17.2 million and $10.5 million during the three and six months ended June 30, 2022 compared to the same periods of 2021, primarily as a result of certain intangible assets being fully amortized, partially offset by increased capital expenditures related to IT and real estate optimization initiatives.

Impairment Charges

As part of our operating expense-savings initiatives, we have taken strategic actions to streamline our real estate footprint and related expenses, resulting in impairment charges due to the write-down of right-of-use assets and related fixed assets, including leasehold improvements.

During the three months ended March 31, 2022 and 2021, we recognized non-cash impairment charges of $1.3 million and $37.7 million related to certain of our right-of-use assets and leasehold improvements as a result of these cost-savings initiatives.

assets, including leasehold improvements.

During the six months ended June 30, 2022 and 2021, we recognized non-cash impairment charges of $1.6 million and $37.7 million, respectively, as a result of these cost-savings initiatives.

Other Operating Expense, Net

Other operating expense, net of $0.9 million and $2.8 million for the three months ended March 31, 2022 and 2021, respectively, relate primarily to net losses recognized on asset disposals in connection with our real estate optimization initiatives.

Other operating expense, net of $15.7 million and $12.4 million for the three months ended June 30, 2022 and 2021, respectively, and Other operating expense, net of $16.5 million and $15.2 million for the six months ended June 30, 2022 and 2021, respectively, relate primarily to non-cash net book losses recognized on asset disposals in connection with our real estate optimization initiatives.

Interest Expense

Interest expense decreased $5.9 million during the three months ended March 31, 2022 compared to the same period of 2021, primarily as a result of the interest rate reduction of our incremental term loan facility as amended in July 2021 and the $250.0 million voluntary repayment made in July 2021 on our term loan credit facilities in connection with the repricing transaction.

Gain (Loss) on Investments, Net

During the three months ended March 31, 2022, we recognized a loss on investments, net of $1.8 million in connection with declines in the value of our investments.

During the three months ended March 31, 2021, we recognized a gain of $0.2 million.

Other Expense, Net

Other expense, net was $0.3 million and $0.8 million for the three months ended March 31, 2022 and 2021, respectively.

Interest expense decreased $3.4 million and $9.3 million, respectively, during the three and six months ended June 30, 2022 compared to the same periods of 2021, primarily as a result of the interest rate reduction of our incremental term loan facility as amended in July 2021 and the $250.0 million voluntary repayment made in July 2021 on our term loan credit facilities in connection with the repricing transaction.

Gain on Investments, Net

During the three and six months ended June 30, 2022, we recognized a gain on investments, net of $9.6 million and $7.8 million, respectively, in connection with increases in the value of our investments.

During the three and six months ended June 30, 2021, we recognized a gain of $49.6 million and $49.8 million, respectively, primarily related to the sale of our investment in the San Antonio Spurs.

Gain on Extinguishment of Debt

During the three and six months ended June 30, 2022, we recognized a gain on extinguishment of debt of $8.2 million in connection with the open market repurchases of $113.5 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $105.3 million in cash.

Income Tax Benefit (Expense)

The effective tax rate for the Company for the three months ended March 31, 2022 was 29.3%.

The effective tax rate for the Company for the three and six months ended June 30, 2022 was 10.5% and 35.4%, respectively.

The effective tax rate was primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards and net operating loss carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

Net Loss Attributable to the Company

Net loss attributable to the Company decreased $193.1 million to Net loss attributable to the Company of $48.6 million during the three months ended March 31, 2022 compared to a Net loss attributable to the Company of $241.7 million during the three months ended March 31, 2021, primarily as a result of the increase in revenue from the continuing recovery from the macroeconomic effects of the COVID-19 pandemic and the continuing growth of our operating businesses.

Net Income (Loss) Attributable to the Company

Net income attributable to the Company of $14.4 million during the three months ended June 30, 2022 increased $46.7 million compared to a Net loss attributable to the Company of $32.3 million during the three months ended June 30, 2021, primarily as a result of the increase in revenue from the continuing recovery from the macroeconomic effects of the COVID-19 pandemic and the continuing growth of our operating businesses.

Net loss attributable to the Company decreased $239.8 million to $34.2 million during the six months ended June 30, 2022 compared to Net loss attributable to the Company of $274.0 million during the six months ended June 30, 2021, primarily as a result of the increase in revenue from the continuing recovery from the macroeconomic effects of the COVID-19 pandemic and the continuing growth of our operating businesses.

Multiplatform Group Results

(In thousands) Three Months Ended

2022 2021 Change

June 30, % Six Months Ended

2022 2021 Change 2022 2021 Change

Revenue $ 633,300 $ 605,850 4.5 % $ 1,204,460 $ 1,103,747 9.1 %

4 unchanged sentences

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Multiplatform Group increased $73.3 million compared to the prior year, primarily as a result of the continued recovery from the impact of the COVID-19 pandemic.

Broadcast revenue grew $57.9 million, or 16.2%, year-over-year, driven by higher spot revenue as well as higher trade and barter revenue including the impact of the timing of the iHeartRadio Music Awards Show, while Networks grew $2.5 million, or 2.1%, year-over-year.

Revenue from our Multiplatform Group increased $27.5 million compared to the prior year, primarily as a result of the continued recovery from the impact of COVID-19.

Broadcast revenue grew $12.2 million, or 2.7%, year-over-year, driven by higher spot revenue and political advertising revenue as 2022 is a midterm election year, partially offset by lower trade and barter revenue due to the impact of the timing of the iHeartRadio Music Awards show, while Networks grew $3.9 million, or 3.2%, year-over-year.

Revenue from Sponsorship and Events increased by $9.5 million, or 33.2%, year-over-year, primarily as a result of the return of live events.

Operating expenses increased $44.1 million, driven primarily by higher trade and barter expense and event costs in connection with the return of live events including the impact of the timing of the iHeartRadio Music Awards Show, as well as higher sales commissions in connection with the increase in revenue.

The increase was also impacted by the employee retention credit recognized in the first quarter of 2021 related to the CARES Act.

Operating expenses increased $14.4 million, driven primarily by event costs related to the return of live events including the iHeart Country Festival, higher sales commissions in connection with the increase in revenue, and an increase in bad debt expense due to a credit in Q2 2021 related to the recovery of COVID-19 reserves recorded in 2020.

These increases were partially offset by a decrease in trade and barter expense due to the impact of the timing of the iHeartRadio Music Awards show and lower variable bonus accruals based on financial performance.

Revenue from our Multiplatform Group increased $100.7 million compared to the prior year, primarily as a result of the continued recovery from the impact of COVID-19.

Broadcast revenue increased $70.1 million, or 8.7%, year-over-year, while Networks grew $6.4 million, or 2.7%, year-over-year.

Revenue from Sponsorship and Events increased by $20.7 million, or 40.6%, year-over-year, primarily as a result of the return of live events.

Operating expenses increased $58.5 million, driven primarily by higher event costs in connection with the return of live events including the iHeart Country Festival, as well as higher sales commission, talent and profit share costs, all driven by higher revenue, and an increase in bad debt expense due to a credit in 2021 related to the recovery of COVID-19 reserves recorded in 2020.

These increases were partially offset by lower rent and utilities in connection with our real estate optimization initiatives as well as lower variable bonus accruals based on financial performance.

Digital Audio Group Results

(In thousands) Three Months Ended

2022 2021 Change

June 30, % Six Months Ended

2022 2021 Change 2022 2021 Change

Revenue $ 252,561 $ 197,930 27.6 % $ 466,780 $ 355,483 31.3 %

6 unchanged sentences

Digital Audio Group revenue increased as a result of general increased demand for digital advertising and the growing popularity of podcasting.

Operating expenses increased $44.2 million in connection with our Digital Audio Group’s significant revenue growth, including the impact of higher variable sales commissions, content and profit share expenses due to higher revenue and the development of new podcasts.

In addition, operating expenses increased due to our investments in increased headcount and key infrastructure to support our growing digital operations.

Operating expenses increased $30.0 million due to higher employee compensation costs related to increased workforce due to the investments in key infrastructure to support our growing digital operations and higher variable content costs, third-party digital costs and profit share expenses due to higher revenue and the development of new podcasts.

Revenue from our Digital Audio Group increased $111.3 million compared to the prior year, including growth from Digital, excluding Podcast revenue, which grew $48.9 million, or 18.5%, year-over-year, driven by increased demand for digital advertising.

Podcast revenue also increased by $62.4 million, or 68.0%, year-over-year, driven by higher revenues from the development of new podcasts and growth from existing podcasts.

Digital Audio Group revenues increased as a result of general increased demand for digital advertising, the growing popularity of podcasting, the continued addition of premium content to our industry-leading podcast business and our improving ability to monetize our digital audiences and inventory utilizing our sales force and advertising technology platforms, partially driven by investments in the digital space.

Operating expenses increased $74.2 million in connection with our Digital Audio Group’s significant revenue growth, including the impact of variable employee compensation expense, talent costs and third-party digital costs due to higher revenue, as well as increased content and production costs primarily resulting from the development of new podcasts.

In addition, operating expenses increased due to investments in key infrastructure to support our growing digital operations.

Audio & Media Services Group Results

(In thousands) Three Months Ended

2022 2021 Change

June 30, % Six Months Ended

2022 2021 Change 2022 2021 Change

Revenue $ 71,065 $ 61,175 16.2 % $ 131,922 $ 116,312 13.4 %

4 unchanged sentences

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Audio & Media Services Group increased $5.7 million compared to the comparative period in the prior year due to the continued recovery from the impact of the COVID-19 pandemic.

Operating expenses increased $4.7 million primarily as a result of higher variable employee compensation and bad debt expense.

Revenue from our Audio & Media Services Group increased $9.9 million compared to the comparative period in the prior year due to an increase in political advertising revenue as 2022 is a midterm election year and the continued recovery from the impact of COVID-19.

Operating expenses increased $8.3 million primarily as a result of higher employee compensation related to seasonal (political) staffing, higher merchandising costs and a new purchase agreement with third-parties for specific inventory spots.

Revenue from our Audio & Media Services Group increased $15.6 million compared to the comparative period in the prior year due to an increase in political advertising revenue as 2022 is a midterm election year and the continued recovery from the impact of COVID-19.

Operating expenses increased $13.0 million primarily as a result of higher employee compensation related to seasonal (political) staffing, higher merchandising costs and a new purchase agreement with third-parties for specific inventory spots.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(In thousands) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Operating income (loss) $ 82,869 $ 28,126 $ 95,204 $ (48,230)

8 unchanged sentences

(In thousands) Three Months Ended

Net loss $ (48,739) $ (242,056)

June 30, Six Months Ended

2022 2021 2022 2021

Net income (loss) $ 15,182 $ (31,960) $ (33,557) $ (274,016)

Income tax (benefit) expense 1,782 24,449 (18,427) 104,384

2 unchanged sentences

EBITDA $ 209,246 $ 205,321 $ 333,568 $ 235,684

Loss (gain) on investments, net 1,765 (191)

Gain on investments, net (9,590) (49,644) (7,825) (49,835)

Gain on extinguishment of debt (8,203) — (8,203) —

Other expense, net 2,175 363 2,445 1,170

8 unchanged sentences

Depreciation and amortization, Impairment charges and Other operating expense, net.

Alternatively, Adjusted EBITDA is calculated as loss, adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Loss (gain) on investments, net, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense, net, Share-based compensation expense, and restructuring expenses.

Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Loss (gain) on investments, net, Gain on extinguishment of debt, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense, net, Share-based compensation expense, and restructuring expenses.

Restructuring expenses primarily include expenses incurred in connection with cost-saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle.

4 unchanged sentences

We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management.

We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates.

believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates.

In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry.

2 unchanged sentences

Because it excludes certain financial information compared with operating income (loss) and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliation of Cash Provided by (Used for) Operating Activities to Free Cash Flow

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow

(In thousands) Three Months Ended

Cash provided by (used for) operating activities $ (52,212) $ 71,728

June 30, Six Months Ended

2022 2021 2022 2021

Cash provided by operating activities $ 155,801 $ 29,129 $ 103,589 $ 100,857

Purchases of property, plant and equipment (49,653) (32,111) (72,210) (51,061)

10 unchanged sentences

Pursuant to our 2021 Plan, we will grant restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

Share-based compensation expenses are recorded in SG&A expenses and were $5.5 million and $5.7 million for the three months ended March 31, 2022 and 2021, respectively.

On March 28, 2022, we issued performance-based restricted stock units (“Performance RSUs”) to certain key employees.

Such Performance RSUs vest upon the achievement of certain total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance.

As of March 31, 2022, there was $34.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

Share-based compensation expenses are recorded in SG&A expenses and were $8.6 million and $5.9 million for the three months ended June 30, 2022 and 2021, respectively, and $14.1 million and $11.6 million for the six months ended June 30, 2022 and 2021, respectively.

On March 28, 2022, we issued performance-based restricted stock units ("Q1 2022 Performance RSUs") to certain key employees.

The Q1 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance.

On May 9, 2022, we issued performance-based restricted stock units ("Q2 2022 Performance RSUs") and restricted stock units ("2022 RSUs") to certain key employees.

The Q2 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service.

The Q2 2022 Performance RSUs are measured over a 3-year period from the date of issuance.

The 2022 RSUs vest upon continued service.

The 2022 RSUs are being recognized ratably over a 3-year period from the date of issuance.

As of June 30, 2022, there was $62.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 3.8 years.

In addition, as of March 31, 2022, there was $12.5 million of unrecognized compensation costs related to unvested share-based compensation arrangements that will vest based on performance and service conditions.

This cost will be recognized over a 50-month period from the date of issuance.

In addition, as of June 30, 2022, there were unrecognized compensation costs of $11.7 million of Q1 2022 Performance RSUs and $14.7 million of Q2 2022 Performance RSUs related to unvested share-based compensation arrangements that will vest based on performance and service conditions.

These costs will be recognized over a 50-month period from the date of issuance for the Q1 2022 Performance RSUs and over a 3-year period from the date of issuance for the Q2 2022 Performance RSUs.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion highlights cash flow activities during the periods presented:

(In thousands) Three Months Ended

(In thousands) Six Months Ended

Cash provided by (used for):

6 unchanged sentences

Operating Activities

Cash provided by operating activities decreased from $71.7 million in the three months ended March 31, 2021 to cash used for operating activities of $52.2 million in the three months ended March 31, 2022 primarily due to an increase in the payment of bonuses and commissions in the first quarter of 2022.

Cash provided by operating activities of $103.6 million during the six months ended June 30, 2022 increased from $100.9 million during the six months ended June 30, 2021 primarily due to an increase in cash flows from operations as the Company's businesses continue to recover from the impact of COVID-19, mostly offset by an increase in the payment of bonuses and commissions in the first quarter of 2022.

The Company did not pay bonuses to the vast majority of employees in the first quarter of 2021.

Investing Activities

Cash used for investing activities of $19.7 million during the three months ended March 31, 2022 primarily reflects $22.6 million in cash used for capital expenditures.

Cash used for investing activities of $49.7 million during the six months ended June 30, 2022 primarily reflects $72.2 million in cash used for capital expenditures.

We spent $48.7 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $11.1 million in our Digital Audio Group segment primarily related to IT infrastructure, $4.1 million in our Audio & Media Services Group segment, primarily related to software, and $8.3 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities of $249.3 million during the three months ended March 31, 2021 primarily reflects the net cash payment made to acquire Triton Digital for $228.4 million.

Cash used for investing activities was partially offset by proceeds from the sale of certain properties related to our real estate optimization initiatives.

Cash used for investing activities of $218.3 million during the six months ended June 30, 2021 primarily reflects the net cash payment made to acquire Triton Digital for $228.5 million.

In addition, $51.1 million in cash was used for capital expenditures.

We spent $31.5 million for capital expenditures in our Multiplatform Group segment and $11.7 million for capital expenditures in our Digital Audio Group segment primarily related to IT infrastructure, $2.2 million in our Audio & Media Services Group segment, primarily related to software and $5.7 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities was partially offset by cash provided by investing activities related to proceeds received of $50.8 million from the sale of our investment in the San Antonio Spurs.

Financing Activities

Cash used for financing activities totaled $0.5 million during the three months ended March 31, 2022.

Due to the $250.0 million voluntary repayment of our term loan credit facilities in the third quarter of 2021, our Term Loan Facility no longer requires quarterly principal payments.

Cash used for financing activities of $13.8 million during the three months ended March 31, 2021 primarily resulted from required quarterly principal payments made on the Term Loan Facility and repayment of a subsidiary note payable.

Cash used for financing activities totaled $110.7 million during the six months ended June 30, 2022 primarily due to the open market repurchases of $113.5 million aggregate principal amount of our 8.375% Senior Unsecured Notes due 2027 for $105.3 million in cash, reflecting a discounted purchase price from the face value of the notes.

Cash used for financing activities of $19.9 million during the six months ended June 30, 2021 primarily resulted from required quarterly principal payments made on the Term Loan Facility and repayment of a subsidiary note payable.

Sources of Liquidity and Anticipated Cash Requirements

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $279.7 million as of March 31, 2022, cash flow from operations and borrowing capacity under our $450.0 million ABL Facility.

As of March 31, 2022, iHeartCommunications had no amounts outstanding under the ABL Facility, a borrowing base of $443.6 million and $26.9 million in outstanding letters of credit, resulting in $416.7 million of borrowing base availability.

Together with our cash balance of $279.7 million as of March 31, 2022 and our borrowing capacity under the ABL Facility, our total available liquidity 1 was approximately $696 million.

We continue to evaluate the ongoing impact of COVID-19 on our business.

The challenges that COVID-19 has created for advertisers and consumers had an adverse impact on our revenue for the three months ended March 31, 2021.

For the three months ended March 31, 2022, our revenues increased significantly compared to the three months ended March 31, 2021 due to recovery from the macroeconomic effects of COVID-19, among other factors discussed in the Results of Operations section of the MD&A.

We believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $294.8 million as of June 30, 2022, cash flow from operations and borrowing capacity under our $450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "New ABL Facility") which refinanced and replaced in its entirety the existing ABL Facility (the "Existing ABL Facility").

As of June 30, 2022, iHeartCommunications had no amounts outstanding under the ABL Facility, a facility size of $450.0 million and $29.4 million in outstanding letters of credit, resulting in $420.6 million of borrowing base availability.

Together with our cash balance of $294.8 million as of June 30, 2022 and our borrowing capacity under the New ABL Facility, our total available liquidity 1 was approximately $715 million.

We regularly evaluate economic conditions including the ongoing impact of COVID-19 on our business.

For the six months ended June 30, 2022, our revenues increased compared to the six months ended June 30, 2021 due to recovery from the macroeconomic effects of COVID-19, among other factors discussed in the Results of Operations section of the MD&A.

Although we cannot predict future economic conditions or the impact of any potential contraction of economic growth on our business, we believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.

We are a party to many contractual obligations involving commitments to make payments to third parties.

These obligations impact our short-term and long-term liquidity and capital resource needs.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of March 31, 2022, while others are considered future commitments.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of June 30, 2022, while others are considered future commitments.

Our contractual obligations primarily consist of long-term debt and related interest payments, commitments under non-cancelable operating lease agreements, and employment and talent contracts.

In addition to our contractual obligations, we expect that our primary anticipated uses of liquidity in 2022 will be to fund our working capital, make interest and tax payments, fund capital expenditures, pursue certain strategic opportunities and maintain operations.

Assuming the current level of borrowings and interest rates in effect at March 31, 2022, we anticipate that we will have approximately $241 million of cash interest payments in the remainder of 2022.

We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations for at least the next twelve months.

In addition, none of our long-term debt includes maintenance covenants that could trigger early repayment.

We appreciate the challenges posed by the COVID-19 pandemic, however, we remain confident in our business, our employees and our strategy.

Further, we believe our available liquidity will allow us to fund capital expenditures and other obligations and make interest payments on our long-term debt.

Assuming the current level of borrowings and interest rates in effect at June 30, 2022, we anticipate that we will have approximately $168 million of cash interest payments in the remainder of 2022.

We believe that our cash balance, our cash flow from operations and availability under our New ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations for at least the next twelve months.

We acknowledge the challenges posed by the COVID-19 pandemic and any potential slow down in economic activity, rising inflation and interest rates, and other macroeconomic trends, however, we remain confident in our business, our employees and our strategy.

Further, we believe our available liquidity will allow us to fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next twelve months.

If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities;

however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.

We frequently evaluate strategic opportunities, and we expect from time to time to pursue acquisitions or dispose of certain businesses, which may or may not be material.

1 Total available liquidity is defined as cash and cash equivalents plus available borrowings under the ABL Facility.

We frequently evaluate strategic opportunities.

During the three months ended June 30, 2022, we conducted open market repurchases of $113.5 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $105.3 million in cash, reflecting a discounted purchase price from the face value of the notes.

We expect from time to time to pursue other strategic opportunities such as acquisitions or disposals of certain businesses, which may or may not be material.

1 Total available liquidity is defined as cash and cash equivalents plus available borrowings under the New ABL Facility.

We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

Summary Debt Capital Structure

As of March 31, 2022 and December 31, 2021, we had the following debt outstanding, net of cash and cash equivalents:

(In thousands) March 31, 2022 December 31, 2021

As of June 30, 2022 and December 31, 2021, we had the following debt outstanding, net of cash and cash equivalents:

(In thousands) June 30, 2022 December 31, 2021

Term Loan Facility due 2026 $ 1,864,032 $ 1,864,032

1 unchanged sentence

Asset-based Revolving Credit Facility due 2023 1

Asset-based Revolving Credit Facility due 2027 1

6.375% Senior Secured Notes due 2026 800,000 800,000

4 unchanged sentences

8.375% Senior Unsecured Notes due 2027 2

1,336,450 1,450,000

Other Subsidiary Debt 69 90

4 unchanged sentences

$ 5,332,588 $ 5,386,739

1 On May 17, 2022, we entered into a $450.0 million New ABL Facility, maturing in 2027, which refinanced and replaced in its entirety the Existing ABL Facility.

For more information about the New ABL Facility, refer to Note 5, Long-Term Debt .

2 During the three months ended June 30, 2022, we repurchased $113.5 million aggregate principal amount of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 for $105.3 million in cash, excluding accrued interest, via open market transactions.

The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $8.2 million.

Our New ABL Facility contains a springing fixed charge coverage ratio that is effective if certain triggering events related to borrowing capacity under the New ABL Facility occur.

As of June 30, 2022, no triggering event had occurred and, as a result, we were not required to comply with any fixed charge coverage ratio as of or for the periods ended June 30, 2022.

Other than our New ABL Facility, none of our long-term debt includes maintenance covenants that could trigger early repayment.

As of June 30, 2022, we were in compliance with all covenants related to our debt agreements in all material respects.

For additional information regarding our debt, refer to Note 5, Long-Term Debt .

Our subsidiaries have from time to time repurchased certain debt obligations of iHeartCommunications, and may in the future, as part of various financing and investment strategies, purchase additional outstanding indebtedness of iHeartCommunications or its subsidiaries or our outstanding equity securities, in tender offers, open market purchases, privately negotiated transactions or otherwise.

We or our subsidiaries may also sell certain assets, securities, or properties.

These purchases or sales, if any, could have a material positive or negative impact on our liquidity available to repay outstanding debt obligations or on our consolidated results of operations.

These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in iHeartCommunications’ debt agreements.

These transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material.

Supplemental Financial Information under Debt Agreements

Pursuant to iHeartCommunications' material debt agreements, Capital I, the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand.

Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three months ended March 31, 2022, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.

Further, as of March 31, 2022, we were in compliance with all covenants related to our debt agreements in all material respects.

Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three and six months ended June 30, 2022, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.

Further, as of June 30, 2022, we were in compliance with all covenants related to our debt agreements in all material respects.

Commitments, Contingencies and Guarantees

17 unchanged sentences

A significant amount of our long-term debt bears interest at variable rates.

Additionally, certain assumptions used within management's estimates are impacted by changes in interest rates.

Accordingly, our earnings will be affected by changes in interest rates.

As of March 31, 2022, approximately 39% of our aggregate principal amount of long-term debt bore interest at floating rates.

Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the three months ended March 31, 2022 would have changed by $0.3 million.

As of June 30, 2022, approximately 40% of our aggregate principal amount of long-term debt bore interest at floating rates.

Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the six months ended June 30, 2022 would have changed by $2.5 million.

In the event of an adverse change in interest rates, management may take actions to mitigate our exposure.

14 unchanged sentences

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf.

This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, the anticipated impacts of and recovery from the COVID-19 pandemic on our business, financial position and results of operations, our expected costs, savings and timing of our modernization initiatives and other capital and operating expense reduction initiatives, expected interest rate savings from our amendment to and $250 million voluntary prepayment on our Term Loan credit facilities, our business plans, strategies and initiatives, benefits of acquisitions, our expectations about certain markets, expected cash interest payments and our anticipated financial performance and liquidity.

This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, the anticipated impacts of and recovery from the COVID-19 pandemic on our business, financial position and results of operations, economic trends including inflation and potential recessionary indicators, our expected costs, savings and timing of our modernization initiatives and other capital and operating expense reduction initiatives, debt repurchases, our business plans, strategies and initiatives, benefits of acquisitions, our expectations about certain markets and businesses, expected cash interest payments and our anticipated financial performance and liquidity.

Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

19 unchanged sentences

• regulations impacting our business and the ownership of our securities;

• certain other factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as updated by “Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, and other filings with the Securities and Exchange Commission (“SEC”).

• certain other factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as updated by other filings with the Securities and Exchange Commission (“SEC”).

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis