cmls-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38108

Cumulus Media Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

82-5134717

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

3280 Peachtree Road,

NW Suite 2200

Atlanta,

30305

(Address of Principal Executive Offices)

(ZIP Code)

(404) 949-0700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0000001 per share	CMLS	Nasdaq Global Market

Table of Contents

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

Accelerated Filer

☑

Non-accelerated Filer

Smaller Reporting Company

☑

Emerging Growth Company

☐

If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ¨

As of April 29, 2021, the registrant had 20,445,622 outstanding shares of common stock consisting of: (i) 18,361,871 shares of Class A common stock; (ii) 2,083,751 shares of Class B common stock, and no warrants issued and outstanding. In addition, the registrant had 22,154 Series 1 warrants authorized to be issued.

Table of Contents

CUMULUS MEDIA INC.

INDEX


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020			3
Condensed Consolidated Statements of Operations For the Three Months Ended March 31, 2021 and 2020			4
Condensed Consolidated Statements of Stockholders’ Equity For the Three Months Ended March 31, 2021 and 2020			5
Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2021 and 2020			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			15
Item 4. Controls and Procedures			22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			24


Item 6. Exhibits			24


Signatures			24

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



Dollars in thousands (except for share data)	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	293,806	$	271,761

Accounts receivable, less allowance for doubtful accounts of $5,820 and $6,745 at March 31, 2021 and December 31, 2020, respectively	164,122		201,275
Trade receivable	2,633		1,986

Prepaid expenses and other current assets	34,095		27,942
Total current assets	494,656		502,964
Property and equipment, net	203,964		208,692
Operating lease right-of-use assets	154,214		157,568
Broadcast licenses	824,844		825,590
Other intangible assets, net	139,446		144,387
Deferred income tax assets	12,498		7,779
Other assets	12,646		12,758
Total assets	$	1,842,268	$	1,859,738
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	102,086	$	94,128
Current portion of operating lease liabilities	27,987		28,121
Trade payable	1,426		1,537

Current portion of term loan due 2026	5,250		5,250

Total current liabilities	136,749		129,036
2020 revolving credit facility	60,000		60,000
Term loan due 2026, net of debt issuance costs of $3,684 and $3,850 at March 31, 2021 and December 31, 2020, respectively	459,165		460,311
6.75% senior notes, net of debt issuance costs of $5,280 and $5,486 at March 31, 2021 and December 31, 2020, respectively	447,556		447,350
Operating lease liabilities	126,579		129,273
Financing liabilities, net	220,729		222,802
Other liabilities	15,074		13,375

Total liabilities	1,465,852		1,462,147
Commitments and contingencies (Note 9)
Stockholders’ equity:
Class A common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 18,535,604 and 18,135,956 shares issued; 18,327,716 and 17,961,734 shares outstanding at March 31, 2021 and December 31, 2020, respectively	—		—
Convertible Class B common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 2,117,906 and 2,416,253 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	—		—
Treasury stock, at cost, 207,888 and 174,222 shares at March 31, 2021 and December 31, 2020, respectively	(2,729)		(2,414)
Additional paid-in-capital	338,099		337,042
Retained earnings	41,046		62,963
Total stockholders’ equity	376,416		397,591
Total liabilities and stockholders’ equity	$	1,842,268	$	1,859,738

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


Dollars in thousands (except for share and per share data)	Three Months Ended
	March 31, 2021		March 31, 2020
Net revenue	$	201,728	$	227,914
Operating expenses:
Content costs	90,148		88,566
Selling, general and administrative expenses	90,098		103,627
Depreciation and amortization	13,410		12,790
Local marketing agreement fees	496		1,047
Corporate expenses	16,438		11,809
(Gain) loss on sale or disposal of assets or stations	(283)		1,816


Total operating expenses	210,307		219,655
Operating (loss) income	(8,579)		8,259
Non-operating expense:
Interest expense	(17,549)		(17,159)


Other expense, net	(138)		—
Total non-operating expense, net	(17,687)		(17,159)
Loss before income taxes	(26,266)		(8,900)
Income tax benefit	4,349		1,549
Net loss	$	(21,917)	$	(7,351)
Basic and diluted loss per common share (see Note 8, "Loss Per Share"):
Basic: Loss per share	$	(1.07)	$	(0.36)
Diluted: Loss per share	$	(1.07)	$	(0.36)


Weighted average basic common shares outstanding	20,419,450		20,225,074
Weighted average diluted common shares outstanding	20,419,450		20,225,074

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


For the three months ended March 31, 2021 and 2020
Dollars in thousands	Class A Common Stock			Class B Common Stock			Treasury Stock
	Number of Shares	Par Value		Number of Shares	Par Value			Number of Shares	Value		Additional Paid-In Capital		Retained Earnings		Total
Balance at December 31, 2020	17,961,734	$	—	2,416,253	$	—		174,222	$	(2,414)	$	337,042	$	62,963	$	397,591
Net loss	—	—		—	—			—	—		—		(21,917)		(21,917)
Shares returned in lieu of tax payments	—	—		—	—			33,666	(315)		—		—		(315)
Conversion of Class B common stock	298,347	—		(298,347)	—			—	—		—		—		—
Exercise of warrants	—	—		—	—			—	—		—		—		—
Issuance of common stock	67,635	—		—	—			—	—		—		—		—
Stock based compensation expense	—	—		—	—			—	—		1,057		—		1,057
Balance at March 31, 2021	18,327,716	$	—	2,117,906	$	—		207,888	$	(2,729)	$	338,099	$	41,046	$	376,416



















Balance at December 31, 2019	15,681,439	—		1,926,848	—			68,658	(1,171)		333,705		122,682		455,216
Net loss	—	—		—	—			—	—		—		(7,351)		(7,351)
Shares returned in lieu of tax payments	—	—		—	—			75,493	(1,072)		—		—		(1,072)
Conversion of Class B common stock	38,563	—		(38,563)	—			—	—		—		—		—
Exercise of warrants	121,114	—		—	—			—	—		—		—		—
Issuance of common stock	112,569	—		—	—			—	—		—		—		—
Stock based compensation expense	—	—		—	—			—	—		719		—		719
Balance at March 31, 2020	15,953,685	$	—	1,888,285	$	—		144,151	$	(2,243)	$	334,424	$	115,331	$	447,512

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Dollars in thousands	Three Months Ended
	March 31, 2021		March 31, 2020
Cash flows from operating activities:
Net loss	$	(21,917)	$	(7,351)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,410		12,790
Amortization of right of use assets	4,835		2,216
Amortization and write-off of debt issuance costs	494		1,103
Provision for doubtful accounts	(1,078)		1,093
(Gain) loss on sale or disposal of assets or stations	(283)		1,816




Deferred income taxes	(4,719)		5,561
Stock-based compensation expense	1,057		719
Non-cash interest expense on financing liabilities	996		193
Non-cash imputed rental income	(1,109)		—

Changes in assets and liabilities (excluding acquisitions and dispositions):
Accounts receivable	38,231		37,083
Trade receivable	(647)		(989)
Prepaid expenses and other current assets	(6,094)		(11,732)
Operating leases, net	(4,511)		6,623

Other assets	(118)		(3,510)
Accounts payable and accrued expenses	7,416		(19,822)
Trade payable	(111)		124
Other liabilities	94		(1,701)
Net cash provided by operating activities	25,946		24,216
Cash flows from investing activities:
Proceeds from sale of assets or stations	—		12,000

Capital expenditures	(2,890)		(3,108)
Net cash (used in) provided by investing activities	(2,890)		8,892
Cash flows from financing activities:
Repayment of borrowings under term loan	(1,313)		(1,313)



Proceeds from PPP loans	1,681		—
Borrowings under the 2020 revolving credit facility	—		60,000
Financing costs	—		(431)
Shares returned in lieu of tax payments	(315)		(1,072)


Repayments of financing liabilities	(989)		(88)
Repayments of finance lease obligations	(75)		(88)
Net cash (used in) provided by financing activities	(1,011)		57,008
Increase in cash and cash equivalents and restricted cash	22,045		90,116
Cash and cash equivalents and restricted cash at beginning of period	271,761		17,007
Cash and cash equivalents and restricted cash at end of period	$	293,806	$	107,123

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of Business, Interim Financial Data and Basis of Presentation

Cumulus Media Inc. (and its consolidated subsidiaries, except as the context may otherwise require, "CUMULUS MEDIA," "we," "us," "our," or the "Company") is a Delaware corporation, organized in 2018, and successor to a Delaware corporation with the same name that had been organized in 2002.

Nature of Business

CUMULUS MEDIA is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month - wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 415 owned-and-operated stations across 86 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, CNN, the AP, the Academy of Country Music Awards, and many other world-class partners across nearly 7,300 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with personal connections, local impact and national reach through on-air and on-demand digital, mobile, social, and voice-activated platforms, as well as integrated digital marketing services, powerful influencers, full-service audio solutions, industry-leading research and insights, and live event experiences. CUMULUS MEDIA is the only audio media company to provide marketers with local and national advertising performance guarantees. For more information visit www.cumulusmedia.com.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company has one reportable segment and presents the comparative periods on a consolidated basis to reflect the one reportable segment. In the opinion of management, the Company's unaudited Condensed Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented herein. The accompanying condensed consolidated balance sheet as of December 31, 2020, was derived from the Company’s audited financial statements as of December 31, 2020, and our accompanying unaudited Condensed Consolidated Financial Statements as of March 31, 2021 and for the periods ended March 31, 2021 and 2020, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The financial condition and results for the interim periods are not necessarily indicative of those that may be expected for any future interim period or for the full year. The unaudited Condensed Consolidated Financial Statements herein should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including significant estimates related to bad debts, intangible assets, income taxes, stock-based compensation, contingencies, litigation, valuation assumptions for impairment analysis, certain expense accruals, leases and, if applicable, purchase price allocations. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. We assessed these aforementioned estimates and judgments utilizing information reasonably available to us and considering the unknown future impacts of the novel coronavirus disease ("COVID-19") pandemic. The business and economic uncertainty resulting from the COVID-19 pandemic has made such estimates and assumptions more difficult to calculate. While there was not a material impact to our key estimates as of and for the quarter ended March 31, 2021, our estimates may change based on the magnitude and duration of COVID-19, as well as other factors. Actual amounts and results may differ materially from these estimates.

Comprehensive Loss

Comprehensive loss includes net loss and certain items that are excluded from net loss and recorded as a separate component of stockholders' equity. During the three months ended March 31, 2021 and 2020, the Company had no items of other comprehensive loss and, therefore, comprehensive loss does not differ from reported net loss.

Table of Contents

Assets Held for Sale

Long-lived assets to be sold are classified as held for sale in the period in which they meet all the criteria for the disposal of long-lived assets. The Company measures assets held for sale at the lower of their carrying amount or fair value less cost to sell. As of March 31, 2021 and December 31, 2020, the amount of assets held for sale was not material.

Supplemental Cash Flow Information

The following summarizes supplemental cash flow information to be read in conjunction with the unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020:


	Three Months Ended
	March 31, 2021		March 31, 2020
Supplemental disclosures of cash flow information:
Interest paid	$	8,610	$	7,192
Income taxes paid (refunded)	9		(122)
Supplemental disclosures of non-cash flow information:
Trade revenue	$	10,293	$	9,098
Trade expense	9,534		8,081
Noncash principal change in financing liabilities	(16)		203
Reconciliation of cash and cash equivalents and restricted cash to the unaudited Condensed Consolidated Balance Sheet:
Cash and cash equivalents	$	293,806	$	105,728
Restricted cash	—		1,395
Total cash and cash equivalents and restricted cash	$	293,806	$	107,123

Recent Accounting Standards Updates

ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"). In June 2016, the FASB issued ASU 2016-13 which requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of "probable" has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset's origination for as many as five years.

Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard was effective for public business entities, excluding Smaller Reporting Companies ("SRC"), for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The standard is effective for SRCs for fiscal years beginning after December 15, 2022. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its unaudited Condensed Consolidated Financial Statements.

2. Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following table presents revenues disaggregated by revenue source (dollars in thousands):



	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Advertising revenues	$	196,436	$	224,540
Non-advertising revenues	5,292		3,374
Total revenue	$	201,728	$	227,914

Table of Contents

Advertising Revenues

Substantially all of the Company's revenues are from advertising, primarily generated through (i) the sale of broadcast radio advertising time and advertising and promotional opportunities across digital audio networks to local, regional, national and network advertisers and (ii) remote/event revenue. The Company considers each advertising element a separate contract, and thus a separate performance obligation, as a result of both the customer's and the Company's respective ability to stop transferring promised goods or services during the contract term without notice or penalty. Thus, revenue associated with these contracts is recognized at the time advertising or other services, for example hosting an event, are delivered.

The Company's payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is generally not significant. There are no further obligations for returns, refunds or similar obligations related to the contracts. The Company records deferred revenues when cash payments including amounts which are refundable are received in advance of performance.

Non-Advertising Revenues

Non-advertising revenue does not constitute a material portion of the Company's revenue and primarily consists of licensing content, and to a lesser degree, imputed tower rental income and satellite rental income.

Trade and Barter Transactions

The Company provides commercial advertising inventory in exchange for goods and services used principally for promotional, sales, programming and other business activities. Programming barter revenue is derived from an exchange of programming content, to be broadcast on the Company's airwaves, for commercial advertising inventory, usually in the form of commercial placements inside the show exchanged. Trade and barter value is based upon management's estimate of the fair value of the products, supplies and services received. Trade and barter revenue is recorded when commercial spots are aired, in the same pattern as the Company's normal cash spot revenue is recognized.

Trade and barter expense is recorded when goods or services are consumed. For the three months ended March 31, 2021 and 2020, amounts reflected under trade and barter transactions were: (1) trade and barter revenues of $10.3 million and $9.1 million, respectively; and (2) trade and barter expenses of $9.5 million and $8.1 million, respectively.

Capitalized Costs of Obtaining a Contract

The Company capitalizes certain incremental costs of obtaining contracts with customers which it expects to recover. For contracts with a customer life of one year or less, commissions are expensed as they are incurred. For new local direct contracts where the new and renewal commission rates are not commensurate, management capitalizes commissions and amortizes the capitalized commissions over the average customer life. These costs are recorded within selling, general and administrative expenses in our unaudited Condensed Consolidated Statements of Operations. As of March 31, 2021 and December 31, 2020, the Company recorded an asset of approximately $5.4 million and $5.8 million, respectively, related to the unamortized portion of commission expense on new local direct revenue.

Table of Contents

3. Intangible Assets

The gross carrying amount and accumulated amortization of the Company’s intangible assets as of March 31, 2021 and December 31, 2020 are as follows (dollars in thousands):


	Indefinite-Lived				Definite-Lived								Total
Gross Carrying Amount	FCC licenses		Trademarks		Affiliate and producer relationships		Broadcast advertising		Tower income contracts		Other
Balance as of December 31, 2020	$	825,590	$	19,760	$	130,000	$	32,000	$	13,592	$	11,060	$	1,032,002

Assets held for sale	(732)		(5)		—		—		(5)		(4)		(746)
Dispositions	(14)		—		—		—		—		—		(14)
Balance as of March 31, 2021	$	824,844	$	19,755	$	130,000	$	32,000	$	13,587	$	11,056	$	1,031,242

Accumulated Amortization
Balance as of December 31, 2020	$	—	$	—	$	(30,530)	$	(16,533)	$	(3,902)	$	(11,060)	$	(62,025)
Amortization Expense	—		—		(2,955)		(1,600)		(377)		—		(4,932)
Assets held for sale	—		—		—		—		1		4		5

SEC Form 10-Q filed by Cumulus Media Inc.