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 Townsquare Reports Second Quarter 2017 Results
   Wednesday, August 09, 2017 7:00:00 AM ET

Townsquare Media, Inc. (TSQ ) ("Townsquare," the "Company," "we," "us," or "our") announced today financial results for the second quarter ended June 30, 2017.

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"We are pleased to report another solid quarter that was in line with our expectations," commented Steven Price, Chairman and Chief Executive Officer of Townsquare. "In the second quarter, net revenue increased 2.6%, and net income and Adjusted EBITDA were approximately flat. Our second quarter performance was anchored by our Local Marketing Solutions segment, where revenue increased 4.3% over the prior year, and 4.8% excluding political revenue. Our results in this segment are representative of the continued strength of our local advertiser solutions and the strength our local teams."

Second Quarter Highlights*

-- As compared to the second quarter of 2016:

-- Net revenue increased 2.6%, consistent with previously issued guidance

-- Local Marketing Solutions net revenue increased 4.3%

-- Entertainment net revenue was approximately flat

-- Net income was approximately flat

-- Adjusted EBITDA was approximately flat, consistent with previously issued guidance

-- Diluted net income and diluted Adjusted Net Income Per Share of $0.20 and $0.21, respectively

Year to Date Highlights*

-- As compared to the first half of 2016:

-- Net revenue decreased 1.1%

-- Local Marketing Solutions net revenue increased 2.9%

-- Entertainment net revenue decreased 10.2%

-- Net income decreased 39.4%

-- Adjusted EBITDA decreased 5.0%

-- Repaid $6.7 million of long-term debt

* See below for discussion of non-GAAP measures and reconciliations to GAAP measures.

Segment Reporting We have two reportable segments, Local Marketing Solutions, which provides broadcast and digital products and solutions to advertisers and businesses within our local markets, and Entertainment, which provides live event experiences and music and lifestyle content directly to consumers, and promotion, advertising and product activations to local and national advertisers.

Quarter Ended June 30, 2017 Compared to the Quarter Ended June 30, 2016

Net Revenue Net revenue for the quarter ended June 30, 2017 increased $3.5 million, or 2.6%, to $140.7 million, as compared to $137.2 million in the same period last year. Local Marketing Solutions net revenue increased $3.8 million, or 4.3%, to $90.5 million and Entertainment net revenue decreased $0.2 million, or 0.5%, to $50.2 million, due to revenue declines in certain of our live events and in our national digital business. Excluding political revenue, net revenue increased $3.9 million, or 2.9%, to $140.1 million and Local Marketing Solutions net revenue increased $4.2 million, or 4.8%.

Net Income Net income for the quarter ended June 30, 2017 decreased $39 thousand, or 0.7%, to $5.6 million as compared to $5.6 million in the same period last year.

Adjusted EBITDA Adjusted EBITDA for the quarter ended June 30, 2017 increased $0.1 million, or 0.2%, to $25.3 million as compared to $25.3 million in the same period last year.

Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

Net Revenue Net revenue for the six months ended June 30, 2017 decreased $2.5 million, or 1.1%, to $229.1 million, as compared to $231.6 million in the same period last year. Local Marketing Solutions net revenue increased $4.6 million, or 2.9%, to $166.5 million and Entertainment net revenue decreased $7.1 million, or 10.2%, to $62.5 million, in part due to revenue declines in our live events business, in part due to the prior year sale of certain live events, in addition to revenue declines in our national digital business. Excluding political revenue and the sale of certain live events, net revenue increased $0.1 million, or 0.0%, to $228.0 million, Local Marketing Solutions net revenue increased $5.9 million, or 3.7%, to $165.5 million and Entertainment net revenue decreased $5.9 million, or 8.6%, to $62.5 million.

Net Income Net income for the six months ended June 30, 2017 decreased $1.7 million, or 39.4%, to $2.6 million, as compared to $4.2 million in the same period last year.

Adjusted EBITDA Adjusted EBITDA for the six months ended June 30, 2017 decreased $1.9 million, or 5.0%, to $35.4 million, as compared to $37.2 million in the same period last year.

Liquidity and Capital Resources As of June 30, 2017, we had a total of $31.1 million of cash on hand and $50.0 million of available borrowing capacity under our revolving credit facility. As of June 30, 2017, we had $571.9 million of outstanding indebtedness, representing 5.5x and 5.2x gross and net leverage, respectively, based on Adjusted EBITDA for the twelve months ended June 30, 2017 of $104.9 million.

The table below presents a summary, as of August 8, 2017, of our outstanding common stock and securities convertible into common stock, excluding options issued under our 2014 Omnibus Incentive Plan.

Security                                     Number Outstanding1                         Description
Class A common stock                         13,819,639                                  One vote per share.
Class B common stock                         3,022,484                                   10 votes per share.2
Class C common stock                         1,636,341                                   No votes.2
Warrants                                     8,977,676                                   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 $898.3
Total                                        27,456,140
1 Each of the shares of common stock listed below, including the shares of Class A common stock issuable upon exercise of the warrants, has equal economic rights.
2 Each share converts into 1 share of Class A common stock upon transfer or at the option of the holder, subject to certain conditions, including compliance with FCC rules.
3 The warrants are fully vested and exercisable for shares of Class A common stock, subject to certain conditions, including compliance with FCC rules.

Conference Call Townsquare Media, Inc. will host a conference call to discuss certain second quarter 2017 financial results on Wednesday, August 9, 2017 at 8:00 a.m. Eastern Time. The conference call dial-in number is 1-877-407-0784 (U.S. & Canada) or 1-201-689-8560 (International) and the confirmation code is 13667230. A live webcast of the conference call will also be available on the equity investor relations page of the Company’s website at www.townsquaremedia.com.

A replay of the conference call will be available through August 16, 2017. To access the replay, please dial 1-844-512-2921 (U.S. & Canada) or 1-412-317-6671 (International) and enter confirmation code 13667230. A web-based archive of the conference call will also be available at the above website for thirty days after the call.

About Townsquare Media, Inc. Townsquare is a media, entertainment and digital marketing solutions company principally focused on small and mid-sized markets across the U.S. Our assets include 312 radio stations and more than 325 local websites in 66 U.S. markets, a digital marketing solutions company serving approximately 11,750 small to medium sized businesses, approximately 550 live events with nearly 18 million attendees each year in the U.S. and Canada, and one of the largest digital advertising networks focused on music and entertainment reaching more than 50 million unique visitors each month. Our brands include iconic local media assets such as WYRK, KLAQ, K2 and NJ101.5; acclaimed music festivals such as Mountain Jam, WE Fest and the Taste of Country Music Festival; unique touring lifestyle and entertainment events such as the America on Tap craft beer festival series, the Insane Inflatable 5K obstacle race series and North American Midway Entertainment, North America’s largest mobile amusement company; and leading tastemaker music and entertainment owned and affiliated websites such as XXLmag.com, TasteofCountry.com, Loudwire.com and BrooklynVegan.com. For more information, please visit www.townsquaremedia.com.

Forward-Looking Statements Except for the historical information contained in this press release, the matters addressed are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms. 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. See "Risk Factors" and "Forward-Looking Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on or about the date hereof, for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements. Townsquare Media, Inc. assumes no responsibility to update any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures and Definitions In this press release, we refer to Adjusted EBITDA, Adjusted EBITDA Less Interest, Capex and Taxes, Adjusted Net Income and Adjusted Net Income Per Share, which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP").

We define Adjusted EBITDA as net income (loss) before the deduction of income taxes, other (income) expense (net), interest expense, cancellation and (repurchase) of debt, transaction costs, stock-based compensation, net (gain) loss on sale of assets, impairment of FCC licenses, impairment on investment and depreciation and amortization. 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 Net Income is defined as net income (loss) before the deduction of income taxes, transaction costs, net (gain) loss on sale of assets and cancellation and (repurchase) of debt. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average shares outstanding. These measures do not represent, and should not be considered as alternatives to, net income (loss) or cash flows from operations, as determined under GAAP. In addition, these non-GAAP measures may not be comparable to similarly-named measures reported by other companies. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth in the tables below.

We use Adjusted EBITDA to facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. We use Adjusted Net Income and Adjusted Net Income Per Share to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of transaction costs, net (gain) loss on sale of assets and cancellation and (repurchase) of debt. Further, while discretionary bonuses for members of management are not determined with reference to specific targets, our Board of Directors may consider Adjusted EBITDA, Adjusted EBITDA Less Interest, Capex and Taxes, Adjusted Net Income and Adjusted Net Income Per Share when determining discretionary bonuses.

Investor Relations Claire Yenicay (203) 900-5555 investors@townsquaremedia.com

TOWNSQUARE MEDIA, INC.
CONSOLIDATED BALANCE SHEETS
(in Thousands, Except Share and Per Share Data)
(unaudited)
                                                                                                                                                      June 30,          December 31,
                                                                                                                                                      2017              2016
ASSETS
Current assets:
Cash                                                                                                                                                  $     31,072      $     51,540
Accounts receivable, net of allowance of $1,468 and $1,433, respectively                                                                              66,536            59,642
Prepaid expenses and other current assets                                                                                                             13,374            11,445
Total current assets                                                                                                                                  110,982           122,627
Property and equipment, net                                                                                                                           142,659           139,607
Intangible assets, net                                                                                                                                512,549           513,915
Goodwill                                                                                                                                              295,266           292,953
Investments                                                                                                                                           4,563             4,313
Other assets                                                                                                                                          9,967             7,290
Total assets                                                                                                                                          $     1,075,986   $     1,080,705
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                                                                                                                      $     9,357       $     10,602
Current portion of long-term debt                                                                                                                     5                 6,901
Deferred revenue                                                                                                                                      17,721            17,213
Accrued expenses and other current liabilities                                                                                                        23,397            25,813
Accrued interest                                                                                                                                      4,586             4,622
Total current liabilities                                                                                                                             55,066            65,151
Long-term debt, less current portion (net of deferred financing costs of $7,504 and $8,006, respectively)                                             564,439           564,315
Deferred tax liability                                                                                                                                52,814            50,967
Other long-term liabilities                                                                                                                           9,804             10,221
Total liabilities                                                                                                                                     682,123           690,654
Stockholders’ equity:
Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 13,819,639 and 13,735,690 shares issued and outstanding, respectively 138               137
Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,022,484 shares                                                       30                30
issued and outstanding, respectively
Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 1,636,341 shares                                                       17                17
issued and outstanding, respectively
Total common stock                                                                                                                                    185               184
Additional paid-in capital                                                                                                                            366,663           365,434
Retained earnings                                                                                                                                     26,567            24,450
Accumulated other comprehensive loss                                                                                                                  (608)             (722)
Non-controlling interest                                                                                                                              1,056             705
Total stockholders’ equity                                                                                                                            393,863           390,051
Total liabilities and stockholders’ equity                                                                                                            $     1,075,986   $     1,080,705
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands, Except Per Share Data)
(unaudited)
                                                                                Three Months Ended          Six Months Ended
                                                                                June 30,                    June 30,
                                                                                2017          2016          2017          2016
Net revenue                                                                     $   140,663   $   137,157   $   229,080   $   231,589
Operating costs and expenses:
Direct operating expenses, excluding depreciation, amortization and stock-based 108,724       105,594       181,735       182,498
compensation
Depreciation and amortization                                                   6,836         6,003         13,226        12,126
Corporate expenses                                                              6,635         6,313         11,984        11,870
Stock-based compensation                                                        183           204           371           457
Transaction costs                                                               190           181           389           350
Net loss on sale and retirement of assets                                       716           1,079         714           713
Total operating costs and expenses                                              123,284       119,374       208,419       208,014
Operating income                                                                17,379        17,783        20,661        23,575
Other expense (income):
Interest expense, net                                                           7,990         8,881         16,244        17,446
Repurchase of debt                                                              --            (427)         --            (461)
Other expense (income), net                                                     16            44            49            (403)
Income before income taxes                                                      9,373         9,285         4,368         6,993
Provision for income taxes                                                      3,810         3,683         1,813         2,776
Net income                                                                      $   5,563     $   5,602     $   2,555     $   4,217
Net income attributable to:
Controlling interests                                                           $   5,168     $   5,451     $   2,117     $   4,007
Non-controlling interests                                                       395           151           438           210
Net income per share:
Basic                                                                           $   0.30      $   0.31      $   0.14      $   0.23
Diluted                                                                         $   0.20      $   0.20      $   0.09      $   0.15
Weighted average shares outstanding:
Basic                                                                           18,470        18,365        18,450        18,114
Diluted                                                                         28,445        27,438        28,498        27,238
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands)
(unaudited)
                                                                                  Six Months Ended
                                                                                  June 30,
                                                                                  2017          2016
Cash flows from operating activities:
Net income attributable to:
Controlling interests                                                             $    2,117    $    4,007
Non-controlling interests                                                         438           210
Net income                                                                        $    2,555    $    4,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization                                                     13,226        12,126
Amortization of deferred financing costs                                          851           809
Deferred income tax expense                                                       1,813         2,776
Provision for doubtful accounts                                                   1,112         1,272
Stock-based compensation expense                                                  371           457
Repurchase of debt                                                                --            (461)
Write-off of deferred financing costs                                             83            339
Net loss on sale and retirement of assets                                         714           713
Changes in assets and liabilities, net of acquisitions:
Accounts receivable                                                               (11,041)      (5,050)
Prepaid expenses and other assets                                                 (4,252)       (5,511)
Accounts payable                                                                  (1,497)       5,642
Accrued expenses                                                                  (2,087)       (3,147)
Accrued interest                                                                  (5)           (291)
Other long-term liabilities                                                       (416)         (477)
Net cash provided by operating activities                                         1,427         13,414
Cash flows from investing activities:
Purchase of property and equipment                                                (12,352)      (12,416)
Payments for acquisitions, net of cash received                                   (2,157)       (373)
Acquisition of intangibles                                                        (150)         --
Proceeds from insurance settlement                                                --            451
Proceeds from sale of assets                                                      190           1,162
Net cash used in investing activities                                             (14,469)      (11,176)
Cash flows from financing activities:
Repayment of long-term debt                                                       (6,662)       (17,460)
Deferred financing costs                                                          (432)         --
Proceeds from sale of minority interest in subsidiary                             --            50
Proceeds from exercise of employee stock options                                  346           --
Cash distributions to non-controlling interests                                   (87)          (88)
Repayments of capitalized obligations                                             (613)         (84)
Net cash used in financing activities                                             (7,448)       (17,582)
Net effect of foreign currency exchange rate changes                              22            (346)
Net decrease in cash and restricted cash                                          (20,468)      (15,690)
Cash and restricted cash:
Beginning of period                                                               51,540        33,298
End of period                                                                     $    31,072   $    17,608
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in Thousands)
(unaudited)
                                                       Six Months Ended
                                                       June 30,
                                                       2017            2016
Supplemental Disclosure of Cash Flow Information:
Cash payments:
Interest                                               $      15,314   $      16,573
Income taxes                                           1,341           815
Purchase obligations:
Capital lease                                          $      --       $      525
Barter transactions:
Barter revenue - included in net revenue               $      11,633   $      9,732
Barter expense - included in direct operating expenses 6,624           6,818
Equity issued in respect of acquisitions:
Common stock, joint venture acquisition                $      513      $      --
TOWNSQUARE MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS BY SEGMENT
(in Thousands)
(unaudited)
                                                                    Three Months Ended        Six Months Ended
                                                                    June 30,                  June 30,
                                                                    2017         2016         2017          2016
Statement of Operations Data:
Local Marketing Solutions net revenue                               $   90,458   $   86,704   $   166,534   $   161,911
Entertainment net revenue                                           50,205       50,453       62,546        69,678
Net revenue                                                         140,663      137,157      229,080       231,589
Operating Costs and Expenses:
Local Marketing Solutions direct operating expenses                 59,408       54,889       114,740       109,053
Entertainment direct operating expenses                             49,316       50,705       66,995        73,445
Direct operating expenses, excluding depreciation, amortization and 108,724      105,594      181,735       182,498
stock-based compensation
Depreciation and amortization                                       6,836        6,003        13,226        12,126
Corporate expenses                                                  6,635        6,313        11,984        11,870
Stock-based compensation                                            183          204          371           457
Transaction costs                                                   190          181          389           350
Net loss on sale and retirement of assets                           716          1,079        714           713
Total operating costs and expenses                                  123,284      119,374      208,419       208,014
Operating income                                                    17,379       17,783       20,661        23,575
Other expense (income):
Interest expense, net                                               7,990        8,881        16,244        17,446
Repurchase of debt                                                  --           (427)        --            (461)
Other expense (income), net                                         16           44           49            (403)
Total other expense                                                 8,006        8,498        16,293        16,582
Income before income taxes                                          9,373        9,285        4,368         6,993
Provision for income taxes                                          3,810        3,683        1,813         2,776
Net income                                                          $   5,563    $   5,602    $   2,555     $   4,217

The following table reconciles on a GAAP basis net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income for the three and six months ended June 30, 2017 and 2016, respectively (dollars in thousands):

                                          Three Months Ended      Six Months Ended
                                          June 30,                June 30,
                                          2017        2016        2017        2016
Net income                                $   5,563   $   5,602   $   2,555   $   4,217
Provision for income taxes                3,810       3,683       1,813       2,776
Income before taxes                       9,373       9,285       4,368       6,993
Transaction costs                         190         181         389         350
Net loss on sale and retirement of assets 716         1,079       714         713
Repurchase of debt                        --          (427)       --          (461)
Adjusted income before taxes              10,279      10,118      5,471       7,595
Provision for income taxes                4,178       4,013       2,271       3,014
Adjusted Net Income                       $   6,101   $   6,105   $   3,200   $   4,581
Adjusted Net Income Per Share:
Basic                                     $   0.33    $   0.33    $   0.17    $   0.25
Diluted                                   $   0.21    $   0.22    $   0.11    $   0.17
Weighted average shares outstanding:
Basic                                     18,470      18,365      18,450      18,114
Diluted                                   28,445      27,438      28,498      27,238

The following table reconciles on a GAAP basis net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA and Adjusted EBITDA Less Interest, Capex and Taxes for the three and six months ended June 30, 2017 and 2016, respectively (dollars in thousands):

                                               Three Months Ended          Six Months Ended
                                               June 30,                    June 30,
                                               2017          2016          2017          2016
Net income                                     $     5,563   $     5,602   $     2,555   $     4,217
Provision for income taxes                     3,810         3,683         1,813         2,776
Interest expense, net                          7,990         8,881         16,244        17,446
Transaction costs                              190           181           389           350
Depreciation and amortization                  6,836         6,003         13,226        12,126
Stock-based compensation                       183           204           371           457
Repurchase of debt                             --            (427)         --            (461)
Other(a)                                       732           1,123         763           310
Adjusted EBITDA                                25,304        25,250        35,361        37,221
Net cash interest expense                      (12,157)      (13,250)      (15,314)      (16,573)
Capital expenditures                           (6,699)       (5,920)       (12,352)      (12,416)
Cash paid for taxes                            (1,028)       (380)         (1,341)       (815)
Adjusted EBITDA Less Interest, Capex and Taxes $     5,420   $     5,700   $     6,354   $     7,417
(a) Other includes net loss on sale and retirement of assets and other expense (income), net.

The following table reconciles net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA on a quarterly basis for the twelve months ended June 30, 2017 (dollars in thousands):

                                     Quarter Ended                                            Twelve
                                                                                              Months
                                                                                              Ended
                                     September 30, December 31,  March 31,      June 30,      June 30,
                                     2016          2016          2017           2017          2017
Net income (loss)                    $    15,863   $    3,211    $    (3,008)   $    5,563    $    21,629
Provision (benefit) for income taxes 10,493        3,771         (1,997)        3,810         16,077
Interest expense, net                8,294         8,332         8,254          7,990         32,870
Transaction costs                    256           238           199            190           883
Depreciation and amortization        5,686         6,164         6,390          6,836         25,076
Stock-based compensation             206           3,591         188            183           4,168
Impairment on investment             4,236         --            --             --            4,236
Repurchase of debt                   --            (85)          --             --            (85)
Other(a)                             (374)         (317)         31             732           72
Adjusted EBITDA                      $    44,660   $    24,905   $    10,057    $    25,304   $    104,926
(a) Other includes net gain (loss) on sale of assets and other expense (income), net.

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SOURCE Townsquare Media, Inc.

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