Cumulus CEO Stresses Turnaround Progress

During Thursday's Earnings Call with analysts, CEO Mary Berner recalled that when she joined the company, it was clear it faced substantial company specific challenges including rapidly deteriorating operating and financial performance and a looming debt overhang.

Berner stated "With no immediate pressure to deal with the balance sheet at that time, we've worked quickly to identify and prioritize the efforts necessary to rebuild Cumulus into an organization that could deliver sustainable, profitable and industry-leading performance. And in order to achieve this objective, we laid out three foundational priorities growing ratings, different culture and enhancing the basic blocking and tackling of the day-to-day operations."

Call Highlights:

• "In 2016, our focus on these fundamental priorities produced as I've said significant and measurable progress and more recently as a result of this progress, as expected we have began to see some positive financial indicators. Starting with rating, by any measure our rebound has been tremendous marked by reversal of four straight years of ratings decline. Our PPM markets which generate about half of our Station Group revenue have outperformed the industry for 15 straight months, with almost all of those months showing year-over-year double digit growth.

• "Our diary markets representing the other half of our Station Group revenue naturally take longer to turnaround given the measurement methodology; however, those markets are now showing rating vitality. In the recently released fall ratings book, Cumulus diary markets grew in both absolute ratings and ratings share. In fact, as we move into the second quarter of 2017, for the first time in five years, the entire platform will be selling off improved ratings.

• Our most recent employee survey completed in November maintains the dramatic improvements in sentiment we've been seeing all a year and the nearly universal embrace of our new cultural dynamics. 97% of employees say they plan to be with the Company in 12 months, 93% of employee say they believe Cumulus is changing for the better, 93% are proud to work at Cumulus, and 85% of employees are excited for the future.

• "Our total turnover is down from a high point in the upper 40s during 2015 to 24% now, with that performance beating our internal goals in less than a year. Full-time turnover is down from 30% in 2015 to 20% in 2016, and voluntary sales turnover is down from 36% to 23%. These are strong numbers which are not only significant, not only right, but a key factor and our ability to deliver against our third foundational priority, improving execution in every job and by every employee.

In prior earnings calls, she noted that it takes some time for ratings improvements to be reflected in revenue because you not only have to generate the increase in ratings, you have to do so consistently over a period of time, have those ratings published and then go-to-market with those published ratings.

According to Berner:

• "Over the last 12-months as our rating have improved, we have seen them flow into revenue in a fashion that reflects that lag. Miller Kaplan measures revenue market share across ad channels in 53 of our markets, covering over 80% of our Station Group revenue. In those markets, a national spot using the first convert, the first channels convert operating improvement. Our ratings gains have helped us deliver revenue share growth in 11 of the last 12-months.

• "On the local side where ratings convert somewhat more slowly, we have now seen revenue share growth for six consecutive months through February 2017. And as we've moved to refine our digital strategy which I'll speak more about shortly, we've been able to deliver digital revenue shared gains in 11 of the last 12 months as well. In total, across all Station Group ad channels, total revenue share has grown in eight of the last 12-months as well as in both the fourth quarter and for the full-year 2016.

As for 2017,  Berner assured those on the call that Cumulus would "continue to build our sales execution program to expand the revenue impact of our ratings increases. These efforts generally fall into one of five categories, talent, training and tools, sales analytics, platform growth, products and tactics, and digital."