Regent Communications (RGCI) beat consensus EPS estimate by $0.01; Q4 revenues increase while operating income declines

Regent Communications (RGCI) reported results  on February 15, 2005 for
the fourth quarter and year end 2004.  Below are some highlights.

Results 4Q04 vs. 4Q03:

• GAAP EPS: $0.06 vs. $0.03 (+200%); consensus was $0.05
• Operating EPS: $0.03 vs. $0.03 (+0%)
• Broadcast revenues: $22.1M vs. $19.2M (+15%)
• Same statio broadcast revenues: $19.2M vs. $18.2M (+5%)
• Operating income: $3.1M vs. $3.3M (-6%)
• Operating margin: 14.0% vs. 17.2% (-320 bps)
• Income from continuing operations: $1.0M vs. $1.4M (-29%)
• Income from continuing ops margin: 4.5% vs. 7.3% (-280%)
• Net Income: $2.5M vs. $1.5M (+66%)
• Net Income margin: 11.3% vs. 7.8% (+350 bps)
• Free cash flow: $4.0M vs. $4.3M (-6%)
• Cash: $1.2M
• Debt: $76.5M

1Q05 Guidance:

• Net broadcast revenues: $18.6M - $18.8M
• Same station net broadcast revenue growth: 5%-6%
• Station operating income: $4.6M - $4.8M
• Corporate overhead expense: $2.1M
• Blended interest rate: 5%
• Cash taxes: $50k
• EPS: flat vs. 1Q04
• Capex: $1.8M ($670k in maintenance capex)

Quick comments:

• Repurchased $9 million of stock during 2004; did not purchase any shares during Q4 as the company was renegotiating a credit facility (resulting in 40 bps reduction in debt service costS)
• Board has authorized a share repurchase of up to $20M
• Achieved stated leverage goal of 3.5x for 2004
• Q1 ad rates flat versus last year; possiblity of rate increases in key markets due to increased demand
• Convertng 5 stations in 5 markets to digital in 2005; conversion will cost $700k ($400k in 1Q; $200k in Q2; $100k in Q3)