Emmis Communications (EMMS) reports wider loss than expected; raises revenue guidance for 1Q05

Emmis Communications (ticker: EMMS) reported results on April 14, 2005 for
the fourth quarter and year end 2004.

Results 4Q04 vs. 4Q03:

• Reported EPS: $(4.75) vs. $(0.43)
• Adjusted EPS: $(0.07) vs. $(0.26)
• Consensus EPS was $(0.02)
• Revenue: $137.9M vs. $131.4M (+5%)
• Consensus revenue was $138.5M
• Operating Income: $17.5M vs. $5.2M (+237%)
• Operating margin: 12.7% vs. 3.9% (+880bps)
• Reported Net Income: $(265.9M) vs. $(21.4M) (+1,142%)
• Reported Net margin: -192.9% vs. -16.3%
• Adjusted Net income: $37.1M vs. $(21.4M)
• Adjusted Net margin: 26.9% vs. -16.3%
• Cash: $16.1M vs. $20.0M (-20%)
• Debt: $1180.6M vs. $1263.3M (-7%)
• Station Operating income: $39.3M vs. $41.1M (-4%)

Revenue breakdown 4Q04 vs. 4Q03:

• Radio: $61.2 vs. $56.2 (+9%)
• Television: $56.6 vs. $56.4 (+0%)
• Publishing: $20.0 vs. $18.8 (+6%)

Expense breakdown 4Q04 vs. 4Q03:

• Radio: $39.3 vs. $34.5 (+14%)
• Television: $41.6 vs. $38.8 (+7%)
• Publishing: $17.7 vs. $17.0 (+4%)

Gross profit breakdown 4Q04 vs. 4Q03:

• Radio: $21.9 vs. $21.6 (+1%)
• Television: $15.1 vs. $17.6 (-14%)
• Publishing: $2.3 vs. $1.8 (+29%)

Gross margin breakdown 4Q04 vs. 4Q03:

• Radio: 35.8% vs. 38.5% (-270bps)
• Television: 26.6% vs. 31.2% (-460bps)
• Publishing: 11.7% vs. 9.6% (+200bps)

1Q05 Guidance

• Revenue: $160.2 million
• Consensus was: $158.4 million

Quick comments:

• Consolidated debt-to-EBITDA leverage was 5.9x versus 6.7x in 4Q03
• Revenue impact of the Hot 97 tsunami incident was $1 million
• During the quarter, EMMS finalized its agreement with
  Bonneville International Corporation to swap three of Emmis’ Phoenix
  radio stations (KTAR-AM, KMVP-AM and KKLT-FM) for Bonneville’s WLUP-FM (Chicago’s The Loop) and $74.8 million in cash
• During the quarter, EMMS agreed to
  acquire D.EXPRES, a Slovakian company that owns and operates
  Rádio Expres, a national radio network in Slovakia, for $16 million; the acquisition closed on March 10, 2005

• During the fourth quarter, Emmis Publishing announced the launch
  date of Tu Ciudad, an English-language magazine catering to
  upwardly-mobile Latinos in Los Angeles; the magazine will debut in May 2005
• Paid down almost $102 million in debt during the quarter, $75 million was related to the Bonneville swap