Arbitron Inc. Reports 2012 Second Quarter Financial Results Company reports earnings per share (diluted) of $0.37;

Net income increases 31.4 percent on revenue growth of 9.1 percent;

Reiterates 2012 full year guidance for revenue and earnings per share.

COLUMBIA Md., July 19, 2012 /PRNewswire/ -- Arbitron Inc. (NYSE: ARB) today announced results for the second quarter ended June 30, 2012.

Net income for the second quarter 2012 increased 31.4 percent to $10.0 million, or $0.37 per share (diluted), compared with $7.6 million, or $0.27 per share (diluted), for the second quarter of 2011.

The Company reported revenue of $104.4 million, an increase of 9.1 percent over revenue of $95.7 million during the second quarter of 2011.  Factors contributing to the second quarter revenue increase include annual escalators in the Company's multi-year radio ratings contracts, in particular, the continued phase-in of contracted price increases for the Portable People Meter™ (PPM®) service as well as growth in revenues from the Company's cross-platform and mobile services. In addition, second quarter revenue benefited from the timing of certain items associated with survey data from prior periods.

Costs and expenses for the second quarter increased by 5.8 percent to $93.8 million in 2012 from $88.7 million in 2011.

Earnings before interest, income tax expense, depreciation and amortization (EBITDA) for the quarter was $23.6 million, an increase of 19.7 percent compared with EBITDA of $19.7 million for the second quarter of 2011. 

EBITDA margin in the second quarter increased to 22.6 percent from 20.6 percent for the same period last year.

For the six months ended June 30, 2012, net income increased 16.5 percent to $27.8 million compared with $23.8 million in 2011. Earnings per share (diluted) for the first six months of 2012 was $1.02 compared with $0.86 for the first six months of 2011.

Revenue for the first six months of 2012 was $210.8 million, an increase of 7.2 percent compared to revenue of $196.6 million for the same period in 2011.

Costs and expenses for the six months ended June 30, 2012 increased by 5.3 percent to $169.0 million from $160.5 million.

EBITDA increased 12.4 percent to $60.2 million in the first six months of 2012 from $53.6 million for the same period in 2011, with EBITDA margins of 28.6 percent and 27.3 percent, respectively.

Management Comment on Second Quarter 2012 Results

Said William T. Kerr, President and Chief Executive Officer:

"Throughout the second quarter, we remained focused on our longstanding priorities: pursuing opportunities for revenue growth while enhancing the value and utility of our core services.

"The Discovery Channel signed on for our new cross-platform service to evaluate how its radio and television tune-in campaign delivered viewers to the 2012 premiere episode of The Deadliest Catch, its popular reality program. Our new promotion evaluation service takes advantage of the radio and television measurement capabilities of our existing PPM measurement panels.

"Arbitron Mobile reached an agreement with iResearch, a leading online measurement company in China, to use our on-device smartphone and tablet meter technology to jointly operate a syndicated mobile media research service in mainland China, the world's largest smartphone market.

"On the digital radio front, we have completed the development of a methodology for retrieving, storing and processing daily raw streaming log file data from broadcasters and content delivery networks, and continued the important dialogue with the radio industry on the appropriate approach and reporting framework for our planned integrated radio ratings service.

"Throughout the quarter, we maintained our efforts to enhance the quality of our radio ratings services. Based on these efforts and on our progress, and as we just announced, the Media Rating Council has accredited the average quarter hour monthly radio ratings data produced by our PPM service in five additional markets, including Los Angeles. In total, the ratings data produced in 14 markets can now display the MRC double checkmark logo.

"Even as we invested in our core services and in growth initiatives, we continued to deliver margin growth and were able to return capital to our shareholders through dividends and stock repurchases."

2012 Full-Year Guidance

Arbitron is reiterating its revenue and earnings per share guidance for 2012.

Arbitron expects 2012 revenue to increase between 5 percent and 7 percent over its 2011 revenue of $422.3 million.

The Company anticipates 2012 earnings per share (diluted) between $2.15 and $2.30, an increase of 8 percent to 15 percent over comparable 2011 earnings per share (diluted) of $2.00, which excludes the impact of an impairment charge of $0.07 per share (diluted) taken in the fourth quarter 2011. These estimates include an anticipated net investment of approximately $12 million pre-tax in Arbitron's cross-platform initiatives and Arbitron Mobile in 2012.

Earnings Conference Call: Schedule and Access

Arbitron will host a conference call at 10:00 a.m. Eastern Time, today, July 19, 2012.

The Company invites you to listen to the call toll-free by dialing (877) 262-6702. The conference call can be accessed from outside the United States by dialing (443) 863-7301. To participate, users will need to use the following code: 93475335. The call will also be available live on the Internet at the following sites: www.arbitron.com and www.streetevents.com.

A replay of the call will be available from 1:00pm on July 19, 2012, through 11:59pm on July 26, 2012. To access the replay, please call (toll-free) (855) 859-2056 in the United States or (404) 537-3406 if you're calling from outside of the United States. Replay listeners will need to enter the following code: 93475335.

Presentation of Non-GAAP Information

The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. These non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to either net income as an indicator of Arbitron's operating performance, or cash flow, as a measure of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

About Arbitron

Arbitron Inc. (NYSE: ARB) is an international media and marketing research firm serving the media—radio, television, cable, and out-of-home; the mobile industry; as well as advertising agencies and advertisers around the world. Arbitron's businesses include: measuring network and local market radio audiences across the United States; surveying the retail, media, and product patterns of U.S. consumers; providing mobile audience measurement and analytics in the United States, Europe, Asia, and Australia; and developing application software used for analyzing media audience and marketing information data.

The Company has developed the Portable People Meter™ (PPM®) and the PPM 360™, new technologies for media and marketing research.

Portable People Meter™, PPM® and PPM 360™ are marks of Arbitron Inc.

PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.

Arbitron Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

  • successfully obtain and/or maintain Media Rating Council, Inc. ("MRC") accreditation for our audience ratings services;
  • renew contracts with key customers;
  • collect, manage, and process the consumer information we utilize in our media marketing and information services in compliance with applicable data protection and privacy statutes, regulations, and other requirements;
  • successfully execute and maintain our cross-platform and mobile measurement initiatives;
  • support our current and future services by designing, recruiting, and maintaining research samples that appropriately balance quality, size and, operational cost;
  • successfully develop, implement, and fund initiatives designed to enhance sample quality;
  • successfully manage costs associated with cell phone household recruitment, targeted in-person recruitment, and address-based sampling;
  • successfully maintain and promote industry usage of our media and marketing information services, a critical mass of broadcaster encoding, and the proper understanding of our services and methodologies in light of governmental actions, including investigation, regulation, legislation or litigation, customer or industry group activism, or adverse community or public relations efforts;
  • successfully manage the impact on our business of the current economic environment generally, and in the advertising market, including, without limitation, the insolvency of any of our customers or the impact of economic environment on our customers' ability to fulfill their payment obligations to us;
  • successfully integrate acquired operations, including differing levels of management and internal control effectiveness at the acquired entity;
  • effectively respond to rapidly changing technologies by creating proprietary systems to support our research initiatives and by developing new services that meet marketplace demands in a timely manner;
  • successfully execute our business strategies, including evaluating and, where appropriate, entering into potential acquisition, joint-venture or other material third-party agreements;
  • successfully develop and implement technology solutions to identify and report consumer use of new and existing forms of media content and delivery, and advertising in an increasingly competitive environment; and
  • compete with companies that may have financial, marketing, sales, technical or other advantages over us.

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption "ITEM 1A. — RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2011, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

In addition, any forward-looking statements contained in this document represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

 

(Tables to follow)

 


Arbitron Inc.

Consolidated Statements of Income

Three Months Ended June 30, 2012 and 2011

(In thousands, except per share data)

(Unaudited)






Three Months Ended




June 30,


%


2012

2011

Change

Change






Revenue

$104,407

$95,737

$8,670

9.1%

    Costs and expenses





    Cost of revenue

63,205

61,025

2,180

3.6%

    Selling, general and administrative

20,701

18,656

2,045

11.0%

    Research and development

9,896

9,017

879

9.7%

       Total costs and expenses

93,802

88,698

5,104

5.8%






Operating income

10,605

7,039

3,566

50.7%






    Equity in net income of affiliate

5,391

5,453

(62)

(1.1%)






Earnings before interest and income taxes  (1)

15,996

12,492

3,504

28.0%

    Interest income

11

8

3

37.5%

    Interest expense

132

104

28

26.9%






Earnings before income taxes

15,875

12,396

3,479

28.1%

    Income tax expense

5,912

4,812

1,100

22.9%






Net Income

9,963

7,584

2,379

31.4%






Income per weighted-average common share





    Basic

$0.38

$0.28

$0.10

35.7%

    Diluted

$0.37

$0.27

$0.10

37.0%











Weighted-average shares used in calculations





    Basic

26,318

27,159

(841)

(3.1%)

    Diluted

26,804

27,608

(804)

(2.9%)











Dividends per common share

$0.10

$0.10

-

-
















Other data:





EBITDA   (1)

$23,610

$19,731

$3,879

19.7%

Non-cash share-based compensation

$2,209

$1,826

$383

21.0%






(1) The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

Arbitron Inc.

Consolidated Statements of Income

Six Months Ended June 30, 2012 and 2011

(In thousands, except per share data)

(Unaudited)






Six Months Ended




June 30,


%


2012

2011

Change

Change






Revenue

$210,801

$196,606

$14,195

7.2%

Costs and expenses





Cost of revenue

110,653

106,704

3,949

3.7%

Selling, general and administrative

38,704

35,765

2,939

8.2%

Research and development

19,614

18,012

1,602

8.9%

Total costs and expenses

168,971

160,481

8,490

5.3%






Operating income

41,830

36,125

5,705

15.8%






Equity in net income of affiliate

3,035

2,921

114

3.9%






Earnings before interest and income taxes (1)

44,865

39,046

5,819

14.9%

Interest income

31

14

17

121.4%

Interest expense

261

268

(7)

(2.6%)






Earnings before income taxes

44,635

38,792

5,843

15.1%

Income tax expense

16,865

14,961

1,904

12.7%






Net Income

27,770

23,831

3,939

16.5%






Income per weighted average common share





Basic

$1.04

$0.88

$0.16

18.2%

Diluted

$1.02

$0.86

$0.16

18.6%











Weighted average shares used in calculations





Basic

26,782

27,119

(337)

(1.2%)

Diluted

27,273

27,602

(329)

(1.2%)











Dividends per common share

$0.20

$0.20

-

-
















Other data:





EBITDA (1)

$60,222

$53,600

$6,622

12.4%

Non-cash share-based compensation

$4,377

$3,831

$546

14.3%






(1) The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

 

Arbitron Inc.

EBIT and EBITDA Non-GAAP Reconciliation

Three Months and Six Months Ended June 30, 2012 and 2011

(In thousands)

(Unaudited)



Three Months Ended

Six Months Ended


June 30,

June 30,


2012

2011

2012

2011






Net income

$9,963

$7,584

$27,770

$23,831

Income tax expense

5,912

4,812

16,865

14,961

Net interest expense

121

96

230

254






EBIT (2)

$15,996

$12,492

$44,865

$39,046






Depreciation and amortization

7,614

7,239

15,357

14,554






EBITDA (2)

$23,610

$19,731

$60,222

$53,600






EBIT Margin (2)

15.3%

13.0%

21.3%

19.9%

EBITDA Margin (2)

22.6%

20.6%

28.6%

27.3%






 

(2) Arbitron's management believes that presenting EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization), both non-GAAP financial measures, as supplemental information helps investors, analysts, and others, if they so choose, in understanding and evaluating Arbitron's operating performance in some of the same manners that management does because EBIT and EBITDA exclude certain items that are not directly related to Arbitron's core operating performance. Arbitron's management references these non-GAAP financial measures in assessing current performance and making decisions about internal budgets, resource allocation and financial goals.

 

EBIT is calculated by adding back net interest expense and income tax expense to net income. EBITDA is calculated by adding back net interest expense, income tax expense, and depreciation and amortization to net income.

 

EBIT and EBITDA should not be considered substitutes either for net income as indicators of Arbitron's operating performance, or for cash flow as measures of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies.

 


Arbitron Inc.

Condensed Consolidated Balance Sheets

June 30, 2012 and December 31, 2011

(In thousands)



June 30,

December 31,


2012

2011


(Unaudited)

(Audited)

Assets:



Cash and cash equivalents

$11,073

$19,715

Trade receivables

61,304

62,886

Property and equipment, net

65,808

70,651

Goodwill, net

45,242

45,430

Other assets

38,173

40,286




Total assets

$221,600

$238,968




Liabilities and Stockholders' Equity:



Deferred revenue

$52,307

$37,080

Other liabilities

61,605

75,072

Stockholders' equity

107,688

126,816




Total liabilities and stockholders' equity

$221,600

$238,968




Note: The December 31, 2011 Condensed Consolidated Balance Sheet is derived from the audited Balance Sheet included in the Company's Form 10-K for the fiscal year ended December 31, 2011.

 

 

 

SOURCE Arbitron Inc.



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