Arbitron Inc. Reports 2007 Second Quarter Financial Results
Revenue up 6.6 percent
Planned spending on Portable People Meter rollout drives 17.1% increase in costs
Net income per share (diluted) is $0.13
rbitron Inc. (NYSE: ARB) today announced results for the second quarter ended June 30, 2007.
For the second quarter of 2007, the Company reported revenue of $79.0 million, an increase of 6.6 percent over revenue of $74.2 million during the second quarter of 2006.
Costs and expenses for the second quarter increased by 17.1 percent, from $67.3 million in 2006 to $78.8 million in 2007, due in part to planned expenditures for the rollout of the Portable People MeterTM (PPM) ratings service in Philadelphia, New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside and Chicago.
Earnings before interest and income tax expense (EBIT) for the quarter were $5.4 million, a decrease of 55.0 percent compared with EBIT of $11.9 million for the second quarter of 2006.
Net income for the quarter was $3.8 million, compared with $7.4 million for the second quarter of 2006. Net income per share for the second quarter of 2007 was $0.13 per share (diluted), compared with $0.24 per share (diluted) during the comparable period last year.
For the six months ended June 30, 2007, revenue was $170.8 million, an increase of 7.3 percent over revenue of $159.3 million for the same period in 2006.
EBIT decreased 26.6 percent from $41.0 million in the first six months of 2006 to $30.1 million in 2007. Net income for the period in 2007 decreased 24.5 percent to $19.3 million compared with $25.5 million in 2006. Earnings per share (diluted) for the six months in 2007 were $0.64, compared with $0.83 per share (diluted) last year.
Stephen Morris, chairman, president and chief executive officer of Arbitron, made the following comments:
“Since the end of the 1st quarter, we signed long term contracts for the PPM ratings service with three leading radio groups: Clear Channel, Cox Radio and Entravision Communications. These contracts, along with the agreements with more than a dozen other major broadcasters and numerous advertising agencies that we had already signed, allow us to focus all our energy on executing the rollout of the PPM ratings service in the top 50 markets.”
“Two markets–Philadelphia and Houston–have already completed the switch to PPM ratings as the currency in the market. We are also well into the process of installing the PPM service in the three largest and most complex radio markets: New York, Los Angeles and Chicago, and our progress to date has been good. We are currently on schedule, but each market presents its own set of challenges. It is difficult and exacting work to recruit representative panels of consumers in these extremely diverse markets.”
“For Project Apollo, our initiative with The Nielsen Company to develop new measures of advertising return-on-investment, our pilot subscribers continue to evaluate the Project Apollo value proposition in the context of their particular company’s marketing needs. Our goal remains to reach a decision about implementation in the second half of the year.”
Company Guidance for 2007
Arbitron is reiterating its previously issued revenue guidance for the full year 2007 and is updating the earnings per share guidance.
The Company continues to expect that revenue will increase between 5.5 percent and 7.5 percent in 2007 compared to last year.
Based on recently completed contract negotiations as well as on the Company’s current experience with the recruitment and management of the PPM panels in the 2007 and 2008 rollout markets, earnings per share (diluted) is expected to be between $1.35 and $1.45 for the full year 2007. This compares to the previous estimate of $1.30 to $1.50 per fully diluted share for 2007.
Earnings conference call: schedule and access
Arbitron will host a conference call at 10:00 a.m. ET on July 19 to discuss its second quarter results and other relevant matters. To listen to the call, dial (toll free) 888-694-4641. The conference call can be accessed from outside of the United States by dialing 973-582-2734. To participate users will need to use the following code: 8962786. The call will also be available live on the Internet at the following sites: www.arbitron.com, www.ccbn.com and www.streetevents.com .
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 comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.
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