SALM - Salem Media (SALM) - On Track For A Good Year

Solid Q4 results. Fourth-quarter revenues of $69.1 million were stronger than our $64.8 million, growing a remarkable 7.2% year-over-year. The Publishing segment was the main driver of revenue growth, generating $6.5 million in revenue, a 27.1% increase YoY. Adjusted EBITDA was $10.8 million compared to our $9.6 million estimate, a 9.3% upside variance.Continuing the digital path. Digital revenue comprised roughly 29% of total revenues, ten years ago that figure was only 12%. The newest channel of digital revenues, Podcast revenues, were $1.6 million in the quarter, a notable result to end its first year of existence. Management intends to expand the company's digital footprint through its different platforms.Revising Estimates. Management indicated that total company revenues are pacing 3% to 5% above the year earlier quarter, better than our original growth assumption of 2%. Expense growth of 7% to 9% was more than we were looking for, however, as the company appears to be investing in the Salem News Channel. We tweaked slightly lower our Q1 Adj. EBITDA estimate from $7.5 million to $6.9 million, while currently maintaining our full year 2022 adj. EBITDA estimate of $38.1 million. Significantly improved financial position. The company's debt leverage ratio decreased to 4.4 times, the lowest level since 2001. Recently, the company used $2.5 million in proceeds from real estate sales to pare down debt, with another land sale expected this year. Management targets debt leverage to decline to below 4 times.Valuation Summary. Currently, the SALM shares trade at a compelling 7.1 times enterprise value to our 2022 cash flow estimate. That is below the 10-year historical average trading range. Our target multiple of 8.4 times would represent a valuation in the middle of its trading range. The shares are rated Outperform with a price target of $5.25. Read More >>