Favorable Q3 results. While revenues were in line with expectations ($237.7 million versus our estimate of $237.0 million), adj. EBITDA was much better than we thought ($48.5 million versus our estimate of $36.0 million). But, the stand out in the quarter, was the better than expected EBITDA , which reflected aggressive cost reductions. Management indicated that Q3 fixed expenses were reduced by an impressive $10 million. This accounted for virtually all of the upside EBITDA variance.Reiterates favorable 2022 adj. EBITDA outlook. In spite of some near term revenue headwinds, management appeared sanguine about delivering $175 million to $200 million in adjusted EBITDA for full year 2022. Notably, management plans to deliver more than $70 million in fixed cost reductions in 2022 compared with its 2019 baseline expenses. We believe that the positive upside in EBITDA in Q3 is a reflection of its fixed cost reductions and gives credence to its ability to deliver on 2022 expectations.Q4 revenue headwind. Management indicated that labor shortages and supply chain issues are creating a challenging environment for some of its key advertisers, including Auto, Restaurants, Retail and Entertainment. Q4 revenues are pacing up slightly year over year. While we previously anticipated this guidance, we are tweaking our Q4 revenue and adj EBITDA estimates around the edges.Strengthening balance sheet. Combined with a $20 million PPE loan forgiveness, the company had proforma $153 million in cash and net debt of $653 million, falling below 5 times leverage. Given management's goal to generate $175 million to $200 million in adj. EBITDA, leverage is expected to be below 4 times by year end 2022. As such, by year end, the company may explore options with its free cash flow to return capital to shareholders.Compelling stock valuation. Near current levels, the CMLS shares trade at 5.2 times Enterprise Value to our 2022 adj. EBITDA estimate. As illustrated later in this report, the shares trade well below industry peer multiples currently near 7 times EV to 2022 cash flow estimates. We believe that the shares offer a compelling risk/reward relationship and we reiterate our Outperform rating with a $27 price target. Our price target reflects a cash flow multiple in line with current industry averages. Read More >>