Q1 2021 Cumulus Media Inc Earnings Call
Good day, and thank you for standing by and welcome to the Cumulus Media Quarterly earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require further six further assistance. Please press star zero and I would now like to turn the call over to Mr. Collin Jones. Please go ahead.
Thank you operator, welcome everyone to our first quarter 2021 and earnings conference call.
And today by our President and CEO, Mary Berner, and our CFO, Frank Lopez Balboa before we start. Please note that certain statements in today's press release and discussed on this call may constitute forward looking statements under federal Securities laws.
Actual results may differ materially from the results expressed or implied in forward looking statements. These statements are based on management's current assessments and assumptions and they're subject to a number of risks and uncertainties. In addition, we will also use certain non-GAAP financial measures. We believe the supplementary information is useful to investors, although it should not be considered.
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Full description of these risks as well as financial reconciliations to non-GAAP terms are and our press release and SEC filings and press release can be found and the Investor relations portion of our website and our form 10-Q was also filed with the SEC. Shortly before this call a recording of today's call will be available for about a month details for how to access that replay.
They can also be found on our website with that I'll now turn it over to our president and CEO Mary Berner Mary.
Thanks, Colin and good morning, everyone.
Here the Q1 earnings call comes so soon after the prior year wrap up that we also see often feel like we're just confirming what we said a short while earlier, but the pandemic change that last year. Our first quarter report was devoted to how we were going to weather. The biggest crisis, our business had ever faced one that was not even on our radar when we ended 2019.
And this year with a much better outlook on the pandemic and greater conviction and recoveries that will be last spoke to you and I'll start by saying what a difference 10 weeks makes.
Today, we are pleased to report our Q1 results against the backdrop of and improving public health and economic environment. Once again, we delivered quarterly sequential revenue improvement with positive momentum across all our businesses with particularly strong results and podcasting, which was up approximately 35% year over year.
On a same station and ex political basis, we finished the quarter with total revenues down less than 10% year over year.
The fact that we were pacing down about 20% at the time of our last earnings call.
Digitally our 2020 cost actions will result in a fixed cost base that it's permanently and that is permanently reduced by more than $50 million versus the 2019 baseline and improvement from the 45 million, we guided to last quarter.
And through cash generated from operations, including contingent including continued strong working capital management, we increased cash by 22 million and the quarter, finishing with nearly 300 million and the bank.
As the macroeconomic Ah.
And Barton and macro environment continues to improve we have never been more confidence and our strong competitive position and proven track record of solid execution numerous revenue growth drivers and ability to consistently generate significant free cash flow gives us give us a number of viable path along which to growth.
Shareholder value in the short and long term.
Starting with the Big picture, let me give you some color on just how dramatically. The outlook has changed this time last year, we were facing the specter of a deep and prolonged recession that according to some contents might've resulted and the closure of as many other.
And as many as one third of small businesses that drive our local revenues.
But and the small business pulse survey conducted by the U S Census Bureau, just a few weeks ago, less and 2% of small businesses surveyed had closed permanently and less than 8% anticipate they will be permanently operating at a lower level, meaning that 90 per cent of small businesses already are or anticipating getting back to their pre pandemic level.
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So this along with continued historic levels of government spending and highest consumer sentiment reading that we've seen and a year support and economists' projections that we were entering a period of increasingly robust economic activity as.
As more and more states announced their timelines for total rollback of the pandemic mandates that are restricted commerce and consumers seeking to satisfy a year, a pent up demand for travel entertaining and engaging and life away from the computer screen, we're starting to see a kind of grand reopening of life as we knew it.
And historically with its unparalleled reach and efficiency local promotion capabilities and well established track record and the most effective advertising vehicle for generating foot traffic. There has been no better marketing partner for Grand reopening and radio.
And combination with radio Cumulus is other platforms streaming audio national and local podcast and digital marketing services and event capabilities can provide a one stop marketing shop for our local and national clients, who want to leverage this moment in time.
And we're putting this powerful and well positioned platform to work for.
For example.
To take advantage of the continuing explode quote explosion of sports betting as and advertising category, we talked about before its grown nicely and we're benefiting from that growth. In fact, we already have nearly doubled the business committed for the full year 2021, as we had and the entirety of 2020.
And the ramp ups unsurprising, and many states where sports betting is legal and there are 10 or even more operators buying per market position, but our significant local presence, particularly against the demographics that are most valuable to sports betting organizations as well as our marquee national sports talent and the NFL rights make us.
Desirable as a marketing partner, we are having more conversations every day about how we can best use our beachfront property to drive sign ups from high value depositors for sports betting company. We've also been able to tap into the content side of the sports betting ecosystem recently launching the first nationally syndicated sport.
[noise] bedding show called pick Central and partnership with Barstool sports, which brings with it and extremely loyal and younger skewing audience to radio picks.
<unk> Central which provides the best setting and lines of the day as well as commentary on various sports topics and betting strategies, it's hosted by brand and Walker with Barstools, Big Kat and Dave Portnoy joining.
Additionally, we're starting to see a big uptick and activity by venues across the country, which are planning new or expanded events and concerts while.
While we expect that event revenue will still be at depressed levels in Q2, and likely Q3 relative to pre pandemic levels.
<unk> a partnership conversations with life promoters has increased substantially and we even have certain tentpole events that are on track to materially exceed pre COVID-19 performance.
Examples are our annual concert and Atlanta, one and one five first which will be headlined this year by country Music Star Brantley Gilbert and October pre sold nearly four times as many tickets this year than it did in years prior and we're seeing similar results and other markets across the country.
And the last quarter, we've continued to grow our podcast and content stable, adding to the more than 1 billion podcast downloads, we achieved last year.
For instance in March we struck a deal with DCP entertainment to distribute market and monetize all of their podcast, including say their name, which was nominated for the net 2021 and be as award podcast of the year.
We also took important steps this quarter to rebrand our podcast network as the Cumulus podcast network.
The word change the rebranding marks and consolidation of Cumulus media is national and local podcasts into one entity in order to capture the full breadth and diversity of our owned and partnered portfolio and provide advertisers at all level levels access to a comprehensive offering of podcasts across the.
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Another example, as to how we've been able to leverage the and tower tire Cumulus media platform is how we have been the old and new media companies to successfully expand podcast first talents into national Syndicate nationally syndicated radio we first created the paradigm with Ben Shapiro, whose radio show was launched in 2019 and is now.
And over 250 affiliate stations across the country. The strategy has been tremendously successful as and Optimizes, our ability to monetize content and talent across platforms and build audiences through both digital and over and over the air distribution.
In March we announced our second major partnership in this regard with Dan Bun Gino, a leading conservative voice, who had number one among all podcast following the election in 2020 and is consistently ranked in the top 10, and the news category and Apple for most of 2021 as well.
And the void left by Rush Limbaugh, Seth the Dan Bunch, you know shell will officially launched on may 24th and the coveted noon to three P. M radio broadcast time slots out of the gate. The program will be launched and over 100 markets, including at least eight of the top 10 markets.
As important and investing in as important as best as investing in these growth opportunity has been and will be going forward at the same time, we've made significant reductions to our cost profile and.
As I noted earlier and now that we're now on track to permanently lower our fixed cost base by more than $50 million versus 2019, which is of course, a more appropriate baseline and we still see opportunity to rationalize the fixed cost of the business. For example, we have several facility consolidations and reductions underway reflecting.
Insights, we drew from the work from home environment pandemic forced us into last year.
Additionally, we've been able to renegotiate contracts, where it made sense and generates generate savings from better business processes.
While it's still too early to size of precision. We anticipate these additional cost actions will begin to positively impact our P&L and 2022.
These continue efforts to reduce costs and enhance operating leverage allow us to generate more EBITDA from each incremental dollar of revenue and with our significant cash balance and low net debt as EBITDA recovers, we expect to experience rapid deleveraging, which will give us even greater flexibility and our capital.
Allocation decisions.
Looking ahead, we are optimistic about the recovery prospects.
We know that it in an environment that is changing as fast as this one pacing is not a great or even good really indicator of what to expect this quarter. So I will note that while we are currently pacing up a bit more than 35% versus 2020, we fully expect that similar to last quarter. When we finished much.
Better than we were pacing at the time of our earnings call. We will continue to see continued improvements in year over year revenue performance as the quarter progresses.
With that I'll turn the call over to Frank to give you a bit more detail on the quarter right.
Thank you Mary it's nice to be speaking with everyone today and the context supermarket environment that is improving on a number of fronts.
As usual I'll speak to our numbers on a same station basis.
And Q1, we finished the quarter better and down 20% and we indicated on our last call with total revenue book $201.7 million.
Down 10, 9% from Q1 2020.
There was also a nice improvement versus our fourth quarter results on an ex political basis, Q4 was down 17% year over year, well and that same basis Q1 was down less than 10% year over year we.
We saw improvement across the board driven not just by the market environment.
But also the various growth strategies and areas of Barry discussed.
Digital led the way and the quarter with good growth and podcasting. Once again was a bright spot up approximately 35 per cent year over year.
One thing to note and the digital front. So we've made a change to our presentation of digital versus spot revenues. This quarter, which was prompted by measurement changes from Nielsen that led us to shift several stations to a full simulcast.
This allows us to differentiate the listenership and advertisers receive between over the air broadcast and accompanying extreme.
As a result, we're now presenting the revenues related to the streaming simulcast audience as digital revenues, which more accurately reflects the actual contribution of streaming to our business.
The magnitude of this change was mid single digit millions and the quarter and to be clear. This had no impact on total revenue.
Expenses declined in the quarter by $5 million or 3%.
But if not for the return of the Ncw tournament, which of course was not held last year.
Pensive would've been down and board.
We delivered more than $10 million of permanent cost reductions year over year and the quarter.
And as Marvin mentioned, we are now and track and fixed cost base that is permanently lower than our 2019 annual baseline by more than $50 million.
EBITDA for the quarter was $8 9 million <unk>.
However, with the strong working capital performance, we generated 26 moving to cash from operations and the quarter.
Free cash by $22 million.
This allowed us to finish the quarter with a cash balance of approximately $294 million.
As you review our 10-Q.
You also will note that with the December changes to the PPP loan program, we became eligible to apply for PPP loans like several of our broadcast peers.
We applied and were approved for $20 million.
We received 1.7 million of that amount in Q1, and the other $18 3 million in early April.
And as we've mentioned in prior quarters, we do have a mandatory prepayment requirement for about $133 million of our cash balance, which reflects net proceeds from asset sales and 2020.
And if not we invested including Capex are required to pay down debt.
About half of that pay down that is not reinvested would go over the term loan in June.
The other half would be split between term loan and bonds and the September October timeframe.
Unless we chose to make such Paydowns earlier.
Another $60 million of cash balance reflects amounts drawn from our ABL revolver.
As a final note.
We're now and the mid to the competitive sales process for a sizable piece of property that we have and Nashville.
Which we have mentioned in prior calls and we hope to share more details on that and the near future.
With that we can open the line for questions moderator, we're ready for our first question.
Yes.
And at this time I would like to remind everyone.
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Thank you everyone for joining us and we will see you and the next quarter. Thanks.
Thank you for your participation and this does conclude today's conference you may now disconnect.