Q1 2021 Urban One Inc Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to the urban one 2021 first quarter earnings call. As a reminder, this conference is being recorded.

We will begin this call with the following safe Harbor statement.

During this call urban one will be sharing with you certain projections and other forward looking statements regarding future events or its future performance urban one class.

That certain factors, including risks and.

Certainties referred to in the 10-K 10.

10, Qs and other reports P. At it leave files with the Securities and Exchange Commission.

Could cause the company's actual results to different materially from those indicated by the projection or forward looking statements. This call will present information as of May 12, 2021. Please note that urban one disclaims any duty to.

Update any forward looking statements made in this presentation.

In this call urban one may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www urban one.

Dot Com a replay of this conference will be available from 12 P. M. Eastern standard time today May 12, 2021 until 11 59 P. M may 13th 2021 callers may access the replay by calling 1866.

2171041, or four zero to 90, 701, I'm, sorry, 90, 70847 with the access code 10593 to one.

Access to live audio and a replay of this conference will also be available on urban one's corporate website at www urban one dot com. The replay will be made available on the website for seven days after the call no other recordings or copies of this call are.

Arthur rise or may be relied upon.

I'd now like to turn the conference over to average C. Liggins, Chief Executive Officer of urban one who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins. Please go ahead. Thank you very much operator also joining me are Karen Wishart, our chief administrative officer Jodi Drew R. R.

CFO for T V, one and Kris Simpson, our general counsel for the company.

You all have got the press release for the first quarter result, we were pretty happy with.

Our performance in Q1, and very excited that this is the quarter that we will put behind us and start to lap.

Our COVID-19 comps.

Even with two months of of Coke negative bad COVID-19 accounts are strong for months last year, we actually posted stronger EBITDA.

Q1 compared to 2019.

Starting to see significant.

Rebound activity for Q2, and our radio business.

Our other units continued to perform well so we're very optimistic.

About the full year, so I will.

Now I'll turn it over to Peter to go into the specifics on the numbers. Thank.

Thank you Alfred net revenue was down by three 6% year over year for the quarter ended March 31, 2021, approximately $91.4 million.

Core radio revenue, excluding political was down 13, 7% year over year in the first quarter January was down 28, 4% February was down 19, 9%.

<unk> was up eight 8% so we saw sequential improvement throughout the quarter.

Including political National AD sales for Q1 were down by 23, 7% year over year, while local AD sales were down 21, 5% by.

By category Entertainment was down approximately $2 million driven by the lack of concert event and movie activity financial was down by $1 $7 million services was down by $1 $4 million driven by lower tax legal and recruitment clients spending retail was down.

$1 million food and beverage was down approximately $900000 driven by lower spend from fast food and other restaurants.

The outlook for radio in the second quarter because of our strong up with Q2 pacing currently up by more than 70% as we lapped our most difficult quarter from 2020.

Adjusted EBITDA for Q1 was impacted by $1 $4 million of expenses related to the Richmond Casino project, Despite which as Alfred said, we posted a higher adjusted EBITDA debt.

In the first quarter of 2019.

Net revenue for reach media was up by 16, 8% in the first quarter driven by increased advertiser demand for the African American audience.

<unk> business related to COVID-19, and the launch of a Macy's podcast adjusted EBITDA reach was up by approximately $1 $9 million year over year.

Net revenues from our digital segment increased by 64, 7% in Q1 strong demand from brands to spend with black honed and certified diversity publishes contributed to the growth in direct advertising sales that I. One digital this drove adjusted EBITDA growth for the quarter of approximately $3 2 million.

Year over year from digital segment.

We recognized approximately $46 $2 million of revenue from our cable television segment during the quarter a decrease of 2.6% cable TV advertising revenue was down one 6% cable TV affiliate revenue was down by two 8% with rate increases of approximately $1 million offset by churn of approximately.

Absolutely one $7 million.

Cable subscribers for TV, one as measured by Nielsen finished Q1 2021 at $49 4 million down from $51 4 million at the end of Q4, and Cleo had 20, $29 8 million Nielsen subscribers.

We recorded approximately $1 $7 million of cost method income less administrative expenses for our investment in the MGM National Harbor property for the quarter compared to $1 $4 million last year and $1 7 million in 2019.

Okay.

<unk> expenses, excluding depreciation amortization impairments and stock based compensation decreased to approximately $65 $2 million in first quarter down 0.6% from prior year.

We saved approximately $1 million in employee compensation expenses and $650000.

And reduce travel and office expenses due to our cost savings initiatives year over year. We also saved approximately $1 1 million and lower programming content amortization expense from the cable TV segment.

Savings were offset by an increase of approximately $1 $3 million in marketing spend to promote programming at TV one.

The increase in corporate selling.

General and administrative expenses, primarily due to an increase in professional fees related to the rich from gaming symmetry.

Operating expenses were down 11, 4% a radio SG&A expense line was down nine 9%.

Employee compensation revenue variable expenses and discretionary marketing and promotions.

Radio programming and technical expenses were down 14%, mainly from lower employee and talent compensation reduced music royalties.

Reach operating expenses were down 21%, mainly due to lower employee compensation on a favorable reversal of bad debt expense.

Operating expenses in the digital segment were up by 12% driven predominantly by variable expenses related to the increased revenues cable TV expenses were up five 2% year over year programming content expense decreased by approximately $1 1 million sales and marketing expenses were up by approximately $1 nine.

$1 million driven by the increased media campaigns to support program.

Operating expenses in the corporate and elimination segment were up by 23, 9%, primarily due to the increase in professional fees for corporate development activities relating to potential game in another similar business activities.

For the first quarter consolidated broadcast and digital operating income was approximately $36 $4 million a.

A decrease of three 3% consolidated adjusted EBITDA was $28 8 million a decrease of 10, 6% year to year.

Interest expense was approximately $18 million for the first quarter compared to approximately $19 $1 million from the same period in 2020 company made cash interest payments of approximately $13 9 million on a sac extending debt in the quarter.

The benefit from income taxes was approximately $10000 in the quarter and the company received a cash refund of taxes of $32000 net.

Net income was $7000 zero, which rounds to zero.

<unk> per share compared to a net loss of approximately $23 $2 million or <unk> 51 per share from the first quarter of 2020 capital expenses expenditures were approximately $804000 compared to approximately $1 $4 million last year.

As previously announced on January 25th 2021, we successfully refinanced all of the company's existing debt cash on hand, and $825 million senior secured notes at a rate of 737, 5% to February one 2028 as of.

March 31, 2021 total gross debt was $825 million.

The ending unrestricted cash was $56 $8 million.

Net debt was approximately $768 2 million.

Compared to a $134 $6 million of LTM reported adjusted EBITDA, given a total net leverage ratio of 571 times and with that I'll hand, it back to al. Thank you Peter.

I wanted to call to everyone's attention I don't know a few.

Yes.

Much in the advertising fresh but yes.

Yeah there is.

Very very positive advertising climate.

For African American owned media companies.

Corporations, like Procter and Gamble and general Motors have made significant.

<unk> to increase their investment an African American owned media, specifically and also within the last week, the Interpublic group of AD agencies, and now group in advertising to very large <unk>.

Advertising holding companies have also committed to increase their spend with African American owned media.

<unk> will benefit greatly from that these are a tailwind that started in the aftermath of the protest over the George void murder in the Black lives matter movement last year I got a lot of questions about.

About whether or not.

We thought that momentum was one time, whether it was sustainable or whether it really was a sign of a.

Positive momentum that would create systemic change and and and and I got it.

Certainly say that all signs are pointing to continued momentum.

Larger commitments.

And a real desire to create a more equitable playing field as it relates to media investment so that's very positive.

The group <unk> and the Interpublic announcements all came within the last week.

I've been involved in high level conversations.

With with these corporations and these AD advertising agency holding company so yeah.

Well aware of the intent and a commitment debt there theyre laying out and you know it all starts at the top so when the Ceos decide that this is a commitment that they want to make to multicultural media and diverse one media then that's.

That's a big statement.

<unk> one.

I want to talk about our Richmond, Virginia.

Virginia Casino.

Opportunity and initiative as I mentioned before we are.

Urban one in partnership with <unk>.

Peninsula Entertainment made a proposal to the city of Richmond to build a $600 million casino resort in the study.

It was an initiative based on our desire to further expand into the gaming arena since we had.

It had such a great experience with our investment at MGM National Harbor.

Started off with six different companies that responded to the RFP on February 22nd It is now down to just two of us.

One and the Cordish companies and <unk> and.

And we're spending a lot of time.

Trying to to to win this in and get it over the finish line I guess.

You could say since there's two of US we are we have a 50 50 shot.

But we are.

Currently in <unk> and.

In discussions with the study so the other so.

It was the other party.

However, we've got very different proposals are.

Proposal is on the south side of Richmond in an industrial area.

That.

It doesn't really impact neighborhoods and actually has widespread support from the largely minority neighborhoods in population status that surround it because of the amenities that are project would bring.

The competing project that's sponsored by the Cordish companies is yeah in.

In North Richmond, and trendy restaurant bar area called Scotts edition.

That has the exact opposite population so ultimately it's going to come down to where.

Where the city.

<unk> sees itself wanting to spark.

Weather economic development, so stay tuned on that we should.

We should hear something by the end of the month, but this is the first time, you'll see it flowing through our P&L.

Had $1 $4 million of what we call it chase costs and those are costs for the RFP lobbyists.

Printing.

Yes.

The initial architecture designs renderings that you have to put together.

To show what your what your project is advertising et cetera.

Should we be chosen.

Which one we'll know by the end of May beginning of June.

Then we will have to go to city council to get.

Our proved to be put on the ballot for a referendum that will happen in November where the citizens of Richmond will then vote on whether or not to approve.

<unk> Casino resort casino at the chosen location right out at our location there'll be additional costs that will come from running the referendum and then more architecture costs.

So we.

We're estimating our chase cost could be if we win.

Up to now.

$4 million or so if we don't win there'll be yeah.

Half that but yeah.

Pretty exciting to get this far and.

You can go to one casino resort Dot com.

That's one casino resort dot com.

And get updates information Theres lots of videos about what were planning there as I have said before should we be lucky enough to be chosen this particular opportunity it could create.

Create a another revenue and EBITDA stream.

That would rival the size of our radio group or <unk>.

Our cable television operation, so would be a pretty significant diversification opportunity for the company.

Operator can we go to the line for Q&A. Please.

And ladies and gentlemen, if you wish to ask a question. Please press. One then zero on your telephone keypad, you will hear an acknowledgment town that you have been placed in the queue and you may remove yourself from queue at any time by repeating the one zero command.

And again, if you do have a question. Please press one to zero at this time and one moment. Please.

And we do have a question from laugh Lehman from Eaton Vance. Please go ahead.

Hi, great. Thanks.

So you mentioned on the pacings.

For I guess quarter up 70% in Q2 that sounds great.

Like others in the space your actual numbers for Q1 ended up being better than the pacings and Thats kind of what what people had said is that.

Things were coming in later and then the actual numbers are actually doing better than the patients is that is that continuing do you think that will occur again, where.

There's a little bit of a delay and you'll still you'll do even better than the pacings or is that is that kind of normalized in terms of accounts.

It feels like it you know.

But.

The timing of when dollars hit yes.

It's so much harder to predict these days.

Certainly done.

During the pandemic things, we're canceling at breakneck speed and then when they started to turn you started to see.

The numbers look really really ugly and clothes and improve throughout the throughout the month.

And throughout the quarter.

Q1 was.

January was down 28, and then it was February down 21 in March was plus eight right.

So I suspect that growth, we'll see things booking late.

And improving.

But as you get close closer to normalization.

And then yes, I think that improvement pace during the month in the quarter, we will start to slow as well now.

You are seeing you are seeing a robust economy right now.

And particularly in our National Nash.

National facing businesses.

Reach media.

We have we have inventory problems and sold out and so therefore, we're in a position where rates are rising.

I guess inflation is a good thing from that sense.

And.

And youre seeing that youre seeing more demand and inventory.

Okay.

In digital and you're also seeing pretty strong demand and television local radio is not as robust robust as those other platforms, but is absolutely improving so the answer to your question is I guess, if you're asking do we think we're going to do better than <unk>.

Plus 70.

For Q2.

I know you do have a forecast Peter we do and it is slightly better than that but it's not.

Not dramatically so and as I look at the patients I think we called out in your quote out for the April finished up about just just on the 90% 89%.

Yes, Mays pace in.

Up about 75% june's pacing up about 49%.

If we were calling it now we'd say, it's mid seventies mid seventy's yeah. So.

A tick over the 70 Mark.

I would say that when we budgeted for our radio business, we did not budget to be back at 2019 levels, we budgeted to be somewhere between 2019 and 2020.

And we are on target for that.

Revenue performance.

And.

Yeah.

So we feel comfortable about that is too early for us to say, whether or not we're going to.

Over perform that but right now we feel we feel pretty good about it we've got our.

Our Q4 last year was was.

Tremendous because of political so Peter and I were talking about it earlier I think we're gonna be feeling good tracking along until we get to Q4 right now.

And then because it was such a big big quarter for US now, but we still think that one.

We can hit the metric that I just described to you.

Yes, and then the other thing to point out is.

Digital obviously is our strongest growth there at the moment from a radio standpoint, and so when we talk about our patients we are including the.

Digital business and that the radio digital business in that when we report out and break down.

Advertising, we pull all of digital into the digital segment. So just just to be careful that we're talking about the same thing the plus plus 70 number includes.

Radio digital performance.

Okay. Thanks, that's helpful.

Any update on events.

What the timing is looking like on that.

I mean, our biggest event that.

We've got we've got two big events, one birthday Bash and in.

In Atlanta is.

Is scheduled to resume in June.

We're doing it forgot the name it's the old Atlanta Braves Stadium debt now I think in the Georgia State facility.

It holds 50 or 60000 people and were setting it up to be socially distance for 15000.

People, but the business model for it.

This year actually.

Could see it be quite profitable so should we.

We hit that benchmark so that is happening.

Reduced capacity and then we have our fantastic voyage cruise.

From reach media scheduled for Q4 and right now that's on.

We'll all plans are.

Our set for it to go.

And that would be a significant driver.

As well with profit expectations to be not.

Not.

At the historical.

From a profit levels, but not far off of it.

And I think as long as.

Cases, keep coming down and vaccinations keep happening in the economy keeps.

We are starting to open then youll youll see.

US continue to return to events, but two of our biggest events are happening at this point in time this year.

Okay terrific and if I could maybe just one more and then I'll.

Jump out just any update in terms of the financing on Richmond, I think you've been pretty clear on the last call that I guess, you can write up to a 75 million common equity check out of this.

Every one silo, but it might not be that much.

Yeah.

Program so.

Yes.

It's moving around and the reason is moving around is because we're negotiating with the city, which kind of moves around the numbers.

And the project.

But a couple of things we've got.

Robust demand from almost 60 local investors that have signed up to invest alongside us in this project.

And so the idea that we sell off at least 10%.

Of this too.

To people, who actually live in Richmond.

<unk> is a real concrete plan right. These people are signed up with given us numbers et cetera.

And so.

That is helpful to go to reduce whatever.

Our number is our original equity commitment was $75 million, so that equity commitment would have been seven.

75, minus the seven and a half for their 10%.

I pledged to put some personal money into it.

As well.

And so.

The local investment number can go up we could look at alternative ways to finance it.

Pandemic was helpful from the standpoint as we got.

I think smarter about.

The tools that we could use to raise capital we were very.

Lucky and excited to have gotten that refi off.

We have two ATM programs for both classes of shares in place.

We've used at least one of them.

The class as we haven't used the class days, so, yes, I would say to you that.

<unk>.

And we'll be very conscious of how we finance this.

And avail ourselves of all capital opportunities to also.

Be able to focus and think about our continued goal of deleveraging.

That's all.

That's super important even though.

Current leverage level is.

Is that a place given the pandemic that we haven't seen before we realize that it's not where it needs to be now and so we're.

We're not going to do anything.

Net.

Yes.

That stretches us to then so.

So we would we would look at also other outside out.

Other ways to raise capital outside of.

Selling equity and taken the local investors too.

Deleveraging is still a very important.

Effort for us and.

And we're not losing side of that if we are if we were lucky enough to be chosen.

I think that I don't know whats going to happen to our securities, but they should respond in a positive manner, because yes, it will be significantly accretive event, although it will be out in.

In terms of when it comes to fruition.

Went in that license will build significant value in and of itself.

Terrific, Thanks very much.

And once again, if you do have a question. Please press one zero.

Our next question is from the line of Todd Morgan. Please go ahead and he's from Jefferies.

Great. Thank you and thanks for all the color as usual I'll just have to kind of follow ups on the operating side I guess first of all very broadly I mean, given the kind of the positive start to the year in your comments here I know you said the fourth quarter is a little bit of a tougher comp but is it fair to say that kind of your broader thoughts about sort of EBITDA for the full year.

You've kind of talked about in the past.

I would think you're feeling a little bit better about that your ability of that at this point just given the gastro.

100% a few.

You remember our road show.

And so we did our refi we.

We didn't actually.

We didn't actually give official guidance, but.

We knew Q4 was going to be.

Yes, we knew this was going to be a nonpolitical year in Q4 was big for us et cetera, and so what we expressed.

In terms of EBITDA kind of neighborhoods ZIP code soft when you whispered guidance.

Still there's still an effect now I'll caveat that by saying if we if we don't win the reference the Richmond.

Since we're going to have a one time hit of probably a couple million Bucks.

That will come off of that number.

Is that youre, probably referring to.

But if we do it a roll into the investment and we will probably be over our bogey.

No. That's helpful. That's helpful and also.

This year with production restarting in the TV side, I know you called out expectations that the programming cost levels could rise along with that is that unfolding as you've kind of previously anticipated or as how is that really kind of.

Kind of moving in this environment.

Is there any change from what you thought previously Joe do you want to give them the idea of what the increased programming expense income due this year.

I don't have one of our total one last year, but yeah, we are expecting.

Was it about 10% increase in our in our program amortization based on.

Production being back and and.

Just making commitments.

Promises to our affiliates deliver a certain number of original hours.

But it sounds like there's really kind of on track with what you thought before in other words.

Okay. Okay no. That's that's that's.

That's perfect no good good quarter. Thank you very much.

<unk>.

Thank you. The next question is from Patrick Wang from buying it investment. Please go ahead.

Yes. Good morning, Thank you for the question.

Gratulation is on the debt.

Bidding can you just talk about from.

Six months K. So one eliminate the other four are whats competition from the city. So the garden This project.

Yeah, I think look it was a.

Number of factors that eliminated the the other four.

Not all of them got eliminated for the same reason I think.

A level of.

Experience.

And belief in their business plan.

One is.

Was one.

The site control are yes.

It was a second one size and scope of project.

<unk>.

Would be a third one.

The Monkey Indian tribe.

Yes proposed a $350 million.

Project that is essentially across the street from our location so.

I think they got eliminated because.

They also warrant teamed with.

I'd known existing gaming operator, and they had the lowest project sort of proposal in terms of value I know valleys got eliminated because of.

Issues with them.

<unk> from.

From state and governmental organizations at the city debt and control for their site and also.

Neighborhood pushback Golden Nugget got eliminated because they basically had a backup contract on the valley site. They didn't actually have an option on it so various different ones.

<unk>.

And and now its down to to us in Cordish and.

And it's really going to be about location, where where folks want to put it.

The ability for that location to also win in a referendum.

Because the citizens get the vote now on that.

And I think.

Yes to some degree what.

<unk>.

The City selection committee feels.

About who will.

Create and develop the.

The debt the highest quality product.

And.

And so I think those are going to be kind of the remaining consideration. In addition to what are the economics that are going to go to the steady so.

In terms of the underlying real estate.

As a former Philip Morris sites do you actually have a contract with buy the loan or are you going to lease land and debt.

Yes, we have an option deposits, we have an option to buy it.

Okay.

And the timing of sales made in June.

So that's just around the corner.

Yeah.

Honestly I suspect we'll know if we've.

One of our last in the next two weeks.

Okay.

Hey, Greg if you one.

Do you have to divest your MGM Harbor.

I already interest.

Conflict of interest.

No.

We do not.

Yes.

Okay great.

Another question is regarding radio advertising that's true.

Traditionally, it's more local and <unk>.

You talked about the <unk>.

Interest interest from advertisers from minority owned media.

With that what's the component right now between the mix between national local and how much would that increase your national advertising too.

Yeah look I.

Our local radio business.

It's about 27% national or is it higher than that now Peter.

Right now it's around 30, it's around 30 on it.

It depends in a political one nonpolitical, obviously, we tend to be at all in a political year.

Yeah, and look I can't I can't tell you how much it's going to help.

That depends on how many clients each of these people. These AD agencies have at any given time.

Yeah.

They've given us percentage targets for where they want to go bad debt percentage target leaves.

Leaves out.

Sum total spend is right yeah.

I can just tell you that it has been helpful is continuing to be helpful and people are making commitments and that only good news for us.

Right.

Considering the <unk>.

Joined the cap media platform.

Because some of your competitors talked about.

Thank you Mark.

We're already part of it.

Okay, Yeah, yeah catches catches basically.

The day facto only national Rep in the radio business.

Alright.

Good.

Right I.

I'm sorry, Bob.

Under that is that owned by Scripps.

It's not it catches on by I heart.

Okay.

Okay, I'm thinking about Capex.

Moving on the TV side, Okay, Yeah, Youre thinking about the cats TV networks now different company.

Okay.

Gotcha.

Last question is regarding the ATM program that you said.

The aged AR has been used up so I think during the quarter you have spent one $5 million.

Whereas the shares.

Good day.

I said, we view I didn't say it was used up is that we've used it as a the only shares that we've issued.

Im sure we still have outstanding capacity.

On it but we also stood up a class D for the U K.

Okay.

Shares that we have not availed ourselves of.

As of yet.

What's the size of our debt.

ATM is it 50 or 25, it's the shelf is 50, but we're putting a CRO subsequent increments.

We have a $50 million shelf registration, but our pro sub debt will register is going to be 25 million zone.

Okay.

Tariffs now dollar rate.

No that's dollar amount.

Okay, and how much do you have left one under a.

Uh huh.

I think we took.

So from my head about 19, but I'd have to I'd have to double check.

So we have significant capacity still under the second $25 million.

Gotcha.

Alright, Thank you very much thank you.

And our next question is from Ben Uglow from ODM. Please go ahead.

Hey, Thank you guys for taking the question.

On Richmond, I'm, just trying to understand the purchase price and potential accretion for you guys. So you are saying it would kind of all things if all things go well it could be an equal contributor to your radio television EBITDA So call it.

One of between $100 million to $130 million.

$600 million purchase price it seems quite cheap compared to other gaming transactions am I thinking about that the right way and also does the $600 million include the land or would that be additional debt.

Actually the $600 million includes land includes everything actually includes from soft costs like interest and everything else too so.

I mean.

Yeah, that's kind of the math right now that's how we're looking at it right and but all of this stuff is contingent upon gaming studies that we all.

The state hires a company who project with gaming revenue would be by market given.

The structure that they have set up in terms of the number of licenses et cetera, then we hire people to come in and drill down on the market and give us an estimate what they think the market size will be based on household income population et cetera.

And then you overlay.

A tax rate that whatever the state is going to charge you and then what you think the.

The local city charge is going to be then you layer in whatever else additional you're going to do in sort of a host community agreement, where you're also going to make some financial commitments and then you layer over an expense structure, which your operating partner.

Has yes.

Yes, a very strong and deep knowledge base, because they they run casinos and it spits out an EBITDA number and yeah that EBITDA number is you know is 100 or better right and.

Ah.

But I'm going to caveat all of this is that gay.

Gaming studies have been wrong right like you can miss him some do better some.

Do worse National Harbor was actually right on target if that actually not.

A little better.

We first saw that business plan I think it said that the gaming revenue was going to be.

In the sixes.

And cash flow EBITDA was going to be $1 75 in gaming revenue has been.

In the low sevens and they've done a couple $100 million of EBITDA of.

When MGM did Springfield.

That study was wrong and they missed the mark right. So for us yes.

That's the math, we look at but we'll know one.

We'll capitalize it and think about the risk from that.

Yet the perspective of whats our downside right.

How far off could this be.

And and its still be.

An accretive.

Opportunity for the company.

And that will inform how much we're willing to spend and bid et cetera.

To also protect our downside, but yeah that that's kind of the math right now.

Got it.

All of that context, and then I'll kind of follow up onto the ATM program that you guys are running obviously.

It's dilutive to the equity and I guess I'm just curious when you guys think about bolstering liquidity or.

Raising capital for these type of projects.

I guess, what's the thought process behind diluting our equity when it's trading at $2 50 a share.

Kind of comparing that to the current rate environment and kind of fixed income instruments. I mean are you guys yeah.

Equities cheap and I'm, just trying to understand that.

That's a good question.

I still think we have too much leverage.

I knew for sure we had too much leverage when we were levered at six seven times.

Yeah, now that we're a turn that lower coming out of a.

Out of a pandemic I still think it's too much leverage and should go down we bought back a lot of shares over the years.

I think we bought back.

Half the company probably more than half the company now probably at an average rate of.

Dollar right you used it was 80.

We had always said that in order to Delever parts of fund.

The projects that we think can build value.

Were potentially a seller of stock.

At three.

$3 level.

On the DS.

We're a seller of stock of the A's.

At these higher levels, we haven't been a seller where it's at now but we were we were a seller in the sixes.

And the <unk>.

And how I think about that is that's a yes.

That's a positive trade for us given what we.

Bought shares back for in the past and if you still think you have too much leverage.

I do yeah, I don't I don't think this company should be living in.

In the high fives in terms of leverage so.

And so that's that's how we think about it.

And in the.

The family My mother, and myself, probably one close to 50% of the shares. So it's really we're taking the <unk>.

The biggest hit on the dilution.

But I think getting into a leverage range.

Where you are comfortable in that.

And it's sustainable is more important for the long term health of the company.

And so you know that.

That's how I think about it.

And then just jumping in just jumping in from the previous gentlemen question.

I just checked on the $21 $9 million available on the class a.

The amount of the 25 or so.

Still substantial.

<unk>.

I appreciate all that context and color makes sense just last one from me. Obviously you guys are extremely busy on the gaming initiative. When you think about kind of your broadcasting assets in stations kind of radio T V.

You guys have done so.

Selective asset optimization on the M&A front do you think that your portfolio is kind of where you want it to be as it stands today and kind of how do you kind of view the current M&A landscape. Thanks very much.

Think that the answer is now I think our assets should ultimately be combined with a.

Larger radio platform to get more scale, particularly in the markets that we already operate in the swap we did with entercom to get out of St. Louis and.

And get larger in Charlotte has been great.

<unk>.

The businesses is just a lot more stable when you.

<unk> got largest share shares in and Youre in multiple formats, and it's also becoming more of a scale business.

Competing against I heart, and Entercom and Cumulus, Yes, I think that now that there is not.

Radio DRAM on the on the horizon.

That our company probably has the best well positioned to be.

One of the central platforms in the consolidation.

And that's absolutely what I think should happen in radio I've said it before.

And Oh.

And why aren't we focused on it now because nobody wants to do anything now because nobody has any idea what their real EBITDA is right now you're coming off of COVID-19, I mean, cumulus used to do $210 or $216 million in EBITDA and they went down to like 80, something last year and now theyre going to bounce back to somewhere.

Between $1 12, and 120 I don't think that they think that's their EBITDA equilibrium right. So nobody wants to do a deal.

Nobody wants to buy nobody wants to sell right now because you just don't know what assets are worth.

But as soon as we get through that I think are I.

I think we should be focused on doing something.

Makes sense I appreciate that Ms sneak in one more.

You mentioned kind of target leverage do you have a number in mind there.

And the force.

Yes.

Great appreciate all the contacts and answering the questions today. Thank you guys.

Thank you and the next question is from Matt Bank.

Please from legal and general Please go ahead.

Hey, guys. Thanks for taking my question just to follow up on the last one did you sort of imply that you'd be the consolidator.

Celebrate.

This consolidation of debt of video assets.

Yes.

That's a good question I have always said that we are willing.

And assets to be on either side of a transaction that created value and made sense I like the radio business.

Quite frankly.

There then.

Co prior to COVID-19 it hit it actually stabilized.

<unk>.

And so.

Like the Entercom deal was interesting because I was like we either need to leave Charlotte or you need to leave Charlotte.

And I said I'll do either.

In fact, they were actually going to buy our stations in Charlotte two and a half years ago and then they backed away from it. So we ended up.

I in them.

Im always willing to be on either side of a transaction if I had to handicap it.

Yes.

They're not a lot of radio operators left with people, who know the business know how to run a radio stations like running radio stations don't mind. The business. So I would have to say that given the current landscape, we would probably be the surviving entity.

Just because.

I don't see IHOP is not going to be able to do anything.

Substance as needed to Entercom.

<unk>.

No.

But again I'm willing to look at it.

Either way, but if I had to handicap, it where the where the surviving entity and I'm happy to and I'm happy to be that and I'm happy to be.

The management solution for that because we like the business. We know the business at the radio business has actually helped us get into these other businesses, we would've been able to get into the cable business. If it hadn't been for the radio business. The radio business is absolutely help.

Helping us.

In getting to the gaming space so.

Uh huh.

But if there are opportunities.

There were markets that made sense for us to leave our swap around because we created value okay.

We have no intention of.

Exiting the business altogether the business that we're creating we think we have a lot of opportunity and upside. So I don't want to give anybody an intention the intention that we're at.

A stellar from that we're leaving the business standpoint.

We would be a seller or a swap or.

<unk> assets in order to create value.

What should we can then use to delever or deploy into other areas that we can grow faster does that makes sense.

That makes sense.

Ladies to that because it seems like.

Wholesale.

Our transactions.

Difficult just given the ownership growth since then.

More sort of market by market and the.

Swapping.

I just had a couple of stations that simple.

Yeah.

There really are no buyers.

If somebody put a radio company up for sale today, I mean, I think that happened I think there was a process.

For town square at one time, it Didnt ultimately materialize.

Ultimately that materialized in the major shareholder getting.

Just getting bought out.

I don't think there's anybody who wants to go out and just.

By Big Radio company, but.

For a company like ours.

There are significant synergies for matching up in markets, where we're not fully yet so Indianapolis Dallas.

Cincinnati, Washington D C.

There's there are significant cost savings.

If you look at us in.

<unk> another company like a like.

Like accumulates.

Yeah.

Between corporate and the seven markets that we overlap in.

There is there is there.

There's a lot of cost and revenue synergies there I think that somebody needs to take advantage of that.

Alright, that's helpful and just to put it all of them.

Previous question that was asked.

The road show.

Soft indication income EBITDA.

For the full year around 130, assuming debt.

And we're seeing just a stat.

And from what Youre, saying.

With that EBITDA number seems like I know you should be generating a pretty healthy amount of free cash flow.

I mean are you.

What do you plan to do with that cash how.

How are you going to say.

She's going to see 1000 seats that you can invest in potential casino.

Buyback debt.

How would you should think about that.

So I think rough.

Roughly $70 million is not a bad number to think about.

Free cash flow for this year and.

It's probably not that much of a coincidence.

Yes.

Around the quantum give or take a bit on the Richmond investments. So we could invest a year's cash flow and that project. If we don't I think we will keep it on the balance sheet and look for other opportunities and we also have the ability to prepay.

10% a year on the notes so up to $82 $5 million, we could prepay at one O. Three on the notes. So we will look at that we will see where we come out on Richmond, and then make.

The appropriate capital allocation decision after that but to your point I think our cash and liquidity position at the end of the year will be extremely robust.

So how does that guide with Joe's earlier comments that leverages <unk> to reduce the leverage but then you sort of take all the free cash flow and investing the entity that is sort of outside the U S.

Strictly right, so and how does that sort of philosophy at work.

Well.

That was always the plan when we marketed or.

Our refi, we talked about gaming opportunities and we've got a specific carve out.

For additional gaming investments and.

And we talked about we talked about Richmond.

And.

You heard the gentleman earlier, when he asked about the Richmond math.

And should we be fortunate enough to be chosen the math works right.

It'll be a it would be a great transaction and it would be accretive to the company and worth doing.

And so you would.

Opt to take.

A year's free cash flow and invest and enrichment and.

Net net you are going to improve the company's.

We're going to improve the company's equity value and <unk>.

Lower the risk.

On its debt hopefully our securities move as well and.

If they do then you could.

So.

Yeah.

Issue, you know you could issue more equity and pay down debt.

If we only put $70 million in Richmond will probably even have leftover cash.

Pay down some debt.

As well so.

And so that's how we kind of look at it right and if we don't win Richmond.

We will pay down debt and Delever.

Even more so than we might otherwise so I think the yes, I think the theories.

Work hand in hand, it wouldn't work hand in hand, if we Didnt think Richmond was a significant opportunity.

But what we do.

Got it and then I think like this.

<unk> put option that become exercisable I think alike.

'twenty two 'twenty three I think I mean, I think if you sort of indicated that the plan.

Which put what you talked about MGM put option.

Yes, yes, it's exercisable every year. It's just this year, it's exercisable at its highest.

At its maximum value, which is seven times whatever their EBITDA is but it's exercisable every year and yes, we always have the opportunity to put our stake in MGM and now we think Thats, probably worth you know north of $90 million and that's another way to Delever, yes. So the multiple is fully back to the end of this year seven.

Times EBITDA with no balance sheet adjustments.

And then it's an annual evergreen so we get the chance to do that.

Every Q1 from from here on out.

Is there a plan to market share.

What are you thinking there.

We haven't talked about it but I wouldn't monetize this year because they are probably still dealing with.

Theyre not theyre not even up at a 100% capacity. So there is still dealing with the.

COVID-19 effects one there on their business, Yeah, I don't think Theyre EBITDA would get back to $200 million this year I could be wrong.

But yes, I wouldn't monetize it to share plus it's stable.

And so I think you monetize it when you need the cash for something whether that delevering.

Or.

Some other value creating transaction, but.

Okay, great. Thank you very much thank you.

Operator, we've got time for one last question.

And actually there are no further questions in queue at this time I'm sorry, Mr. Lehman just queued up one moment please.

Oh, sorry, I'll just stop.

A quick one.

We said one last one.

Yes.

One they will do it.

Can you talk a little bit about the sports betting potential revenue opportunity and whether or not you see that is impacted at all by your success or lack of with Richard.

Say that again, we look at it all the one now.

Your sports betting advertising opportunity I mean, I'm wondering John about your AD categories, even though one doing strong.

We have not seen the level of sports betting advertising activity as other companies have because we don't have and we've got one sports station yeah and.

And.

We had one in Washington, but we traded that as part of the <unk> swap we picked up a sports station in Charlotte actually I'm not sure we had one.

Enrichment, but we also just.

Did something down there.

We don't run that any longer one one of the competitors does.

So.

So we we havent been benefiting from that.

I do think that if.

If we're able to win win Richmond will have a very different view on sports betting and how the company plays in it.

Cause we will pick up a one <unk>.

Sports betting license, along with the bricks and mortar.

License.

So the company probably will start to think about.

Our brand and how it participates in sports betting.

And not just from an advertising standpoint, but from an operator standpoint, yeah, one who can we partner with them.

Et cetera et cetera.

Perfect.

Hello.

Operator, thank you very much and everybody. Thank you we'll talk to you next quarter as always feel free to reach out to us directly.

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