Q4 2021 Urban One Inc Earnings Call

Yes.

[music].

Ladies and gentlemen, thank you for standing by and welcome to urban one's year end earnings call. At this time all participants are in a listen only mode. Later on we will conduct a question and answer session and instructions will be given at this time.

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

Urban one cautions you that certain factors, including risks and uncertainties referred to in the 10, Ks 10, Qs and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward looking statements.

This call will present information as of March 3rd 2022. Please note that urban one disclaims any duty to update any forward looking statements made in the 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 the call or in the company's press release, which can be found on its website at www dot urban <unk>.

Emerald one dot com.

A replay of the conference will be available from 12 PM Eastern March three 2022 until 11 59 P. M March seven 2022 callers may access the replay by calling eight.

662071041 to repeat the toll free number 8662071041 international callers may dial direct at four O 297%.

00847 the.

The replay access code will be 2519146.

The access code 25191.

Four six.

Access to live audio and a replay of the conference will be available on urban one's corporate website at www Dot urban numeral 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 authorized or may be relied upon.

I'll now turn the call over to Alfred Liggins, Chief Executive Officer of Urban one who is joined by Peter D. Thompson Chief Financial Officer. Please go ahead, Sir Thank you very much operator, and welcome to our fourth quarter results and year end conference call also joining Peter and I are Karen.

Wishart, who is our chief administrative officer, Jodi jewelry, and Chief Financial Officer at TV, One and we have Christopher Simpson, our general counsel.

Also on the call and as the press release date.

Very happy with our Q4 and.

And most of all our full year outperformance, we had guided EBITDA to be $1 40 to 145 that guidance was up from $1 35 at the beginning.

Of last year, and and we were able to exceed that and come in at.

150.

And some change so very proud of the team.

Across all of our platforms.

They performed exceptionally well.

During COVID-19 and as we come.

Out of Covid.

We are continuing to accelerate that performance.

The demand for our platform and our audience continues to be very strong as Ive stated.

I expect this demand to continue for the foreseeable future.

Do you believe there has been a paradigm shift now at.

At how advertisers look at.

Minority targeted and focused audiences.

<unk> inclusion in as it relates to <unk>.

Ownership.

In media the fact of the matter is it's.

It's always been a very logical business proposition now that the.

The audiences.

<unk>.

The Hispanic and African Americans.

Our increasingly valuable as the country continues to grow and its minority presence and and now.

Think more and more advertisers are really.

Putting their investments.

In those areas and so we're very pleased that Liam.

A big beneficiary of that having.

In this space for over 40 years so.

Peter is going to take you through the details of the numbers and the operations there is a lot.

For him to say a lot to unpack here.

And then after that we will go to Q and a Peter thanks.

Thank you Alfred.

As Alfred said, we were very pleased with our full year 2021 numbers.

First quarter of 2022 has started very strongly as well with advertising pacing is up across the board.

First quarter core radio advertising revenue, excluding political is pacing up low double digits.

The auto category is still trailing prior year.

But services health care retail and entertainment are all showing very healthy increases.

Reach advertising revenues are also pacing up strong double digits as AD sales for TV, one and also the digital segment revenues are pacing up strong double digits first quarter.

So as we move into this year.

We've had a good start there was some noise in the fourth quarter expenses, which I will talk about in more detail later, but I think the key points.

Firstly that we were missing around $13 $9 million of political advertising spend in the quarter and we made that up with some lower margin business.

Such as events, which obviously came with higher expenses.

We also had higher sales commissions driven by increased revenues and we had higher annual bonus and incentive plans the skewed into fourth quarter expenses.

We ran almost 50% more hours of original television programming in fourth quarter and this led to an increased content amortization expense of TV one.

In our digital segment invested more in content contract acquisition.

And also had higher accruals full year incentive based compensation.

So the quarterly expense run rate was inflated by these various issues and Hasnt really fully representative of what we expect to have going forward.

Consolidated adjusted EBITDA was $32 5 million for the quarter down from $41 7 million for 2020 and up from $27 5 million in 2019 full year, adjusted EBITDA was $150 2 million compared to $138 million.

In 2020 on $133 5 million in 'twenty.

2019.

This exceeded our full year adjusted EBITDA guidance for 2021.

As I mentioned with some favorable signs for continued success in 2022 net revenue was up by 15, 3% year over year for the quarter ended December 31, 2021, and approximately $171 million.

Net revenue for the radio segment decreased 11, 6% year over year in the fourth quarter due to non returning political advertising revenue.

Political revenue was down $10 million in just the radio segment and down $13 9 million overall.

Excluding political net revenue for the radio segment was up 15, 5%.

Local AD sales, excluding political were up 11% and national AD sales were up 12% excluding political.

Most of the major advertising categories were up from last year, except for political food and beverage and automotive were also down.

And automotive was down 21, 8% due to supply chain challenges in the auto industry.

Government and public was still our biggest category driven by government funded pandemic outreach amongst other initiatives.

The entertainment category saw the biggest increase in the quarter from last year up 166% with increases from all of the entertainment product categories.

Services healthcare financial telecoms travel and transportation also all saw double digit increases compared to last year and retail was also up.

Net revenue for reach media was $19 3 million in the fourth quarter compared to $10 $3 million in the prior year.

<unk> revenue from the Tom Joyner Fantastic voyage was approximately $7 million.

The remaining revenue increase was due to strong demand for network audio.

Adjusted EBITDA in the <unk> segment was up by $100000 for the quarter and by $4 3 million for the full year.

Net revenues for our digital segment increased by $4 $7 million in fourth quarter continued demand for Blackstone and targeted brands drove the growth in direct advertising sales on <unk> digital.

Adjusted EBITDA decreased for the quarter by $1 9 million, but increased by $11 2 million for the full year compared to 2020 and by $16 6 million compared to 2019.

We recognized approximately $54 $6 million of revenue from our cable television segment during the quarter, an increase of 19, 9% cable TV advertising was up 43, 6% excluding political would have.

Favorable rate volume impact of $1 7 million two.

$2 $1 million of free video on demand revenue.

Three increase in Cleo television.

And $2 $1 million favorable audience deficiency unit per annum.

Cable TV affiliate revenue was up by five 7% driven by rate increases unlike converting free subs paying subs, which was partially offset by churn.

Cable subscribers for TV, one as measured by Nielsen finished fourth quarter 'twenty, one at $49 3 million up from $42 3 million at the end of Q3.

<unk> had $43 8 million Nielsen stuff.

We recorded approximately $2 million of cost method income less admin expenses for our investment in the MGM National Harbor property for the quarter compared to $1 $6 million last year and $1 $7 million in 2019.

Based on internal estimates of publicly available information a put option is currently valued at around $100 million.

Mind investors, we have the option to put 667% stake and MGM National Harbor at seven times trailing EBIT.

Operating expenses, excluding depreciation amortization impairments and stock based compensation increased to approximately $106 $1 million in fourth quarter compared to $74 1 million in Q4 of 20 <unk>.

Of this increase $3 $5 million is for the non cash charge on the Ceo's employment agreement award on $1 9 million is for the one time casino Chase costs. Both of these amounts are added back to adjusted EBITDA.

As a result of the continuing reopening the economy and increases in revenue.

Following operating expenses increased from the prior year.

Employee compensation increased by approximately $5 $9 million programming content amortization.

Cable TV segment increased by $5 8 million.

Revenue variable expenses increased by $4 $2 million outside services, including contract talent and consulting fees increased by $1 $7 million marketing and promotional expanding expenditure increased by $1 $4 million.

<unk> expenses increased by $7 1 million of which $6 6 million was for the reach cruise.

Radio operating expenses were up $3 6 million.

Music license fees employee compensation and promotional spending for the main expense increases with radio reach offering expenses.

$8 5 million against a revenue increase of $9 million.

You mentioned crude revenue was $7 million in the cruise expense was $6 6 million.

Sharing expense and affiliate fees will hold up.

Operating expenses in the digital segment were up $6 $4 million driven predominantly by incentive compensation in variable expenses related to track traffic acquisition sales cable TV expenses were up $7 $6 million year over year programming content.

<unk> increased by approximately $5 8 million in employee compensation increased by approximately $1 million.

Operating expenses in the corporate and elimination segment were up by $5 8 million, which included the Richmond Chase casino costs and $1 9 million in the employment Agreement Award.

The $3 $5 million.

For the fourth quarter consolidated broadcast and digital operating income was approximately $44 $1 million decrease of 14, 9%.

Interest expense was approximately $15 9 million for the fourth quarter compared to approximately $18 7 million for the same period in 2020.

Company made cash interest payments of approximately $187000 in the quarter since the semiannual debt service payments are due February for us and the focus for us.

Provision for income taxes was approximately $1 $2 million in the quarter and the company paid cash taxes in the amount of <unk>.

$369632 net.

Net income was approximately $6 6 million or <unk> 13 per share compared to $26 4 million or 58 cents per share in the fourth quarter of 2020 capital expenditures of approximately $2 $1 million and the company executed a stock vest tax repurchasing 2530 shares of class D. <unk>.

Common stock in the amount of $9.

As of December 31, 2021, total gross debt was $825 million ending cash was $151 $7 million and net debt was approximately $673 3 million compared to $152 million of LTM reported adjusted EBITDA for total net.

Leverage ratio of 448 times.

We believe our stock is currently trading below market comparable given a valuable to auction.

MGM property, a high cash balance reduced net leverage ratio strong adjusted EBITDA performance, particularly from digital cable TV network radio segments and also our ongoing free cash flow generation, we will continue to be opportunistic, but prudent in terms of share repurchases.

And we expect the board to authorize a stock buyback program as part of our capital allocation strategy.

We currently expect full year 2022, adjusted EBITDA to be between $145 million to $150 million absent any significant economic slowdown with potential upside in political and digital revenues exceed expectations.

That I will hand backs out thank you.

The other important topic that people want some color on what's going on with our efforts in Richmond on the second casino referendum.

Yeah.

<unk>.

The city.

Council of Richmond, Virginia voted eight to one.

Two.

Ill ask to petition the court for a second referendum to be.

To be put on the ballot.

For this coming November .

However that was that was the first step and then.

There was a.

There is an effort.

In the General Assembly.

In Virginia.

Bye.

A state Senator that represents another steady.

Petersburg to actually.

Block that referendum and move.

The.

The casino license opportunity out of Richmond to Petersburg, there were two bills one in the house and one in the Senate.

That would do that.

The one in the house side the one in the Senate also got killed we've been.

Down an enrichment.

Following that and.

And advocating for the opportunity for Richmond to have a second.

Chance to vote on this the city Council also committed too.

To offering up legislation that would reduce property taxes, and specifically target casino revenues to two.

Two schools and other capital projects so it.

It is a different it is a different project.

Even though those two bills died.

There is language that's been put in the budget Bill currently.

That.

Wood.

Secondly block Richmond from having a second referendum this year and would not allow us to have a another referendum into until November up 23 and with study.

The viability of Petersburg as a potential location, yes. So.

We used for this year does that look like.

That it will move out of Richmond currently this language would prohibit.

Regimen from.

Having another referendum this year.

But.

Yes.

If they chose to.

Could do it in 'twenty three there is still a lot of moving parts in the general Assembly that session.

Goes to till mid March.

A lot of politics involved.

Involved.

With this with casino issue quite frankly that has nothing to do with the viability of the casino being enrichment and has everything to do about <unk>.

Certain legislators wanting at other places and willing to trade off things.

In terms of votes for certain issues in order to get it.

So very fluid.

At this point in time, but.

But we're highly engaged our partner in the Richmond Casino operating partner Peninsula <unk> their card the Peninsula Entertainment.

<unk> has recently a week ago announced that they were being sold and they are actually being sold to Churchill Downs incorporated which is a much larger gaming entity.

That obviously.

I don't want to say, obviously that owns the Kentucky Derby. If you don't know who Churchill downs is but most people think of them as the Kentucky Derby, but theyre also a very large gaming operator and own a number of gaming facilities and class and casinos most of there.

They are gaming operations are class III slot machines and to also table games, there and the <unk>.

Florida market there in the Maryland market.

Theyre all over Kentucky.

They're in.

And Ohio, They just won the class III license in Terre Haute.

Indiana.

A very.

Large.

Gold plated.

Partner and even though our partner in peninsula, very committed and we liked.

We like working with them.

Folks at Churchill Downs, who had the opportunity to.

I've talked to you last week and actually meet yesterday are very excited about the Richmond opportunity and want to be.

Very helpful in trying to make.

To make sure that that opportunity is not lost and we get.

Resurrect a chance for a second vote. So I don't have any news.

I'm not here to tell you that it's dead Im not here to tell you that is going to happen.

It's 50 50 at this point in time, but.

We're still alive and still hopeful and still put an effort into it so.

Yes that also.

Dovetails into another topic of conversation because I think in the last conference call, we talked about and Thats debt repayment people, we've got a bunch of cash.

As Peter articulated and and quite frankly.

<unk>.

Until we know what's going to happen with the RBA casino opportunity.

We're kind of sitting on that.

For now, but I suspect that <unk>.

As the year moves on we are continuing to build more cashes as operations continue to perform great.

As they have been.

But I would not be surprised.

No.

If we ultimately decided to.

Purchased some of our debt.

In the open market.

Which were which.

We're allowed to do therefore retiring that debt.

I don't want anybody to think that we're just at the mindset.

Stockpile cash for the sake of stockpiling cash.

But it really is largely related to whether or not we're going to have to make a significant $100 million investment in.

And the casino opportunity, but.

Things are going well im optimistic about.

Where we sit as a company.

Sullen.

And nervous about the geopolitical backdrop as I'm sure. We all are.

In this country and what does that mean for.

The economy here at home.

But we.

We are doing.

Yeah.

We're doing the best that we can and.

And then.

Ever changing media environment and in an uncertain geopolitical environment.

With that operator, I would like to open the lines up for questions.

Ladies and gentlemen, if you wish to ask a question. Please press one then zero on your phone.

Chris One zero.

Signal you wish to ask a question.

Yeah.

And we're going to take a question from the line of Patrick Wang with Voya investments. Please go ahead.

Yes. Good morning, Thanks for the question.

I noticed that the.

Our debt balance is down to 811.

Does that mean that you have repurchased some of the notes in the open market at this point.

So no cash on hand at this moment.

No. So that's just.

When we reported we reported net average issuance costs. So any any OID. So that's just a net number the gross debt is 825.

As I mentioned.

As I mentioned earlier.

We are in the mid one third is in terms of today's cash balance.

I will just put it in the second.

So yes, no the gross that Hasnt changed and bring no no.

No purchases.

Cash balance as of this morning.

It was about $137 million.

Okay. Okay.

And so what is the timeline now.

<unk>, what's going to happen next.

Just kind of give us.

<unk>.

On the development of the casino projects.

I think that over the next 30 days, we'll know where we sit on our chances of run on a referendum.

<unk> 22.

Versus having to run one and 2003 and yes, a number of things if it goes to 'twenty three we got to there is.

Theres a number of other things that happen.

They have to happen.

Sort of.

Secure whether it's us.

Our deal with the city doesn't go that far right. So the city has got ultimately decide that they're okay wanting to go to <unk> to 'twenty three right. So those discussions are ongoing right now everybody is working hard.

The city and us to try to get it in 'twenty, two if where we end up.

Hi.

Is that we can't run to 'twenty. Three then everybody's got to sit down and say, okay are we willing to stay committed to this project for another.

Year end.

Three quarters right access now three quarters about a year and a half.

And I've been in and out of Richmond pretty much every week I was just there yesterday.

So we're working lockstep with the city.

They want to see this happen obviously, they don't want to have this opportunity to move to another jurisdiction and.

And so we're all working on the same page but.

So I just said.

Next 30 days, we will know whether or not we're going to be at a run one this year and then I think over that period of time, we'll probably have some clarity on.

Whether or not.

Coalition, all wants to hang together and pursue it in 'twenty three.

Right right. So what's the likelihood that Petersburg, we will get it.

I have no idea I mean, it's not going to happen this year.

Yeah.

Hello, everybody wants me to handicap. This this is politics I can't I can't Handicap, how and even if I gave you a handicap I also can't handicap the boat right. So last go around.

Had pulls that said that we were.

Prior to the RFP, 62% of Richmond, <unk> were in favor of gaming after the RFP process. Because there are a number of proposals that were proposed in in kind of middle to upper middle class neighborhoods and people went bananas the whole NIMBY thing at.

At the end of the RFP process.

47% for gaming, 45% against gaming then after we got chosen it was 52% to 53%.

For gaming.

Five undecided and the balance against it and then once the referendum was run and you had.

Surge of <unk>.

Conservative voters across Virginia come out we lost.

58, 5% to $49 one five so I.

I don't want to lead anybody on that.

We're working this.

The political thing.

Political environment right now is uncertain, but even if we get it right, even if we get a chance to run a referendum.

Again, it's a 50 50 shot right. So if you own our securities our own our stock you should really be focused on the fundamentals of the base business.

Our cable networks or the return of our radio business.

The digital business, which is now really starting to take flight the value of our MGM stake, which we own the put is that maturation theyre doing exceptionally well and think about the casino as upside if it were to happen.

Right right.

Could you also talk about your <unk>.

On radio you before you talked about our proposal.

Station swaps to get more economy of scale.

Is there any recent update for for the plant.

Yes, we can.

Can you to look at stuff.

We're.

Focused.

Sure.

Primarily on opportunities that.

Allow us to get and market scale.

And.

We are currently analyzing a number of opportunities.

We do not have.

A.

Definitive agreed upon deal to do anything.

At this point in time.

But I.

I continue to believe that scale in the radio business.

Makes sense.

<unk>.

I'm of the opinion that the radio actually it's not an opinion the radio business at least in the markets that we've operated in have been declining over the last whatever 10 years kind of low single digits and I think our markets. The average decline is then like minus 2% some markets are doing better.

Than others and again I'm just looking at the market.

That work that we are in so.

It's a slightly declining business and.

You can make money in it.

And I'm, not saying that that doesn't ultimately.

If you get further consolidation and ultimately.

There.

Radio is undervalued in terms of its cost per thousand and I do think as the industry consolidates and you've got.

More big players.

Really out there.

Harping on that and being able to deliver value for advertisers and ultimately I think you could get some lift.

Cpm's, but anyway, notwithstanding that when you underwrite any sort of acquisition.

Radio I think you need to do it from the mindset that this is going to be a.

A business that could be declining in low single digits and how do you manage that that should inform what you pay that should inform how youre going to manage that business.

And.

And so that's what we're going through until you got a.

You've got to look at acquisitions I think through those lenses.

Through that lens and.

But I think ultimately it makes sense I also think that it will take us out of.

Now I'm, not saying anything that we buy won't be in our format wheelhouse, but I think if we do participate in further full scale radio consolidation it will necessitate us going outside of our traditional box.

Urban radio, but thats not bad we did that in our swap with Entercom and Charlotte North Carolina, and that's turned out to be great for US. We now have a real cluster they are that Scott.

Some scale and instead of being a market, where we had eight or $900000.

EBIT Don used to just breakeven now we have multi millions of dollars of EBITDA and and we've got a real broad offering.

For advertisers, including urban.

I'd like to have a collection of clusters that look like that.

End markets so.

That's where we're sitting right now.

Paul.

One last question on the margin this quarter.

About $10 million shy of last year's EBITDA level or is that just because of the political advertising the lack of thereof for.

There are some other one time investment.

Digital side, Thats dragging down our margins.

And then can we.

Look for 2022 margins, probably a bit higher than the first quarter because these investments.

Yes, so look I'm, sorry, Abbvie there has been great.

Yes revenue is great.

The political obviously was high margin high margin.

That wasn't there this quarter and if you think about the crews for example that was $7 million of revenue $400000 of profit we were very happy with it we wanted to run a big scale of them.

Post pandemic and see how it went but honestly very diluted.

Margins and then as I also mentioned.

<unk>.

Q4 was expense heavy and is not really representative of a regular quarter, we have the TV one amortization higher.

We had incentive payments that were for the full year, but we didn't know what that was we're going to be until the fourth quarter. So there were heavy incentive payments booked into fourth quarter. So to your point and the margins were depressed in fourth quarter I am naturally so and.

And we would expect to see margins general return too.

Historic kind of run rate.

Okay. Thank you.

Once again, ladies and gentlemen, if you wish to ask a question. Please press one zero.

We have a question from the line of rape Lehman was Eaton Vance. Please go ahead.

Hi, Good morning, Thanks for taking my question just wondering if you could talk about your full year guidance.

And EBITDA for 'twenty, two just some of the puts and takes what could go better or worse and.

With it being political.

Why why you see it being down year over year.

Yes, good question.

Ah.

So our digital business.

He has exploded.

I think the budget was last year was $30 million give or take and we did close to 60 right now.

Mike Hi, <unk>.

So.

This is a business that we started in 2008 and we struggled with it for a very long time now digital publishing is hard.

It's switched from being sort of domain website domain oriented than two.

Search oriented than to social oriented.

And now every time any one of the big platforms changes an algorithm. It changes your your audience size contents expensive you got to give Google and Facebook.

A large part of your revenues so for years and years and years. This business either broke even lost $1 million or made a $1 million.

Prior to going into the pandemic, we started to cut a lot of expenses.

We made I think $900000 in and.

2019, correct me, if I'm wrong, Peter Yes.

We had a low expense base going into the pandemic, we trimmed it some more although be it not as much as other places, but then you get this uplift in.

An African American audiences target social equity and demand started to really increase.

Dramatically.

And then we made $6 million I think in 2020.

<unk> going into 'twenty, one we're like okay.

And by the way traffic has been.

The same are declining we didn't know where the demand was really going to go 21. The demand was even stronger right now and so we ended up making like $17 million last year.

So quite frankly.

The answer is is we're budgeting for digital to go down just because we don't know where.

That demand is going to sort of peak, we don't know how much of it is a moment of time a moment in time I.

I do believe that the paradigm has shifted as far as advertisers wanting to put dollars towards this audience and toys.

Our minority owned.

Entities, but I, just don't know when it levels off if it if it declines et cetera, So we budgeted digital down.

And so that and yes, we do have political and I, just don't know but quite.

Quite frankly.

We took digital down from $17 $5 million performance to a $10 million budget, that's a big number right now.

Ironically, though.

It's actually doing really well in Q1.

So there is there is potential upside, we're just allowing no.

We're allowing for there could be some withdraw of.

Of the.

Extraordinary demand that we've seen.

So that's how we're thinking about it and political could be.

Off the charter as well and I think Peter articulated that there could be upside there you want to yes, I mean look segment by segment.

Our radio properties, we are anticipating higher revenues and higher adjusted EBITDA year over year in 'twenty, two and the same for TV. One you know incredible performance great AD sales growth.

We expect EBITDA growth this year, so really what alpha saying as you know when we when we kind of balance out all of the segments.

We are least certain about digital it's a newer business. So it has been going.

It's been growing like.

How long can we continue that and there are more factors at play like how many impressions can we deliver what's traffic doing who is changing their algorithm. So we kind of dial that back as Alfred said, but to your point the other segments with forecasting in that guidance.

And so look here's the thing you'll know what we print in Q1 right you can track.

We are doing.

Quarter to quarter. So at some point in time people will be able to figure out how they're going to they're going to do better than this $1 45 to $1 50, we contemplated not giving guidance at all.

But.

People.

Kind of like to know something now and so.

We felt comfortable.

Putting out $1 45 to $1 50, we also don't know what's going to happen in the world right. In terms of is there going to be a recession is there going to be.

Fallout from whats happening in Europe .

But anyway.

That's how we came to guidance and I guess, one could argue that we.

We should do better.

Then.

Then our guidance.

Got it got it.

Yes, that's helpful and maybe just on political to drill down a little bit.

That's what we're talking about mid term.

Election cycle versus presidential and.

Typically thats lower but but a lot of folks are thinking at.

At least certain markets could be could be equal or maybe even more.

Where do you guys come out on that do you think.

Yeah.

When we kind of look back.

Four year cycles.

2020 was obviously exceptional and if it's anything like that then we're going to beat that number.

I think when we when we go back and look at 2018.

Yeah.

We did about $7 $4 million net and.

We're kind of thinking it'll be somewhere in that ZIP code and give it give or take $1 million.

But it could go.

Kind of what we baked into our guidance and our budgets, but if it ends up being more akin to 2020, then we will we will beat the previous high watermark. We've had just for reference was in 2012, we did $9 1 million. So.

We did we did in 2020, we did about $18 9 million net.

And in 2012 prior to that we did $9. One so there is some kind of bookends as to where it could go.

Okay, great and maybe if I could one more you talked about some of the some of the one off expenses.

But I didnt necessarily hear in there I think kind of inflation.

Don't know if theres anything supply chain related, but maybe just more inflation or maybe.

On the wages.

Yes.

Yeah anything dimension there yes.

Yes, we did do salary increases.

Midway through last year from memory and that's the first time in a long time that we've done across the board increases so yes that will drive.

Fences up.

And there is obviously there is inflationary pressures on various things I think for us.

We're pretty fixed costs, but most of the year and most of our escalators and our agreements are.

Very low single digits.

Stuff that we haven't been able to negotiate overtime.

<unk>.

I mean.

We kinda.

We kind of got away from the CPI.

Sort of eschar.

Escalator, a lot of years and kind of focused on trying to get things to be 1% to 2% I mean, I don't know all of our contracts you remember all of our contracts off the top of my head, but if theres a two 5% number in one of our contracts that's like the outlier.

We long.

Ago rejected that.

Three four and 5% increases were now.

Yes.

They werent the norm right because there was no inflation for a long time and so we spent a lot of time negotiating.

Those down.

Got it.

Sorry, I said that was my last question, but again, but I didn't take a one more when you mentioned.

In your last answer what could happen in the world and recession et cetera.

Any comments on kind of how your business.

Would be affected in a recession maybe versus some other.

Similar types of business you guys seem to be a little more resilient I mean.

Well I.

I mean look we sell advertising right.

So, yes, and it depends on what kind of recession.

The recession is off the top of my head.

Sure.

Then I remember like 2009, 2010, and then the pandemic sort of catastrophic economic meltdown recessions right not just like.

GDP has gone backwards by 1%.

And and.

And so we.

We are a management team that does what it takes in order to get to the other side. We had a lot of that I mean, I think at one point in time, we were close to nine times and we've cut that ratio in half.

Having any sort of major issues with.

Debtholders and things things of that nature, So I think the management team.

As willing and used to doing what it takes to.

To keep the company on it.

Good financial footing, but.

<unk>.

Our mix of assets.

I think.

Yeah.

Protects us.

Our diversification against.

Number of things certainly during the pandemic our radio business in April after the pandemic really started in full force was down 70 plus percent and then it was it was unbelievable and you saw the radio companies you saw their EBITDA get cut by.

More than half.

And and we actually ended up.

Doing well.

On the other side of that even though we all took pain without took salary cuts and stuff like that.

We got through it in a large part of that is because our cable TV business.

You have flourished in our digital business.

Did well we've got.

Of our $500 million ish of revenue of $100 million of that is from.

Subscription fees from afar.

Affiliate fees from cable TV operators that are prone to <unk>.

Swings.

And the economy prone to churn, yes, but not the swings in the economy. So.

I think compared to other radio companies, we obviously are more.

Protected because we are more diversified and.

And so.

It depends on what kind of recession. It is now and.

But the answer is yes, I think that we do better because we are diversified across more.

Sure.

Different types of businesses.

We got we got more of a unique position I think the desire for people to spend against our audience and with and with minority owned companies right now.

No.

Will help further insulate us and we've also gotten our debt down and.

<unk>.

We like being.

Not in a stressful leverage position and planned.

And plan to stay in that zone.

The other thing is that when I said management to do what it takes even though the family owns a very large percentage of the company.

We're not hesitant to sell equity when we need to right now so during the <unk>.

<unk>.

We.

Accessed the ATM market and we we sold $50 million worth of equity.

<unk>.

At different points in time, when it made sense.

And that helped us immensely.

Proper capital allocation.

Extraordinary expense control diversification now are great.

Demographic.

Yes.

Is a battle tested.

Management team than I am.

Really proud of all the way down through all the different divisions. So they are probably sick of me.

Yes.

Shouting the mantra of we got a reduced debt we've got to do this.

But it's served us well in the troops have really.

Leaned in and instead of being resentful of our need to.

To to do tough things in order to get it down they did it.

And we've gotten through to the other side.

Thanks for taking all my questions.

Operator, we got time for one more.

Our next question will come from one of Sundahl borrower Dara John with Lord Abbott. Please go ahead.

Yeah, Hi, thanks for.

Squeezing me in.

<unk>.

To kind of step back and maybe have you discuss a little bit more about what your ultimate leverage targets are.

And then put that in the context of you mentioned authorization to buyback stock.

As well as <unk>.

Valuate this referendum what happens if in 30 days it doesn't look like it's going to happen in 'twenty two parts. There's a chance it may happen in 'twenty, three or you're still pointing to hold on to the cash until you figure out what happens in 'twenty three so if you could.

Could give us some kind of timely app or.

That would be very helpful. Yes.

Yes look I have to think I haven't sat here and thought through all of that but just off the top of my add.

It ends up being that it's going to happen in 2003, and if we hold the coalition together and.

And we're going to move forward and support it in 'twenty three company generates a lot of cash. So there is an opportunity for us too.

<unk> paid down.

Debt.

By some stock back.

If we choose to even do some.

Some.

Opportunistic M&A and still be in a position to make the the.

The 100 million dollar.

The investment that we need to.

For the casino so no we won't just hold on to the cash we're paying 7% and three eighths on our debt and and we'd like to continue to increase our free cash flow generation. So.

Sure.

These assets generate a lot of free cash flow so.

I would feel comfortable.

What are going down.

The balance sheet.

Because I know, we will still be in position to be able to execute on the casino opportunity.

Got it and then in terms of your leverage targets for the core business.

Ray do you want to get to before you'll say you know if you've done enough and moving more towards equity returns.

Yeah.

I don't want to see a six handle on our.

Our leverage ratio again right.

And.

Yeah.

Four and a half now.

And.

If we do nothing is going to be below four by the end of the year will probably be in the high threes by year end, if we don't.

If nothing happens now that's a great place to be right now.

And so.

Sure.

Not saying that we wouldn't consider doing something that took the leverage up.

Five to do something in the very short term that we thought was going to get us back down quickly strategic.

<unk>.

But I got to tell you where I want to be for the long term is I want to be.

I want to be below four right.

<unk> and.

<unk>.

Yes.

And I want to stay there.

Yeah.

And so.

So that's how I think about it.

Yeah, I don't think now and again.

I mean, we sell equity right. So we've done it.

We'll do it.

We'd like to do it Opportunistically I mean, we bought back probably over half the shares of this company.

Over a 10 year period, and we bought them back at prices that like when nobody out when the world.

They think the world's ending people when people think the world is ending and we have a.

And we have a real.

Good viewpoint on our business and what we're actually able to do with it.

Been opportunistic and we bought back shares at very low prices I think during the pandemic.

Got it.

How many shares it was up almost 4 million shares at <unk> 76.

And so turnaround in selling those shares at five Bucks is now is a great trade, but at the end of the day I would like to see this company go below four.

And.

<unk>.

I don't ever want to see a six handle again.

<unk>.

And I would try to avoid anything with a five handle.

It wasn't just for a short period of time in order for us to work through sort of.

<unk> and integration of an acquisition that eventually got us back down.

Into the fours and on the path to go below four.

Just one clarification point on that when you said strategic transaction that could get to.

Or close to five times.

For a short term basis do you also do you kind of include the gaming investment as part of that or when you say a strategic youre talking more within the quarter.

That's an extraordinarily good question and I hadn't really thought about that.

I don't I don't want to answer that because right at the $100 million goes out the door and then.

Look I'm, referring here, but it's a $100 million goes out the door.

And that's going to make our leverage ratio ex right, we're going to take that into account and whatever M&A opportunity that we're looking at right at that time right. So if we spend $100 million out the door for the Richmond Casino and then there is an M&A opportunity and then all of a sudden.

In order for us to do that.

Our leverage is looking like.

Five eight or five 9% gas a bit six times, we're probably not going to do that transaction.

With all cash right, we will probably do it.

In a way that our leverage is lower now by the way if we're spending $100 million out the door to do the Richmond Casino, our stock is not going to be $5 right. Our stock is going to be something.

<unk> way higher because the market has shown when they thought we were going to get it last time that they are willing to give us some value for that.

Ahead of it actually being opened.

And so.

So we will have other tools at our disposal.

<unk> two to manage our leverage does that makes sense yeah, no that makes a lot of sense. Thank you for that clarification. Okay.

Thank you very very much.

For your.

With today's call everybody. Thank you for attending thank you for your support and as I always say, Peter and I tried to be exceptionally accessible.

Offline, so feel free to send an E mail or blow in our call if you.

Mr question or something later that you need answered and thank you very much and see you next quarter.

Ladies and gentlemen that does conclude our conference for today. Thank you again for using the AT&T teleconference service you may now disconnect.

Yeah.

Thank you everyone.

We're sorry your conferences ending now please hang up.

[music].

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to urban one year end earnings call. At this time all participants are in a listen only mode. Later on we will conduct a question and answer session and instructions will be given at this time.

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

Urban one cautions you that certain factors, including risks and uncertainties referred to in the 10-K 10, Qs and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward looking statements.

This call will present information as of March 3rd 2022. Please note that urban one disclaims any duty to update any forward looking statements made in the 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 the call or in the company's press release, which can be found on its website at www dot urban new.

One dot com.

A replay of the conference will be available from 12 P. M. Eastern March three 2022 until 11 59 P. M March seven 2022 callers may access the replay by calling eight.

662071041 to repeat the toll free number 86620710 or one and.

International callers may dial direct at four O 29700847.

The replay access code will be 2519146.

The access code 25191.

Four six.

Access to live audio and a replay of the conference will be available on urban one's corporate website at www Dot urban numeral 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 authorized or may be relied upon.

I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of urban one who is joined by Peter D.

Thompson Chief Financial Officer. Please go ahead, Sir Thank you very much operator, and welcome to our fourth quarter results and year end conference call also joining Peter and I are Karen Wishart, who is our chief administrative officer of jewelry jewelry as a chief financial officer at TV, One and we have Christopher <unk>.

<unk>, our general counsel.

Also on the call and as the press release States.

Very happy with our Q4 and.

And most of all our full year outperformance, we had guided EBITDA to be $1 40 to 145 that guidance was up from $1 35 at the beginning.

Of last year, and and we were able to exceed that and come in at <unk> 50 and <unk>.

Some change so very proud of the team.

Across all of our platforms.

They performed exceptionally well.

During COVID-19 and has become <unk>.

Out of Covid.

We are continuing to accelerate that performance.

The demand for our platform and our audience continues to be very strong as Ive stated.

I expect this demand to continue for the foreseeable future.

Do you believe there has been a paradigm shift now at it.

And how advertisers look at.

Annuity targeted focused audiences.

Diversity and inclusion as it relates to.

Ownership.

In media.

The matter is it.

It's always been a very logical business proposition now that.

<unk>.

The audiences.

The Hispanic and African Americans.

Our increasingly.

Valuable as the country continues to grow and its minority presence and and now.

More and more advertisers are really putting their investments.

In those areas and so we're very pleased that we own.

Been a big beneficiary of that having been in this space for over 40 years. So.

Peter is going to take you through.

The details of the numbers and the operations there is a lot.

For him to say a lot to unpack here.

And then after that we will go to Q and a Peter.

Thank you Alfred.

As Alfred said, we were very pleased with our full year 2021 numbers.

First quarter of 2022 has started very strongly as well with advertising pacings up across the board.

First quarter core radio advertising revenue, excluding political is pacing up low double digits.

The auto category is still trailing prior year.

But services healthcare retail and entertainment are all showing very healthy increases.

Reach advertising revenues are also pacing up strong double digits as our AD sales with TV, one and also the digital segment revenues are pacing up strong double digits first quarter.

So as we move into this year.

We've had a good start there was some noise in the fourth quarter expenses, which I'll talk about in more detail later, but I think the key points.

Firstly that we were missing around $13 $9 million of political advertising spend in the quarter and we made that up with some lower margin business.

Such as events, which obviously came with higher expenses.

We also had higher sales commissions driven by increased revenues and we had higher annual bonus and incentive plans the skewed into fourth quarter expenses.

We ran almost 50% more hours of original television programming in fourth quarter and this led to an increased content amortization expense of TV one.

In our digital segment invested more in content contract acquisition.

And also had higher accruals full year incentive based compensation.

So the quarterly expense run rate was inflated by these various issues and Hasnt really fully representative of what we expect to have going forward.

Consolidated adjusted EBITDA was $32 5 million for the quarter down from $41 7 million for 2020 up from $27 5 million in 2019.

Adjusted EBITDA was $152 million compared to $138 million in 2020, $133 5 million in 'twenty.

2019.

This exceeded our full year adjusted EBITDA guidance for 2021.

As I mentioned with some favorable signs for continued success in 2022 net revenue was up 515, 3% year over year for the quarter ended December 31, 2021, and approximately $131 million.

Net revenue for the radio segment decreased 11, 6% year over year in the fourth quarter due to non returning political advertising revenue.

Political revenue was down $10 million and just the radio segment and down $13 9 million overall.

Excluding political net revenue for the radio segment was up 15, 5%.

Local AD sales, excluding political were up 11% and national AD sales were up 12% excluding political.

Most of the major advertising categories were up from last year, except for political food and beverage and automotive were also down.

And automotive was down 21, 8% due to the supply chain challenges in the auto industry.

Government and public was still our biggest category driven by government funded pandemic outreach amongst other initiatives.

The entertainment category saw the biggest increase in the quarter from last year up 166% with increases from all of the entertainment product categories.

Services healthcare financial Telecom travel and transportation also all saw double digit increases compared to last year and retail was also up.

Net.

For reach media was $19 $3 million in the fourth quarter compared to $10 $3 million in the prior year.

Revenue from the Tom Joyner Fantastic voyage was approximately $7 million. The remaining revenue increase was due to strong demand from network audio.

Adjusted EBITDA in the <unk> segment was up by $100000 for the quarter and by $4 $3 million for the full year.

Net revenues for our digital segment increased by $4 $7 million in fourth quarter continued demand for Blackstone and targeted brands drove the growth in direct advertising sales on <unk> digital.

Adjusted EBITDA decreased for the quarter by $1 9 million, but increased by $11 $2 million for the full year compared to 2020 and by $16 6 million compared to 2019.

We recognized approximately $54 $6 million of revenue from our cable television segment during the quarter, an increase of 19, 9% cable TV advertising was up 43, 6% excluding political would have.

Favorable rate volume impact of $1 7 million.

$2 $1 billion of free video on demand revenue.

Three increase in Cleo television.

And $2 $1 million favorable audience deficiency unit per annum.

<unk> TV affiliate revenue was up by five 7% driven by rate increases.

Converting free subs paying subs, which was partially offset by churn.

Cable subscribers with TV, one as measured by Nielsen finished fourth quarter 'twenty. One at 49 3 million up from $42 3 million at the end of Q3.

<unk> had $43 8 million and stuff.

We recorded approximately $2 million of cost method income less admin expenses for our investment in the MGM National Harbor property for the quarter.

Prior to $1 $6 million last year, and $1 $7 million in 2019.

Based on internal estimates of publicly available information put option is currently valued at around $100 million.

Mind investors, we have the option to put 667% stake and MGM National Harbor at seven times trailing EBIT.

Operating expenses, excluding depreciation amortization impairments and stock based compensation increased to approximately $106 $1 million in fourth quarter compared to $74 1 million in Q4 of <unk>.

Of this increase $3 5 million for the noncash charge on the Ceo's employment agreement award on $1 9 million for the onetime casino Chase costs. Both of these amounts are added back to adjusted EBITDA.

As a result of the continuing reopening the economy and increases in revenue.

Following operating expenses increased from the prior year.

Employee compensation increased by approximately $5 $9 million programming content amortization.

Cable TV segment increased by $5 $8 million.

Revenue variable expenses increased by $4 $2 million outside services, including contract talent and consulting fees increased by $1 $7 million marketing and promotional expanding expenditure increased by $1 $4 million.

<unk> expenses increased by $7 1 million of which $6 6 million was for the reach cruise.

Radio operating expenses were up $3 $6 million.

Music license fees employee compensation and promotional spending for the main expense increases with radio reach offering expenses.

$8 5 million against a revenue increase of $9 million.

You mentioned the cruise revenue was $7 million in the cruise expense was $6 6 million.

Sharing expense and affiliate fees will hold up at reach.

Operating expenses in the digital segment were up $6 $4 million driven predominantly by incentive compensation in variable expenses related to truck traffic acquisition sales cable TV expenses were up $7 $6 million year over year programming content.

<unk> increased by approximately $5 $8 million in employee compensation increased by approximately $1 million.

Operating expenses in the corporate and elimination segment were up by $5 8 million, which included in the Richmond Chase casino costs and $1 9 million unemployment agreement Award.

$3 $5 million for.

For the fourth quarter consolidated broadcast and digital operating income was approximately $44 $1 million decrease of 14, 9%.

Interest expense was approximately $16 9 million for the fourth quarter compared to approximately $18 7 million.

For the same period in 2020.

We made cash interest payments of approximately $187000 in the quarter since the semiannual debt service payments are due February 1st and a focus for us <unk>.

Provision for income taxes was approximately $1 $2 million in the quarter and the company paid cash taxes in the amount of.

<unk> $369632 net.

Net income was approximately $6 6 million or <unk> 13 per share compared to $26 4 million or 58 cents per share in the fourth quarter of 2020 capital expenditures of approximately $2 $1 million and the company executed a stock vest tax repurchase in 2530 shares of class D. <unk>.

Common stock in the amount of $9000.

As of December 31, 2021, total gross debt was $825 million ending cash was $151 7 million and.

Net debt was approximately $673 $3 million.

Compared to $152 million of LTM reported adjusted EBITDA for a total net leverage ratio of 448 times.

We believe our stock is currently trading below market comparable given our valuable to auction an MGM property a high cash balance reduced net leverage ratio strong adjusted EBITDA performance, particularly from digital cable TV network radio segments.

Also our ongoing free cash flow generation.

We'll continue to be opportunistic, but prudent in terms of share repurchases and we expect the board to authorize a stock buyback program as part of our capital allocation strategy.

Currently expect full year 2022, adjusted EBITDA to be between $145 million to $150 million absent any significant economic slowdown with potential upside in political and digital revenues exceed expectations and with that I will hand it back.

Thank you.

Other important topic that people want some color on what's going on with our efforts in Richmond on the second casino referendum.

Yeah the.

The city.

The Council of Richmond, Virginia voted eight to one.

Two.

Ill ask two.

Petition the court for a second referendum to be.

To be put on the ballot for this coming November .

However that was that was the first step and then.

There was a.

There is an effort.

In the General Assembly.

In Virginia.

Bye.

A state Senator that represents another city.

Petersburg to actually.

Block that referendum and move.

The the.

The casino license opportunity out of Richmond to Petersburg, there were two bills one in the house and one in the Senate.

That would do that.

One on the house side the one in the Senate also got killed we've been.

Down an enrichment.

Following that and.

And advocating for the opportunity for Richmond to have a second.

Chance to vote.

On this the city Council also commit.

<unk> committed to.

To offering up legislation that would reduce property taxes, and specifically target casino revenues to.

Two schools and other capital projects so.

It is a different it is a different project.

Even though those two bills died.

There is language that's been put in the budget Bill currently.

That.

Wood.

Actively block Richmond from having a second referendum this year and would not allow us to have another referendum two until November up 23 and with study.

The viability of Petersburg as a potential location so.

We.

For this year does that look like.

That it will move out of Richmond currently this language would prohibit.

Regimen from.

Having another referendum this year.

Sure.

Yes.

If they chose to do it in 'twenty three there is still a lot of moving parts in the general Assembly that session.

Goes to till mid March.

There's a lot of politics.

Involved.

With this with casino issue quite frankly that has nothing to do with the viability of the casino being enrichment and has everything to do about <unk>.

Certain legislators wanting at other places and willing to trade off things.

<unk>.

In terms of votes for certain issues in order to get it.

So very fluid.

Tom.

At this point in time, but.

But we're highly engaged our partner in the Richmond Casino operating partner Peninsula PT Lee there caused the peninsula entertainment.

Recently, a week ago announced that they were being sold and they are actually being sold to Churchill Downs incorporated which is a much larger gaming entity.

That obviously.

I don't want to say, obviously that owns the Kentucky Derby. If you don't know who Churchill downs is but most people think of them as the Kentucky Derby, but theyre also a very large gaming operator and own a number of gaming facilities and class and casinos most of there.

Their gaming operations are.

Class III slot machines and to also table games there.

The Florida market there in the Maryland market are out there all over Kentucky.

There and.

In Ohio, I think just one the class III license in Terre Haute.

Deanna so.

A very.

Large gold.

Gold plated.

Partner and even though our partner in peninsula is very committed and we liked.

We like working with them.

The folks at Churchill Downs, who had the opportunity to.

They have talked to you last week and actually meet yesterday are very excited about the Richmond opportunity and want to be.

Very helpful.

Turning to.

Make sure that that opportunity is not lost and we get.

Resurrect a chance for a second vote. So I don't have any news.

I'm not here to tell you that it's dead Im not here to tell you that it's going to happen.

It's 50 50 at this point in time, but.

We're still alive and still hopeful and still put an effort into it so.

That also.

Dovetails into another topic of conversation because I think in the last conference call, we talked about and Thats debt repayment people, we've got a bunch of cash.

As Peter articulated and.

Quite frankly.

Until we know what's going to happen with the.

The RBA casino opportunity.

We're kind of sitting on that.

For now, but I suspect that <unk>.

As the year moves on we are continuing to build more cash is as operations continue to perform great.

As they have been.

But I would not be surprised.

If we ultimately decided to.

Purchased some of our debt.

In the open market.

Which where we.

We are allowed to do therefore retiring that debt.

I don't want anybody to think that we're just at the mindset.

Stockpile cash for the sake of stockpiling cash.

But it really is largely related to whether or not we're going to have to make a.

<unk>.

$100 million investment in.

And the casino opportunity, but.

Things are.

Well im optimistic about.

Where we sit as a company.

I'm selling in.

And nervous about the geopolitical backdrop as I'm sure. We all are.

In this country and what does that mean for.

The economy here at home.

But we.

We're doing.

Yeah.

We're doing the best that we can and.

And then.

Ever changing media environment and in an uncertain geopolitical environment.

With that operator, I would like to open the lines up for questions.

Ladies and gentlemen, if you wish to ask a question. Please press one then zero on your phone.

<unk> zero.

Signal you wish to ask a question.

And we're going to take a question from the line of Patrick Wang with Voya investments. Please go ahead.

Yes. Good morning, Thanks for the question.

Notice that the.

<unk> debt balance was down to 11.

Does that mean that you have repurchased some of the notes in the open market at this point.

Cash on hand at this moment.

No. So that's just.

When we reported we reported a net average issuance costs, so any any OID.

So that's just a net number the gross debt is 825.

As I mentioned.

As I mentioned earlier and I think we are in the mid one third is in terms of today's cash balance.

I will just pull up in the second.

So yes, no the gross that Hasnt changed and bring no no no purchases.

And the cash balance as of this morning.

Was about $137 million.

Okay. Okay.

And so what is the timeline now.

Whats going to happen next and just kind of give us a playbook.

On the development of the Casino project.

I think that over the next <unk>.

30 days, we'll know where we sit on our chances of running a referendum.

In.

<unk> 22.

Versus having to run one and 2003 and a number of things if it goes to 'twenty three we got a there is.

There is a number of other things that happen.

You have to happen.

Sort of.

Secure whether it's us.

Our deal with the city doesn't go that far right. So the city has got ultimately decide that they're okay wanting to go to <unk> to 'twenty three right. So those discussions are ongoing right now everybody is working hard.

The city and us to try to get it in 'twenty, two if where we end up.

Hi.

Is that we can't run to 'twenty three than everybody has got to sit down and say okay are we willing to stay committed to this project for another.

Year end.

At three quarters right access now to year, three quarters about a year and a half.

And I've been in and out of Richmond pretty much every week I was just there yesterday.

So we're working lockstep with the city.

They want to see this happen obviously, they don't want to have this opportunity to move to another jurisdiction and.

And so we're all working on the same page but.

So I just said.

Next 30 days, we'll know whether or not we're going to have to run one this year and then I think over that period of time, we'll probably have some clarity on.

Whether or not the <unk>.

Coalition, all wants to hang together and pursue it in 'twenty three.

Right right. So what's the likelihood that Petersburg, we will get it.

I have no idea I mean, it's not going to happen this year.

Yes.

Hello, everybody wants me to handicap. This this is politics I can't I can't Handicap, how and even if I gave you a handicap I also can't handicap the boat right. So last go around.

<unk> pulls that said that we were.

Prior to the RFP, 62% of Richmond, there's we're in favor of gaming after the RFP process. Because there are a number of proposals that were proposed in in kind of middle to upper middle class neighborhoods and people went bananas the whole NIMBY thing yes.

And of the RFP process.

47% for gaming, 45% against gaming that after we got chosen it was 52% to 53%.

For gaming.

Five undecided and the balance against it and then once the referendum was run and you had.

Surge of <unk>.

Conservative voters across Virginia come out we lost.

58, 5% to $49 one five so I.

I don't want to lead anybody on that.

We're working this.

The political thing.

Political environment right now is uncertain, but even if we get it right, even if we get a chance to run a referendum.

Again, it's a 50 50 shot right.

If you own our securities our own our stock you should really be focused on the fundamentals of the base business.

Our cable networks or the return of our radio business.

The digital business, which is now really starting to take flight the value of our MGM stake, which we own the put is that maturation theyre doing exceptionally well and think about the casino as upside if it were to happen.

Right right.

Could you also talk about your <unk>.

On radio you before you talked about potential.

Station swaps to get more economies of scale.

Is there any recent update for for the plant.

We continue to look at stuff.

Where.

Focus.

Sure.

Primarily on opportunities that.

Allow us to get and market scale.

And.

We're currently analyzing a number of opportunities.

We do not have.

A.

Definitive agreed upon deal to do anything.

At this point in time.

But yes.

I continue to believe that scale in the radio business.

Makes sense.

I'm of the opinion that the radio actually it's not an opinion the radio business at least in the markets that we've operated in have been declining over the last whatever 10 years kind of low single digits I think our markets. The average decline has been like minus 2% some markets are there.

Better.

Than others and again I'm just looking at the market.

<unk>.

That work that we are in so.

It's a slightly declining business and you can make money in it.

And I'm, not saying that that doesn't ultimately.

If you get further consolidation and ultimately.

There.

Radio is undervalued in terms of its cost per thousand and I do think as the industry consolidates and <unk> got.

More big players.

Sure.

Really out there.

Harping on that and being able to deliver value for advertisers and ultimately I think you could get some lift.

Cpm's, but anyway notwithstanding that.

Are you underwriting any sort of acquisition.

Radio I think you need to do it from the mindset that this is going to be a.

A business that could be declining.

In the low single digits and how do you manage that that should inform what you pay that should inform how youre going to manage that business.

And.

And so that's what we're going through and so you got to.

You've got to look at acquisitions I think through those lenses.

Through that lens and.

But I think ultimately it makes sense I also think that it will take us out of.

Now I'm, not saying anything that we buy won't be in our format wheelhouse, but I think if we do participate in further full scale radio consolidation it will necessitate us going outside our traditional box.

Urban radio, but thats not bad we did that in our swap with Entercom and Charlotte North Carolina, and that's turned out to be great for US. We now have a real cluster there that Scott.

Some scale and instead of being a market, where we had eight or $900000.

EBITDA is used to just breakeven now we have multi millions of dollars of EBITDA and and we've got a real broad offering.

For advertisers, including urban.

I'd like to have a collection of clusters that looked like that.

End markets so.

That's where we're sitting right now.

Paul.

One last question on the margin this quarter.

About $10 million shy of last year's EBITDA level is that just.

All because of the political advertising the lack of thereof for.

There are some other one time investment.

Digital site, that's dragging down the margins.

And then can we.

Look for 2022 margins, probably a bit higher than the first quarter because these investments.

Yes, so look I'm, sorry, obviously, there has been great.

Yes revenue is great.

Political obviously was high margin high margin.

That wasn't there this quarter and if you think about the crews for example that was $7 million of revenue $400000 of profit we were very happy with it we wanted to run a big scale of them.

Post pandemic and see how it went but honestly very dilutive on margins and then as I also mentioned.

Q4 was expense heavy and there is not really representative of a regular quarter, we have the TV one amortization.

We had in <unk>.

Sensitive payments that were for the full year.

Didn't know what those were going to be until the fourth quarter. So there were heavy incentive payments booked into fourth quarter. So to your point and the margins were depressed in fourth quarter I am naturally so.

And we would expect to see margins generally return too.

Historic kind of run rate.

Okay. Thank you.

Once again, ladies and gentlemen, if you wish to ask a question. Please press one zero.

We have a question from the line of rape Lehman was Eaton Vance. Please go ahead.

Hi, Good morning, Thanks for taking my question I'm, just wondering if you could talk about your full year guidance.

And EBITDA for 'twenty, two just some of the puts and takes what could go better or worse and.

With it being political.

Why do you see it being down year over year.

Yes, good question.

Ah.

So our digital business.

He has exploded.

I think the budget was last year was $30 million give or take and we did close to 60 right now Mike Hi, <unk>.

So.

This is a business that we started in 2008 and we struggled with it for a very long time now digital publishing is hard.

It's switched from being sort of domain website domain oriented than two.

Search oriented than to social oriented.

And now every time any one of the big platforms changes an algorithm. It changes your your audience size contents expensive you got to give Google and Facebook.

A large part of your revenues so for years and years and years. This business either broke even lost $1 million or made $1 million.

Prior to going into the pandemic, we started to cut a lot of expenses.

We made I think $900000 and in 2019, correct me if I'm wrong Peter.

We had a low expense base going into the pandemic, we trimmed it some more although be it.

Not as much as other places, but then you get this uplift in.

In African American audiences target, social equity and demand started to really increase the.

<unk> dramatically.

And and then we made $6 million I think in 2020, and the pandemic going into 'twenty, one we're like okay.

And by the way traffic has been.

No.

Same are declining we didn't know where the demand was really going to go 21. The demand was even stronger right now and so we ended up making like $17 million last year.

So quite frankly.

The answer is is we're budgeting for digital to go down just because we don't know where.

That demand is going to sort of peak, we don't know how much of it is a moment of time a moment in time I.

I do believe that the paradigm has shifted as far as advertisers wanting to put dollars towards this audience and toys.

Our minority owned.

Entities, but I, just don't know when it levels off if it if it declines et cetera, So we budgeted digital down.

And so that and yes, we do have political and I, just don't know but quite.

Quite frankly.

We took digital down from $17 $5 million performance to a $10 million budget, that's a big number right now.

Ironically, though.

It's actually doing really well in Q1.

So there is there is potential upside, we're just allowing now.

We're allowing for there could be some withdraw of.

Of the.

Extraordinary demand that we've seen.

So that's how we're thinking about it and political could be.

Off the charter as well and I think Peter articulated that there could be upside there you want to yes, I mean look segment by segment.

Radio properties, we are anticipating higher revenues and higher adjusted EBITDA year over year in 'twenty, two and the same for TV. One you know incredible performance great AD sales growth.

We expect EBITDA growth this year, so really what else was saying as you know when we when we kind of balance out all of the segments.

We're least certain about digital it's a newer business. So it has been going.

It's been growing like how long can we continue that and there are more factors that play a lot. How many impressions can we deliver what's traffic doing who is changing their algorithm. So we kind of dialed that back as Alfred said, but to your point the other segments with forecasting in that guidance.

And so look here's the thing you'll know what we print in Q1 right you can track how we're doing.

Quarter to quarter. So at some point in time people will be able to figure out how they're going to they're going to do better than this $1 45 to 150, we contemplated not giving guidance at all.

But.

People.

Kind of like to know something now and so.

No.

We felt comfortable.

Putting out $1 45 to $1 50, we also don't know what's going to happen in the world right. In terms of is there going to be a recession is there going to be.

Fallout from what's happening in Europe .

But anyway that's.

That's how we came to guidance and I get one could argue that we.

We should do better.

Then.

Then our guidance.

Sure.

Yes.

Got it got it maybe just to yeah. That's helpful and maybe just on political to drill down a little bit.

Lots of folks talking about mid term.

Election cycle versus presidential and.

Typically thats, lower but but a lot of folks are thinking.

At least in certain markets could be could be equal or maybe even more.

Where do you guys come out on that do you think.

When we kind of look back.

Four year cycles.

2020 was obviously exceptional and if it's anything like that then we're going to beat that number.

I think when we when we go back and look at 2018.

Sure.

We did about seven $4 million net and.

We're kind of thinking it'll be somewhere in that Zip code.

Take $1 million.

But it could go.

Kind of what we've baked into our guidance and our budgets.

If it ends up being more akin to 2020 than we will.

We will beat the previous high Watermark, we've had just for reference was in 2012, we did $9 1 million. So.

We did in 2020, we did about $18 9 million net.

And in 2012 product so that we did $9. One so there is some kind of bookends as to where it could go.

Okay, great and maybe if I could one more you talked about some of the some of the one off expenses.

But I didnt necessarily hear in there I think kind of inflation.

I don't know if theres anything supply chain related, but maybe just more inflation or maybe.

On the wages.

Yes.

Yeah anything dimension there yes.

Yes, we did do salary increases.

Midway through last year from memory and that's the first time in a long time that we've done across the board increases so yes that will drive.

Fences up.

And there is obviously there is inflationary pressures on various things I think for us.

We're pretty fixed costs, but most of the year and most of our escalators and our agreements are.

Very low single digits.

Stuff that we haven't been able to negotiate overtime.

Sure.

I mean, we.

<unk> China.

We kind of got away from the CPI.

Sort of Heska.

Escalator, a lot of years and kind of focused on trying to get things to be 1%, 2% I mean, I don't know all of our contracts and remember all of our contracts off the top of my head, but if theres a two 5% number in one of our contracts that's like the outlier.

We long.

Ill go rejected that.

Three four and 5% increases were now.

Yes.

They werent the norm right because there was no inflation for a long time and so we spent a lot of time negotiating.

Those down.

Got it.

Sorry, I said that was my last question, but again, but I didn't think of one more when you mentioned.

In your last answer what could happen in the world and recession et cetera.

Any comments on kind of how your business.

Would be affected in a recession maybe versus some other.

Similar types of business you guys seem to be a little more resilient I mean.

Well you know I.

I mean look we sell advertising right.

So, yes, and it depends on what kind of recession.

The recession is off the top of my head.

Sure.

Then I remember like 2009, 2010, and then the pandemic sort of catastrophic economic meltdown recessions right not just like.

GDP has gone backwards by 1%.

And and.

And so we.

We are a management team that does what it takes in order to get to the other side. We had a lot of that I mean, I think at one point in time, we were close to nine times and we've cut that ratio in half.

Without having any sort of major issues with.

Debtholders and things things of that nature, So I think the management team.

Is willing and used to doing what it takes to.

To keep the company on it.

And a good financial footing, but.

<unk>.

Our mix of assets.

I think.

Protects us.

Our diversification against.

Things certainly during the pandemic our radio business in April after the pandemic really started in full force was down 70 plus percent and then it was it was unbelievable and you saw the radio companies you saw their EBITDA get cut by.

More than half.

And and we actually ended up.

Doing okay.

On the other side of that even though we all took pain without took salary cuts and stuff like that.

We got through it in a large part of that is because our cable TV business.

You have flourished in our digital business.

Did well we've got.

Of our 500 million ish of revenue of $100 million of that is from.

Subscription fees from afar.

Affiliate fees from cable TV operators that are prone to <unk>.

Swings.

And the economy prone to churn, but not the swings in the economy. So.

I think compared to other radio companies, we obviously are more.

Protected because we're more diversified and.

And so.

It depends on what kind of recession. It is now and.

But the answer is yes, I think that we do better because we are diversified across more.

Sure.

Different types of businesses.

We got we got more of a unique position I think the desire for people to spend against our audience and with and with minority owned companies right now.

No.

Will help further insulate us and we've also gotten our debt down and.

<unk>.

We like being.

Not in a stressful leverage position and planned.

And plan to stay in that zone.

The other thing is that.

<unk> management to do what it takes even though the family owns a very large percentage of the company.

We're not hesitant to sell equity when we need to right now so during the <unk>.

Pandemic.

We.

Access the ATM market and we we sold $50 million worth of that equity.

<unk>.

At different points in time, when it made sense and that helped us immensely.

Proper capital allocation.

Destroy generic expense control diversification.

Great.

Demographics.

Yes.

Is a battle tested.

Management team than I am.

We are really proud of all the way down through all the different divisions. So they are probably sick of me.

Yes.

Shouting the mantra of we got to reduce debt, we got to do this.

But it served us well in the troops have really.

Leaned in and instead of being resentful of our need to.

To to do tough things in order to get it down they did it.

<unk>.

And we've gotten through to the other side.

Sure.

Thanks for taking all my questions.

Operator, we got time for one more.

Our next question will come from one of SUNS, our borrower Dara John with Lord Abbott. Please go ahead.

Yeah, Hi, thanks for.

<unk> me in.

Just.

Wanted to kind of step back and maybe.

Can you discuss a little bit more about what your ultimate leverage targets are.

And then put that in the context of <unk>.

Mentioned authorization to buy back stock.

Well as you know as you evaluate this referendum what happens if in 30 days it doesn't look like it is.

Going to happen in 'twenty two.

A chance it may happen in 'twenty three are you still a point of hold on to the cash until you figure out what happens in 'twenty three so.

Could give us some kind of time lag or.

That would be very helpful.

Yes look I have to say I haven't sat here I thought through all of that but just off the top of my add.

It ends up being that it's going to happen in 2003, and if we hold the coalition together.

And we're going to move forward and support it in 'twenty three company generates a lot of cash. So there is an opportunity for us too.

Pay down debt.

By some stock back.

If we choose to even do some.

Simpson.

Opportunistic M&A and still be in a position to make the.

The $100 million.

Investment that we need to.

For the casino so no we won't just hold on to the cash.

<unk> seven and three eights on our debt and.

And we'd like to continue to increase our free cash flow generation. So.

Yes.

These assets generate a lot of free cash flow so.

I would feel comfortable.

We're going down.

The balance sheet.

Because I know it will still be in position to be able to execute on the casino opportunity.

Got it and then in terms of your leverage targets for the core business.

Ray do you want to get to before you'll say you know if you've done enough and moving more towards equity returns.

Yes.

I don't want to see a six handle on our costs.

On our leverage ratio again right.

And Ah.

Four and a half now.

And.

If we do nothing is going to be below four by the end of the year will probably be in the high threes by year end, if we don't.

If nothing happens.

That's a great place to be right now.

So.

I'm, not saying that we wouldn't consider doing something that took the leverage up.

Two five to do something in the very short term that we thought was going to get us back down quickly strategic.

But I got to tell you where I want to be for the long term is I want to be.

I want to be below four right.

<unk> and.

And.

And I want to stay there yeah.

And so.

So that's how I think about it.

I don't think and again.

We sell equity right. So that means we have done it we will do it.

We'd like to do it Opportunistically I mean, we bought back probably over half the shares of this company.

Over a 10 year period, and we bought them back at prices that like when nobody out when the world.

They think the world's ending people when people think the world is ending and we have a.

And we have a real good viewpoint on our business and.

What we're actually able to do with it.

Opportunistic and we bought back shares at very low prices I think during the pandemic.

Got it.

How many shares it was awesome almost 4 million shares of 76.

And so turnaround in selling those shares at five Bucks is now is a great trade, but at the end of the day I would like to see this company go below four.

And.

I don't ever want to see a fixed handle again.

<unk>.

And I would try to avoid anything with a five handle.

If it wasn't just for a short period of time in order for us to work through sort of.

Integration of an acquisition that eventually got us back down.

Into the fours and on the path to go below four.

Just one clarification point on that when you said strategic transaction that could get to.

Or close to five times.

For a short term basis do you also do you kind of include the gaming investment as part of that or when Youll see a strategic youre talking more within the quarter.

That's an extraordinarily good question and I hadn't really thought about that.

I don't I don't want to answer that because right at the $100 million goes out the door and then.

Look I'm, referring here, but at the $100 million goes out the door.

And then that's going to make our leverage ratio ex right, we're going to take that into account and whatever M&A opportunity that we're looking at right at that time right. So if we spend $100 million out the door for the Richmond Casino and then there is an M&A opportunity and then all of a sudden.

In order for us to do that.

Our leverage is looking like.

Five eight or five nine or got to mid six times, we're probably not going to do that transaction.

All right, we will probably do it.

In a way that leverages lower now by the way if we're spending a $100 million out the door to do the Richmond Casino, our stock is not going to be $5 right. Our stock is going to be something.

Way higher because the market has shown when they thought we were going to get it last time that they are willing to give us some value for that.

Ahead of it actually being opened.

And so.

So we will have other tools at our disposal.

<unk> two to manage our leverage does that makes sense, yes, no that makes a lot of sense. Thank you for that clarification. Okay.

Operator, thank you very very much.

Sure.

Help with today's call everybody. Thank you for attending thank you for your support.

And as I always say, Peter and I try to be exceptionally accessible offline. So feel free to send an E mail or blow in our call if you.

Mr question or think of something later that you need to answer and thank you very much and see you next quarter.

Ladies and gentlemen that does conclude our conference for today. Thank you again for using the AT&T teleconference service you may now disconnect.