Q3 2022 Spanish Broadcasting System Inc Earnings Call
Good morning, and welcome to the Spanish Broadcasting systems third quarter 2022 earnings Conference call.
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I'd now like to turn the conference over to Brad Edwards of Investor Relations. Please go ahead.
Thank you and good morning, everyone.
Before we begin please recognize that certain statements on this conference call are not historical fact may be deemed therefore to be forward looking statements under the private Securities Litigation Reform Act of 1995.
Particularly our statements about future results expected to be obtained from the Companys current strategic initiatives are forward looking statements. Many important factors may cause the company's actual results could differ materially from those discussed in any such forward looking statements Spanish broadcasting system undertakes no obligation to publicly update or.
Revised its forward looking statements.
Please also note that we will be discussing non-GAAP financial measures.
The company believes that operating income before depreciation and amortization gain on the disposal of assets recapitalization costs and other operating income or expense, excluding noncash stock based compensation or adjusted Oi BDA is useful in evaluating its performance because it reflects a measure of performance.
For the company stations before considering costs and expenses related to capital structure and dispositions. This information.
<unk> is not intended to be considered in isolation or as a substitute for operating income net income or loss cash flows from operating activities or any other measure used for determining the companys operating performance or liquidity that is calculated in accordance with U S. GAAP a reconciliation.
<unk> of the Companys U S GAAP information to adjusted or IBD is provided in the tables attached to the company's 2022 third quarter earnings release, which is available on the Investor Relations section of the Companys website at Www Dot Spanish broadcasting Dot com.
I will now turn the conference over to Mr. Albert Rodriguez.
Good morning, ladies and gentlemen, welcome to the Sps 2022 third quarter earnings conference call on today's call. We will provide an overview of recent operating developments and review our financial results. Joining me today are Jose Molina, our chief financial.
Officer, and Richard Laura <unk>, our general counsel.
Our third quarter results reflect continued solid performance by our multimedia assets as our audio digital and video assets.
Meaningfully grew their top line compared to the same period last year, our multi platform audience continues to grow and we've never been in a better position to connect brands with the rapidly growing Latino population.
Earlier this week, we announced the release of a comprehensive report and marketers guide to investing in premium Hispanic owned and targeting an audio content. The Nielsen report showed that brands, who consistently advertised on Hispanic owned and Hispanic targeted audio stations.
Between 2017, and 2021 showed an average return of advertising spend ROA, yes that was 12% higher than brands that did not invest.
This report in collaboration with Nielsen marks the first ever analysis, demonstrating the outsized value of investing in Hispanic owned media and delivers targeted and authentic Latino content.
A bit of history in 2020 major agencies holding companies and major media brands committed to increasing their investment in diverse on media the opportunity there would be an increase in investment in both since then we've seen an increase in investment in Hispanic owned.
Targeted media.
Dino population in the U S continues to grow rapidly in size influence cultural impact and purchasing power Latino collective buying power rose by nearly 90% between 2010 and 2020 and is currently.
<unk> at almost two trillion dollars.
More importantly, it is projected to rise of $2 six trillion in just the next few years with this growing influence Latinos have higher expectations of brands want to engage with the Latino community, including intentional investment in Latino owned media companies. According to Nielsen Hispanics are not only.
More likely to seek out culturally relevant content, but there are 24% more likely to seek out diverse owned media outlets.
True return on investment comes from an authentic connections with the Latino audience via media publishers, who sit at the intersection of Hispanic ownership culturally relevant has been a content and scale SBS sits at that Barry intersection being the largest diverse owned and operated.
The national minority supplier development Council.
<unk> media company in the United States, we are wholly committed to the Hispanic community, which we serve and since our founding nearly four decades ago. Our sole purpose has always been to provide latinas with premium and trusted content.
What began as one radio station in New York has grown into a national footprint with 360 degree media capabilities, including audio digital video and live music events embracing. Hispanic culture has been seamlessly built into every part of our business from <unk>.
One <unk>.
Yes, we have always been committed to operating the best diverse minority owned Spanish language audio and digital entertainment platform in the nation with targeted investments, we are making will build on our market leadership in history of industry outperformance now lets review our operations and we'll start with.
Our ideas radio networks.
The third quarter of 2022 idle radio networks outpaced the marketplace by 37% Miller Kaplan reported networks popped down by 10%, while Ida radio networks delivered an outstanding performance of 47% growth.
The key categories during the period, where pharmaceuticals up plus 890% home products at plus 38% insurance in mortgages, plus 28% <unk>, plus 34% and general services, plus 11% either radio network the largest minority owned Hispanic audio.
Network, delivering 42% of all Spanish language listeners across the country continues its commitment to super serving Hispanics either radio network reaches nearly 22% of all Hispanic consumers each month across more than 300 affiliates.
NMS D C certified with presence in the top 50 U S. Hispanic markets. Some of the key highlights Friday initiatives included even a morning show El mech level, Alex sensation, the Influencer network delivering campaign messaging through our national platform, while penetrating local markets.
The rest of the center, where brands are aligned with Latin artists now, we'd look to our audio division, where we continue to ramp the number one spot in top markets across the nation with increasing listener engagement across all our audio stations, here's the snapshot, where we are number one.
In New York with Ws <unk> Mega 97, nine number one in Miami with Ws D. J S M and so.
<unk>.
Number one in Orlando W. P Y O F N L. So 95, three number one Puerto Rico W. O D E F N Latin waiver nine before.
Hispanic listeners love, our content, which shows in the ratings results, we dominate the Hispanic audio market and total market.
And it is the fastest growing format in any language, our digital screen ratings for Ws <unk> Mega 97, nine FM again is the number one Nielsen most streamed audio station in the nation at a 48 ppm markets and the rest of the DMA.
Nationwide, we're adding chat and messaging capabilities for audio stations on that most of the GAAP to advance our stronghold further online with our daily content podcast from our top shows are now available exclusively on almost like up as mentioned earlier W. XD jail. So 106.
Seven has been the rating leader in Miami, all year, along among all persons and I want to say again, and probably led and sold 167 has the only Hispanic female leading morning host with their bus Elong Bella Vita and it has continued to be our number one rating.
Our format in the morning W. RMA Rip more 95, just celebrated its <unk> anniversary and hosted a 100%. So that grew up on ASO concert yearly station event with the participation of the hottest Cuban artists such as hinted a sonar and check out.
The Nielsen October 2022 book is out and W. P, while at them level and wearable.
Well sold 95 three is the official number one most listened to station in all of Orlando, beating all other Spanish stations in the market and our morning show a debt below par with Rocky the Kid is number one in the entire market, beating all stations.
25 shares per Nielsen now, let's go to Los Angeles last year, we brought back home DJ Eddy won the most sought after DJ at clubs and venues on the West Coast and we're very excited to announce that he is number one rated afternoon show among Hispanics 18 to 34 on cake. So Omega.
$96 three FM in that show airs from three P. M to seven P. M. Pacific Standard time, we just launched a new campaign for modern or hanging out with their useful and fun image. This talented married couple continues to grow and be a favorite Mega 96, three <unk> so well.
San Luis <unk> La Raza 97, nine is the number one regional Mexican station with a cheeky lien mid days from 10% to three P. M. A cheeky link is also on our San Francisco station and across our <unk> Radio network in Puerto Rico, We have a station with the number one in each demographic with adults 18.
34 W. O D E F and unwavering 94, 7% is number one with the 16 share and <unk> <unk> $106 nine as number two with the 13 sure and with adults 18 to 49 Mega continues to be number one.
We are ready to start the new year with strong local community outreach now two mega where our national footprint reaches millions of homes via our cable and satellite broadcast partners Mega TV has continued to serve its local and captive audience through our cable and satellite partners as well as active engagement with our digital audience via.
Social media, our prime time content strategy.
Two entertains and informs Latino viewers throughout the U S and Puerto Rico with Mega TV has unique original content.
<unk> to be successful, while driving growth among critical demographic groups.
<unk> content remains an area of focus and we are making progress driving audience growth among critical demographic groups now, let's turn to our live events Division our Spanish broadcasting.
Entertainment Division entered into a mark a new market by producing its first ever latitude life concert event in San Diego latitude is the only event of its kind in the nation focused on how U S. Latinos are sustaining the economic growth of America. The conferences attended by many of Americas.
Influential leaders across all sectors of the economy gathering in San Diego to better understand how economy is being driven by U S. Latinos S. PSC partner with the organization to produce the evening concert with performances by one is local Sps D J, Alex and <unk>.
<unk> at the exclusive Rady shell venue concert attended was over 4000 attendees.
S. PSC also co produced 30th anniversary concert of our station La Raza 97, nine FM in Los Angeles. The station marked 30 years of serving the Hispanic community in the Los Angeles DMA in commemoration of this historic achievement Sps C produced the anniversary concert.
<unk> top Mexican regional bands such as bundles like Gogo.
Fever bond.
<unk> to name a few the event was attended by over 6000 attendees.
The Division also launched its chrome drew up heritage shows calabash in Los Angeles.
Now two day festival at the Crypto Dotcom Marina is highly anticipated concert in the head on drawn ROE, which has over 14000 attendees each night.
Joe is headlined by the industry top if they get on the artist and serves as a leading concert to service our clients with sponsorship opportunities as PSC continues to evaluate strategic growth opportunities in all markets and has a robust schedule through 2023, now turning to our mobile and digital platform.
And strategic initiatives.
Over the last several years, we've had great success transforming SBS into the leading multi media spanning media company today, we connect brands with more Hispanics than ever before.
I forget audience continues to expand.
Expand.
For our brand partners. There has never been a more important time to have Latino focused marketing strategy and outreach program. The Latino population is growing rapidly in size cultural influence and purchasing power Sps has the multimedia assets the reach in over four decades of experience.
And commitment to the Latino communities across the U S. As such we can deliver compelling integrated advertising opportunities across all major platforms and offer access to coveted demographic groups as I stated our aggregate audience continues.
As of September 30, our total audience was up 96% compared to Q3. The prior year August 22, we had a record of $3 1 million unique listeners to live audio.
Compared to $1 6 million in 2021.
Programmatic revenue grew by 126% with total division grew by 42% year over year.
Almost got platform reaches over $3 7 million across all devices, who combine.
For over 25 million streaming hours per month.
Usage and adaptation are mostly it continues to accelerate as it offers a truly unique mobile and digital experience, including original daily video content short form programming millions of songs and a personalized experience overall, we have placed strategic emphasis on identifying.
New digital revenue streams, as well as increasing our CPM on existing digital offerings during the third quarter. Our total streaming audience surpassed $3 1 million unique listeners per month. This audience delivered 35 million listening hours and over $75 million total sessions in the quarter.
Given Hispanics so heavily over index on mobile phone ownership and usage of mobile remains the primary driver of our mobile digital traffic and accounted for approximately 94% of our total digital traffic in the quarter, a key driver of our growth in streaming.
And sessions has been the expansion of our music user base as well as increase in consumption of our podcast and play list products with an average time spent listening of over 45 minutes and the most popular categories. We have added 22, new shows in Q3.
In summary, our audio and digital revenue trends continued to outpace the industry and we remain the leading Spanish language multi media company in the United States, We continued to invest in our audio and digital platforms, while also expanding our aggregate audience and connecting our brands to work with partners.
With highly engaged audiences.
We're focused on finishing the year strong and heading into 2023 with increased momentum across our business. We are consistently outperforming the broader industry and expect that trend to continue given our audio network and digital leadership permanently Kaplan revenues from January through September of 2020.
<unk> outperformed all of our industry peers by 110 basis points. This confirms that Sps grows revenue faster than any and every audio broadcaster in the nation.
For your time and attention today now let me turn the call over to Jose morning enough for the financial overview.
Thank you Albert.
Before turning to our results I would like to mention that our results continue to reflect the investments that we've made in our business beginning with our startup stations in Orlando and Tampa are digital personnel and infrastructure and our programming content.
We expect these investments to continue in the near term.
After which we should see our margins and profitability normalize.
We believe that we are making the necessary and right investments to drive accelerated long term growth.
While also sustaining and building on the power of our brands and market leadership positions.
Now turning to our third quarter results.
Our consolidated revenues totaled $41 3 million compared to $39 million for the same prior year period.
The resulting in an increase of approximately $2 3 billion or 6%.
Additionally, our consolidated revenues exceeded the same pre pandemic period in 2019 by $5 million or 14%.
Our radio revenues totaled $38 million.
Increasing $2 1 million or 6%.
The growth was primarily due to increases in other revenues and digital and network sales.
Our radio revenues also exceeded the same.
Pre pandemic period of 2019 by $5 6 million or 17%, which marks the sixth consecutive quarter that radio's revenues are above 2019 levels.
Our television revenues totaled $3 2 million, an increase of approximately 200000 or 7% primarily due to an increase in other revenues and local sales.
Our consolidated adjusted EBITDA, a non-GAAP measure totaled $10 million remaining flat compared to the same prior year period.
Our radio adjusted <unk> decreased 10%, primarily due to the increase in operating expenses of $3 7 million, partially offset by the growth in revenues.
Radio station operating expenses increased mainly due to increases in compensation and benefits advertising and promotion allowance for doubtful accounts and the lack of production tax credits, partially offset by a decrease in barter expense.
Our TV adjusted EBITDA increased 77% due to lower operating expenses of $1 3 million and higher revenues.
Corporate expenses remained flat and operating income totaled $9 million compared to $9 2 million for the same prior year period, representing a decrease of 2%.
Capital.
Managers during the third quarter were approximately $1 4 million.
As per our credit agreement, our current net debt to adjusted EBITDA leverage is seven one times.
As of yesterday, we had cash on hand of approximately $8 million. In addition, we have an undrawn $50 million revolver fully available as needed.
This will conclude our formal remarks and with that I would like to turn the call over to the operator for any questions operator.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
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At this time, we will pause momentarily to assemble our roster.
And our first question will come from Tim Daggett of RBC. Please go ahead.
Hey, guys. Thanks for taking the question can you talk about the trend. Good morning can you talk about the trends youre seeing so far in the fourth quarter.
I'll give it will give you color on the fourth quarter.
National right now is.
It was basically flat for October we're seeing double digit growth growth in.
November and December .
Our network is through the roof network is double digit growth for fourth quarter in local is doing well as well but were in the positive.
Yeah.
Great and how about political revenue like that number should be and how does the political revenue look in the fourth quarter.
Political revenue in the fourth quarter looks good we are currently transacting with political revenue. So there is.
There is still an election in Georgia, and we're benefiting from that so we had a decent.
Political quarter, not 100% of the political quarter that we expected.
Historically for for two decades, a Florida has been on the top tier ranking with.
With in terms of a swing states and although Florida is still kind of a swing state. The ranking has gone down in terms of the Democrats and Republicans battling out of Florida.
Somewhat.
Very strong.
Republican turn out.
And the outcome of Florida, So the Democrats held back a little bit and they invested a little bit more in Nevada, Arizona, Georgia, Pennsylvania, Michigan.
But with our programmatic revenue have an upside we benefited and all of those states withdrawal.
And all of the states on our audio platform.
Okay, Great and can you talk about the stations in Tampa.
Orlando those free cash flow.
Positive now and how much of the increased expenses this quarter on the radio side Rich <unk>.
Those ramping up those two stations.
Look our strategic imperative and I'm glad you asked about Tampa and Orlando those are markets that we're very very excited about.
Our strategic imperative, obviously is managing for long term long term growth and liquidity of this company.
But with respect to Spanish broadcasting core values.
Our core values to Super serve the 65 million Hispanics nationwide.
With culturally relevant content now, let's go a little bit more granular with that question.
With Orlando, we are breaking all kinds of records with respect to to our ratings right now and we're basically the number one Hispanic.
Operator in Orlando are beating out.
Other Hispanic broadcasters.
In that marketplace, and we did it relatively quick.
And in terms of billing we are very pleased with what we're seeing in the building in Orlando and I want to say, even in and Tampa. When you look at the Miller Kaplan and you look at all of the data management platforms. We took a station that was ranked.
Revenue wise.
The signal.
From 'twenty three to being ranked number seven and number nine so we've done an incredible job with revenue.
And we expect that we're going to have an incredible incredible 'twenty three with both Tampa and Orlando and what I want for everyone to understand and Tampa and Orlando.
We couldnt just looked the other way with the with the market like that level is growing so much with Hispanics.
It grew from maybe top 30 now into the teens both of them respectfully and those are very large sized markets with respect to revenue each one of those markets will be in the $125 million range there about parallel.
In terms of what the radio market is going to do so we're excited about that opportunity and it was the right investment to make.
And look I wanted to take everyone in memory Lane, a several years ago, when we decided to get into the network space and we did our due diligence we did research and we built an incredible infrastructure now to have.
The largest hispanic.
<unk> network in the nation, let's span.
Spanish homes and Hispanic targeted and we're very very very we've done credible job.
With our network and our network is on fire and I wanted to point out to everyone Nielsen Nielsen approached us sometime ago early this year that they were looking at the Hispanic audience obviously.
The census numbers showed the biggest growth.
Any group of the population in America that came from Hispanics. So Hispanics had the highest growth Spanish about 20% of.
U S population and they took a specific look at Sps and they released a report yesterday and I advise everyone. That's listening to US today go through the report we're putting it on our website.
And it is it's a study and it's the <unk>.
<unk> return on AD spend for investing and Hispanic targeted.
And one radio and it definitely pays off with advertisers and I mentioned in my comments, let the.
Our brand partners led let advertise with us they see a higher return than on their own investments then the advertisers that don't advertise with Hispanic owned and Hispanic targeted media.
So we are very very well positioned for the short term, but more importantly for all the investors in the long term.
And.
We have the experience to do it and frankly.
I don't think there is there is a creative group and our programming group in America that can do it better than our team and I will go directly to why im saying that Nielsen says that.
<unk> is the number one station in America, the most listened to station in America.
Most green station in America. It is.
Also in the report it indicates.
Mega Ws <unk> as the most listened to Hispanic station in the World. So I want to say.
I want to say factually, but I can put up our programming team against anyone else in any silicon labs that can do programming or content better than America, because we own and we operate the number one station in America. The most listened to so we are taking the company.
Okay to the complete next level and you will see you will see we're promising you youre going to see the incredible work, we're going to the outcome lets youre going to have on both Tampa and Orlando.
I would advise everyone hopes.
With that study.
Got it to you offline.
That would be great. Thanks, maybe one last question for me I see the TV business lost a little bit of money. This year would you consider selling the television stations and is there a potential market for people looking to buy stations like that.
Some point in the near future.
Absolutely.
We've received several inquiries and if anything does take a step where we'd be.
A series of software that would be seriously considered.
That would be seriously consider but we are looking at our expenses on our video platforms on our programming platforms. We're taking a hard look at expenses to make sure we hold the line and we invest prudently so but that's a great question. Thank you for us.
Great. Thank you guys.
Thank you.
The next question comes from Matt Swope of Baird. Please go ahead.
Good morning, Matt.
Albert Good morning Jose.
Hi, Matt.
Jose could I ask you a question sort of around the cash for 2022.
There've been a couple of moving pieces on the tax side, you gave us some detail on the employee retention credit and the reporting package I think theres another tax refund other than that and then obviously you got the business interruption.
Amen.
Can you just walk us through the cash for all of those pieces.
Sure sure.
The insurance proceeds was about $2 8 million and that came in in the third quarter.
So that and then on the RTC credit the total credit was for $3 seven of that.
When I say 300 came in.
In the third quarter, but an additional $3 8 million came in.
Early fourth quarter.
Okay.
And then is there another tax credit other than that.
I'm just looking at what you wrote in the piece here, where it said.
They were at the start of the year, there was a $4 $7 million asset on the balance sheet and then as of September 30th.
Company had received $4 1 million of such credits.
But then are you, saying $3 8 million of something else also came in in Q4.
No.
That's all the same that's all the same piece correct I think I think the question came about they were asking about the cash taxes.
Think that's where the confusion lies between cash taxes and the RTC.
So just to summarize it basically there are $4 7 million of <unk> tax credit of which we have collected.
Approximately $4 one of that what's pending and.
And we're hoping to get it by the end of the year is about six to 700000.
Okay.
I see and is there a cash tax refund of any kind other than that or that that's what we expect for the year.
That's what we expect for the year.
Got you that's helpful.
And then.
Just in general just cash taxes alone.
For this year.
From a payment perspective, we're looking at about approximately 6 million to $6 1 million.
Gotcha, and then is that about what we should expect for next year or two for that.
It just depends on the results really but.
I would say we will be in that range.
Because a lot of the 6 million that we paid this year a good a good portion of that was for 2021.
Right.
And then just back to the insurance proceeds for a second that that all flowed through revenue right. You broke up for US what went into I think it was 2.3 into.
Radio and end 0.3 into TV, that's all 100% to the bottom line, both for revenue and EBITDA right.
Correct correct got.
Got it.
That claim continue so so we're hoping to see additional monies, but that that's been long, it's a long process.
Do you have any potential a forecast of what additional proceeds might come in.
The goal would be an additional 2 million, but again, it's a long process.
I see.
So if we're looking at an LTM EBITDA number right now that.
That's somewhere in the $41 million range.
As we start to think about next year, we should we should probably just back out the $2 6 million that came in from that and be at a number right now that's about $38 million would you agree with that thinking.
Well again like I said I think.
We have an additional 2 million that were chasing after so.
I'll leave that up to you guys to factor out.
So we're hoping that.
We feel bullish on it but again, it's a process.
Right now, that's certainly fair and on the Orlando and Tampa losses today that should be a tailwind going into next year right versus the losses that you've had on the startup.
Hopefully our attorney I know you had said sort of a six to 12 months period for both stations to be profitable.
Yeah. So so.
Clearly at the end of the year, we'll probably end up with.
I'll give you a breakout.
For the third quarter those two stations had a loss of approximately 600000.
Our year to date, they're at one six so it definitely for next year, we definitely feel very comfortable about both of these stations will be profitable.
That's definitely our goal Orlando is his number one rated already.
We have put a good amount of investment behind that station.
Tampa is one that we will continue to put.
Investments and get it to the point, where we feel very comfortable but I got to tell you.
Well look we're very we're very pleased in terms of the response from the community and we're seeing orlando's close to 47 about low 40%. Hispanic.
As the largest minority group there in Tampa is in the 30% and in terms of the overwhelming response I'll give you a little color for the Nielsen, but one of the most recent recent Nielsen books.
Our morning show this as a total market number this is not a Hispanic number. This is the total market number our share is about 24%.
In the morning alone the rest of the day parts they rank in the top five.
But in the morning in particular, when you have a 24% the most important day part.
I mean, they're all important but you know what we have to have a strong and good morning show. It is your vertical to have a successful product. When you have the strongest morning show in a marketplace that size youre the leader in the marketplace, but in particular.
We are where we are.
I was so impressed with the fast rapid growth in terms of ratings that we're going into 2023 very very excited for in particular both of these markets.
Theres not a lot of top markets that you see a number with a 20 something percent of.
Total market share in the morning.
That's like off the charts. So we're really excited about that about what it's going to bring to us in the future right.
Alright.
That sounds great and then if I could just ask one last one just a follow on to Tim's question on on the TV hypothetical.
Yes, again being completely hypothetical if you were to do something with T V strategic.
Would would mega Mega.
Mega TV business have to go with it or could those be separated how would you think about that.
Okay.
Mega Mega is an iconic brand.
It's a brand level was born in New York City, and the capital of the business World and that name alone Mega is as I mentioned earlier on the call and what I had what I've discussed.
<unk> is the number one most streamed listened to station in America, Oh, and it speaks Spanish.
So there's a lot of.
Brand equity in the name. So it just depends look we've received several inquiries if anything would come in serious with respect to one off where we would look at seriously and you would probably.
Probably my guess would be okay.
Everybody and anybody who wouldn't want the name of the brand Mega brand Mega is.
The iconic.
Radio station in America, So I would I would probably estimate that mega would probably be considered to be part of an offer.
Got it. Thank you guys appreciate your time.
Thank you so much.
The next question comes from Patrick Wang of Voya investment. Please go ahead.
Good morning, Patrick and great to hear from me today.
Thank you. Thank you.
I feel questions Todd on the two.
Two station.
In Florida.
Much down with the.
The startup costs of our format and cost the capex, because I noticed that $3 7 million increase in Opex.
And then second quarter results.
So to the tune of $4 million to $5 million increase in top box.
Capex you can add up everything together in terms of timing.
And you're pretty much done.
Or there's still more to go.
We're going to continue throughout the year.
Like I said, we feel very comfortable where Orlando is now we're meeting them.
Our main investment focus will be in Tampa.
But yes, we look again at the end of the day, we're going to do whatever we need to do.
Extremely successful into into these <unk>.
Emerging markets are.
The opportunities there.
And we believe.
Critical to the long term future of this company to be in those markets and succeed in those markets.
Alright.
I don't think something full operation mode.
Uh huh.
Or is it still kind of ramping up in terms of.
Deployment into the market.
Look I think we stepped up both markets appropriately.
Keep in mind.
Most of our most of our content lower putting in those markets.
They've come from.
From.
Like superstars from Puerto Rico, or even Alex sensation, but syndicated in 40 markets. So I.
I think we've staffed the.
Both Orlando and Tampa team appropriately I do not foresee that we're going to be hiring a lot more people right now I think we're at a good place in terms of of where we should be.
Both of those stations.
Sure.
I'll give you I'll give you color for for October .
Both of those stations have done.
<unk> well with respect to revenue.
Tampa with respect to the ratings.
We expect it to grow even higher which will enhance the revenues. So I think we're in good shape right now no in terms of.
Investing.
As an introductory phase we will still continue to do that but you were still in the introductory phase.
We're not going to be in the introductory phase probably next time this year.
<unk>.
When do you see that inflection point.
Revenue growth.
Possibly.
Okay.
Yes.
Our models and our research has the show let the ratings are staying matured.
And we've seen an incredible incredible growth in Orlando.
And we are looking to have the Tampa station grow at that level, but we're pleased in Tampa in the sense of when we put a client they stay on our direct response clients are getting tremendous results in Tampa station in and look I refer everyone to go back to the.
The Nielsen study.
As it highlights a lot of things nationwide on the.
The growth of the Hispanic population and the growth of Hispanics with audio nationwide.
So.
They tune, but youre going to be very pleased without some of these two stations, we did not go into investing into our station.
So we.
We could be.
Let me put it let me phrase it this way we want.
Investing in those two markets, obviously because of the <unk>.
Composition of the growth of Hispanics.
The long term effect is going to have on <unk>.
Managing the long term growth of Sps and on liquidity, it's going to it's putting us in a very solid position for the short term.
Alright, okay.
Okay looking forward to that.
Whats.
Alright.
<unk> I'm not familiar with that acronym that could you elaborate on that is that a tax credit against your cash taxes you owe.
Or is that something else.
It's an employee retention credit.
And it was a program.
We have a nice writeup on it on the in our reporting package.
But long story short, it's basically we amended our payroll taxes.
It was a government program and basically.
Government will credit us $4 7 million.
Of which we have collected as of today $4 one of that.
Okay.
And you're still a $6 million of cash taxes.
For the year.
Two separate <unk>.
Two separate pieces.
Correct.
She has nothing to do with the normal federal and state taxes.
Completely different.
Okay. So you have to see.
Close to or through your P&L again.
And so that's a contra expense.
Correct.
Gotcha.
We've paid in cash taxes, I want to say $4 9 million and we estimate that.
By the end of the year will be six months.
Alright.
Okay.
Yeah.
You indicate that the pacing, it's pretty strong in November and.
December to date.
What's driving that compared to October flat panel verticals that are particularly strong.
Sure.
All right.
Stronger interest for Hispanic markets.
We're definitely seeing stronger interests for the Hispanic market.
We are overjoyed.
Really excited on the momentum.
Spanish broadcasting being the leader in their space.
In this particular study with Nielsen I refer you to go to it if he wants to sell.
Send it to you offline.
The return on AD spend for investing in Spanish targeted and owned media pays off for advertisers and our advertisers are getting tremendous tremendous results.
We look of units simple we're getting.
A bill for.
For.
Some of the biggest brands in America, let have.
Blood have not historically considered investing Hispanic media. So it's opening up an incredible opportunity and we are we're seeing gains before that we haven't seen it.
What a particular space.
Mentioned in the pharmaceutical area working with suitable houses has historically always been a strong category for video and we're seeing very strong in the audio right now plus the consumer packaged goods again, a lot of interest on Hispanic owned Hispanic targeted media so.
We are look everyone in our team is excited for 'twenty three they can't wait for it and I'll give you color on our network business and that is very telling.
We've had the banner year for our network business, we have never had the revenue in our network in the history of this company.
You can look and say well how is it going to look for next year. If you had such an incredible year and network.
Our network upfront.
Double digits for 2023.
It's again network is up for us our upfront negotiations are up considerably and it's up.
Double digits for 2023, so we're really really excited.
To continue to to look at the long term growth of Spanish broadcasting system. We're excited.
Okay.
Performing well, having automotive advertising.
These wells are there.
We have and its interesting because theres always been looked at and that's a great question audio has always been benefited with automotive in tier three and I want to say with distributors in tier two and three.
Tier one manufacturing has always has always relied on video in national and network television. So.
The opportunity for automotive we are seeing an increase in automotive, we're seeing and particularly in the tier three and tier one.
Some color on the tier three the supply chain issues.
<unk> was basically a burden for for media properties, because the car dealerships forget, let's say 100 cars and as soon as data load them. They were sold now with the supply chain getting better.
The automotive industry is relying more on.
On broadcasters in the audio space. So I do think it's a benefit for for audio in particular tier three now tier one and we've done okay. In tier two tier one is something I want to particularly highlight that we're doing well in all of the tier one manufacturers because.
The environment, we're living the set the recent census numbers that were released in 2020, the incredible fastest growth.
The population of America, which happens to be Hispanic.
We are so pleased but all of the OEM automotive broadcasters are onboard in terms of spending.
Spending money in particular with us and.
We're very very pleased with that and look if you looked at I'll give you a little color for October Miller Kaplan, just came out and we Spanish broadcasting Okay. When you looked at the markets, where we're in and the markets that we serve we were up about 600 basis.
<unk>, which is in itself it's incredible it's incredible.
So we're really pleased about it.
Okay great.
Just one last question.
The year is almost over.
The live event.
Transpire compared to your estimate for 2022 and then what.
How's it looking for 2023, because it's 10 million, that's probably right in the ballpark, but the outperformed or under delivered argue.
Youre talking about <unk>.
Yes.
Special events.
Yeah.
To date from a ticket sales standpoint, we've done nine eight.
So we're doing quite well and then fourth quarter is a pretty robust.
Yeah.
Of that lineup. So so from a from a revenue standpoint from a top line revenue standpoint, and from a sponsorship standpoint, I think we're doing quite well.
Yeah.
Okay, what about one thing.
We're currently building that lineup of our signature stations are lined up now we're just filling in the filler.
So we're currently working on that but yes, we feel.
That is a definitely a line of business thats on growth mode.
And and.
And our crowds tell us that we're doing a good job I mean.
We sell on every single event so.
So definitely an opportunity.
Okay good to hear thank.
Thank you.
Thank you.
The next question comes from Craig car larvae of Longfellow. Please go ahead.
Good morning.
Good morning. Thank you for the time I have two questions first.
Regarding liquidity, how do you against the backdrop of the minimum liquidity you feel comfortable running the business. How do you see liquidity evolving I guess in Q4 and throughout 2023.
I guess secondary.
On my second question would be surrounding the balance sheet do you view, the Tampa and Orlando asset.
Final piece that you need.
We have a sustainable capital structure and a business that generates.
Through free cash flow year in year out what do you think there are other strategic pieces that need to be added or subtracted.
Look at all that that's an excellent question, we look at with our research and data.
Continuously.
We wanted to see where the Hispanic grocers and we wanted to be there at the forefront look we serve the Hispanic audience very very passionately.
And let's let's go back into the Covid area, where before Covid pre COVID-19 numbers, our audio monthly impressions were close to $60 million.
And during Covid.
People started listening to smart devices, and our platforms and more and we grew that rapidly from 60 million audio impressions to 180 million impressions and we looked at closely all of the markets and all of the DMA is where the Hispanic growth as that and look at.
When we go into a market we've done our analysis and our research and we've got I want to say the best team again, I'll put it up to any team in any silicone valley.
Valley lab, but.
Once we decided to go into a market, we're going to deliver we're going to deliver strong numbers and it has to do with that we are.
Hispanic company, let's basically run by Hispanics and delivers Hispanic content. So we're going to continue to look at any market.
Opportunity, but for right now I think we're really in great shape.
In addition to.
I mean, we also look at the market and see where the synergies are within our content that we have in other markets. So I think yes.
Clearly there is.
Hispanics are moving.
There's other markets that are attractive.
Again opportunities out there.
As to liquidity I think I think our goal would be to have at least one coupon in the bank at all times. So we're working on that and that's what that's where we are today, where we're a little bit short as of today, but that would be the goal.
Are there other sales.
You could target land or anything else that would help bolster liquidity.
Although weak with sure.
I mean, we have two buildings that we can we can potentially look at but.
The issue with that is that we move out then we will incur capex and our opex so right.
Those are sensitivity analysis that we need to make.
And make those decisions when the time is right.
Okay.
Okay. Thank you thanks.
Thanks, Craig Craig Thanks have a good day.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
I want to thank everyone, who participated in our third quarter.
Earnings call.
Belated happy Thanksgiving to everybody and I look forward to discussing fourth quarter and year end very exciting time.
For our companies continue to grow.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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