Q3 2023 Urban One Inc Earnings Call
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Yeah.
Yes.
Ladies and gentlemen, thank you for standing by 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 report.
So 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 January 11th 'twenty 'twenty. Four. Please note that urban one disclaims any duty to update any forward looking statements made in the <unk>.
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In this call urban one may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www dot urban one dot com.
A replay of this conference call will be available from one P. M. Eastern time January 11th 'twenty 'twenty four until 11 59 P. M January 18th 2020 for callers may access the replay by calling 8662071041 or international callers may dial dirt.
Four zero to 90 700847, the replay access code is 2318685 access to live audio and a replay of the conference call will also be available on urban one's corporate website at www Dot urban one dot com the replay will made.
Available on the website for seven days after the call no other recordings or copies of this call or outright or may be relied upon.
I'll 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.
Thank you operator also joining our team.
Our.
Our chief administrative officer, Karen Wishart, our general Counsel, Kris Simpson and Chief Financial Officer.
He wanted to Jordan Dror.
We have released our third quarter results did so before the end of the year. So that's been out there and you are.
Obviously, you do on the conference call I'll, now Oh, yeah, a little bit.
Of news that's already out there I think we kind of guided.
As to where we were going to be for the year and third quarter for <unk>.
Yeah.
As well as the rest of the radio sector.
Yeah awful quarter, yeah, ours ours wasn't any different.
The fourth quarter.
Huge political now that's kind of same station ex political and kind of in line with the with third quarter as well, but yes net net we still you know are affirming our year end guidance.
125 to almost 28.
Yeah, we're still on top of that and comfortable with that as we got finished tying out.
The year end results are good news going into twenty-four.
And the radio sector Q1.
Listings are.
<unk> are substantially better faster.
A lot by improving local economy for us where the peso.
Low single digits today, it bounces around but today, it's minus one for Q1, yeah, let's see how that looks and holds but we're optimistic as we go into.
24 for a bottoming, if you will and and radio advertising performance and then an upswing due to political so with that I'm going to turn it over to Peter and let him get into the detail of the numbers and I'll come back for Q&A.
Peter: Net revenue was down by two 8% year over year for the quarter ended September 32023, and approximately $100.
Speaker Change: Got it.
Speaker Change: Revenue for the radio segment was $42 million, a decrease of 0.6% year over year.
Speaker Change: And we went down by 14.4% same.
Speaker Change: Same station and minus 12% same station ex political which as Alan said is broadly in line with what we discussed on our last earnings call. According to Miller Kaplan.
Our local AD sales were down eight 4% against the market that was down five 7% with core and a national AD sales were down 7% against the market that was down 10%.
Q4, 23 radio segment is expected to be down approximately 14% all in.
Speaker Change: On a same station basis Q4 is expected to be down approximately 23%.
Speaker Change: And then ex political down about 13%, so so broadly kind of in line.
Speaker Change: Q3 same station.
Speaker Change: And Q1 pacings on a same station basis currently down very low single digits local is pacing plus 4% national is down about 20%.
Net revenue for reach media was $11 $2 million in the third quarter up 10, 8% over prior year and adjusted EBITDA was $3 $4 million down six 7% for the quarter net.
Net revenues for our digital segment decreased by 3% in Q3 to $24 million.
Speaker Change: Direct sales are down while local radio streaming and podcast revenues were all up.
Speaker Change: Adjusted EBITDA was $7 4 million down $7 4 million down two 9% year over year.
Speaker Change: We recognized approximately $46 $8 million of revenue from our cable television segment during the quarter decreased to seven 6%.
Speaker Change: Cable TV advertising revenue was down five 9%.
While we had a favorable rate impact of $1 $1 million.
Speaker Change: Unfavorable volume impact of $1 $2 million half a million unfavorable audience deficiency units and then $850000 re class of Vod revenue to a digital segment.
Speaker Change: Related to CTV.
Speaker Change: Cable TV affiliate revenue was down by nine 3% with favorable rate increases of $1, two being offset by $3 4 million of net churn.
Cable subscribers with TV, one as measured by Nielsen finished Q3, 2023 of $44 million compared to $45 1 million at the end of Q2.
<unk> TV had $41 4 million Nielsen subs.
Operating expenses, excluding depreciation and amortization stock based compensation and impairments of long lived assets.
Increased to approximately $84 $5 million for the quarter up five 3% from approximately $8 2 million incurred for the comparable period in 2022.
Speaker Change: Radio operating expenses were up 14, 1% or $39 million.
Speaker Change: The Houston Radio acquisition, which was effective August one 2023 that added approximately $2 $2 million to expense and also the Indianapolis acquisition, which we did back in September of 2022 added approximately $2 million.
Speaker Change: Spencer.
On a same station basis.
Speaker Change: Sales Commission expenses were down on event expenses were down from last year for the quarter due to the timing difference between.
Two of the largest radio events for the company.
Reach operating expenses were up by 21, 4%. So that was and that was driven by increased reach that station compensation expense.
Given the addition of four new networks as well as eventful expenses on pilot compensation.
Speaker Change: Operating expenses in the digital segment were down 3% driven predominantly by variable sales expenses tied to lower direct advertising revenues.
<unk> expenses were down four 4% year over year.
Speaker Change: Content amortization expense was up by $1 $7 million.
Speaker Change: Driven by $2 $2 million or original programming and.
Speaker Change: And that increase was offset slightly by a reduction in promotional media spend.
Speaker Change: Excellent $20 $1 million.
Sidra that we had a greater number of premiere hours that we promoted in prior year.
Speaker Change: Operating expenses in the cohort.
Speaker Change: The <unk> segment.
By approximately $520000, primarily as a result of higher third party consulting and audit expenses.
Speaker Change: Consolidated adjusted EBITDA.
Speaker Change: It was $34 1 million for the quarter down 23%.
Speaker Change: For the third quarter consolidated broadcast and digital operating income was approximately $43 $8 million a decrease of 13, 9%.
Interest expense decreased to approximately $14 million for Q3 down $15 $3 million last year due to lower overall debt balances.
Speaker Change: Company made cash interest payments of approximately $26 $9 million in the quarter.
The next semiannual debt service payment is due in Q1.
Speaker Change: Yeah.
Speaker Change: And $85 4 million impairment of goodwill and long lived assets was recorded across 10 about 13 radio markets.
The benefit from income taxes was approximately $16 $8 million for the quarter. The company paid cash income taxes in the amount of approximately $1 6 million.
Net loss was approximately $54 4 million or $1 14 per share compared to net income of $3 $5 million or <unk> <unk> per share for the third quarter of 2022 capital expenditures were approximately.
For the quarter.
Speaker Change: As of September 32023, total gross debt was $725 million.
Speaker Change: Ending unrestricted cash was $195 $7 million.
<unk> and net debt of approximately $529 3 million, which would compare to $133 $3 million of LTM reported adjusted EBITDA for a total net leverage ratio of 397 times.
Pro forma for the Indiana, Indianapolis, and Houston Radio acquisitions.
Speaker Change: Total net leverage was three nine.
Speaker Change: And with that I'll hand back to you. Thank you Peter.
Speaker Change: Our radar could you open it up to the.
Speaker Change: Colliers.
For Q&A. Please.
Speaker Change: Okay, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one zero at this time and one moment. Please for your first question.
Speaker Change: Okay.
Speaker Change: Your first question comes from the line of Health Stiner from BNP Paribas. Please go ahead.
Heath Stiner: Hey, guys congratulations on the quarter and come in in line with expectations, great to see the affirmation of the guide for the year.
Speaker Change: I guess you know one thing that really stuck out to me was I thought the Q1 pacings for where radio for much stronger than I would've expected you speak to local being stronger which is fantastic is that really just a reflection of the economy, improving and people are stepping back in and being willing to advertise again.
Speaker Change: And I guess my little to partner on that is just sort of you know.
Speaker Change: For the year with sort of that pacing do you think should we be thinking that overall radio revenue should be up year over year with political.
Yeah, the answer to that is yes.
And.
Speaker Change: And look I would.
Speaker Change: Yeah.
Speaker Change: I definitely feel like we've gone through and add recession in 'twenty three I mean, we felt that we felt bad I mean, you could really see it national right now advertisers pulling pulling back we saw it across all of our businesses. So yeah. It was not one of them was not affected from TV.
Speaker Change: The radio.
Speaker Change: Digital just because there's an AD recession doesn't necessarily mean there is.
Speaker Change: The a macro economic recession.
Speaker Change: So the recession that.
Speaker Change: That never materialize is or a soft landing or or or whatever you use.
Want to call it.
Speaker Change: So I'm not I'm not good at sort of predicting why.
Ill make advertising trends move in one direction.
Speaker Change: Or another but it definitely does feel like you've kind of bottomed out in the third and fourth quarter I'm hearing it from other operators that.
Speaker Change: That business in in Q1.
Speaker Change: It looks better and you know I think the tenor.
Speaker Change: Around the country seems much more optimistic in terms of whether or not we're gonna have a soft landing now so.
My guess is yeah, yeah things are you now bottomed out and are improving and.
Speaker Change: And that's indicative of what's happening with our radio pacings right now again, that's my opinion, you know, but that's what it feels like.
Actually I had a conversation with one of our.
Speaker Change: R.
Our sales managers handles.
National political.
Speaker Change: Stop for US, we're starting to see more political avails, yeah, coming and those should also yes, there's not a ton of political money in that Q1 number right now yeah and that thought is maybe 150 grand or something like that.
Speaker Change: But we're starting to see it youll see it heat up so hopefully.
Speaker Change: Again, that's a good sign for things to come for the year.
Speaker Change: Yeah, great no that absolutely.
Speaker Change: That is fantastic.
Speaker Change: <unk> itself is certainly irrefutable, so anyway, I guess moving onto my next question is I mean with all of that I guess I would think than that.
Speaker Change: It does it would it be right to it and I know, you're not putting out any guidance yet for 2024, but sort of with that backdrop. I mean, certainly there probably will still be some sub pressure on T V. But overall I mean, when you guys sort of maybe you'd be disappointed at this point if EBITDA was flat for the year and 'twenty four I would think that there would probably be some room for a little bit of improvement year over year.
Speaker Change: We're not there yet but use that you like you said.
Speaker Change: You called out the single biggest headwind and.
Speaker Change: That's the pay TV ecosystem.
Speaker Change: And churn she doubled.
Speaker Change: Some decline.
Speaker Change: Those are difficult to deal with.
Speaker Change: No.
Speaker Change: We're not prepared to give a 24 number yet we're still working through budgets.
Speaker Change: Yes.
Speaker Change: Yes honestly.
Speaker Change: Seeing this momentum in the radio business.
Speaker Change: Is it.
Speaker Change: So our mindset, but we're not ready to plant.
Speaker Change: Our stake in the ground.
Speaker Change: So.
Speaker Change: Yeah.
That makes sense out, but that's definitely a.
Speaker Change: Prudent and I appreciate the conservatism.
Speaker Change: But respect of strong performance and then I'll just say one last question I guess I'll go back into the queue and.
Speaker Change: Thank you guys of course for the time, but I guess I just wanted to say.
So for the debt pay down we have been talking about that.
Speaker Change: Before it I think on the last call you had said youre pretty much restricted from doing anything until the last 10-Q was posted I mean, so now that that's done.
Speaker Change: Have you started to buy back any of the bonds, yet and in the open market in <unk> and <unk>.
Speaker Change: Just asking that and then just any and then if there's any update on the size of the buyback or what you think youll towards it.
Speaker Change: Yes they.
Speaker Change: The answer is yes, we are active in the market now.
Yeah.
Speaker Change: That's great.
Great and any update on the overall sizing of what you think.
Speaker Change: I think I've said I think I've said on the call before that you know.
Speaker Change: Yeah, I think I think we talked about it right I kind of Triangulated. Yeah. We tend we tend to look at like our bond buybacks and kind of $25 million tranches.
Speaker Change: We you know I think we got an authorization from our board for $75 million, just because we kind of like the round number of 650 in terms of face amount of debt to go down too.
Speaker Change: To next and so that's what we did we got that authorization, we kind of look at you know 20.
Speaker Change: $25 million tranche is and then kind of a pause and see where we're at and now.
Speaker Change: That's been our yeah, that's kind of been our game plan, Yeah, and and that's what we're done so.
Speaker Change: Great. Thank you guys so much for the questions and congratulations again.
Speaker Change: Youre welcome.
Speaker Change: If there are any additional questions. Please press one zero.
Speaker Change: And you have a question from the line of Brad Kern, a private investor. Please go ahead.
Brad Kern: Hi, Thanks for taking my call.
Brad Kern: First of all wanted to.
Brad Kern: I wanted to see if.
Brad Kern: If there's any update on the way you're thinking about capital deployment in terms of strategic investments and I don't know if you can maybe share what youre seeing out there in terms of opportunities that you're betting.
Brad Kern: For other uses of the cash on balance sheet.
Speaker Change: I'll start with that.
Speaker Change: Yeah, there is no strategic investment.
Speaker Change: Decisions.
Speaker Change: Currently being vetted at the company right now we've got you know we've got nothing on the table.
We know we're not exploring we're not working on an acquisition.
Speaker Change: Now we.
Speaker Change: We still are active in trying to figure out.
Speaker Change: Future gaming opportunities, but there is nothing actionable today.
And and so the number one use of capital right now is what I just described to the last.
Speaker Change: Callers question and that's.
Speaker Change: That's it yeah.
Speaker Change: Really boring delevering and operating and strategically trying to figure out what to do.
Speaker Change: Yeah, I'll do with with these businesses.
Speaker Change: Or do we take our cable TV business, yeah, what our next distribution opportunities that stuff's changing so fast.
Speaker Change: Yeah like I feel good that we're sitting back and we and we have you know we are breathing room to two.
Speaker Change: You have to figure out where the puck is going in and tried to escape there and continue to work on Delevering at the same time so.
Speaker Change: Yes.
Okay. That's helpful. And then there was some news in December about round.
Speaker Change: Paramount potentially selling and talk yourself EEG too.
A management led buyout and then you had said on a previous call that you were you were around yeah kind of who they are.
Speaker Change: I don't.
I I mean, I saw I thought I saw that news report I don't you know I don't know how real. It is you know I think you know a number of people kind of reached out when they saw that news report and said Hey, we're still interested and you know.
Speaker Change: And it looks like you know Paramount didn't really respond.
Speaker Change: To that they seem like they're working on some sort of larger.
Speaker Change: Solution.
Now so I don't know anymore I mean, we were yes.
Speaker Change: We were we were there with a bid that was you know.
Speaker Change: While lower than the $3 billion at bad kind.
Speaker Change: Kind of.
Speaker Change: Said that they were looking for are we.
Speaker Change: We had a great private equity partner lined up and ready to go in and we had a couple of banks lined up and ready to you know to underwrite it for our bid was real.
Speaker Change: So I've seen all of that that they know that we where they are and we were credible and we could we could be actionable.
Speaker Change: So it would be surprising to me you know if they and again. This is just my opinion.
Speaker Change: I'll go out and do kind of like a one off deal without at least calling people that they know that we're credible there to create some tension if they if they work and they're going to decide to sell for a lower number than than three and come down to kind of where everybody was that.
Speaker Change: It would be surprising if we didn't get a call to reengage.
Speaker Change: And we have it now and so I don't know what's going on there yeah.
Speaker Change: But it feels like they've got bigger fish to Fry right I think I, just saw something usually either yesterday or the day before about the sky dance in Redbird trying to take.
Speaker Change: Take out National Amusements, Yeah, it seems like.
Speaker Change: A larger discussion than whether or not you're going to spin out V T.
Speaker Change: Yeah, absolutely alright, thanks for the time.
Speaker Change: Sure.
Speaker Change: If there are any additional questions. Please press one than zero.
Speaker Change: Yes.
Speaker Change: And at this time there are no further questions right well. Thank you everybody we look forward to.
Speaking with you again on our year end conference call.
Speaker Change: Ladies and.
That does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.
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