Q1 2024 iHeartMedia Inc Earnings Call
Hello, Thank you for standing by my name is Sarah and I will be your conference operator today at this time I would like to welcome everyone to the I Heart Media Q1, 2024 earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you would like to ask a question during that time. Please press star one on your telephone keypad.
I would now like to turn the conference Sir to Mike Mcginnis head of Investor Relations you may begin.
Good morning, everyone and thank you for taking the time to join US for our first quarter 2024 earnings call. Joining me for today's discussion are Bob Pittman, our chairman and CEO and rich Bressler, our president COO and CFO at the conclusion of our prepared remarks management will take your questions and.
And to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward looking statements regarding our financial performance and operating results.
These statements are based on management's current expectations and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, during this call we will refer to certain non-GAAP financial measures reconciliations between GAAP and non-GAAP financial measures are included in our earnings.
The release earnings presentation, and our SEC filings, which are available in the Investor Relations section of our website and now I will turn the call over to Bob.
Thanks, Mike and good morning, everyone. We're pleased to report that our first quarter 2024 results were in line with our previously provided adjusted EBITDA and revenue guidance ranges as expected. We saw February March improve over the January pace of business. Although the marketplace continues to be dynamic with the changing outlook on interest rates inflation trends in global and domestic.
<expletive> uncertainty we remain confident that this is a recovery year highlighted by the strong momentum in our podcast business and the sequential improvement of our multiplatform groups year over year. Adjusted EBITDA performance. We also see material upside from political advertising in the back half of the year and the benefit of our ongoing focus on cost efficiencies as well.
Now let me take you through some of the key financial results of the quarter and the first quarter, we generated adjusted EBITDA of 105 million in the middle of the guidance range, we provided of $100 million to $110 million. Our consolidated revenues for the quarter were down one 5% compared to the prior year quarter within the guidance range of flat to down 2%.
Our Q1 free cash flow was negative 81 million a significant improvement compared to the negative $133 million in the prior year. As a reminder, Q1 is our seasonal low point for free cash flow in the year and we will generate positive free cash flow in each of the remaining quarters in 2024 with each quarter, increasing sequentially, we anticipate our full.
All year free cash flow to be significantly higher than last year, turning now to our individual operating segments. The digital audio group generated first quarter revenues of 239 million up 7% versus prior year and represented 30% of the company's total revenue for the quarter. The digital audio group generated adjusted EBITDA of 68 million.
Up 26% versus prior year, the digital audio groups adjusted EBIT margins were 29% up from 24% in Q1, 2023 marking the digital audio group segments highest Q1 EBITDA margin ever within the digital audio group, our podcast revenues grew 18% versus prior year.
Podcasting continues to be the hottest new consumer medium and we are the leader in that medium and every key metric audience revenue and earnings podcasting remains a strong growth engine for the company and our financial discipline and podcasts expenses continues to pay off as our podcast thing EBITDA margins remain accretive to our total company adjusted EBITDA.
Margins.
In March <unk> was once again ranked the number one podcast publisher in the U S with more monthly downloads than the next two largest podcast publishers combined according depart track our leadership position and pod casting is in part the result of the power of our broadcast radio assets. As a reminder, we've used those assets to build not only the pie.
Gas business, but also the IHOP radio App, which is the number one digital radio service and our marquee live events business, which includes the recent IR Radio Music Awards and the IHOP Country Festival. In addition to our industry, leading podcast business and our digital radio streaming service, which has five times the listening of our closest competitor.
We also have the largest social footprint of any audio service by a factor of seven and we operate 3000 national and local websites the reach more than 110 million people in the United States each month, all of which represent additional opportunities for our advertising partners to interact with our highly engaged consumer base and provided.
<unk> revenue growth for the company turning now to the multi platform group, which includes our broadcast radio networks and events business in the first quarter revenues were 493 million down six 7% versus prior year and down seven 6%, excluding the impact of political advertising adjusted EBITDA was 77 million.
<unk> down 11, 3% versus prior year and this represents a substantial sequential quarterly adjusted EBITDA improvement from down 38% year over year in Q4, 2023, I heart continues to be ranked number one in radio audience in more markets than the next two largest radio companies combined and our events business.
<unk> strong momentum for example, the IHOP Radio Music Awards generated 84 billion social impressions three times more than the Super Bowl and 2.3 times more than the Grammys and we've continued to make meaningful progress in the development of our programmatic platforms that enable the automated buying selling and planning of our broadcast radio inventory.
[noise], which give our broadcast radio inventory exposure to the digital Tam looking at the business as a whole we had our first quarter of year over year adjusted EBIT growth in five quarters, driven by the substantial sequential year over year improvement in the performance of all of our segments. The multiplatform group the digital audio group and the audio of media serve.
Or is this group positive indicators of a recovery year. In addition to continuing to build out our business and develop new consumer and revenue opportunities. Our management team remains focused on expense management, driving efficiencies and structuring our business using technology, including AI for long term profitability and the maximize shareholder value.
And now I'll turn it over to rich.
Thank you Bob as I take you through our results you'll notice that as Bob mentioned, our first quarter 2024 results were in line with our previously provided revenue and adjusted EBITDA guidance ranges.
Our Q1 2024 consolidated revenues were down 1.5% year over year in line with the guidance, we provided of flat to down 2%. Our consolidated direct operating expenses decreased 0.9% for the quarter. This decrease was primarily driven by lower variable content cost lower event costs relate to the timing of that.
2020 for IHOP Radio Music Awards, which were on April one this year and March 27th last year, partially offset by higher third party digital costs related to the increase in digital revenues.
Our consolidated SG&A expenses decreased 4.4% for the quarter. This decrease was driven by lower marketing expense due to the timing of the 2020 for IHOP Radio Music awards and lower variable bonus expense, partially offset by an increase in certain costs incurred in connection with the execution of our cost savings initiatives.
We generate a first quarter GAAP operating loss of $34 7 million compared to a GAAP operating loss of $48 9 million in the prior year quarter.
Our first quarter, adjusted EBITDA was $105 million of 12% compared to $93 million in the prior year quarter and within the guidance range, we provided of $100 million to $110 million.
Turning now to the performance of our operating segments and as a reminder, there are slides in the earnings presentation on our segment performances.
In the first quarter, the digital audio groups revenues were $239 million up 7% year over year and they comprised 30% of our first quarter consolidated revenues.
The digital audio groups adjusted EBITDA was $68 million of 25.9% year over year, and our Q1 margins were 28, 5% a year over year increase of 428 basis points. This was the highest Q1 EBITDA margin for the digital audio group in our company's history.
Within the digital audio group or a pi casting revenues, which grew 18% year over year and our non pipe casting digital revenues, which grew one 2% year over year.
The multi platform revenues were $493 million down six 7% year over year or down seven 6%, excluding the impact of political.
Adjusted EBITDA was $77 million down 11.3% year over year and this represents a substantial sequential improvement from down 38% year over year in Q4 2023 the.
The multi platform groups adjusted EBITDA margins were 15, 6%.
Turning to the audio and media services group revenues were $69 million of 12, 7% year over year, and adjusted EBITDA was $24 million or 54% from $15 million in the prior year, excluding the impact of political the audio and media services group revenues were up 6.1 person.
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At quarter end, we had approximately $4.86 billion of net debt outstanding which was the lowest net debt position in the history of our company or.
Our total liquidity was $788 million at quarter end, which includes a cash balance of $361 million our quarter ending net debt to adjusted EBITDA ratio was 6.9 times and 2024, we expect to make progress towards our goal of a net debt to adjusted EBITDA ratio of approximately.
Emily four times as highlighted on past calls, we have no material maintenance covenants and no debt maturities until May 2026, we continue to be opportunistic in responding to market development and are evaluating all opportunities surrounding our capital structure.
In aggregate, we now have repurchased $534 million of our eight and three a senior unsecured notes at a meaningful discount to their par value generating both earnings and free cash flow accretion.
This has reduced the outstanding amount of writing three eighths senior unsecured notes from 1.45 billion to approximately $916 million, resulting in aggregate annualized cash interest savings of approximately $45 million in the first quarter, our free cash flow was a negative $81 million a <unk>.
And an improvement from negative $133 million in the prior year quarter, and our Q1 2024 of free cash flow excludes the positive impact of the $101 million of cash proceeds from our equity stake in the sale of BMI that we received in February as.
As a reminder, Q1 is our seasonal low point for free cash flow in the year and we will generate positive free cash flow in each of the remaining quarters in 2024.
Our free cash flow for the year will also benefit from the presidential election cycle, which we expect to generate robust political advertising, which as reminders paid upfront and will help fuel our free cash flow generation, particularly in Q3 and Q4.
Turning now to our outlook for Q2, we expect our Q2 2020 for revenues to be approximately flat year over year. We are still closing the month of April but expect revenues to be down 0.4%.
Turning to the individual segments for Q2, we expect the digital audio groups revenues to be up high single digits. We expect a multiplatform group's revenue to be down mid single digits, a sequential improvement from Q1.
And we expect the audio and media services group revenues to be down low single digits, we expect to generate second quarter adjusted EBITDA in the range of $140 million to $160 million compared to $191 million in the prior year quarter for.
For this quarter, we will not have our usual flow through of revenue due to the timing of the IHOP Radio music Awards, which occurred in Q1 last year and in Q2. This year, we recognized expense associated with the event, including production and marketing costs. When the awards are aired on Fox and streamed on <unk>.
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Turning to some of the items affecting our full year free cash flow, we expect our cash taxes to be approximately 10% of adjusted EBITDA in 2024.
Our estimate of full year 2020 for capital expenditures is expected to be approximately $100 billion.
Cash restructuring expenses will be approximately $60 million. This year as we continue to execute on new opportunities to optimize our organization for efficiency and growth as.
As Bob mentioned, we continue to see signs of improvement throughout our business and the broader advertising marketplace and as we look ahead, we expect to generate significant political revenues as a result of the presidential election cycle. Although most of the political revenue comes in the back half of the year as an early.
Khater, our full year 2020 for political revenues are currently pacing approximately 16% higher than the last presidential election cycle. When we generated $167 million of political revenue with that context, we expect to see a significant year over year improvement in our full.
Full year adjusted EBITDA performance.
Behalf of our entire management team, Bob and I want to thank our team members, who work to deliver for their communities, our advertising partners and for IHOP everyday.
Now, we will turn it over to the operator to take your questions. Thank you.
Thank you.
I would like to ask a question. Please press star one on your telephone keypad.
If you have to adapt and with wish to withdraw your question simply press Star One again, one moment please.
There are no questions at this time I will turn the call to the speakers for closing remarks.
Well.
Bob and I and the entire management team again would like to thank you all for taking a few minutes. This morning to listen to the <unk> story.
And we are available anytime for any follow up questions again, Thank you all.
This.
Today's conference call. We thank you for joining you may now disconnect your lines.
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