Q3 2024 iHeartMedia Inc Earnings Call
Thank you for standing by. My name is Rebecca and I will be your conference operator today. At this time I would like to welcome everyone to the iHeartMedia Q3 2024 earnings call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Speaker Change: Good morning, everyone, and thank you for taking the time to join us for our third quarter 2024 earnings call.
Speaker Change: Joining me for today's discussion are Bob Pittman, our Chairman and CEO, and Richard Bressler, our President, COO, and CFO.
At the conclusion of our prepared remarks, management will take your questions. In addition 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.
Speaker Change: 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 including today's recent 8k filing.
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 release, earnings presentation, and our SEC filings, which are available in the investor relations section of our website. And now I'll turn the call over to Bob.
Bob Pittman: Thanks, Mike, and good morning, everyone. Before we discuss the company's third quarter operating results, I want to provide two important and positive updates.
The first is about our capital structure.
As you may have seen in our 8K file this morning, we're pleased to report that we have entered into a transaction support agreement with a group of debt holders representing, on an aggregate basis, approximately 80% of the company's outstanding debt.
Speaker Change: We've agreed to pursue, and the supporting debt holders have agreed to support, exchange offer transactions that will be offered to all holders of the company's existing debt. The exchange offers will accomplish three things. One, they will extend the majority of our debt maturities by three years.
Speaker Change: Two, our current consolidated annual cash interest expenses will remain essentially flat. And three, they will provide for some overall debt reduction.
We expect the exchange offers to close prior to the end of the year.
Speaker Change: The high levels of support from our debt holders demonstrates the confidence they have in the future of our business, for which we are extremely appreciative. The Transaction Support Agreement marks an important step in our commitment to optimize our balance sheet, and it provides the company with the flexibility to remain focused on continuing IHART's transformation.
The second is an update on our ongoing modernization initiatives and the associated cost savings.
As a reminder, iHeart is a high operating leverage business.
Technology is the key to increasing our operating leverage, and it is a constant focus for us. It allows us to speed up processes, streamline legacy systems, and it enables our folks to create more, better, and faster.
Speaker Change: We've now taken another significant step in our modernization journey, flattening our organization, eliminating redundancies, and breaking down silos.
It will be easier to do business with us and easier to get our business done as well as accelerate revenue growth.
Speaker Change: and this new use of technology will have a major impact on cost, reducing our annual expenses by approximately 150 million in 2025.
Speaker Change: Coupled with the full year benefit of actions taken earlier this year, this brings our total annual cost savings to $200 million in 2025 compared to 2024.
Speaker Change: In addition to improving our operations, these cost savings give us greater certainty in delivering our financial performance for next year and beyond.
Speaker Change: And we will continue this modernization process as we further deploy AI and other advancements to transform our operating structure as we move forward.
Speaker Change: While the marketplace is dynamic, we continue to see strong momentum in our podcast business, our digital ex-podcast business, and the sequential improvement of our multi-platform group's year-over-year revenue performance.
Speaker Change: In addition to the continuing positive impact of an ad market recovery, our results also reflect the power of our assets, the upside from political advertising, and the benefit of our ongoing focus on cost efficiencies.
Speaker Change: Now let me take you through some of the key financial results for the quarter.
In the third quarter, we generated adjusted EBITDA of $205 million within the guidance range we provided of $200 to $220 million.
Speaker Change: Our consolidated revenues were up 5.8% compared to the prior year quarter in line with our guidance of up mid-single digits and excluding the impact of political, our consolidated revenues were even up 2% compared to the prior year quarter.
Speaker Change: Turning now to our individual operating segments, the Digital Audio Group generated third quarter revenues of $301 million, up 12.7% versus prior year, in line with our previously provided guidance of up low double digits, and represented approximately 30% of the company's total revenue, and is now about half the size of the multi-platform group's revenue. For the quarter, the Digital Audio Group generated adjusted EBIT of $100 million.
Speaker Change: up 6.8 percent versus prior year. The Digital Audio Group's adjusted EBITDA margins were 33.2 percent, continuing the trend of sequential margin improvement in each quarter this year. The Digital Audio Group's earnings are now almost three-quarters the size of the Multiplatform Group's earnings.
Speaker Change: Within the Digital Audio Group are podcast revenues, which grew 11% versus prior year, in line with our previously provided guidance of up, low, double digits.
Speaker Change: Our non-podcast digital revenues grew 14% versus prior year, and we expect that strength to continue as well.
Speaker Change: In September, iHeart was once again ranked the number one podcast publisher in the U.S., according to PodTrack. And our financial discipline in podcasting continues to pay off, as our podcasting EBITDA margins remain accretive to our total company-adjusted EBITDA margins.
Speaker Change: As a reminder, our leadership position in podcasting is, in part, the result of the power of our broadcast radio assets.
Speaker Change: We have used those assets to build not only the podcast business, but also the iHeartRadio app, which is the number one digital radio service, and our marquee live events business, which includes the recent iHeartRadio Music Festival, as well as the upcoming iHeartRadio Jingle Ball Tour.
Speaker Change: In addition to our industry-leading podcast business and our digital radio streaming service, which has five times the digital listening of our closest competitor, we also have the largest social footprint of any audio service by a factor of six.
Speaker Change: and we operate 3,000 national and local websites that reach more than 140 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 provide additional revenue growth for the company.
Speaker Change: Turning now to the Multi-Platform Group, which includes our broadcast radio, networks, and events businesses.
Speaker Change: In the third quarter, revenues were $620 million, down 1.1 percent versus prior year, in line with our previously provided guidance of down low single digits, and down 2.9 percent, excluding the impact of political advertising.
Speaker Change: Adjusted EBITDA was $130 million, compared to $162 million in the prior year quarter, due primarily to the timing of certain non-cash marketing expenses associated with our iHeartRadio Music Festival, which we discussed last quarter, as well as expenses associated with serving as the exclusive audio home of NBC's coverage of the 2024 Summer Olympics in Paris.
Speaker Change: We believe NBC's ratings success further validates the strength of our relationship with our listeners and the power of our multiple platforms, including broadcast radio, to drive performance for our partners.
Speaker Change: And there's one more point I want to make about the power and uniqueness of our broadcast radio assets that's particularly relevant right now.
Speaker Change: Over the past few years, we've done groundbreaking work to identify and understand the ignored consumer as part of our ongoing tracking of the American consumer.
Speaker Change: This is a huge consumer group that feels ignored and even disrespected by the media and advertisers. Indeed, this week's national election could even be thought of as the revenge of the ignored consumer.
Speaker Change: We saw this ignored consumer and the wave of public dissatisfaction coming. How?
Speaker Change: We've been connecting with these ignored consumers for years through our network of trusted hosts and broadcast radio stations who talk and engage with them on a daily basis.
Speaker Change: These ignored consumers will have a tangible impact on business and marketing decisions going forward and given our unique position here, we think we'll benefit from that.
Speaker Change: And with our multi-platform group, we're also continuing the important development of programmatic platforms that will enable the automatic buying, selling, and planning of our broadcast radio inventory, which allow us to participate in the growing and substantial digital and programmatic TAMs.
Speaker Change: Turning to the Audio and Media Services Group, revenues were $90 million, up 45.3% year-over-year, and adjusted EBITDA was $44 million, up 162% from $17 million in the prior year.
Speaker Change: excluding the impact of political, the audio and media services groups revenues were still up 13.7 percent driven primarily by the growth in digital revenues. Digital is an important growth area for CATS and the ad tech investments made across iHeart will continue to enhance that performance.
Speaker Change: Before I turn it over to Rich, I want to take a moment to acknowledge the incredible work of our teams on the ground as two hurricanes impacted the country last month. As the storms approached, our local stations updated listeners to forecast and provided life-saving insights into how to prepare for storms of this magnitude.
Speaker Change: And as the storms made landfall, our teams remained on site and on the air, providing critical, real-time updates to our listeners, often the only source of information available, as Power Out had just knocked out TV stations and took down cell and Wi-Fi service.
Speaker Change: We're extremely proud that in the midst of these overwhelming natural disasters, the people of IHART continued to do what they do best, even as they were personally impacted.
Speaker Change: And now I'll turn it over to Rich. Thank you, Bob. As I take you through our results, you'll notice that our third quarter 2020 for IVIDA results were in line with our revenue and adjusted IBIDTA guidance ranges.
Rich: Our Q3 2024 Consolidated Revenues were up 5.8% year-over-year, in line with the guidance we provided of up mid-single digits.
Rich: Our consolidated direct operating expenses increased 7.8% for the quarter. This increase was primarily driven by higher variable content costs related to the increase in digital revenues.
Our consolidated SG&A expenses increased 6.4% for the quarter.
Speaker Change: The increase was driven primarily by the timing of higher non-cash marketing expense due to the 2024 Summer Olympics and the iHeartRadio Music Festival as well as costs incurred in connection with the cost savings initiatives implemented in the third quarter.
Speaker Change: We generated a third quarter gap operating income of $76.7 million compared to income of $69 million in the prior year quarter.
Speaker Change: Our third quarter adjusted EBITDA was $205 million, within the guidance range we provided of $200 to $220 million and compared to $204 million in the prior year quarter.
Speaker Change: turning now to the performance of our operating segments and as a reminder there are slides in the earnings presentation on our segment performances.
Speaker Change: In the third quarter, the Digital Audio Group's revenues were $301 million, up 12.7% year-over-year, and they comprised approximately 30% of our third quarter consolidated revenues.
Speaker Change: The Digital Audio Group's adjusted EVDA was $100 million, up 6.8% year-over-year, and our Q3 margins were 33.2%.
Speaker Change: Within the Digital Audio Group are our podcasting revenues of $114 million, which grew 11% year-over-year.
Speaker Change: and our non-podcasting digital revenues of $187 million, which grew 13.6% year-over-year, reflecting the investments we've made in building out our more diversified digital capabilities, even though some of those incremental revenues came in at a slightly lower margin.
Speaker Change: The multi-platform group's revenues were $620 million, down 1.1% year-over-year, or down 2.9% excluding the impact of political.
Speaker Change: Adjusted EBITDA was $130 million, down from $162 million in the prior year quarter, and the Multi-Platform Group's Adjusted EBITDA margins were 21%.
Speaker Change: Turning to the Audio Media Services Group, revenues were $90 million, up 45.3% year-over-year, and adjusted EBITDA was $44 million, up 162% from $17 million in the prior year.
Speaker Change: excluding the impact of political, the audio and media services groups revenues were up 13.7% driven primarily by the growth in digital revenues.
Speaker Change: As Bob mentioned in his remarks, this morning we announced that we have entered into a transaction support agreement with a group of debt holders representing approximately 80% of our existing debt to support an exchange of approximately $4.1 billion of debt for new notes and term loans.
Speaker Change: The key highlights here are that, as a result of the transaction contemplated by the agreement, we expect our new notes and term loans to have maturities ranging from 2029 to 2031, and we expect to slightly reduce our total debt levels.
Speaker Change: We also know, many of you have watched carefully, to see if an extension of our debt would increase our cash interest payments. And I am pleased to say that our annual cash interest expense will remain essentially unchanged.
Speaker Change: and notably, none of the exchange transactions will have any impact on the equity capitalization of the company.
Speaker Change: Overall, this transaction strengthens the company's financial flexibility while providing IHOP with ample runway to accelerate our strategic growth initiatives.
Speaker Change: This marks a significant step in the company's strategy of discipline, balance sheet, and capital structure management, and we look forward to continuing the dialogue with additional debt holders in the coming weeks.
Speaker Change: At quarter-end, we had approximately $4.79 billion of net debt outstanding, which was the lowest net debt position in the history of our company. Our total liquidity was $858 million at quarter-end, which includes a cash balance of $432 million.
Speaker Change: our quarter-ending net debt to adjusted IVID-DA ratio was 7.2 times and we expect to end the year at approximately six times.
Speaker Change: In the third quarter, our free cash flow was $73 million compared to $68 million in the prior year quarter.
Speaker Change: Before I get into our detailed guidance, I want to spend a moment on our technology driven efficiency actions and how you should think about them in the context of our financials.
Speaker Change: As Bob mentioned, as a result of the initiatives we announced today, we reduced our annual expenses by approximately $150 million in 2025.
Speaker Change: and when we coupled that with the full-year benefit of actions taken earlier this year, we will generate $200 million of cost savings in 2025 compared to 2024.
there will be some ordinary course add-backs to the business.
like increasing music license fees in line with growing revenues.
Speaker Change: contractually obligated increases to certain licensed products and services and additional compensation expense as we continue to invest in high-growth areas, among others, which are expected to add approximately $50 million to our 2025 expense base.
Speaker Change: This results in net savings of approximately $150 million in 2025 compared to 2024.
Speaker Change: Our continuous focus on cost efficiency not only helps to unlock the value of the company's assets, it also provides us with the financial flexibility to weather periods of advertising uncertainty.
Speaker Change: Let me now give you some context for our Q4 guns.
Speaker Change: As a result of the change in the Democratic presidential candidate, we expect our political revenues to be only slightly better compared to the last presidential election cycle in 2020, which was slightly less than we had originally expected.
Speaker Change: Although this is the best year of political spin we've ever had, this slight dip to our expectations has impacted Q4.
Speaker Change: In addition, like many other media companies and advertising agencies, we also saw a slowdown in non-political advertising leading up to Election Day, as a number of advertisers held their spend in what they seemed to view as a period of uncertainty.
Speaker Change: With the election now behind us, we expect non-political spending to resume.
Speaker Change: However, since we can't be certain, advertisers will resume their prior spending levels.
Speaker Change: We reduced our full-year adjusted EBITDA guidance to approximately $750 million.
Speaker Change: as reflected in today's TSA filing, down from the previously announced range of $760,000 to $800,000.
Speaker Change: Turning now to guidance for Q4 and the full year. We expect our Q4 2024 revenues to be up high single digits.
Speaker Change: We are still closing the month of October, but expect revenues to be up approximately 15%.
Speaker Change: Turning to the individual segments for Q4, we expect the digital audio groups revenues to have high single digits, we expect multi-platform groups revenues to be up mid single digits, and we expect the audio and media services group revenues to be up approximately 50%.
Speaker Change: We expect to generate fourth quarter adjusted EBITDA of approximately $290 million, up approximately 39% compared to $208 million in the prior year quarter.
Speaker Change: We expect our full year 2024 revenues to be up mid-single digits.
Speaker Change: As mentioned earlier, we expect to generate full year adjusted IBITDA of approximately $750 million, up approximately 8% compared to $697 million in 2023.
Speaker Change: Turning to some of the items affecting our full year free cash flow.
Speaker Change: We expect cash taxes to be approximately 5% of adjusted EBITDA in 2024. Our full year 2024 capital expenditures are now expected to be approximately $95 million.
Speaker Change: Cash restructuring expenses will be approximately a hundred million dollars this year as we continue to execute our new opportunities to optimize our organization for efficiency and growth.
Speaker Change: And as today's TSA filing also included forward estimates, I want to take a minute to touch on a few of the key 2025 projections included there as well.
Speaker Change: We expect our full year 2025 revenues to be approximately flat to 2024. Excluding the impact of political, we expect our 2025 revenues to be up low single digits.
Speaker Change: We expect to generate full year adjusted EBITDA of approximately $770 million and free cash flow of approximately $200 million.
Speaker Change: At year-end 2025, we expect our net debt-to-adjusted EBITDA ratio to be approximately 5.5 times, and as you'll see in today's TSA, we expect that to improve to approximately 3.2 times by the end of 2028.
Speaker Change: We will now turn it over to the operator to take your questions. Thank you.
Speaker Change: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Stephen Laskes with Golden Sacks.
Speaker Change: Hey, great. Thanks for taking the questions. Two if I could. Maybe first on the 25 guide. Bob, your guidance for next year for revenue implies some nice growth in the underlying business, ex-political. I'm curious if you could just talk a little bit more about what you're hearing or seeing from your advertising partners that could be confident in the ad market improving heading into next year. What verticals do you see recovering or outperforming going into next year? And then maybe one for Rich on the EBITDA guide. Your guidance for adjusted EBITDA up 20 million year-over-year for next year, even with 150 and cost efficiencies. I'm just curious why more of that isn't flowing down to the bottom line. Could you perhaps...
Speaker Change: and they'll help us think about the margin profile of the underlying business and how we should think about the puts and takes of margin next year. Thank you.
Speaker Change: Thank you and let me hit look I think at the end of the day we feel good about next year because I think it's a continuation of what we're
Speaker Change: feeling this year, which is a recovery year, you know, with a little bit of a backup here waiting to see what happened in the election. And I think the sense you hear from the election, regardless of your political belief, is people think this is very good for business, and we're hearing that from sort of Main Street on up. So I think that's good as sort of an overall complexion about what's going on. And then I think from our standpoint, you know, it starts with consumers use our products.
Speaker Change: We have more listeners today on our broadcast radio than we had 10 years ago, and I think there's an increasing realization.
Reach got a little forgotten
Speaker Change: given the size we have and the unique scale we have, we think that plays to our strength.
Speaker Change: I think the second thing to think about is really what ad tech is doing for us.
and it is allowing us.
Speaker Change: to take that broadcast radio inventory and put it into digital buys and we are increasing that. Obviously, we talked a lot about technology in terms of cost savings, but technology is key in terms of our ad tech and allowing us to participate in that and I think we'll make great progress on that next year as well.
Speaker Change: Yeah, and Steve, just to go to your second one and pick up here a little bit in terms of, you know, back to the bottom line, I'd just say a couple things, you know, and just to level set, make sure everybody's sorted. You know, if you look at, we said net that we're going to reduce our overall cost base by $150 million from
Speaker Change: in 2025 compared to 2024. And just as a reminder, which we all know, next year is a non-political.
year, and we've indicated that our political revenue...
Speaker Change: which is about slightly higher than the highest we ever had, which is about $170 million.
Speaker Change: with all that, we projected out our EBITDA, and I'm not sure everybody's had a chance to look at the transaction support agreement that we filed this morning, but just for everybody's benefit, we announced that that would be our projected number, $770 million of EBITDA. And I would say for context,
Speaker Change: And when we announced the course programs this morning, as Bob highlighted, and the benefit, you know, in terms of that we're getting out of technology.
and still be able to be here.
to continue to grow revenue.
Speaker Change: And if you do this straight up math, you'd say, gee, it should more be falling to the bottom line.
but we also, Bob highlighting his remarks.
Speaker Change: that we did see a slowdown in advertising going into the election like I think many companies did due to the uncertainty.
Speaker Change: We are hopeful that that's going to come back very soon. And Bob alluded to that in what he just said.
in terms of the way people are feeling.
Speaker Change: But at the same time, you know, I would say that we want to make sure that we're not overly optimistic or therefore we're conservative
Speaker Change: a little bit as we look out into next year's numbers. But that doesn't take away, I think, if you look at the transaction support agreement, you'll see that we've got a multi-platform group growing in the low single digits and DAG growing in the mid-single digits out there. So there's just a lot of puts and takes there, but we just want everyone to have a high level of confidence, as we do, in hitting those numbers going forward. Yeah, and if I could just add something, too. I think there's a misperception when looking at our company, that our fixed costs are static and can only go up. The truth is, a company like IHART...
Speaker Change: will benefit enormously from technology and I think this cost-cutting and restructuring of the company and how we do business is an example of that. We expect it to continue.
Speaker Change: technology to continue to fundamentally alter the cost structure of our company.
Speaker Change: If you think about that, it allows us to bring down costs, improve margins, and you couple that with our high-growth digital business and what we said before we believe to be in the long term, the low-growth but still growth multi-platform business, and you get some understanding about why we're so excited about our future and the role technology will play in delivering that for us.
That's very helpful. Thank you.
Thank you.
and the
Speaker Change: Your next question comes from the line of Jim Goss with Barrington Research.
Hmm.
Thank you.
Speaker Change: It was interesting that you noted you have more listener broadcast listeners than ten years ago You also well radio Inc yesterday carried some articles about I think some of the consolidation
Speaker Change: changes you're making, aiming to save millions, and in the past you've stressed that
Speaker Change: radio is companionship. Now, I was wondering to the extent that you're making cuts in management, maybe the AI aspects can address that. But in terms of the on-air talent, I wonder if that continues to
Speaker Change: wrote the value of the quality of the offering to listeners.
Speaker Change: and whether that is a potential risk you're facing? Or is, you know, and how do you do this? Because I think it's all attempted to maintain the profitability.
of that broadcast sector.
Speaker Change: Maybe we can discuss that if you would, and then I have a couple of others.
Speaker Change: Sure. Look, I think that article got it completely wrong. I think what we're doing is not getting rid of air talent. What we're able to do now, because we've got technology, is we can take talent we have at any location and put them on the air in another location.
Speaker Change: substantially upgrade the quality of our talent in every single market we're in and allows us to project talent into the situations in which you're going to have the best impact. You're a hundred percent right, it's all about companionship and they and the great talent are great talent because people all want to be their friends.
Speaker Change: And when you look at Ryan Seacrest, he's America's favorite friend. Everybody wants to be his friend. Or Charlemagne the God, or Bobby Bones, or Steve Harvey, etc. So we are increasing.
Speaker Change: Our relationship with the consumer and we're using technology to do it now unfortunately what that means is that You know, there's not a slot for everybody just because somebody's willing to live in the market Doesn't assure them that they're the best person
Speaker Change: for that slot. Before we had this kind of technology, that was the criteria. You had to be willing to live in Hattiesburg, Mississippi or Jackson, Mississippi.
two of my old hometowns.
Speaker Change: in order to be on the radio. Today technology freezes of that constraint and our programmers can now make the decision about who's going to be the best talent.
Speaker Change: in that time slot on that radio station regardless of where they live. In the old days it cost an enormous amount of money to try and broadcast from another town.
Speaker Change: It's not an issue today. So I think the moves we're making is we're breaking down silos, we are speeding up processes, we're streamlining these legacy systems, and we believe what it does is enable our folks to create more.
Speaker Change: better and faster. We should be easier to do business with us, easier to get our business done, and accelerate not only the listenership, but the revenue growth that comes from that as well.
Speaker Change: Okay, and a couple of others that might be somewhat related. You outlined your mix between multi-platform digital audio sales and AMS.
Speaker Change: 2020, 81% multi-platform, 12% digital audio, to 62% multi-platform, 31% digital audio now. What would that look like in a few years, after those lines start to cross?
Speaker Change: And sort of in a related area, you also outlined podcasts versus radio in terms of the complementary nature of in-home versus out-of-home. I'm wondering, is there an ability to cross-sell these opportunities where you
Speaker Change: can address the people who are interested in home in both ways at the same time versus the out-of-home. How do you approach that?
Speaker Change: Let me start with the your second question is yes absolutely we are the question is how do we get to be so big in podcasting?
were bigger than the second and third largest publishers combined.
Speaker Change: The podcast are actually radio on demand. I mean, there's an argument if you sort of think about what is podcasting.
Speaker Change: that it is sort of the Netflix of the audio business, that if you believe Netflix is sort of TV on demand, then podcasting is radio on demand, and actually many of the big podcasts are actually radio shows. The Breakfast Club, one of our biggest podcasts, also a radio show. So yes, the idea of combining the two in terms of appealing to the audience, and also combining the two in terms of reach for advertisers. That if an advertiser goes, you know, I love this podcast.
Speaker Change: But I need more reach from it. We go, great, we've got that radio, that audience on broadcast radio, so we can now, now that you know this is it, we got the looks like on radio, and we can push that out for you as well. So it works on both the consumer level and also works on the.
Speaker Change: advertising level and it's really at the heart of our secret sauce about why we've been able to build a podcast so big and also you're right.
Speaker Change: just having those big podcasts also reflects well on the radio shows, which I think strengthens their appeal as well.
Speaker Change: The only thing, and then I'll come to the first question I might add, just as a reminder,
Speaker Change: You know, we have a strategy in the way we operate the company that any of our, you know,
almost 1,000 advertising salespeople can sell anywhere, anytime.
Speaker Change: any place in the country, whether you're a national salesperson, a local salesperson. And when we talk about our audio tech stack and everything we've built out in terms of technology, that supports that strategy. So it's not, I think this is not theoretical. We've been doing this, you know, for a number of years.
Speaker Change: If you look at, in terms of your first question, growth rate, again, I just, you know, we did put out projections for a number of years, and you'll see in those projections...
that, and I think everybody can then do the math.
Speaker Change: in the free cash flow, low capex, favorable working capital. And then with digital, we expect the overall data group, which includes podcasting,
Speaker Change: to be in the bid to upper single-digit revenue growth going forward, and you'll also just take a second to comment, because we normally get the question in terms of margins.
Speaker Change: You know, we tell people on DAG to project out mid-30 type percent margins on an annual basis. Don't look at these quarterly. And, again, I think you'll see that for 2024, for this year, that we expect to achieve that goal.
All right, well, thanks for taking my questions.
Of course. Thank you.
Speaker Change: Again, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: Why don't we wait for a few seconds just to make sure everybody has a chance to ask any question they'd like to.
Ready?
Speaker Change: Any other questions out there? I want to make sure everybody has a chance.
And there is a question 5.
David Hamburger with Morgan Stanley
Speaker Change: Thank you for the question. So I'm curious, just with regard to the transaction support agreement, how much cash are you allocating to debt reduction? It looks like it's kind of...
Speaker Change: well below your cash balances as they sit today and your expectation for free cash flow 200 million next year as well. And so can you talk a little bit about as you think about the leverage and the deleveraging that you'll undertake, how much of that will be attributable to like actual gross debt reduction and to the extent that you have excess cash sitting on the balance sheet, what's your expectation and how you're gonna utilize that cash?
Speaker Change: Yeah, well, thanks for the question. Look, we haven't, what we stated publicly.
Speaker Change: Let me just go back in terms of the transaction support agreement and the agreement with, at this point, 80% of our existing term loan holders and loan holders. Again, I'm not sure if I've had a chance to...
We threw it and see everything this morning.
Speaker Change: We're very pleased with the outcome that we're going to, you know, extend our maturities to 2000, 2029, 2030. I think probably the most often.
Speaker Change: ask questions we've had in the last year or so is, are you going to be able to keep your cash interest expense flat going forward? And we've essentially done that and we've captured some debt discount. We haven't gone into any more details other than that. I will point out that, you know, today our net leverage is about 7.2, as we reported. We expect to be down to about 6. And again, as a reminder, that's EBITDA to net debt. We expect to be at about 5.5 times by the end of 25. And if you look at what again was filed this morning,
Speaker Change: We expect to improve to about 3.2 times by when you get to the end of 2028. So again, very pleased with the progress that we're making.
Okay, thank you very much. Thank you.
Any other questions?
Speaker Change: Well, with that, we want to thank everybody, Bob, myself, the rest of the management team listening to their heart story. And we are, as always, available for questions once we get off this call. But thank you all for taking the time.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.