Q3 2024 Urban One Inc Earnings Call

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Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the urban one 'twenty 'twenty four third quarter earnings call. As a reminder, this conference is being recorded we will begin the call with the following Safe Harbor statement. During this conference call urban one will be sharing with you certain projections or other forward looking statements regarding future events or its future.

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

Speaker Change: This call will present information as of November 12, 2024. Please note that urban one disclaims any duty to update any forward looking statements made in the presentation. In this call urban one may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call.

Speaker Change: Or in the company's press release, which which can be found on its website at www dot urban one dotcom.

Speaker Change: A replay of this conference call will be available from one P. M. Eastern time November 12, 2024 until 12, a M. Eastern time November 19th 'twenty 'twenty four callers may access the replay by calling 18662071041 international callers may dial direct at.

Speaker Change: 140 to 90 700847, the replay access code is 3607803 access to live audio and a replay of the conference will also be available on urban one's corporate website at www Dot urban one dot com the replay won't be made available.

Speaker Change: On the website for seven days after the call no other recordings or copies of this call are authorized or may be relied upon I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of urban one who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins. Please go ahead.

Speaker Change: Thank you operator very much also joining us is Kris Simpson who's our general account, so Karen Wishart, our chief administrative officer, and Joe did your our Chief financial Officer of TV one.

Speaker Change: Thanks, and welcome to the Q3 earnings call.

Speaker Change: But as you've seen in the press release released our numbers this morning for.

Speaker Change: For Q3, we can send you to experience advertising headwinds in Q3 as we've expected.

Speaker Change: So the company has continued to reduce its indebtedness in the quarter we.

Speaker Change: <unk> repurchased $14 $5 million of our outstanding bonds at 75 cents on the dollar.

Speaker Change: Do you see Q4 excuse me revenues are forecasting at this point to be almost about flat because of our robust political spending of approximately $25 million and that that's in comparison to about 22.

And a half million dollars in 2020, so not quite as good, but but not bad.

Speaker Change: However.

Speaker Change: There's continuing weakness in our cable TV segment.

Speaker Change: It's going to require us to modify our year in EBIT Dod guide from a $110 million.

Speaker Change: To a range of $102 million to $105 million, we expect to have a year in cash balance of $140 million of bye bye.

Speaker Change: Bye bye.

Speaker Change: 12, 31 of this year and are and will continue to manage you know.

Speaker Change: Through this in a in a in a in a prudent manner and and March towards our continued debt reduction.

Speaker Change: With that I'm going to turn it over to Peter Thompson to go through the details.

Peter Thompson: For the quarter and then we'll open it up for Q&A Peter.

Thank you all for it and then just to clarify that was a that was a full year political number not a not just Q4, obviously the bulk of that in Q4, but they were full year numbers the alpha gate.

Peter Thompson: Full year comps for 2020.

Doug: Thanks, Doug.

Doug: Just going through the numbers consolidated net revenues.

Down six 3% year over year for three months ended September 32020 for approximately $110 $4 million.

Doug: Net revenue for the radio broadcasting segment was $39 $7 million, a decrease of one 1% year over year, but down three 6% on a same station basis.

Doug: Excluding political net revenue was down four 8% year over year.

Doug: Down seven 7% on a same station basis.

Doug: According to Miller Kaplan, our local advertising sales were down four 7% against that markets that were down five 7% and national advertising sales was down six 2% against that markets, but were down 0.6%.

Doug: Net revenue for reach media segment was $10 $2 million in the third quarter down eight 2% from the prior year and adjusted EBITDA was $3 $7 million for the quarter up from $3 $4 million last year.

Doug: Net revenues for the digital segment were flat in Q3 at $24 million.

Doug: Direct national sales were down driven by decreased advertising demand, but connected television and podcast revenue showed growth compared to last year.

Doug: Adjusted EBITDA for that segment was $6 $4 million down 13, 5%.

Doug: We recognized approximately $47 million of revenue.

Doug: From our cable television segment during the quarter, which was a decrease of 13% cable TV advertising revenue was down 13, 3%.

Doug: Delivery erosion continued down 29% and total day P. 25, 54, resulting in a rate decrease impact approximately $4 $7 million, which was partially offset by slightly higher volume.

Policy ships.

Cable TV affiliate revenue was down by 12, 8%.

Doug: Gradual rate increases of approximately $700000 being more than offset by approximately $3 million and net subscriber revenue chair.

Doug: Churn is trending at about 11%.

Cable subscribers with TV, one as measured by Nielsen finished Q3, 24, $39 1 million compared to $39 8 million at the end of Q2 clear T V had $37 3 million Nielsen subscribers.

Doug: Operating expenses, excluding depreciation and amortization stock based compensation and impairments goodwill intangible assets and long lived assets increased to approximately $87 $4 million for the quarter ended September 32024.

Doug: Up 3% from the prior year.

Doug: The overall increase in operating expense was primarily due to higher expenses in the Houston radio market as a result of our acquisition we made in August of 2023.

Doug: So third party professional fees.

Doug: And cloud based software licenses.

Doug: Radio operating expenses were up four 8% a $1 million driven by the Houston acquisition, but also an unfavorable adjustment to the bad debt reserve in the quarter.

Doug: Reach operating expenses were down by 24, 8% driven by reduced affiliate station fees also a favorable adjustment to the bad debt reserve in the calls.

Doug: Operating expenses in the digital segment were up by two 4% driven by third party cost of sales and traffic acquisition costs.

Doug: <unk> expenses in the cable TV segment were up four 4% year over year, driven by increased rating service costs, and some higher employee compensation and benefit costs.

Doug: Operating expenses in the corporate and eliminations segment well.

Doug: By approximately $2 million, primarily as a result of higher outside professional fees and cloud based software license fees.

Doug: So holiday to adjusted EBITDA was $25 $4 million for the third quarter down 26, 7% consolidated broadcast and digital operating income.

Doug: Approximately $35 $4 million decrease of 19, 2%.

Doug: Interest income was approximately $1 $1 million in the third quarter compared to $2 $3 million last year decrease was due to lower cash balances in interest bearing investment accounts.

Doug: <unk> expense decreased to approximately $11 $6 million for Q3 down from $14 million last year due to the lower overall debt balances.

Doug: Debt reduction strategy.

Doug: Company made cash interest payments of approximately $22 $7 million in the quarter, including the semi annual debt service payments on the 2028 notes.

Doug: During the quarter the company repurchased $14 million of its 2028 notes at 75% are bringing.

Doug: Bringing the outstanding balance to $599.975 million.

$46 8 million.

Doug: Noncash impairments were recorded in the third quarter for broadcasting licenses and the radio segment and the T V. One trade name the <unk>.

Doug: Primary factors, leading to the impairments with an increase in the discount rate continued decline projected gross market revenues.

Doug: The decline in off.

Doug: Pricing profit margin.

Doug: Benefit from income taxes was approximately $1 $8 million for the third quarter. The company paid cash income taxes in the amount of $201000 capital expenditures for the quarter were approximately $1 $6 million.

Doug: Net loss was approximately $31 $8 million or <unk> 68 per share compared to a net loss of $54 $4 million or $1 20 per share for the third quarter of 2023.

Doug: During the three months ended September 32004 company repurchased 1 million and 15023 shares of class a common stock in the amount of approximately $2 million.

The average price of $2.01 per share.

Doug: And repurchased 586989 shares of class B common stock.

Doug: Out of approximately $800000 at an average price of $1 31 a share.

Doug: As of September 30th 2024, total gross debt was approximately $600 million ending unrestricted cash was $115 million, resulting in net debt of approximately $485 million compared to $103 $7 million of LTM reported adjusted EBITDA.

Doug: For total net leverage ratio of 4.68 times.

Speaker Change: With that I'll hand back to alpha.

Alpha: Thank you very much Peter operator could you open it up for questions. Please.

Speaker Change: Thank you, 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: Once again, if you have a question. Please press one then zero.

Speaker Change: Yeah.

Speaker Change: And at this time there are no questions.

Speaker Change: Thank you very much operator, and thank you all for joining our Q.

Speaker Change: Q3 conference call. Please feel free to reach out to Peter or I offline. If you have any additional.

Speaker Change: Additional questions that.

Speaker Change: Debt.

Speaker Change: You forgot to ask or didn't get a chance to ask.

Speaker Change: We look forward to talking to you next quarter.

Speaker Change: Ladies and gentlemen 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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