Q3 2024 Urban One Inc Earnings Call
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Great.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the urban one 2024 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 per.
Speaker Change: <unk> 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. This.
Speaker Change: 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 are in.
Speaker Change: The company's press release, which which can be found on its website at www Dot urban wanted 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.
Speaker Change: At 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 will be made of.
Speaker Change: <unk> 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 Jody <unk>, 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.
This morning.
Speaker Change: For Q3.
Speaker Change: And you to experience advertising headwinds in Q3 as we've expected so.
Speaker Change: So the company has continued to reduce its indebtedness in the quarter we.
Speaker Change: Repurchase $14 $5 million of our outstanding bonds at 75 cents on the dollar two.
A few feet Q4, excuse me revenues are forecasting at this point to be almost about flat because of our robust political spending.
Approximately $25 million and that that's in comparison to about 22.
Speaker Change: And a half million dollars in 2020, so not quite as good, but but not bad however.
Speaker Change: However.
Speaker Change: There's continuing weakness in our cable TV segment.
Speaker Change: That's going to require us to modify our year in EBIT guide from $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: By.
Speaker Change: 12 31 of this.
Speaker Change: This year.
Speaker Change: And we will continue to manage.
Speaker Change: Through this 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 of the quarter and then we'll open it up for Q&A Peter.
Peter Thompson: Thank you all for it and just to clarify those are those are full year political number not a not just Q4, obviously the bulk of that in Q4, but they were full year numbers, the alpha Gabe and full year 2020.
Speaker Change: Thanks.
Speaker Change: Just gone through the numbers consolidated net revenues.
Speaker Change: Down six 3% year over year for three months ended September 32020 for approximately $110 $4 million.
Speaker Change: 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.
Speaker Change: Excluding political net revenue was down four 8% year over year down.
Speaker Change: Down seven 7% on a same station basis.
Speaker Change: According to Miller Kaplan, our local advertising sales were down four 7% against that markets that were down five 7% of.
Speaker Change: National advertising sales were down six 2% against that market down 0.6%.
Speaker Change: 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.
Speaker Change: Net revenues for the digital segment were flat in Q3 at $24 million direct national sales were down driven by decreased advertising demand, but connected television and podcast revenue showed growth compared to last year.
Speaker Change: Adjusted EBITDA for that segment was $6 $4 million down 13, 5%.
Speaker Change: We recognized approximately $47 million of revenue from.
Speaker Change: From our cable television segment during the quarter, which was a decrease of 13% cable TV advertising revenue was down 13, 3%.
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.
Speaker Change: Most of the ships.
Speaker Change: Cable TV affiliate revenue was down by 12, 8%.
Speaker Change: Actual rate increases of approximately $700000 being more than offset by approximately three and a half a million dollars and net subscriber revenue.
Speaker Change: Churn is trending at about 11% Corrado.
Speaker Change: 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.
Speaker Change: Cleo TV had $37 3 million Nielsen subscribers.
Operating expenses, excluding depreciation and amortization stock based compensation and impairments of goodwill intangible assets and long lived assets increased to approximately $87 $4 million for the quarter ended September 32024 up three 5% from the prior year.
Speaker Change: 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.
Speaker Change: So third party professional fees.
Speaker Change: In cloud based software licenses.
Speaker Change: Radio operating expenses were up four 8% or one and a half million dollars driven by the Houston acquisition, but also an unfavorable adjustment to the bad debt reserve in the quarter.
Speaker Change: 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.
Speaker Change: Operating expenses in the digital segment were up by two 4% driven by third party cost of sales and traffic acquisition costs.
Speaker Change: <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.
Speaker Change: Operating expenses in the corporate and elimination segment were up by approximately $2 million, primarily as a result of higher outside professional fees.
Speaker Change: Cloud based software license fees.
Speaker Change: Consolidated adjusted EBITDA was $25 4 million for the third quarter down 26, 7% consolidated broadcast and digital operating income.
Speaker Change: Approximately $35 $4 million, a decrease of 19, 2%.
Speaker Change: 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.
Speaker Change: <unk> expense decreased to approximately $11 $6 million for Q3 down from $14 million last year due to the lower overall debt balances.
Speaker Change: Debt reduction strategy.
Speaker Change: Company made cash interest payments of approximately $22 $7 million in the quarter.
Speaker Change: And the semi annual debt service payments on the 2028 notes.
Speaker Change: During the quarter, the company repurchased $14 $5 million of its 2028 notes at 75%.
Speaker Change: Bringing the outstanding balance to $599.975 million.
Speaker Change: $46 8 million.
Speaker Change: Noncash impairments were recorded in the third quarter for broadcasting licenses and the radio segment and the T V. One trade name the <unk>.
Speaker Change: Primary factors, leading to the impairments with an increase in the discount rate.
Speaker Change: <unk> decline projected gross market revenues.
Speaker Change: <unk> decline and Oh.
Speaker Change: Operating profit margin.
Speaker Change: Benefit from income taxes was approximately $1 $8 million for the third quarter. The company paid cash income taxes in the amount of $201000.
Speaker Change: Capital expenditures for the quarter were approximately $1 $6 million.
Speaker Change: 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.
Speaker Change: During the three months ended September 30 of 'twenty, four company repurchased $1 million and 15023 shares of class a common stock in the amount of approximately $2 million.
Speaker Change: At an average price of $2.01 per share.
Speaker Change: And repurchased 586999 shares of class B common stock.
Speaker Change: Out of approximately $800000 at an average price of $1.31 per share.
Speaker Change: As of September 32020 for total gross debt was approximately $600 million pending unrestricted cash was $115 million, resulting in net debt of approximately $485 million compared to $103 $7 million of LTM reported adjusted EBITDA.
Speaker Change: For total net leverage ratio of 4.68 times.
Speaker Change: With that I'll hand back to alpha.
Speaker Change: 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 and 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.
Speaker Change: Again, if you have a question please press one zero.
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 questions.
Speaker Change: At 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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Speaker Change: [music].
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Speaker Change: [music].
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the urban one 2024 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.
Speaker Change: <unk> 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 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 look.
Speaker Change: Statements. 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.
Speaker Change: The course of this call or in the company's press release, which which can be found on its website at www dot urban one dot com.
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 2020 for callers may access the replay by calling one 806 62071041 international callers may dial direct.
Speaker Change: At 140 to 90 700847, the replay access code is 360780 <unk> III <unk>.
Speaker Change: 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 will be made available 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 is our general account so Karen Wishart, our chief administrative officer, Joe did your our Chief financial Officer of TV one.
Speaker Change: Thanks, and welcome to the Q3 earnings call.
Speaker Change: But <unk> seen in the press release, we have leased or <unk>.
Speaker Change: Numbers this morning.
Speaker Change: For Q3, we can send you to experience advertising headwinds in Q3 as we've expected so.
Speaker Change: So the company has continued to reduce its indebtedness in the quarter we.
Speaker Change: Repurchase $14 $5 million of our outstanding bonds at 75 cents on the dollar.
Speaker Change: Two feet Q4, excuse me revenues are forecasting at this point to be almost about flat because of our robust political spending.
Speaker Change: Approximately $25 million net that's in comparison to about 22.
Speaker Change: And a $5 million in 2020, so not quite as good, but but not bad.
Speaker Change: There is continuing weakness in our cable TV segment.
Speaker Change: That's going to require us to modify our year in EBIT 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.
Speaker Change: Bye bye.
Speaker Change: Bye.
12 31.
Speaker Change: This year.
Speaker Change: And we will continue to manage.
Speaker Change: Through this.
Speaker Change: In a prudent manner and.
Speaker Change: And March towards our continued debt reduction.
With that I'm going to turn it over to Peter Thompson to go through the details of the quarter and then we'll open it up for Q&A Peter.
Peter Thompson: Thank you all for it and then just to clarify those are those are full year political number is not not not just Q4, obviously the bulk of it in Q4, but they were full year numbers. The alpha gave full.
Speaker Change: Full year comps for 2020.
Speaker Change: Thanks, Jim.
Speaker Change: <unk> gone through the numbers consolidated net revenues.
Speaker Change: Down six 3% year over year for three months ended September 32020 for approximately $110 $4 million.
Speaker Change: 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.
Speaker Change: Excluding political net revenue was down four 8% year over year down.
Speaker Change: Down seven 7% on a same station basis.
Speaker Change: According to Miller Kaplan, our local advertising sales were down four 7% against that markets that were down five 7% and national advertising sales were down six 2% against that markets are down 0.6%.
Speaker Change: 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.
Speaker Change: Net revenues for the digital segment were flat from Q3 at $24 million.
Speaker Change: Direct national sales were down driven by decreased advertising demand, but connected television and podcast revenue showed growth compared to last year.
Speaker Change: Adjusted EBITDA for that segment was $6 4 million down 13, 5%.
Speaker Change: We recognized approximately $47 million of revenue.
Speaker Change: From our cable television segment during the quarter, which was a decrease of 13% cable TV advertising revenue was down 13, 3% Dilip.
Speaker Change: Delivery erosion continued down 29% and total day $25 54, resulting in a rate decrease impact.
Speaker Change: $4 $7 million, which was partially offset by slightly higher volume and sponsorships.
Speaker Change: Cable TV affiliate revenue was down by 12, 8% with contractual rate increases.
Approximately $700000 being more than offset by approximately $3 $5 million and net subscriber revenue.
Speaker Change: Churn is trending at about 11% per annum.
Speaker Change: Cable subscribers for TV, one as measured by Nielsen finished Q3 dollars 24 at $39 1 million compared to $39 8 million at the end of Q2.
Speaker Change: <unk> TV had $37 3 million Nielsen subscribers.
Speaker Change: Operating expenses, excluding depreciation and amortization stock based compensation and impairments of goodwill intangible assets and long lived assets increased to approximately $87 4 million for the quarter ended September 32024 up three 5% from the prior year.
Speaker Change: 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, and also higher third party professional fees.
Speaker Change: Cloud based software licenses.
Speaker Change: Radio operating expenses were up four 8% a $1 million driven by the Houston acquisition and also an unfavorable.
Speaker Change: Adjustments to the bad debt reserve in the quarter.
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 quarter.
Speaker Change: Operating expenses in the digital segment were up by two 4% driven by third party cost of sales and traffic acquisition costs.
Speaker Change: <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.
Speaker Change: Operating expenses in the corporate and elimination segment were up.
Speaker Change: By approximately $2 million.
Speaker Change: Primarily as a result of higher outside professional fees and cloud based software license fees.
Speaker Change: Consolidated adjusted EBITDA was $25 4 million for the third quarter down 26, 7% consolidated broadcast and digital operating income.
Speaker Change: Approximately $35 $4 million, a decrease of 19, 2%.
Speaker Change: 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.
Speaker Change: <unk> expense decreased to approximately $11 $6 million for Q3 down from $14 million last year due to the lower overall debt balances.
Debt reduction strategy.
Speaker Change: Company made cash interest payments of approximately $22 $7 million in the quarter, including the semi annual debt service payments on the 2028 notes.
Speaker Change: During the quarter, the company repurchased $14 $5 million of its 2028 notes at 75%.
Speaker Change: Bringing the outstanding balance to $599.975 million.
$46 8 million.
Speaker Change: And noncash impairments were recorded in the third quarter for broadcasting licenses and the radio segment and the TV one trade name.
Speaker Change: The primary factors, leading to the impairments with an increase in the discount rate.
Speaker Change: Decline projected gross market revenues and a projected decline in.
Operating profit margin.
Speaker Change: Benefit from income taxes was approximately $1 8 million for the third quarter and the company paid cash income taxes in the amount of $201000.
Speaker Change: Capital expenditures for the quarter were approximately $1 $6 million.
Speaker Change: 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.
Speaker Change: During the three months ended September 32004 company repurchased $1 million of 15023 shares of class a common stock in the amount of approximately $2 million at an average price of $2 one one cents per share.
Speaker Change: <unk> repurchased 586999 shares of class B common stock.
Speaker Change: Approximately $800000 at an average price of $1 31 per share.
Speaker Change: As of September 32020 for total gross debt was approximately $600 million.
Speaker Change: Pending unrestricted cash was $115 million, resulting in net debt of approximately $485 million.
Speaker Change: $103 $7 million of LTM reported adjusted EBITDA for a total net leverage ratio of 468 times.
Speaker Change: With that I'll hand back to alpha.
Speaker Change: 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 <unk> 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: And at this time there are no questions.
Speaker Change: Thank you very much operator, and thank you all for joining R.
Speaker Change: Our Q3 conference call. Please feel free to reach out to Peter awry offline. If you have any.
Speaker Change: Additional questions.
Speaker Change: That 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.