Q4 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 2024 fourth quarter earnings call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement.
Speaker Change: 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.
Speaker Change: One cautions you that certain factors, including risks and uncertainties referred to in the 10-K 's, 10-Q 's and other reports it's periodically vials 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 March 27, 2025.
Speaker Change: Please note that Urban One describes any duty to update any forward-looking statements made in the presentation.
Speaker Change: A replay of the conference call will be available from 2 o'clock p.m. eastern daylight time, March 27th, 2025 until 11.59 p.m. eastern daylight time, April 3rd, 2025.
Speaker Change: Callers may access the replay by calling 800-770-2030. International callers may dial direct 609-800-9909. The replay access code is 340-7726.
Speaker Change: Access to live audio and a replay of the conference will also be available on Urban One's Corp website at www.urbanone.com The replay will be made available on the website for seven days after the call.
Speaker Change: 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 was joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.
Speaker Change: Thank you very much operator and welcome to our fourth quarter comp of call. Also joining us as usual is Jody Drewer, who's the Chief Financial Officer at TV1. So, Karen Wishart, who's our Chief Administrative Officer.
Speaker Change: $25 million, that number in Q4 was boosted by a pretty strong performance with our political advertising efforts.
Speaker Change: However, we did see continued headwinds in our cable TV business.
Speaker Change: That actually has started to stabilize in Q1, so that's good news. Unfortunately, the radio business continues to see down drafts in Q1 with pacing currently.
minus 13.6
Speaker Change: Thank you for about 5% which is about 64 people of our workforce.
Speaker Change: You know, we're standing in a pretty strong liquidity position as of the end of the year with about $137 million of cash on hand. We are prepared to offer a 2025 guide even though it's early.
Speaker Change: in the year, but we are going to guide to $75 million of adjusted EBITDA from down from the 103.5 in 2024.
Speaker Change: It's going to be a combination of the weaker radio, primarily driven by a lack of recurrent political advertising, we're going to be down a bit in TV but we feel like that is stabilizing as well.
Speaker Change: for 2025, down from the 103.5 in 2024, continued cost containment and debt reduction, we're going to have to be able to.
Speaker Change: Talk about more when we get to the Q&A section, if anybody has questions. Right now I'm going to let Peter go through the numbers from 2024 and the quarter. Thank you, Alfred.
Peter Thompson: So, consolidated net revenues down to 0.7% year over year, the three months ended December 31st, 24, approximately $170,000,000 dollars.
Peter Thompson: Net Revenue for the Radio Broadcast segment was $47.7 million dollars an increase of 14.5% year over year. Excluding political net revenue was down 5.1% year over year.
Peter Thompson: According to Miller Kaplan, local hand sales were up 0.1% against our markets that were down 5.2% and national hand sales were up 35.4% against the market that was up 28.4%
Peter Thompson: Political advertising drove the growth in the National Marketplace and for our stations and was our largest advertising category for the quarter. The second largest Catherine Gurry for us was Services, which was up 12% driven predominantly by legal services.
Speaker Change: Healthcare, Retail, Auto, Financial, Food and Bev, will down year over year. Telecom, Trailer and Transportation categories were up.
Speaker Change: However, political advertising was $2 4 million on both connected TV podcast revenue were up from prior year. Adjusted EBITDA was $5 3 million, which was an increase of 57%.
Speaker Change: We recognized approximately three.
Speaker Change: $39 $8 million of revenue from our cable television segment during the quarter, which was a decrease of 15, 9%.
Speaker Change: Television advertising revenues down 21, 4%.
Speaker Change: Delivery declined 36% and total day persons 25 54.
Speaker Change: We had approximately 6% fewer units converted to add inventory.
4000 more units allocated to <unk>.
Speaker Change: Do you to help mitigate the delivery impact and.
Speaker Change: And that was partially offset by favorable volume fast revenue.
Speaker Change: One 3 million.
Speaker Change: Overall that resulted in an AD revenue decline of $5 $8 million.
Speaker Change: Cable TV affiliate revenue was down by nine 9% driven by.
Speaker Change: The increased subscriber churn, which was a $3 $3 million loss, partially offset by $1 three and subscriber rate increases and the launch of now TV.
Speaker Change: Full year subscriber churn was minus nine 5%.
Speaker Change: Cable subscribers for TV, one as measured by Nielsen.
Speaker Change: Television had $36 4 million Nielsen subs.
Speaker Change: Operating expenses, excluding depreciation and amortization and stock based compensation and impairments of goodwill intangible assets and long lived assets.
Speaker Change: Decreased to approximately $91 1 million for the quarter ended December 31, 2024, which was a decrease of 13, 8% from prior year.
Speaker Change: The overall decrease in operating expenses was primarily due to lower corporate SG&A expenses, driven by a reduction in the Ceo's TV One award.
Speaker Change: Lower overall expenses in the digital segment due to lower sales and marketing related costs.
Speaker Change: Radio operating expenses were down five 4% or $1 $9 million driven by a favorable adjustment to the bad debt reserves.
Speaker Change: Reach operating expenses were down by seven 8% driven by lower talent and staff incentives incentive based compensation.
Speaker Change: Operating expenses in the digital segment were down 16, 1% driven by lower sales and marketing costs.
Speaker Change: Lower performance.
Speaker Change: <unk>.
Speaker Change: Operating expenses in the cable TV segment up four 1% year over year, driven by increased rating service costs and connected TV support costs.
Speaker Change: Operating expenses in the corporate and elimination segment were down by approximately $10 $2 million, primarily as a result of ducks.
Speaker Change: Duction to C E O S T V one of them.
Speaker Change: Consolidated adjusted EBITDA was $26 $9 million for fourth quarter down <unk>, 9% consolidated broker digital operating income was approximately $38 6 million an increase of one 7%.
Speaker Change: Trust income was approximately $1 1 million in the fourth quarter compared to $2 $5 million last year.
Speaker Change: Increase was due to lower cash balances in interest bearing investment accounts interest expense decreased to approximately $11 $5 million of fourth quarter down from $14 $2 million last year.
Due to the lower overall debt balances as a result of the company's debt reduction strategy.
Speaker Change: Company made cash interest payments of approximately $347000 in the quarter and.
Speaker Change: During the quarter, the company repurchased $15 $4 million of its 2028 notes.
Speaker Change: The average price of 69, 8%, bringing the balance down to $584 million 575000.
Speaker Change: At year end.
Speaker Change: In January 2025, the company repurchased an additional $17 million in notes at a price of 62.5%, bringing the current balance on the debt to $567 million $575000.
Speaker Change: 20.
Speaker Change: $4 2 million and noncash impairment charges were recorded in the fourth quarter 4 million of that was associated with the TV, one brand name and $20 2 million for goodwill associated with the TV one reporting unit.
Speaker Change: Factors, leading to the impairments or a decline in projected gross market revenue and operating profit margin for TV one.
Speaker Change: Provision for income taxes was approximately $27 6 million for the fourth quarter and the company paid cash income taxes in the amount of $130000.
Speaker Change: Capital expenditures for the quarter were approximately $1 3 million.
Speaker Change: Net loss was approximately $35 7 million or <unk> 78 per share compared to a net loss of $11 million or 23 per share for the fourth quarter of 2023.
Speaker Change: During the three months ended December 31, 2024, the company repurchased 1 million 386544 shares of class a common stock in the amount of approximately $2 $1 million.
Speaker Change: Average price of $1 $1 50 per share.
Speaker Change: Of which 908894 shares of class a stock or held in Treasury stock as of December 31, 2024.
Speaker Change: During the three months ended December 31, 2024 company repurchased 703292 shares of class B common stock.
Speaker Change: Out of approximately $700000 with an average price of $1 <unk> per share.
Speaker Change: During the three months ended December 31, 2020 through your company did not repurchase any shares of class a or class b common stock.
Speaker Change: As of December 31st total gross debt was approximately $584 6 million.
Speaker Change: And then unrestricted cash balance was $137 $1 million.
Speaker Change: And net debt of approximately $447 $5 million.
Speaker Change: Compared to $103 $5 million of LTM reported adjusted EBITDA for a total net.
Speaker Change: Net leverage ratio of 433 times.
Speaker Change: On March 16th 2025.
Speaker Change: Company began investigating an incident involving unauthorized third, causing good gained access to infiltrate certain information from.
Speaker Change: Our information technology systems.
Speaker Change: Tom Discovery, we activated our incident response team, which is comprised of internal personnel and external cyber security experts.
Speaker Change: As of today.
Speaker Change: The incident has not impacted the company's operations, our ability to conduct business in the ordinary course.
Speaker Change: This time the incident has not had a material impact on the company's financial condition and the results of operations. Our investigation is ongoing.
Peter Thompson: Thank you Peter.
Speaker Change: Operator could you.
Speaker Change: Oscar.
Speaker Change: Okay.
Speaker Change: Any questions or.
Speaker Change: Coming forward.
Speaker Change: At this time, if you would like to ask a question simply press star followed by the number one on your telephone keypad to withdraw your question Press Star One a second time. Our first question will come from the line of Aaron Watts with Deutsche Bank. Please go ahead.
Speaker Change: Okay.
Peter Thompson: Peter Thanks for having me on.
Speaker Change: A few questions. If I may I guess first just just to clarify Youre <unk> radio pacing down $13 six what was the equivalent performance that lines up with that for the fourth quarter was at the radio advertising down eight is that the right way to think about it.
Speaker Change: Yeah, So gabe.
Speaker Change: Core ex political.
Speaker Change: And so you'd need to strip out the <unk>.
Speaker Change: Strip out the political from Q4.
Speaker Change: For.
Speaker Change: Just looking back through my notes.
Speaker Change: Okay, I'm, sorry, I missed that.
Speaker Change: Yes.
Speaker Change: And then maybe while you're lucky.
Speaker Change: I won't back down.
Speaker Change: So.
Speaker Change: Excluding political net revenue was down five 1%.
Speaker Change: Okay.
Speaker Change: Alright, and then.
Speaker Change: Could you give us a little more insight into what drove the weakness from that down 5% for Q into the first quarter was it broad softness particular categories.
Speaker Change: And then a similar question on where you're seeing the improvement as you look ahead to Q2 and what's pushing that team.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: It is.
Speaker Change: It's absolutely broad softness.
Speaker Change: <unk>.
Speaker Change: Spent a significant amount of time with.
Speaker Change: Hum.
Speaker Change: Our national wrapped in our teams and.
In Q1 your.
Speaker Change: Basically seeing.
Speaker Change: Negative double digit pacing across local national and network radio.
Speaker Change: And.
Speaker Change: Now.
Speaker Change: There was political in Q1.
Speaker Change: But but but not a ton of it and so I think that you're.
Speaker Change: We're absolutely seeing advertisers.
Speaker Change: Probably reacting too.
Speaker Change: And uncertain economy, I think I just read something.
Speaker Change: Hum.
Speaker Change: From the.
Speaker Change: CEO of Walmart talking about.
Speaker Change: Excuse me consumer behavior.
Speaker Change: Being.
Speaker Change: Choppy and skittish the improvement.
Speaker Change: <unk> for us.
Speaker Change: As you know is coming and when I say improvement, it's still negative but it's negative.
Speaker Change: 117 and were seeing a.
Speaker Change: Bounce back and improvement in our Ohio markets, which.
Speaker Change: Our.
Speaker Change: Starting to lap.
Speaker Change: Significant.
Speaker Change:
Speaker Change: The comps as it relate to.
Speaker Change: Excuse me.
Speaker Change: As it related to sports.
Speaker Change: Sports betting revenue.
Speaker Change: And Peter you were gonna add local local pound Scott most strongly in Q2, right. So national's a little better in Q2 than it was in Q2, but the local is.
Speaker Change: Strongly better than in Q2 than it was in Q1 so it's.
Speaker Change: Local ammonia is pacing up in Q2.
Speaker Change: Or is it was down.
Speaker Change: 10% call it in Q1.
Speaker Change: And we're also now.
Speaker Change: And we're seeing improvements.
Speaker Change: And Nashville as well.
Speaker Change: Yes.
Speaker Change: Again, it's still negative.
Speaker Change: Okay, that's encouraging.
Speaker Change: And carrying that out a little further with you in near 25 Guide what are you assuming for the core radio broadcast segment from a topline perspective do you think it can trend back towards neutral Alfredo.
Speaker Change: You're still assuming its going to be down a little bit for the year.
Speaker Change: Yeah.
Speaker Change: But with.
Speaker Change: That guide is also right on top of our internal budget and tell I think.
Speaker Change: Peter.
Speaker Change: Yeah, I mean, it's.
Speaker Change: If you strip out of the political aisle and then we've assumed that the call grows a little bit.
Speaker Change: Number so.
Speaker Change: If you.
Speaker Change: If you took out every dollar of political and Didnt replace it with something else. It would look worse than what we've got so we've assumed.
Speaker Change: Some growth in.
Speaker Change: And local.
Speaker Change: Our national ex political.
Speaker Change: Obviously digital.
Speaker Change: Right right. Okay. Let me, let me squeeze one more in and I appreciate the time.
Speaker Change: Been a lot of talk around deregulation across the broadcasting space I'm curious what opportunities.
Speaker Change: You see that potentially opening up for you on the radio side, whether that's as a seller or a buyer do you think we could see some material consolidation in the space on the heels of a.
Speaker Change: Kind of this new positioning from the from the FCC.
Speaker Change: SEC, Yeah look I've been.
Speaker Change: I've been pretty vocal.
Speaker Change: About my belief that youre going to see further consolidation.
Speaker Change: And the radio sector, you need to see it.
Speaker Change:
Speaker Change: And and we have over the years, then both buyers and sellers recently we've.
Speaker Change: But more of a buyer consolidating and Indianapolis.
Speaker Change: And Houston.
Speaker Change: But we have gotten we've trimmed our portfolio.
Speaker Change: Number of times and gotten out of places that.
Speaker Change: Where we werent successful weren't working.
Speaker Change: For us and put that capital.
Speaker Change: To work.
Speaker Change: Either debt reduction or are more accretive acquisitions, and so I think youll see us continue.
Speaker Change:
Speaker Change: With that I think that we're probably in.
Speaker Change: Better shape.
Speaker Change: Then you have been a number.
Speaker Change: Other folks in the sector in terms of our leverage profile, which I think gives us.
Speaker Change: An advantage too.
Speaker Change: To.
Speaker Change: To be proactive.
Speaker Change: In terms of opportunity.
Speaker Change: <unk>.
Speaker Change: So, but you still have to be careful by even even with consolidation steel still dealing with.
Speaker Change: A negative trend line.
Speaker Change: On the top.
Speaker Change: On the top line revenue.
Speaker Change: Number so it's very tricky in and because of that fact.
Speaker Change: Factor that you have.
Speaker Change: Even if you get de Reg.
Speaker Change: Having new capital come into the industry.
Speaker Change: We'll probably be a challenge right now and so.
Speaker Change: I think that.
Speaker Change: People will look to see if their swap opportunities that can be executed in order to put people in better positions in various different markets.
Speaker Change: Ive always seen that as well.
Speaker Change: Challenging for people to to align on what's a good swap you just don't see a lot of it.
Speaker Change: But the state of the industry might.
Speaker Change: And the <unk>.
Speaker Change: Yes make people more motivated.
Speaker Change: To do that so I would say that it is absolutely a net positive.
Speaker Change:
Speaker Change: Because in.
Speaker Change: <unk>.
Speaker Change: Declining <unk>.
Speaker Change: Industries, you need to create economies of scale.
Speaker Change: And.
Speaker Change: Again so.
Speaker Change: And I also think being bigger in these local markets. It makes you more of a.
Speaker Change: Digital.
Speaker Change: Force for local advertisers because you are covering off more formats, you've got more.
Speaker Change: Audiences that are that that you're touching and we're seeing significant amounts of digital revenue.
Speaker Change: Come into the to the Miller Kaplan, our local markets in fact.
Speaker Change: And about half of our markets, we're seeing more digital revenue than national spot.
Which really came to light fourth quarter budget.
Speaker Change: Process for the first time so yes.
Speaker Change: Having more.
Speaker Change: First in the local market.
Speaker Change: Allow us to compete better digitally.
Speaker Change: I believe as well so so a net positive but still challenged because youre not I don't think youre going to see a flood of of capital come in to execute this consolidation. So people are going to have to figure out how to work it with them between themselves, but I also think that the current debt holders in the industry.
Speaker Change: <unk> are eager for some sort of.
Speaker Change: Solution for folks as balance sheets and.
Speaker Change: And we'll be constructive and trying to see.
Speaker Change: Consolidations happen.
Speaker Change: So it helps the industry and helps the players in it.
Speaker Change: Very helpful perspective, thanks as always happen.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of then breaks with stone ex Financial Inc. Please go ahead.
Speaker Change: Good morning, guys. Thank you for the time and thank you for taking the questions.
Speaker Change: So.
Speaker Change: I've got a couple here most of them most of them around.
Speaker Change: What capital allocation plans are for fiscal 'twenty five.
Speaker Change: So thank you for the guidance.
Speaker Change: You've mentioned the cost reductions and debt buybacks are going to be a focus.
Speaker Change: For 2025.
Speaker Change: I think the market does.
Speaker Change: Be glad to hear that.
Speaker Change: Curious if there's any plans for stock repurchases or.
Speaker Change: As most of you going to be dead.
Speaker Change: We we have been Reaper.
Speaker Change: Repurchasing stock we've got a plan in place. It's yeah. It's a small plan that basically just buy as kind of like they are.
Speaker Change: The daily limits.
Speaker Change: Yes.
Speaker Change: I think we've probably repurchased in the last year.
Speaker Change: $5 $6 million of stock in comparison to $150 million now, what's our total debt repurchases.
Speaker Change: <unk> hundred 40 last year and then another 17 this year right. Yeah. So yeah, so almost a $160 million.
Speaker Change: Of that repurchase yeah.
Speaker Change: I think youll continue to see that kind of outsize ratio.
Speaker Change: Of of how we deploy that capital.
Speaker Change: So we all know.
Speaker Change: 95% of our money.
Speaker Change: Go to continue to.
Speaker Change: Debt reduction.
And so that's you know.
Speaker Change: Okay.
Speaker Change: I think we're also looking at M&A opportunities as the previous year.
Speaker Change: Person was questioning about.
Speaker Change: Reg and.
Speaker Change: Having cash available to us if we can find acquisitions that accomplish the same thing that our deleveraging, which is which is our goal.
Speaker Change: So we keep that in mind, but we're not going to just have it sitting around in the hopes.
Speaker Change: That.
Speaker Change: An acquisition comes along.
Speaker Change: With that said, we've always been mindful and thoughtful about how we repurchased debt right. So we will.
Speaker Change: Looking we'll by then 10 or 15 or <unk>.
Speaker Change: $20 million.
Speaker Change:
Speaker Change: Chunks.
Speaker Change: Hmm.
Speaker Change: We're not a repurchase or at any cost either right now.
Speaker Change: We've we've definitely tried to be opportunistic on the pricing.
Speaker Change: Because that benefits the company.
Speaker Change: Long term and.
Speaker Change: And so if we just if we just go into the market and indiscriminately by depth then it runs away from us.
Speaker Change: <unk>.
Speaker Change: And so now.
Speaker Change: You never know exactly when we're going to be a buyer and we're not going to be higher because we definitely set out.
Speaker Change: For periods, even when we had open windows, because we didn't we didn't like the price.
Speaker Change: Okay got it.
Speaker Change: That's very helpful have there been any I know you disclosed the buybacks through January has there been any debt buybacks since then.
Speaker Change: There were a few good sized trades no.
Speaker Change: Yes, yes.
Speaker Change: That we intentionally.
Speaker Change: Set out.
Speaker Change: While the window was closed we didn't put a plan in place.
Speaker Change: And and we were out of the market for the last year.
Speaker Change: Been out of the market since since that January to repurchase.
Speaker Change: Okay. Okay. Good to know thank you.
Speaker Change: And then second thing is.
Speaker Change: Kind of kind of more operation with the business and I know previous calls you guys have discussed this but can you give a little clarity can you just kind of re explain to me I guess, what exactly as far as revenue is concerned what goes in to your digital segment.
Speaker Change: I know, there's there's kind of a little bit of a few different things that go in there and I've gotten a couple of questions from the investors this quarter on what exactly goes in there. So if you could just remind me I'd appreciate it.
Speaker Change: Yeah look it's a timely question because one of the things that has been going in is the connected TV revenue.
Speaker Change: Yes.
Speaker Change: Yeah, and that's a growth area.
Speaker Change: And with.
Speaker Change: We decided going forward.
Speaker Change: From January one that we're going to report that through the TV segment, so that will be a change.
Speaker Change: Part of the thinking there is.
Speaker Change: Because linear T V.
Speaker Change: Is more challenged.
Speaker Change: So you strip out that growth area and reported as digital is going to give us a false falsely negative position of the TV business. So we're going to kind of re correct repatriate that revenue on those impressions, but to TV, one and we think thats right because.
Speaker Change: They really are attached to the TV business.
Speaker Change: Rather than digital content verticals.
Speaker Change: So.
Speaker Change: Up until now we've reported CTV through digital and we're going to report it through television.
Speaker Change: And then.
Speaker Change: All other digital impressions goes through digital so it can be can be.
Speaker Change: Adverse on content verticals can be pre roll can be better.
Speaker Change: Podcast revenue stream and is the other big one.
Speaker Change: And that's worth talking about we had a really.
Speaker Change: A really good deal through.
Speaker Change: Through cats.
Speaker Change: And then got renegotiated down so call it $7 million of revs.
Speaker Change: That we were getting from.
Speaker Change: Some caps on the podcast inside was reported as digital.
Speaker Change: There's going to be a significantly less significantly.
Speaker Change: Lower probably $4 million low hospitals, podcasts and streamlined sorry, yes streaming and podcasting.
Speaker Change: So.
Speaker Change: So essentially im sorry in the main part of that is stream and if I said podcast and flip them in my head is both to gas stream is the bigger part. So essentially we had a we had an output deal where they basically bought all of our available inventory.
Speaker Change: That we had and.
Speaker Change: And that Guy renegotiate it.
Speaker Change: He has got.
Speaker Change: Cost reductions and.
Speaker Change: And.
Speaker Change: So today in that yeah.
Speaker Change: Success in a big way so we're out now rebuilding our streaming partners. So instead of just giving all of our impressions to one entity, we're actually plugging into multiple.
Speaker Change: Entities, and it's going to take us a while to build that back up but the net is we're.
Speaker Change: We're going to see that revenue probably reduced by tax.
Speaker Change: Yeah.
Speaker Change: A lot of ups and that's going to that's going to affect the digital.
Speaker Change: Revenue number yeah.
Speaker Change: Our T V plus us so you're going to see you're going to see our digital segment.
Speaker Change: Look weak.
Speaker Change: As a result of those two things so on the most recent Miller kaplan's, we're getting annihilated in digital.
<unk>.
Speaker Change: And a big part of that is in our streaming number.
Speaker Change: Okay.
Speaker Change: That's all very helpful. As you report going forward since you since you re categorizing some of that revenue are you going to report are you going to adjust prior period numbers as you.
Speaker Change: I don't think we're planning I don't think we're planning to adjust prior period.
Speaker Change: Okay.
Speaker Change: But I can give look if it's if it's materially different I can probably give color on the earnings call. So.
Speaker Change: So people can understand the differences.
Speaker Change: Okay.
Speaker Change: That is very helpful color. Thank you guys and.
Speaker Change: Talk to you soon thank.
Speaker Change: Thank you.
moorland Pereira: Our next question comes from the line of moorland Pereira with Banc of America Securities. Please go ahead great.
moorland Pereira: Great. Thank you for taking my question.
moorland Pereira: Based on your full year EBITDA guide of $75 million, how should we think about free cash flow for the year. If you can provide any context on some of the puts and takes that would affect that that would be great.
moorland Pereira: Yeah. So obviously the good news.
moorland Pereira: <unk> uses EBITDA has gone down the good news is we got less debt interest payments, so that's about $41 million cap.
moorland Pereira: Capex, we're penciling out $10 million it was a big project going on to consolidate the Indianapolis Office post acquisition that's.
moorland Pereira: Kind of $5 million at the time, so that's a little high turns a little higher than we would normally do is probably a solid number.
TV one programming not a huge difference there.
moorland Pereira: And so long story short at the moment, we're looking at around $25 million.
moorland Pereira: Free cash flow generation of 75.
Speaker Change: Great. Thank you Pierre and then coming back to the cost saves containment, you mentioned about $5 million that you'd be saving from some staff.
Speaker Change: Staff reductions so how should we think about cost savings $4 25 that will hit the numbers as well as the cost to achieve.
Speaker Change: Yeah.
Speaker Change: What we are actually and we wanted to get through.
Speaker Change: Getting our accounts filed year end et cetera.
Speaker Change: And Ah.
And were back focused on what other cost save opportunities that we have we don't have a number yet.
Speaker Change: We do feel like we have.
Speaker Change: More opportunity.
Speaker Change: Two.
Speaker Change: To reduce cost.
Speaker Change: We did our first.
Speaker Change: <unk>.
Speaker Change: Round.
Speaker Change:
Speaker Change: And in Q4 and made it effective.
Speaker Change: But by the end of January, but we haven't gotten there yet but you can now.
Speaker Change: You can expect more don't know how much more yet, but you know what.
Speaker Change: We're looking at every available opportunity.
Speaker Change: Got it so just to confirm minutes.
Speaker Change: The 75 million of EBITDA for the year it does not.
Speaker Change: That number does not at the $75 million does not include any new.
Speaker Change: Our projected cost saves that that might come.
Speaker Change: Yeah, we may.
Speaker Change: We made it simple this year that that numbers are that's our actual budget, where we think we're going to be at and it doesn't take into account.
Speaker Change: Any further.
Speaker Change: Cost reductions in it I mean, I know that.
Speaker Change: Think I hired it given our guide for 2025, which in crude at their expected cost saves.
Speaker Change: We'd already taken out our cost save.
Speaker Change: And we went through the budget process and so anything new.
Speaker Change: Would actually.
Speaker Change: To help that.
Speaker Change: Number going forward.
Speaker Change: Great and then last one for me.
Speaker Change: Is there any are there any.
Speaker Change: Assets or.
Speaker Change: Parts of the business that might be considered noncore and potentially could be.
Speaker Change: Could result in like an asset sale.
Speaker Change: Yeah I mean.
Speaker Change: The answer is.
Speaker Change: Maybe we have some small things you know what I mean.
Speaker Change: Hum.
Speaker Change: No.
Speaker Change: But you need buyers.
Speaker Change: And those those those don't exist right now.
Speaker Change: Al.
Speaker Change: And so yeah.
Speaker Change: In the.
Speaker Change: And the.
Speaker Change: Media M&A landscape.
Speaker Change: In both.
Speaker Change: TV cable networks.
Ray: So ray you haven't seen much activity, you've seen a number of failed processes.
Speaker Change: On the on the cable TV network.
Ray: And.
And so again, we've always been economic animals, meaning that if.
Ray: If somebody were to make us.
Ray: An offer on pieces of our business that would ultimately be accretive to us from a deleveraging standpoint and would help us.
Ray: Hmm.
Ray: Significantly move the needle we would we would absolutely consider it.
Ray: And.
Ray: And on the other side on the acquisition side, we're not really considering anything that also doesn't delever us right. Because we've got we've got enough scale to be relevant now now it's really about getting the balance sheet.
Ray: Two what I call a safe.
Ray: <unk> position and I think that that safe positions gotta be leverage that's in the.
Ray: <unk>.
Ray: In the mid threes.
Ray: Low threes, maybe even retail.
Ray: But yes, you need buyers yeah Sal.
Speaker Change: Which is what I said earlier, when we talked about DRAM.
Ray: And new capital coming into the business.
Ray: Great. Thank you all for it that's all I have thank you.
Howard Steiner: Our next question comes from the line of how Steiner with BNP Paribas. Please go ahead.
Howard Steiner: Hey, guys. Thank you for taking my questions a lot of my questions were already asked but I just have a few quick things.
Howard Steiner:
Howard Steiner: Yes, do you want to hold at least like a $100 million of cash or is there sort of like a minimum cash balance you want to kind of keep on the balance sheet.
Howard Steiner: Or would you sort of be likely to drop below that as you kind of continue to focus on gross debt reduction yeah. No. We don't we don't have a minimum amount of cash that we.
Howard Steiner: Uh huh.
Howard Steiner: We are targeting to keep on the balance sheet, we've got our undrawn $50 million revolver.
Speaker Change: So dow.
Speaker Change: We can definitely see our cash balances will be able to drop in and still be fine from an operating.
Speaker Change: Standpoint.
Speaker Change: Again, our cash.
Speaker Change: Claim that.
Speaker Change: Has been opportunistic right like meaning yes.
Speaker Change: If we can buy our debt at an attractive price then we'll do it.
Speaker Change: Price is not attractive then we sit out and so those that strategy has led us to have.
Speaker Change: More cash on average than probably.
Speaker Change: People might have.
Speaker Change: Otherwise think that we should but it is not because we are hoarding cash it's because we just don't want to go out and.
Speaker Change: Bid up things just because we've got cash rate like <unk> and.
Speaker Change: And so because every time, we have bought that.
Speaker Change: Now it's.
Speaker Change: When we're in the market goes up when we're at now when we're not in the market now it goes down and again the best thing for the company is to try to manage that.
Speaker Change: And the most efficient way possible.
Speaker Change: <unk> continued to get the most deleveraging possible.
Speaker Change: Got it not a strategy, it's not a cash ordering strategy.
Speaker Change: Yeah understood understood.
Speaker Change: And then I know you've talked a lot about sort of the deregulation environment, but I guess, one angle or something that I've been looking at and I'm curious your thoughts as you know I think like W. BD and Comcast have both been kind of working on maybe cable network companies or cable network spin co sort of coming to market I guess I'm. Just curious how you think about that those entities coming.
Speaker Change: Into market and maybe providing some round valuation read through and I'm. Just curious how you think about like any combination or partnership angles, there with your TV business.
Speaker Change: I mean, everybody got all excited when Comcast announced.
Speaker Change: Announced they were doing the spin co.
Speaker Change: No.
Speaker Change: Either because they think that that's going to they're going to be the buyer of.
Speaker Change: All of the stranded cable assets.
Speaker Change: I don't know that to be true right now and you know I think the biggest problem that youre going to have with.
Speaker Change: Cable assets.
Speaker Change: <unk>.
Speaker Change: AMC is trading at.
Speaker Change: Last I looked it was trading at four and a half of it was trading at like five times cash flow, yes, nobody wants to sell.
Speaker Change: Nobody wants to sell cable cash flow at five times, I'd, rather keep it right and and and nobody really wants to buy it at seven or eight times.
Speaker Change: So I yeah.
Speaker Change: I don't.
Speaker Change: I don't necessarily believe that.
Speaker Change: Those entities are going to be.
Speaker Change:
Speaker Change: The end buyers.
Speaker Change: For for peoples.
Speaker Change: Assets I do think Jody J I mean, we've seen churn moderate right now.
Speaker Change: Now.
Speaker Change: <unk>.
Speaker Change: I think we're forecasting what mid single digit turns down from like 11% last year.
Speaker Change: So I had a conversation in New York with a broadcaster I had lunch with them.
Speaker Change: The growth in the virtual yeah I.
Speaker Change: I had.
Speaker Change: The conversation with the broadcast and he said that Hey, you know I've been talking to people in a lot of people think that yes.
Speaker Change: Sort of.
Speaker Change: Churn or <unk> or cable penetration is going to net out now bottom out at like 40%.
Speaker Change: And I guess that would be like $40 million.
Speaker Change: Households.
Speaker Change: That was his view.
Speaker Change: And Ah.
Speaker Change: And I guess the point I'm trying to make is churn has started to ease up there's some people believe that it is going to bottom out at some point in time.
Speaker Change: And if that happens you know.
Speaker Change: That you know that.
Speaker Change: That I think will create.
Speaker Change: More opportunity for people wanting to acquire these assets because you because you know what.
Speaker Change: You know the knife is falling right like you know what you're here.
Speaker Change: What youre going to own and can try to and can better project. What the earnings from that are going to be but I don't think just because you got the spend goes out here that all of a sudden you're going to see a bunch of consolidation I could be wrong, but I haven't talked to anybody at Comcast about it I haven't asked them I just now.
Speaker Change: And I, just dumping people can make that assumption.
Speaker Change: Got it makes sense. Thank you guys for taking my questions. Thank you.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Matt Swope with Baird. Please go ahead.
Matt Swope: Hi, Thanks, Good morning, Alfred Peter.
Alfred Peter: Good morning.
Speaker Change: Peter could you give an update on where your cash balance stands at this point.
Speaker Change: As of this morning, there was a $117 million.
Speaker Change: So so Alfred just sort of listening to you talk about possible capital allocation and things I guess to be a little bit blunt.
Speaker Change: And your bonds or all the way down to 50 now.
Speaker Change: Which doesn't make a lot of sense to me honestly.
Speaker Change: Why not I.
Speaker Change: I guess, one could you find any M&A that gave you a better return than buying your bonds back here and two why not do something bigger you guys have run with a very very low cash balance in the past why not take almost all of that cash maybe do a broad tender or something and buy back as many.
Speaker Change: Bond as you, possibly could maybe at a slight premium to where the market today.
Speaker Change: Versus taking that cash and buying it at where the market is at al.
Speaker Change:
Speaker Change: Like over time.
Speaker Change: Yeah, I'll like that.
Speaker Change: I mean, I think the problem with that with that as you go out and you offer at Tinder. It's.
Speaker Change: Rarely a slight premium right.
Speaker Change: Justin negotiate just doing the bond buybacks or experiences.
Speaker Change: Theres a significant bid ask Glen were an active buyer between where people want to sell in between where the market is marking it right now and so.
Speaker Change: We've done better when we have selectively bought right as opposed to just going out taken all of our cash and Pan some big premium.
Speaker Change: Or the bonds.
Speaker Change: We've considered.
Speaker Change: The tender.
Speaker Change: We're also going to run out of buyers excuse me of sellers at some point because our bonds are very concentrated in.
Speaker Change: Into two.
Speaker Change: Big handset, probably all in over 50% of the.
Speaker Change: Of the issue.
Speaker Change: So you know.
Speaker Change: Uh huh.
Speaker Change: Sure.
Speaker Change: There's going to be a point, where you're not going to.
Speaker Change: See sellers.
Speaker Change: At these levels you know sell them.
Speaker Change: Given given that dynamic is there any thought to doing some kind of liability management exercise are working with your big holders too.
Speaker Change: Capture some of this discount maybe maybe do some equity position you talk about wanting to leverage to be down in the low threes you have given an EBITDA guide that's down over 25% year over year. So obviously.
Speaker Change: So that pushes your leverage a lot higher.
Speaker Change: Is there any way to do some kind of broader.
Speaker Change: I'll use the word restructuring, which I know is a dirty word but to maybe provide some equity to some of those holders just to reduce that debt balance a little bit proactively.
Speaker Change: We have no liability management.
Speaker Change: Exercise.
Speaker Change: Yes in <unk>.
Speaker Change: Process, we haven't engaged anybody people have pitched us now.
Speaker Change: Oh on it.
Speaker Change: We think it's early.
Speaker Change: For us our maturity isn't until February 28, yes.
Speaker Change: So we think it's early too.
Speaker Change: So again discussions on some sort of.
Speaker Change: Rollover amend extend like <unk> like <unk> done like these leased on Etsy.
Speaker Change: Et cetera, but the answer to the.
Speaker Change: The question is.
Speaker Change: As we get closer to that maturity maybe in another year.
Speaker Change: And those discussions.
Speaker Change: With.
Speaker Change: With our holders are absolutely prudent and we would consider.
Speaker Change: All options to accomplish.
Speaker Change: A better bet.
Speaker Change: Our leverage profile, but as I said before there's two players that you got a deal that we all have to people that we need to talk to and figure out whats the best.
Speaker Change: Route for the company because they have over 50% of the issue.
Speaker Change: Got it all right. Thanks, I appreciate that commentary.
Speaker Change: And we have we have consistent dialogue with.
Speaker Change: But with those players were not operating in sort of.
Speaker Change: A vacuum of.
Speaker Change: Information flow between us and our.
Speaker Change: And our debt holders.
Got it thank you.
Speaker Change: And on the $75 million EBITDA guide, Peter that's a little bit lower than I was modeling would you call that a more conservative estimate or how would you characterize that yeah.
Speaker Change: One thing you've got to think about it.
The <unk>.
Speaker Change: The valuation on TV, one went down significantly year over year and as a result of that the liability on the Ceos.
Speaker Change: Award went down by $10 $5 million and.
Speaker Change: That's in we got to pick up and the adjusted EBITDA as a result of the valuation of TV, one going down. So so on a cash basis, you would adjust the $103 five you would take that tenant off off.
Speaker Change: So really a baseline.
Speaker Change: No.
Speaker Change: 93.
Speaker Change: 103, and a half.
Speaker Change: Before me.
Speaker Change: Okay.
Speaker Change: Because of that noncash pickup is not expected to recur this year.
Speaker Change: I see.
Speaker Change: You mentioned that a couple yes that no that does makes sense can you can you just walk us through how that how that CEO Award works.
Speaker Change: Yes.
Speaker Change: I'll oversimplify, it, but it's roughly 4% of any cash proceeds dividends sale proceeds from.
Speaker Change: From the value of TV one.
Speaker Change: And I think the valuation of TV one at the moment is $285 million.
Speaker Change: <unk>.
Speaker Change: And then there's some balance sheet adjustments.
Speaker Change: The liability currently stands.
Speaker Change: Around $10 million.
Speaker Change: On the balance sheet and it has been as high as $25 million in the past. So that's just a reflection on the reduction in the.
Speaker Change: And the accounting and the fair value on the carrying value of the TV one asset is our projections have decreased.
Speaker Change: I see and has cash been paid out on that at all or that's just the liability that moves up and down.
Speaker Change: Have on an annual basis TV on the TV won't declare dividends and <unk>.
Speaker Change: Oh, yes.
Speaker Change: 4% share of those dividends in that range.
Speaker Change: It's around two and a half ish million dollars of you at the moment has been as high as just north of $4 million.
Speaker Change: But is the cash flow from that business has reduced so is the cash payout on the.
Speaker Change: Annual dividends flowing from TV one.
Alfred Peter: I see thank you and maybe just one last one for me probably for Alfred Alfred.
Alfred Peter: Safe to say that the casino process is off the table for now.
Alfred Peter: [laughter] enrichment yeah that's.
Alfred Peter: It's safe to say given that they've actually broken ground on the casino and Petersburg.
Alfred Peter: Yeah, that's I guess, I guess I'm, asking even though at one point you maybe mentioned thinking about it in Maryland as well is it but just given the state of the balance sheet and things is it over.
Alfred Peter: No.
Alfred Peter: We like that business we.
Alfred Peter: Are looking for opportunities to.
Alfred Peter: To invest in it again, our merrell and effort was not around.
Alfred Peter: Our bricks and mortar casino bricks and mortar casino it was around their <unk> gaming legislation.
Alfred Peter: The last two sessions they've been comp.
Alfred Peter: Contemplating.
Alfred Peter: And to introduce I gaming.
Alfred Peter: And and.
Alfred Peter: And we'd like to position ourselves to two two.
Alfred Peter: <unk> be in that business in and get a license and so we've been lobbying to be part of the legislation.
Alfred Peter: Yes.
Alfred Peter: It died again this year.
Alfred Peter: But yes, I gaming as of now.
Alfred Peter: There is a great business.
Alfred Peter: As well it's only.
Alfred Peter: And six.
Alfred Peter: States.
Alfred Peter: Versus 37% 38 states, they actually have land bricks and mortar casinos.
Speaker Change: Operator, so that's been our most recent.
Alfred Peter: Gaming effort, we are currently not.
Speaker Change:
Speaker Change: Participating.
Speaker Change: And any sort of rfps for any land based casino.
Speaker Change: Developments.
Speaker Change: Paul.
Speaker Change: Got it.
Speaker Change: I'll reiterate my unsolicited advice.
Speaker Change: Can't imagine you can get a better return on anything and buying your bonds back in the open market right now, but thank you guys very much.
Speaker Change: Yes.
Speaker Change: We've been taken advice, we spent $150 million in the last year.
Speaker Change: Year.
Speaker Change: <unk>.
Speaker Change: And I appreciate that advice, but again like I said, we want to make sure that we're prudent about how we buy it in.
Speaker Change: <unk>.
Speaker Change: And thats reasonably we do it selectively.
Speaker Change: Thanks, guys.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Anne Silver with Stifel. Please go ahead.
Speaker Change: Hi.
Ken Silver: Ken Silver from Stifel and as my sister.
Speaker Change: Guys doing that.
Speaker Change: Are you using her phone Ken yes.
Speaker Change: Yes exactly.
Speaker Change: And have a nice nice to talk to you again most of my questions.
Speaker Change: Most of my questions were answered I guess, let me just ask you gave the EBITDA guide, which was definitely helpful.
Speaker Change: Would you be.
Speaker Change: Give us a revenue guidance for the year also.
Speaker Change: And you sort of did sort of talking about radio and TV, a little bit but.
Speaker Change: We haven't talked about given that Ken I need to.
Speaker Change: Alfred I am discussing I mean, obviously I can see I can see what we think it's going to be.
Speaker Change: Okay, I don't think I don't think.
Speaker Change: That's fine so let me just ask you how should we think about reach media for the year I mean, it was down I think like high single digits. In 2024 is that sort of a trend that's going to continue or might it stabilize more.
Speaker Change: Yes, we have as a stabilizer.
Speaker Change: Stabilizing.
Speaker Change: Actually.
Speaker Change: Growing a little bit on the bottom line, so tough top line down a bit bottomline alcohol.
Speaker Change: So we don't.
Speaker Change: See that as being.
Speaker Change: Right.
Speaker Change: The problem child this year.
Speaker Change: And then pretty soon now.
Speaker Change: Stable to down a bit but up on the bottom line.
Speaker Change: Okay, and then on digital you called out the sort of the headwind with.
Speaker Change: Cats are there any other obviously youre going to move.
Speaker Change: Some revenues to the TV segment from besides those two things.
Speaker Change: Anything else.
Speaker Change: Significantly yes.
Speaker Change: Yeah. So it's.
Speaker Change: I think there's a couple of other macro things that traffic is down significantly over historic levels and that's a function of.
Speaker Change: Partly AI, partly the new landscape out there so we're not getting.
Speaker Change: Traffic driven to us in the same way as we have before from Google and Facebook. So you've got some headwinds in traffic, which in turn means we have to go out and buy traffic, which reduces the margins go higher Tac.
Speaker Change: Yes.
Speaker Change: And then demand in general we've ridden the DIY, even that's receded. So I think there's a softening in demand in the digital business as well so two jobs definitely got some headwinds for us.
Speaker Change: Okay, Great alright, well, thanks, very much I appreciate it.
Speaker Change: Ken.
Speaker Change: Operator, $10 58, we've got time for one more question.
Speaker Change: We have no questions at this time.
Speaker Change: Okay, great. Thank you.
Speaker Change: Everybody.
Speaker Change: As usual we are available offline for anybody.
Speaker Change: It gets anything you'd like to have a decent conversation.
Speaker Change: About the business. Thank you very much and we'll see you next quarter.
Speaker Change: This will conclude today's meeting. Thank you all for joining you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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