Q4 2024 Urban One Inc Earnings Call
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. During this conference call urban one will be sharing with you certain projections or other forward looking statements regarding future.
For events or its future performance more than one cautions you that certain factors, including risks and uncertainties referred to in the 10-K 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 looking.
Urban One: Statements in this call will present information as of March 27, 2025. Please note that urban one disclaims any duty to update any forward looking statements made in the presentation.
Urban One: 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 or in the company's press release, which can be found on its website at www Dot urban one dot com a replay of the conference call will be available from it to occur.
Urban One: <unk> P M. Eastern daylight time March 27 to 2025 until 11 59 P. M. Eastern daylight time April 3rd 2025.
Urban One: You may access the replay by calling 807 702030 international callers may dial direct 69 8009909. The replay access code is 3407726 access to live audio and a replay of.
Urban One: 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.
Speaker Change: I'll 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. Thank you very much operator, and welcome to our fourth quarter Conference call also joining us as usual as Jodi driller Who's the Chief financial Officer at <unk>.
Speaker Change: TV, one also Karen Wishart, who's our chief administrative officer.
Speaker Change: The press release stated.
Speaker Change: We ended up coming in at the middle of our guidance for adjusted EBITDA and $3 five.
Speaker Change: $5 million.
Speaker Change: That number in Q4 was boosted by a pretty strong performance with our political advertising efforts. However, yeah. We did see continued headwinds in our cable TV business due to churn and the delivery.
Speaker Change: That actually has started to stabilize in Q1. So that's good news. Unfortunately, the radio business continues to see Downdrafts in Q1 with pacings currently.
Speaker Change: <unk> was $13 six however, they are improving going into Q2.
Speaker Change: With patients down just $1 seven.
Speaker Change: Where opt.
Speaker Change: Optimistic that things will continue to improve.
Speaker Change: In our radio business, but with.
Speaker Change: But the downdraft, we've been taking precautions with our.
Speaker Change: Our cost containment.
And further debt reduction we had a staff reduction in Q4 of about 5%, which is about 64 people about workforce glitches.
Speaker Change: Switches save us about $5 billion a year.
Speaker Change: Going in to.
Speaker Change: 2025, it's going to be all about cost.
Speaker Change: Cost containment and also our continued debt reduction.
Danny.
Speaker Change: And a pretty strong liquidity position as of the end of the year with about $137 million of cash on hand, we are prepared to.
Speaker Change: For 2025 guide, even though it's early.
Speaker Change: <unk>.
Speaker Change: In the year, but we are going to guide to $75 million of.
Speaker Change: Adjusted EBITDA.
Speaker Change: Down from the $103 five in 2024.
Speaker Change: It's.
Speaker Change: We're going to be a combination of weaker radio.
Speaker Change: Primarily driven by a lack of recurring political advertising.
Speaker Change: We're gonna be down a bit in TV, but we can we feel like that that is stabilizing.
Speaker Change: As well, so a $75 million guide for.
Speaker Change: For 2025.
Speaker Change: Down from the 103 five in 2020 for continued cost containment and debt reduction.
Speaker Change: We're going 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.
Speaker Change: <unk> 2024 in the quarter. Thank you Alfred.
Speaker Change: So consolidated net revenues were down two 7% year over year.
Speaker Change: Three months ended December 31, 20 for approximately $117 million.
Speaker Change: Net revenue for the radio broadcast segment was $47 $7 million, an increase of 14, 5% year over year, excluding political net revenue was down five 1% year over year.
Miller Kaplan: According to Miller Kaplan local AD sales were up.
0.1% against our markets were down five 2%.
Miller Kaplan: National AD sales were up 35, 4% against the market that was up 28, 4%.
Miller Kaplan: Political advertising drove the growth in the national marketplace and for our stations and was our largest advertising category for the quarter second largest category for US was services, which was up 12% driven predominantly by legal services.
Miller Kaplan: Health care retail auto financial food and Bev.
Miller Kaplan: Down year over year.
Miller Kaplan: Telecom travel and transportation categories were up.
Miller Kaplan: Net revenue for reach media segment was $9 $6 million for the fourth quarter down 10, 7% from prior year adjusted EBITDA was $2 9 million for the quarter a decrease of 15, 4%.
Miller Kaplan: While each benefited from $1 million in political advertising.
Miller Kaplan: Attrition and lower average unit rates offset those dollars.
Miller Kaplan: Net revenues for the digital segment were down three 1% in Q4 of $25 million.
Miller Kaplan: Direct national sales were down driven by decreased advertiser demand.
Miller Kaplan: Political advertising was $2 4 million on both connected TV podcast revenue.
Miller Kaplan: Up from prior year, adjusted EBITDA was $5 $3 million, which was an increase of 57%.
Miller Kaplan: We recognized approximately.
Miller Kaplan: $39 $8 million of revenue from our cable television segment during the quarter, which was a decrease of 15, 9%.
Miller Kaplan: Cable TV advertising revenue was down 21, 4%.
Miller Kaplan: Delivery declined 36% and total day persons 25 54.
Miller Kaplan: We had approximately 6% fewer units converted to add inventory.
Miller Kaplan: 4000 more units allocated to.
Miller Kaplan: A do you to help mitigate the delivery impact.
Miller Kaplan: That was partially offset by favorable volume fast revenue of $1 3 million.
Miller Kaplan: The rollout resulted in an AD revenue decline.
Miller Kaplan: $5 $8 million.
Miller Kaplan: Cable TV affiliate revenue was down by nine 9% driven by.
Miller Kaplan: The increased subscriber churn, which was a $3 $3 million loss.
Miller Kaplan: Partially offset by a $1 three and subscriber rate increases and the launch of now TV.
Miller Kaplan: Full year subscriber churn was minus nine 5%.
Miller Kaplan: Cable subscribers for TV, one as measured by Nielsen fin.
Miller Kaplan: Finished Q4 at 37 2 million compared to $39 1 million at the end of Q3.
Miller Kaplan: Television had $36 4 million Nielsen subs.
Miller Kaplan: Operating expenses, excluding depreciation and amortization and stock based compensation and impairments of goodwill intangible assets and long lived assets.
Miller Kaplan: Decreased to approximately $91 1 million for the quarter ended December 31, 2024, which was a decrease of 13, 8% from prior year.
Miller Kaplan: The overall decrease in operating expenses was primarily due to lower coal for SG&A expenses, driven by a reduction in the Ceo's TV One award.
Miller Kaplan: Lower overall expenses in the digital segment due to lower sales and marketing related costs.
Miller Kaplan: Radio operating expenses were down five 4% or $1 $9 million driven by a favorable adjustment to the bad debt reserves.
Miller Kaplan: Reach operating expenses were down by seven 8% driven by lower talent and staff incentives incentive based compensation.
Miller Kaplan: Operating expenses in the digital segment were down 16, 1% driven by lower sales and marketing costs and lower performance.
Miller Kaplan: <unk>.
Miller Kaplan: Operating expenses in the cable TV segment up four 1% year over year, driven by increased rating service costs and connected TV support costs.
Miller Kaplan: Operating expenses in the corporate and elimination segment were down by approximately $10 $2 million, primarily as a result of production to the C. E O S. T V one of them.
Miller Kaplan: 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%.
Interest income was approximately $1 1 million in the fourth quarter compared to $2 $5 million last year.
Miller Kaplan: Decrease 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.
Miller Kaplan: Due to the lower overall debt balances as a result of the company's debt reduction strategy.
Miller Kaplan: Company made cash interest payments of approximately $347000 in the quarter and.
Miller Kaplan: During the quarter, the company repurchased $15 $4 million of its 2028 notes.
Miller Kaplan: At an average price of 69, 8%, bringing the balance down to $584 million 575000.
Miller Kaplan: At year end.
Miller Kaplan: 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.
Miller Kaplan: 20.
Miller Kaplan: $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.
Miller Kaplan: Mary factors, leading to the impairments or a decline in projected gross market revenue and operating profit margin continued to be well.
Miller Kaplan: 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.
Miller Kaplan: Capital expenditures for the quarter were approximately $1 3 million.
Miller Kaplan: 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.
Miller Kaplan: 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 at an average price of $1 $1 50 per share.
Miller Kaplan: Which 908894 shares of class a stock.
Miller Kaplan: And treasury stock as of December 31, 2024.
Miller Kaplan: During the three months ended December 31, 2024 company repurchased 703292 shares of class B common stock.
Miller Kaplan: Out of approximately $700000 at an average price of $1 <unk> per share.
Miller Kaplan: During the three months ended December 31, 2020 through your company did not repurchase any shares of class a or class b common stock.
Miller Kaplan: As of December 31st total gross debt was approximately $584 6 million.
Miller Kaplan: And then unrestricted cash balance was $137 $1 million.
Miller Kaplan: And net debt of approximately $447 5 million.
Miller Kaplan: Two $103 $5 million of LTM reported adjusted EBITDA for a total net leverage ratio of 433 times.
Miller Kaplan: On March 16, 2025 companies.
Miller Kaplan: The company began investigating an incident involving unauthorized third party <unk> gained access to infiltrate to certain information from.
Miller Kaplan: 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.
Miller Kaplan: Today may eight.
Miller Kaplan: Incident has not impacted the company's operations, our ability to conduct business in the ordinary course.
Miller Kaplan: This time the incident has not had a material impact on the company's financial condition and the results of operations.
Miller Kaplan: Our investigation is ongoing.
Peter: Thank you Peter.
Miller Kaplan: Operator could you.
Miller Kaplan: Oscar.
Miller Kaplan: Any questions or.
Miller Kaplan: 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.
Miller Kaplan: Okay.
Speaker Change: Hey, Peter Thanks for having me.
Speaker Change: Two questions. If I may I guess first just just to clarify your <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.
Gabe: Yeah, So Gabe core.
Speaker Change: Core ex political.
Gabe: And so you'd need to strip out the.
Gabe: Strip out the political from from Q4.
Gabe: I'm just looking back through my notes.
Gabe: Okay, I'm, sorry, I missed that.
Gabe: Yeah.
Gabe: And then maybe while you are lucky.
Gabe: Paul I won't back down.
Gabe: So.
Gabe: Yes, excluding political net revenue was down five 1%.
Gabe: Okay.
Gabe: Alright, and then.
Gabe: 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.
Gabe: And then a similar question on where you're seeing the improvement as you look ahead to Q2 and what's pushing that team.
Gabe: Yeah.
Gabe: So.
Gabe: It is.
Gabe: Absolutely broad softness.
Gabe: Our.
Gabe: Spent a significant amount of time with.
Gabe: Our national wrapped in our teams and.
Gabe: In Q1 your.
Gabe: Basically seeing.
Gabe: Negative double digit pacing across local national and network radio.
Gabe: And.
Gabe: Now.
Gabe: There was political in Q1.
Gabe: But but but not a ton of it.
Gabe: So I think that you're.
Gabe: You're absolutely seeing advertisers.
Gabe: Probably reacting too.
Gabe: And uncertain economy, I think I just read something.
Gabe:
Gabe: The.
Gabe: CEO of Walmart is talking about.
Gabe: Excuse me consumer behavior.
Gabe: Being choppy and skittish the improvement.
Gabe: <unk> for us.
Gabe: As you know is coming and when I say improvement, it's still negative but it's negative.
Gabe: 117 and were.
Gabe: Seeing a.
Gabe: A bounce back in improvement in our in our <unk>.
Gabe: Ohio markets, which.
Gabe: Our.
Gabe: Starting to lap.
Gabe: Significant.
Gabe:
Gabe: The cops as it related to.
Gabe: Excuse me.
Gabe: Is it related to us.
Gabe: Sports betting revenue.
Gabe: 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.
Gabe: Strongly better than in Q2 than it was in.
Gabe: <unk> local at the moment is pacing up in Q2, whereas it was down.
Gabe: 10% call it in Q1.
Gabe: And we're also now.
Gabe: We're seeing improvements.
Gabe: In Nashville, as well so be it.
Gabe: Yes.
Gabe: Again, it's still negative.
Gabe: Okay, that's encouraging.
Gabe: And carrying that out a little further with you in near 25 guide.
Gabe: What are you assuming for the core radio broadcast segment from a topline perspective do you think it can trend back towards neutral Alfred.
Gabe: Are you still assuming its going to be down a little bit for the year.
Gabe: Yeah.
Gabe: But with that.
Gabe: That guide is also right on top of our internal budget and tell I think.
Gabe: Peter.
Peter: Yeah, I mean, it's if you strip out the political and then we've assumed that the call grows a little bit.
Gabe: Number so.
Gabe: If you.
Gabe: 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.
Gabe: So some growth and.
Gabe: And local.
Gabe: Our national ex political and all.
Gabe: Obviously digital.
Gabe: Right right, Okay alright.
Gabe: Let me, let me squeeze one more in and I appreciate the time.
Gabe: Been a lot of talk around deregulation across our broadcasting space I'm curious what opportunities.
Gabe: 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.
Gabe: This new positioning from the from the FCC, Yeah look I've been.
Gabe: I've been pretty vocal.
Gabe: About my belief that youre going to see further consolidation.
Gabe: And the radio sector, you need to see it.
Gabe:
Gabe: And we have over the years, then both buyers and sellers recently we've.
Gabe: A bit more of a.
Gabe: The buyer consolidating and Indianapolis.
Gabe: And Houston.
But we have gotten yeah, we've trimmed our portfolio.
Gabe: Of times and gotten out of places that.
Gabe: Where we werent successful weren't working.
Gabe: For us and put that capital.
Gabe: To work.
Gabe: And either debt reduction or are more accretive acquisitions, and so I think youll see us continue.
Gabe:
Gabe: With that I think that.
Gabe: We're probably in.
Gabe: Better shape.
Gabe: Then you have been a number.
Gabe: Other folks in the sector in terms of our leverage profile, which I think gives us.
Gabe: An advantage too.
Gabe: Two.
Gabe: To be proactive.
Gabe: In terms of opportunity.
Gabe: <unk>.
Gabe: So, but you still have to be careful by even even with consolidation.
Gabe: Youre still dealing with.
Gabe: A negative trend line on the top on the on the top line revenue.
Gabe: Number so.
Gabe: It's very tricky in and because of that.
Gabe: Factor that even if you get de Reg.
Gabe: No.
Gabe: Having new capital come into the industry.
Gabe: We'll probably be a challenge right.
Gabe: And so.
Gabe: I think that.
Gabe: People will look to see if theyre swap opportunities that can be executed in order to put people in better positions in various different markets.
Gabe: Ive always seen that as well.
Gabe: Challenging for people to to align on what's a good swap you just don't see a lot of it.
Gabe: But the state of the industry might end.
Gabe: In the DRAM might make.
Gabe: To make people more motivated.
Gabe: To do that so I would say that it is absolutely a net positive.
Gabe:
Gabe: And.
Gabe: Declining.
Gabe: Industries, you need to create economies of scale.
Gabe: And.
Gabe: So.
Gabe: And I also think being bigger in these local markets. It makes you more of a.
Gabe: Digital.
Gabe: Force for local advertisers because you are covering off more formats, you've got more.
Gabe: Audiences that are that that youre touching and we're seeing significant amounts of digital revenue.
Gabe: Come into the to the Miller Kaplan, our local markets in fact.
Gabe: And about half of our markets, we're seeing more digital revenue than national spot.
Gabe: Which really came to light fourth quarter budget.
Gabe: Process for the first time so yes.
Gabe: Having more.
Gabe: First in the local market.
Gabe: 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.
Gabe: <unk> are eager for some sort of.
Gabe: Solution for folks as balance sheets and.
Gabe: And we'll be constructive and trying to see.
Gabe: Consolidations happen.
Gabe: So it helps the industry and helps the players in it.
Gabe: Very helpful perspective, thanks as always happen.
Gabe: 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 surround.
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 for 2025.
Speaker Change: I think the market does.
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 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> 40 last year and then another 17 this year right, yes, so yeah, so almost $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.
95% of our money will go to continued.
Speaker Change: Our debt reduction.
Speaker Change: And so that's you know.
Okay.
Speaker Change: I think we're also looking at M&A opportunities as the previous year.
Speaker Change: Person was questioning about.
Greg: Greg Yeah and Havent.
Greg: Having cash available to us if we can find acquisitions that accomplish the same thing that our deleveraging, which is which is our goal.
Greg: So we keep that in mind, but we're not going to just have it sitting around in the hopes that.
Greg: An acquisition comes along.
Greg: With that said, we've always been mindful and thoughtful about how we repurchased debt right. So we will.
Greg: Looking we'll by then 10 or 15 or <unk>.
Greg: $20 million.
Greg: Uh huh.
Greg: Chunks.
Greg: Hmm.
Greg: We're not a repurchase or at any cost either right now.
Greg: We've we've definitely tried to be opportunistic on the pricing.
Greg: Of it because that benefits the company.
Greg: Long term and.
Greg: And so if we just if we just go into the market and indiscriminately by debt then it runs away from us.
Greg: <unk>.
Greg: And so now you can.
Greg: 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.
Greg: For periods, even when we had open windows, because we didn't we didn't like the price.
Greg: Okay got it.
Greg: That's very helpful have there been any I know you disclosed the buybacks through January has there been any debt buybacks since then.
Greg: There were a few good sized trades that no.
Greg: Yes, yes.
Greg: That we intentionally.
Greg: Set out a.
Greg: While the window was closed we didn't put a plan in place.
Greg: And and we were out of the market for the last year. It's.
Speaker Change: Have you been out of the market since since that January repurchase.
Greg: Okay. Okay. Good to know thank you.
Greg: 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 key.
Speaker Change: Connected television revenue.
Speaker Change: Yes.
Speaker Change: Yeah, and that's a growth area and we.
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.
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 report 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: He's going to be a significantly less frequently.
Speaker Change: Currently lower probably $4 million lowest levels podcasts and streaming 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 get upstream is the biggest Pos 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 got renegotiated every everybody's got.
Speaker Change: Cost reductions and.
Speaker Change: And so today in that.
Speaker Change: That affects us.
Speaker Change: 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.
Speaker Change: We're going to see that revenue probably reduced by tax.
Speaker Change: All of us and Thats going to and that's going to affect the digital.
Speaker Change: Revenue number yeah.
Speaker Change: C T V plus us so you're going to see you're going to see our digital segment.
Speaker Change: Look weak.
Speaker Change: It was all of those two things so in the most recent Miller kaplan's, we're getting annihilated in digital.
Speaker Change: <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 I don't think so.
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 people can understand the differences.
Speaker Change: Okay.
Speaker Change: That is very helpful color. Thank you guys and.
Speaker Change: Ill 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: Yes.
Moorland Pereira: The good news.
Moorland Pereira: He has his ebitdas gone now 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.
Moorland Pereira: 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.
Moorland Pereira: 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.
Moorland Pereira: Staff reductions so how should we think about cost savings for 'twenty five that'll hit the numbers as well as the cost to achieve.
Yeah.
Moorland Pereira: We are actually and we wanted to get through.
Moorland Pereira: Getting our accounts filed year end et cetera.
Moorland Pereira: And Ah.
Moorland Pereira: And were back focused on what other cost save opportunities that we have we don't have a number yet.
Moorland Pereira: We do feel like we have.
Moorland Pereira: More opportunity.
Moorland Pereira: Two.
Moorland Pereira: To reduce cost.
Moorland Pereira: We did our first.
Moorland Pereira:
Moorland Pereira: Round.
Moorland Pereira: Yeah.
Moorland Pereira: And in Q4 I made it effective.
Moorland Pereira: But by the end of January, but we haven't gotten there yet but you can now.
Moorland Pereira: You can you can expect more don't know how much more yet but.
We're looking at every available opportunity.
Moorland Pereira: Got it and so just to confirm minutes for the 75 million of EBITDA for the year. It does not that that number does not the $75 million does not include any new.
Moorland Pereira: Our projected cost saves that that might come.
Moorland Pereira: Yeah, we made 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.
Moorland Pereira: Any further.
Moorland Pereira: Cost reductions in it I mean, I know that you know.
Moorland Pereira: <unk> given a guide for 2025, which in crude at their expected cost saves.
Moorland Pereira: We've already taken out our cost save.
Moorland Pereira: And we went through the budget process and so anything new.
Moorland Pereira: Would actually.
Moorland Pereira: To help that.
Moorland Pereira: Number going forward.
Moorland Pereira: Great and then last one for me.
Moorland Pereira: 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: And so yeah.
Speaker Change: Yeah.
Speaker Change: And the.
Speaker Change: Media M&A landscape.
Speaker Change: In both.
Speaker Change: TV cable networks.
Speaker Change: 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.
Speaker Change: And.
Speaker Change: And so again, we've always been economic animals, meaning that if.
Speaker Change: If somebody were to make us.
Speaker Change: An offer on pieces of our business that would ultimately be accretive to us from a deleveraging standpoint and would help us.
Speaker Change: It was significantly move the needle we would we would absolutely consider it.
Speaker Change: And.
Speaker Change: 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.
Speaker Change: Two what I call a safe.
Speaker Change: Position and I think that that's safe positions gotta be leverage that's in the.
Speaker Change: <unk>.
Speaker Change: In the mid threes.
Speaker Change: Low threes, maybe even entail.
Speaker Change: But yes, you need buyers yeah Sal.
Speaker Change: Which is what I said earlier, when we talked about DRAM.
Speaker Change: And new capital coming into the business.
Speaker Change: Great. Thank you all for it that's all I have thank you.
Howe Steiner: Our next question comes from the line of how Steiner with BNP Paribas. Please go ahead.
Howe 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.
Howe Steiner:
Howe Steiner: Do you want to hold at least $100 million of cash or is there sort of like a minimum cash balance you want to kind of keep on the balance sheet.
Howe 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.
Howe Steiner: Uh huh.
Howe Steiner: We are targeting to keep on the balance sheet, we've got our undrawn $50 million revolver.
Howe Steiner: So dow.
Howe Steiner: We can definitely see our cash balances.
Howe Steiner: The drop in and still be fine from an operating.
Howe Steiner: Standpoint.
Howe Steiner: Again, our cash.
Howe Steiner: Claim that.
Howe Steiner: Has been opportunistic right like meaning.
Howe Steiner: If we can buy our debt at an attractive price then we'll do it.
Howe Steiner: Price is not attractive then we sit out and so those that.
Howe Steiner: That strategy has allowed us to.
Howe Steiner: Have.
Howe Steiner: More cash on average than probably.
Howe Steiner: People might.
Howe Steiner: Otherwise think that we should but its not because were hoarding cash. It's because we just don't want to go out and bid.
Howe Steiner: Bid up things just because we've got cash right like yeah and.
Howe Steiner: And so because every time, we have bought that now it's.
Howe Steiner: 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.
Howe Steiner: In the most efficient way possible.
Howe Steiner: <unk> continued to get the most deleveraging possible.
Howe Steiner: Got it not a scrap it's not it's not a cash ordering strategy.
Howe Steiner: Yeah understood understood.
Howe Steiner: 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 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 come.
Howe Steiner: 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 and I mean, everybody got all excited when Comcast now.
Howe Steiner: They were doing the spin co yellow.
Howe Steiner: Because they think that that's going to they're going to be the buyer of <unk>.
Howe Steiner: All of the stranded cable assets.
Howe Steiner: I don't know that to be true right now and you know I think the biggest problem that youre going to have with.
Howe Steiner: Cable assets.
Howe Steiner: <unk>.
Howe Steiner: AMC is trading at.
Howe Steiner: 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.
Howe Steiner: 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.
Howe Steiner: So I yeah.
Howe Steiner: I don't.
Howe Steiner: I don't necessarily believe that.
Howe Steiner: Those entities are going to be.
Howe Steiner:
Howe Steiner: The end buyers.
Howe Steiner: For for peoples.
Speaker Change: Assets I do think Jody J I mean, we've seen churn moderate right now.
Howe Steiner: Now.
Howe Steiner: <unk>.
Howe Steiner: I think we're forecasting what mid single digit churn 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: Sure Tim growth virtually 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: 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.
What youre going to own and can try to and can better project. What the earnings from that are down a bit but I don't think just because you got to 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 and Peter.
Alfred: Good morning.
Alfred: Peter could you give an update on where your cash balance stands at this point.
Alfred: 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: Just and negotiate just doing the bond buybacks or experiences.
Speaker Change: There is a significant bid ask when we're in 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 for.
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: Hmm.
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 acquisition 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 more proactively.
Speaker Change: We have no liability management.
Speaker Change: Exercise.
Speaker Change: Yes.
Speaker Change: In process, we have an 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.
Speaker Change: 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.
Speaker Change: 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:
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.
Speaker Change: I see thank you and maybe just one last one for me probably for Alfred Alfred.
Speaker Change: Safe to say that the casino process is off the table for now.
Speaker Change: [laughter] enrichment yeah that's.
Speaker Change: It's safe to say given that they've actually broken ground on the casino and Petersburg.
Speaker Change: 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.
Speaker Change: No.
Speaker Change: We like that business we.
Speaker Change: Are looking for opportunities to.
To invest in it again, our merrell and effort was not around.
Speaker Change: Our bricks and mortar to seeing it bricks and mortar casino it was around their <unk> gaming legislation.
Speaker Change: The last two sessions they've been comp.
Speaker Change: Contemplating.
Speaker Change: And to introduce I gaming.
Speaker Change: And and.
Speaker Change: And we'd like to position ourselves to be in that business in and get a license and so we've been lobbying to be part of the legislation.
Speaker Change: Yes.
Speaker Change: It died again this year.
Speaker Change: But I gaming as of now.
Speaker Change: There is a great business.
Speaker Change: As well it's only.
Speaker Change: And six.
Speaker Change: States.
Speaker Change: Versus 37% 38 states, they actually have land bricks and mortar casinos.
Speaker Change: Operator, so that's been our most recent.
Speaker Change: 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.
Speaker Change: 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 could you 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: I am discussing I mean, obviously I can see I can see what we think it's going to be.
Speaker Change: Sure.
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: But.
Speaker Change: The problem child this year okay.
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.
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.
Operator: Operator, $10 58, we've got time for one more question.
Speaker Change: We have no questions at this time.
Operator: 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.
Speaker Change: [music].
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