Q1 2025 Spanish Broadcasting System Inc Earnings Call

And welcome to the Spanish Broadcasting's first quarter 2025 conference call all participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Speaker Change: Note. This event is being recorded I would now like to turn the conference over to Mr. Mike Smart jockey and with Investor Relations. Please go ahead Sir.

Thank you and.

Speaker Change: Good day everyone.

Speaker Change: Before we begin please recognize that certain statements on this conference call are not historical fact.

It may be deemed therefore to be forward looking statements under the private Securities Litigation Reform Act of 1995.

Speaker Change: In particular statements about future results expected to be obtained from the Companys current strategic initiatives are forward looking statements.

Speaker Change: Many important factors may cause the company's actual results to differ materially from those discussed in any such forward looking statements.

Speaker Change: Spanish broadcasting system undertakes no obligation to publicly update or revise its forward looking statements.

Speaker Change: Please also note that we will we will be discussing non-GAAP financial measures. The company believes that operating income before depreciation and amortization loss on disposal of assets.

Speaker Change: Impairment charges and other operating expenses, excluding noncash stock based compensation or adjusted EBITDA.

Speaker Change: Is useful in evaluating its performance.

Speaker Change: Because it reflects the measure of performance for the company stations.

Speaker Change: Before considering costs and expenses related to capital structure and dispositions.

Speaker Change: This information is not attended to be considered in isolation or as a substitution for operating income net income or loss cash flows from operating activities or any other measure used in determining the company's operating performance or liquidity that is calculated in accordance with.

Speaker Change: With U S GAAP.

Raul: I will now turn the conference call over to Mr. Raul <unk> com.

Speaker Change: Thank you Mike Good morning, ladies and gentlemen, and thank you for joining me for the U S. P. S first quarter 2025 earnings call.

Speaker Change: During the quarter, we continued to make substantial progress in executing on our strategic plan, while simultaneously significantly reducing our operating expenses.

Speaker Change: In Q1, we also successfully launched what is now the number one Spanish station in Houston.

Speaker Change: Continue to invigorate and screens in our Premier radio brands and on air talent procurement and.

Speaker Change: And implemented important growth initiatives at Musica, the digital music and entertainment ecosystem that houses the massive amounts of audio visual content. The company producers on a daily basis.

Speaker Change: More on that in a moment.

Speaker Change: In line with our industry. Our top line results were impacted by a series of be stabilizing marketplace uncertainties that resulted in an advertiser pulled back during the first few months of the year.

Speaker Change: We were also affected by the wildfires that decimated sectors, Los Angeles County, causing a slowdown in overall economic activity in that market enforcing the rescheduling and cancellation of two of our signature first quarter concerts.

Speaker Change: However, these unavoidable setbacks were significantly offset by our continued focus on reducing operating costs and corporate expenses, which yielded an additional $3 $2 million in savings in the quarter as compared to Q1 of 2024.

Speaker Change: We expect these savings to continue throughout 2025 at a rate of approximately $2 $5 million per quarter without affecting our core infrastructure.

Speaker Change: As evidenced by our operating results.

Speaker Change: We are focused on extending our operating momentum in 2025 by continuing to invest in our leading brands and expanding their distribution. We believe these initiatives combined with our emphasis on cost reduction will strengthen our ability to deliver revenue growth.

Speaker Change: And improved cash flows as we aggregate audience shares and impressions and capture a greater proportion of AD dollars.

Speaker Change: Surely with radio I'm happy to report that SBS, just number one in the key demos across the top Hispanic markets of New York, Miami, Los Angeles, San Francisco, and our amazing startup in Houston.

Speaker Change: SBA stations dominate the important morning drive deeper among both 18 to 34 and 25 to 54 year old listeners the most valued demographic for advertisers seeking brand growth and loyalty.

Speaker Change: These results reaffirm the strength of our content strategy local talent fandom and digital amplification in New York City Ws get key was the number one station among Hispanics of all ages in morning drive and it is remarkably the most listened to station in any language among 25%.

Speaker Change: 54 year old New Yorkers sister station W. P. A T follows right behind in second place with Hispanic morning, listeners ages 18 to 34.

Speaker Change: New York City continues to lead the country with unmatched morning dominance and strong full week performance.

Speaker Change: In Miami our W. RMA station is number one among 18 to 34 year olds, all week long and W. X P. J is number one among 25 to 54 year olds in the market.

Speaker Change: Miami is firing on both ends of the demo spectrum and securing its leadership with stations appealing to younger as well as more adult listeners.

Speaker Change: In Los Angeles, SBS against splits the market with a strong generational reach for W. K, so well in the 18 to 34 and KLA ex in the 25 to 54 demos.

Speaker Change: And in the Bay area, our <unk> Z FM is number one in all three key demos 18 to 34 18 to 49 and 25 to 54.

Speaker Change: Our Houston launch earlier this year was a master class in strategic execution from the creation of the brand and its music mix to securing the iconic grow bring these two host mornings, while integrating our radio digital and video platforms to better capture the markets. Hispanic.

Speaker Change: Listeners and the results are in.

Speaker Change: After only five months on the air K R. O Y is the undisputed Hispanic leader in the market dominating Houston's Hispanic morning listeners and the number two station in the morning in any language in the Houston Metro the fourth largest in the nation displacing established competitors that have operated in that market.

Speaker Change: For decades.

Speaker Change: Impressively K Roy has achieved profitability in only its third month or full on operations.

Speaker Change: Give you an overall impression of the impact of a hit show and the hit radio station in a major Hispanic market considered the phone not only does a top ranking in a major market automatically make you a must buy in terms of local radio budgets, but through the stations affiliation with our own Ied.

Speaker Change: <unk> radio networks. It can now be position doesn't audience aggregators for the purpose of securing network budgets and multimarket national syndication monies.

Speaker Change: In fact, the Britney show started that syndication run last week in a number of Texas markets, including Dallas, San Antonio Austin, and Mccowan as well as Indianapolis.

Speaker Change: In addition through our most because digital streaming the surplus embraces generated by K R. Oi will also improve the revenues for the company's ancillary digital businesses in fact.

Speaker Change: Roy is very well positioned to become a leader among the nation's top 18 to 49 streaming stations right up there with our own <unk> flagship in New York City, the most stream station and the nation.

Speaker Change: At the same revenue enhancements hold true for the debut morning show on our W. S U N F M in Tampa.

Speaker Change: Hosted by Kristy, Balderrama and Mandy download and then the increase the morning show previously ranked as the number one Hispanic radio program in the greater Tampa Bay area. During the last decade, Nandy increase these unmatched charisma and ability to connect with their listeners as earned them the devotion of countless Hispanic.

Speaker Change: Fans throughout the Tampa Bay Metro they are joining SBS further confirms our company's ability to attract and promote the best talent in the industry with identical growth prospects for our network revenues, our syndication monies and our digital streaming monetization on la Musica.

Speaker Change: We are in a historic weightings moment and the strategy behind it has been years in the making we have spearheaded the installation of cameras and automated studio systems across key markets borrowing our music streaming expansion and Youtube growth, which is now separately generating significant revenue for the company and growing.

Speaker Change: This is more than rating success is the result of a multi platform content ecosystem that is increasing brand visibility and engagement across every consumer touch point.

Operator: Good day, and welcome to the Spanish Broadcasting's first quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. Please note this event is being recorded.

And promote the best talent in the industry with identical growth prospects for our network revenues, our syndication monies and our digital streaming monetization on lot more Chicago.

Speaker Change: These efforts continue to position Sps as the next generation media leader for U S. Hispanics are testament to the cultural precision emotional relevance and digital adaptability of our programming.

We are in the historic weightings moment and the strategy behind it has been years in the making we have spearheaded the installation of cameras and automated studio systems across key markets powering our music streaming expansion and Youtube growth, which is now separately generating significant revenue for the company and growing.

Mike Smarjofsky: I would now like to turn the conference over to Mr. Mike Smarjofsky with investor relations. Please go ahead, sir. Thank you.

Speaker Change: Turning to digital or streaming audio business is healthy with a market leading C. P M and almost 3 million unique users consuming our content on a monthly basis and registering an impressive 20% increase in Q1 revenue.

Operator: Have a good day.

Operator: Bye.

Speaker: Before we begin, please recognize that certain statements on this conference call are not historical facts. They may be deemed, therefore, to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements about future results expected to be obtained from the company's current strategic initiatives are forward-looking statements.

This was more than ratings success is the result of a multi platform content ecosystem that is increasing brand visibility and engagement across every consumer touch point.

Speaker Change: Furthermore, our digital Division has launched several new initiatives, which will increase sellable inventory and programmatic revenue. Some of these initiatives include aggregating content formats on la Musica from other domestic and international radio groups, including the multi media network from Mexico and others in order to all.

These efforts continue to position Sps has the next generation media leader for U S. Hispanics are testament to the cultural precision emotional relevance and digital adaptability of our programming.

Speaker: Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statement. Spanish Broadcasting System undertakes no obligation to publicly update or revise its forward-looking statements.

Speaker Change: Consumers, an easy way to find and consume their preferred content.

Turning to digital or streaming audio business is healthy with a market leading C. P M and almost 3 million unique users consuming our content on a monthly basis and registering an impressive 20% increase in Q1 revenue.

Speaker Change: Through our announced partnership with Roku, the leading connected TV streaming platform in the U S. We will expand distribution of our La Musica brand of 40 millions of Roku users in the U S and Mexico access to the new Nunn Bush it got TV, including the $24 seven slate of exclusive content, including the lives.

Speaker: Please also note that we will be discussing non-GAAP financial. The company believes that operating income before depreciation and amortization loss on a disposal of assets impairment charges, and other operating expenses, excluding non-cash, stock-based compensation or adjusted OEBDA, is useful in evaluating its performance. because it reflects the measure of performance for the company's station. for considering costs and expenses related to capital structure and disposition.

Furthermore, our digital Division has launched several new initiatives, which will increase sellable inventory and programmatic revenue. Some of these initiatives include aggregating content formats on la Musica from other domestic and international radio groups, including the multi media network from Mexico and others in order to all.

Speaker Change: Meaning of SBS top ranked radio shows popular hosts and iconic personalities ultimately languish at <unk> will also premier SBS is live concerts, including major events, such as its calabash Miami Bash at Mega Mescaline venue performances as well as its unplug artist showcases.

Consumers, an easy way to find and consume their preferred content.

Speaker Change: No doubt the launch of Lovesick <unk> marks an important acceleration.

Speaker: This information is not intended to be considered in isolation or as a substitution for operating income, net income, or loss, cash flows from operating activities, or any other measure used in determining the company's operating performance or liquidity that is calculated in accordance with U.S. GAAP.

Through our announced partnership with Roku, the leading connected TV streaming platform in the U S. We will expand distribution of our La Musica brand of 40 millions of Roku users in the U S and Mexico access to the new La Musica TV <unk>.

Speaker Change: Because brand evolution as a significantly larger audience will now be able to join our exclusive content offerings.

Speaker Change: Going ahead or multi station portfolio combined with our digital music platform, our iden network syndication affiliation service and our live events business represent a unique opportunity for advertisers seeking to target <unk> three six trillion dollar Hispanic market.

Including a $24 seven slate of exclusive content, including the live streaming of SBS top ranked radio shows popular hosts and iconic personalities ultimately languish at getting me will also premier Sps's live concerts, including major events, such as its calabash Miami Bash at Mega Mescaline venue.

Raul Alarcon: I will now turn the conference call over to Mr. Raul Alarcon. Thank you, Mike. Good morning, ladies and gentlemen, and thank you for joining me for the SPS first quarter 2025 earnings. During the quarter, we continued to make substantial progress in executing on our strategic plan while simultaneously significantly reducing our operating expenses. During Q1, we also successfully launched what is now the number one Spanish station in Houston, continued to invigorate and strengthen our premier radio brands and on-air talent procurement, and implemented important growth initiatives at La Musica, the digital music and entertainment ecosystem that houses the massive amount of audiovisual content the company produces on a daily basis.

Speaker Change: Putting their most coveted younger consumers, we are committed to strategically investing in our growth while continuing to drive efficiencies across our operations to the benefit of all our stakeholders.

<unk> as well as its unplug artist showcases nodes.

No doubt the launch of <unk> marks an important acceleration in the music is brand evolution as a significantly larger audience will now be able to enjoy our exclusive content offerings.

Speaker Change: Finally, I'd like to conclude today with a brief note on the Companys monetization plans for its non core TV assets.

Looking ahead, our multi station portfolio combined with our digital languishing a platform our iden network syndication affiliation service and our live events business represent a unique opportunity for advertisers seeking to target the nation's three six trillion dollar Hispanic market.

Speaker Change: As part of a comprehensive deleveraging plan previously delineated the company announced that it had entered into an asset purchase agreement for the sale of its television stations in Puerto Rico.

Speaker Change: The company expects the transaction to close upon FCC approval in Q3 or Q4 of this year and that the proceeds will be used in the refinancing of its bonds prior to their maturity in March of 2026.

Raul Alarcon: More on that in a moment. In line with our industry, our top line results were impacted by a series of destabilizing marketplace uncertainties that resulted in an advertiser pullback during the first few months of the year. We were also affected by the wildfires that decimated sectors of Los Angeles County, causing a slowdown in overall economic activity in that market and forcing the rescheduling and cancellation of two of our signature first quarter concerts. However, these unavoidable setbacks were significantly offset by our continued focus on reducing operating costs and corporate expenses, which yielded an additional $3.2 million in savings in the quarter as compared to Q1 of 2024.

Including their most coveted younger consumers, we are committed to strategically investing in our growth while continuing to drive efficiencies across our operations to the benefit of all our stakeholders.

Speaker Change: Additionally, the company is confident that it will sell its remaining TV assets as well as its ancillary real estate in the near future.

Finally, I'd like to conclude today with a brief note on the Companys monetization plans for its non core TV assets.

Speaker Change: With that I'd like to thank all of you for joining US. This morning. Your continued support is greatly appreciated by all of US at SBS for those of you that would like to contact us directly with any further questions or comments, please email us at Investor Doc Relations.

As part of a comprehensive deleveraging plan previously delineated the company announced that it had entered into an asset purchase agreement for the sale of its television stations in Puerto Rico.

The company expects the transaction to close upon FCC approval in Q3 or Q4 of this year and that the proceeds will be used in the refinancing of its bonds prior to their maturity in March of 2026.

Speaker Change: SBS corporate dotcom.

Speaker Change: Thank you all and have a good day.

Speaker Change: The conference has now concluded.

Speaker Change: Thank you for attending today's presentation.

Raul Alarcon: We expect these savings to continue throughout 2025 at a rate of approximately $2.5 million per quarter, without affecting our core infrastructure, as evidenced by our operating results. We are focused on extending our operating momentum in 2025 by continuing to invest in our leading brands and expanding their distribution. We believe these initiatives combined with our emphasis on cost reduction will strengthen our ability to deliver revenue growth and improved cash flows as we aggregate audience shares and impressions and capture a greater proportion of ad dollars. Now, starting with radio, I'm happy to report that SPS is number one in the key demos across the top Hispanic markets of New York, Miami, Los Angeles, San Francisco, and our amazing startup in Houston.

The company is confident that it will sell its remaining TV assets as well as its ancillary real estate in the near future.

And with that I'd like to thank all of you for joining US. This morning. Your continued support is greatly appreciated by all of US at Sps for those of you that would like to contact us directly with any further questions or comments. Please email us at Investor Doc relations at Sps.

Corporate dot com.

Thank you all and have a good day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[music].

Raul Alarcon: SPS stations dominate the important morning drive bay part among both 18 to 34 and 25 to 54 year old listeners. The most valued demographic for advertisers seeking brand growth and loyal. These results reaffirm the strength of our content strategy, local talent fandom, and digital amplification. In New York City, WSKQ is the number one station among Hispanics of all ages in Morning Drive and is, remarkably, the most listened to station in any language among 25 to 54 year old New York. Sister Station WPAT follows right behind in second place with Hispanic morning listeners ages 18-34. New York City continues to lead the country with unmatched morning dominance and strong full week performance.

Yes.

[noise].

Raul Alarcon: In Miami our WRMA station is number one among 18 to 34 year olds all week long and WXDJ is number one among 25 to 54 year olds in the market. Miami is firing on both ends of the demo spectrum and securing its leadership with stations appealing to younger as well as more adult listeners. In Los Angeles, SBS again splits the market with a strong generational reach for WKXOL in the 18-34 and KLAX in the 25-54 demos. And in the Bay Area, our KRZZFM is number one in all three key demos, 18-34, 18-49, and 25-54. Our Houston launch earlier this year was a masterclass in strategic execution from the creation of the brand and its music mix to securing the iconic Raul Brindis to host mornings while integrating our radio, digital, and video platforms to better capture the market's Hispanic listeners.

Uh huh.

Yeah.

[music].

Okay.

[music].

Raul Alarcon: And the results are in. After only five months on the air, KROY is the undisputed leader in the market, dominating Houston's Hispanic morning listeners and the number two station in the morning in any language in the Houston metro, the fourth largest in the nation, displacing established competitors that have operated in that market for decades. Most impressively, KROI has achieved profitability in only its third month of full-on operation. To give you an overall impression of the impact of a hit show and a hit radio station in a major Hispanic market, consider the following. Not only does a top ranking in a major market automatically make you a must-buy in terms of local radio budgets, but through the station's affiliation with our own IDA radio networks, it can now be positioned as an audience aggregator for the purpose of securing network budgets and multi-market national syndication money.

Raul Alarcon: In fact, the Britney show started its syndication run last week in a number of Texas markets, including Dallas, San Antonio, Austin, and McAllen, as well as Indianapolis. In addition, through La Musica's digital streaming, the surplus impressions generated by KROI will also improve the revenues for the company's ancillary digital businesses. In fact, KROI is very well positioned to become a leader among the nation's top 18 to 49 streaming stations, right up there with our own WSKQ flagship in New York City, the most streamed station in the nation.

Raul Alarcon: The same revenue enhancements hold true for the debut morning show on our WSUN-FM in Tempe. Hosted by Christy Balderrama and Nandi Davila, the Nandi and Christy Morning Show previously ranked as the number one Hispanic radio program in the greater Tampa Bay area during the last decade. Nandi and Christy's unmatched charisma and ability to connect with their listeners has earned them the devotion of countless Hispanic fans throughout the Tampa Bay Metro. Their joining SBS further confirms our company's ability to attract and promote the best talent in the industry, with identical growth prospects for our network revenues, our syndication monies, and our digital streaming monetization on La Musica.

Raul Alarcon: We are in a historic ratings moment, and the strategy behind it has been years in the making. We have spearheaded the installation of cameras and automated studio systems across key markets, powering our La Musica streaming expansion and YouTube growth, which is now separately generating significant revenue for the company and growing.

Raul Alarcon: This is more than ratings. It's the result of a multi-platform content ecosystem that is increasing brand visibility and engagement across every consumer touch point. These efforts continue to position SBS as the next generation media leader for U.S. Hispanics, a testament to the cultural precision, emotional relevance and digital adaptability of our program. Turning to digital, our streaming audio business is healthy, with a market-leading CPM and almost 3 million unique users consuming our content on a monthly basis and registering an impressive 20% increase in Q1 revenue. Furthermore, our digital division has launched several new initiatives which will increase sellable inventory and programmatic revenue.

Raul Alarcon: Some of these initiatives include aggregating content formats on La Musica from other domestic and international radio groups, including the Multimedias Network from Mexico and others, in order to offer consumers an easy way to find and consume their preferred content. Through our announced partnership with Roku, the leading connected TV streaming platform in the U.S., we will expand distribution of our La Musica brand, affording millions of Roku users in the U.S. and Mexico access to the new La Musica TV, including a 24-7 slate of exclusive content, including the live streaming of SBS's top-ranked radio shows, popular hosts, and iconic personalities.

Raul Alarcon: Ultimately, La Musica TV will also premiere SBS's live concerts, including major events such as its Cali Bash, Miami Bash, and Mega Mezcla venue performances, as well as its Unplugged Artist Showcase. No doubt the launch of La Musica TV marks an important acceleration in La Musica's brand evolution as a significantly larger audience will now be able to enjoy our exclusive content offerings.

Raul Alarcon: Looking ahead, our multi-station portfolio combined with our digital La Musica platform, our AIDA and network syndication affiliation service, and our live events business represent a unique opportunity for advertisers seeking to target the nation's $3.6 trillion Hispanic market, including their most coveted younger consumers. We are committed to strategically investing in our growth while continuing to drive efficiencies across our operations to the benefit of all our stakeholders.

Raul Alarcon: Finally, I'd like to conclude today with a brief note on the company's monetization plans for its non-core television aspect. As part of a comprehensive deleveraging plan previously delineated, the company announced that it had entered into an asset purchase agreement for the sale of its television stations in Puerto Rico. The company expects the transaction to close upon FCC approval in Q3 or Q4 of this year and that the proceeds will be used in the refinancing of its bonds prior to their maturity in March of 2026. Additionally, the company is confident that it will sell its remaining television assets, as well as its ancillary real estate, in the near future.

Raul Alarcon: And with that, I'd like to thank all of you for joining us this morning. Your continued support is greatly appreciated by all of us at SBS.

Raul Alarcon: For those of you that would like to contact us directly with any further questions or comments, please email us at investor.relations. at sbscorporate.com Thank you all and have a good day.

Operator: The conference is now concluded. Thank you for attending today's presentation.