Urban One Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 13, 2025

There are 6 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Urban One twenty twenty five First 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 events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties referred to in the 10 Ks, 10 Qs and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward looking statements.

Operator

This call will present information as of 05/13/2025. Please note that Urban One disclaims any duty to update any forward looking statements made in the presentation. In this call, Urban One may also discuss some non GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www.urban1.com. A replay of the conference call will be available from 02:00PM Eastern Daylight Time, May thirteenth, twenty twenty five until 11:59PM Eastern Daylight Time, May twentieth twenty twenty five.

Operator

Callers may access the replay by calling +1 807702030. International callers may dial direct +1 (609) 800-9909. The replay access code is 7968738. Access to live audio and a replay of the conference will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for seven days after the call.

Operator

No other recordings or copies of this call are authorized or may be relied upon. I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Speaker 1

Thank you very much, operator, and welcome everybody to our first quarter twenty twenty five results conference call. As usual joined with Peter and I are Jody Dror, who's our TV One Chief Financial Officer for any TV question Karen Wishart, our Chief Administrative Officer and also Christopher Simpson, who is our General Counsel. You've seen the earnings release q one results largely in line with the guidance that we gave. Q2 radio pacings weakened since our last conference call. They're roughly down about 9% now.

Speaker 1

However, as I've said on the conference call last quarter, our TV ratings seem to have stabilized in Q1 and Q2 and are aligned with what we budgeted. So with that, we're continuing to reaffirm the guidance that we gave of 75,000,000 of EBITDA, something again to note on our 2024 EBITDA, which was about 103, almost 10,000,000 of that was a non cash adjustment for the TV One award associated with my contract. So, if you're looking at apples to apples, it's roughly about $92,000,000 of cash EBITDA down to 75. Still not a stellar year over year performance going backwards, but what we have expected. So with that, we have said that we're going to continue to focus on our cost controls, managing our leverage and maintaining a strong liquidity position.

Speaker 1

One of the things that came up in the last conference calls, what were we going to do with our hundred and $37,000,000 of year end cash. And since that conference call, we've actually bought back in the open market $88,600,000, of our debt at a average price of about 53.9. And we've reduced our gross debt down to $495,900,000 and we're still sitting on, about $80,000,000 of cash on hand at present with an undrawn revolver. So, you know, we continue to be focused on, deleveraging, and maintaining the liquidity position. And so in a difficult environment, you got to make sure that, you know, you're you're prudent and you and you make, yeah, moves that, you know, keep you in, you know, the best possible position of flexibility in terms of leverage and expense control, and that's what we're really focused on.

Speaker 1

So, with that, I'm going to turn it over to Peter to get into the specific details of the numbers and then we'll come back to the coverage.

Speaker 2

Thank you, Alfred. So consolidated net revenue is approximately $92,200,000 down 11.7% year over year. Net revenue for the Radio Broadcasting segment was $32,600,000 a decrease of 10.3% year over year. Excluding political, net revenue was down 7.7% year over year. According to Miller Kaplan, our local ad sales were down 12.8% against our markets that were down 13.2%.

Speaker 2

National ad sales were down 14.6% against our markets being down 11.6. Our largest radio ad category was services, which was up 11% driven by legal services. Travel and transportation was up 17%, but that's our smallest category. Telecom financial categories were up low single digits. All of the other major categories were down, including healthcare, entertainment, retail, government, auto, food and beverage.

Speaker 2

Net revenue for each media segment was $5,900,000 in the first quarter, which was down 30.9% from the prior year. And adjusted EBITDA reach was a loss of $600,000 for the quarter. The combination of client attrition and lower average unit rates drove that decline. Net revenues for the digital segment were down 16.2% in Q1 at $10,200,000 Audio streaming revenue was down by $2,100,000 in the quarter due to the renegotiation of an exclusive third party deal. And that impacted adjusted EBITDA, which was $58,000 compared to $2,300,000 in the prior year.

Speaker 2

We recognized approximately $44,200,000 of revenue from our Cable Television segment during the quarter, a decrease of 7.9. Cable TV advertising revenue was down 6.3%. TV One delivery declined 18% in total day persons 2,554, which is partially offset by an increase in Clio TV, which was up 29% in total day persons 2,554 delivery. And also favorable AVOD and FAST revenue of $1,100,000 which resulted in a net ad revenue decline of $1,700,000 Cable TV affiliate revenue was down by 10%, driven by subscriber churn, which is about 3,300,000 partially offset by $1,000,000 which is a combination of subscriber rate increases and the launch of NOW TV. Cable subscribers for TV One, as measured by Nielsen, finished Q1 at $35,600,000 compared to $37,200,000 at the end of Q4.

Speaker 2

Clio TV had 35,000,000 Nielsen subs. Operating expenses, excluding depreciation and amortization, stock based compensation and impairment of goodwill, intangible assets and long lived assets decreased to approximately $80,700,000 for the quarter, a decrease of 8.6 percent from the prior year. The overall decrease in operating expense was primarily due to lower third party professional fees in the corporate segment, lower content expenses for cable television and lower employee compensation as a result of recent cost savings measures. Radio operating expenses were down 2.9 or approximately $900,000 driven by lower employee compensation costs. Reach operating expenses were down 1.7%, again driven by lower employee compensation costs.

Speaker 2

Operating expenses in the Digital segment were up 3.2% and that was driven by higher traffic acquisition costs, partially offset by lower employee compensation. Operating expenses in the Cable TV segment were down 10.8% year over year, driven by lower programming content expense, on air promotions and employee compensation costs. Operating expenses in the Corporate and Eliminations segment were down by approximately 3,800,000 driven by lower third party professional fees. Consolidated adjusted EBITDA was approximately $12,900,000 down 42.2%. Consolidated Broadcast and Digital operating income was approximately $23,000,000 a decrease of 28.1%.

Speaker 2

Interest and investment income was approximately $1,000,000 in the first quarter compared to $2,000,000 last year. The decrease was due to lower cash balances and interest bearing investment accounts. Interest expense decreased to approximately $10,900,000 for Q1, down from $13,000,000 last year due to the lower overall debt balances as a result of the company's debt reduction strategy. The company made cash interest payments of approximately $21,600,000 in the quarter. During the quarter, the company repurchased $28,200,000 of its 2028 notes at an average price of 58% of par, bringing the balance at quarter end to $556.348 In April, the company repurchased an additional $60,400,000 in notes at an equity price of 51.9%.

Speaker 2

And as Alfred said, that brings the current balance on the debt to $495,930,000 We recorded $6,400,000 in non cash impairments in Q1 against the carrying value of the FCC licenses in five radio markets, which are Dallas, Indianapolis, Raleigh, Philadelphia and Cleveland. The provision for income taxes was approximately $15,700,000 for the first quarter as we booked an additional $14,600,000 valuation allowance against our NOL balances. The company paid cash income taxes in the amount of $33,000 Capital expenditures approximately $2,500,000 Net loss was approximately $11,700,000 or $0.26 per share compared to net income of $7,500,000 or $0.15 per share for the first quarter of twenty twenty four. During the three months ended 03/31/2025, the company repurchased 449,200 shares of Class A common stock in the amount of approximately $700,000 at an average price of $1.48 per share. And we also repurchased 303,622 shares of Class D common stock in amount of approximately $300,000 at an average price of $0.87 per share.

Speaker 2

As of March 31, total gross debt was approximately $556,300,000 ending unrestricted cash was $115,100,000 resulting in net debt of approximately $441,300,000 compared to $94,100,000 of LTM reported adjusted EBITDA for total net leverage ratio of 4.69 times. And finally, we recast the comparable periods for 2024 to reflect the move of $7,900,000 of CTV revenue from digital to TV and also the reapportionment across platform sales and marketing expenses. We talked about that on the last earnings call, a number of questions came up. So, we thought we'd just give you the comps from prior quarters with those recast numbers. And with that, I'll hand back to you, Alfon.

Speaker 1

Thank you very much. Operator, we'll go to the lines for Q and A.

Operator

We will now begin the question and answer Our first question will come from the line of Ben Briggs with Stonix Financial Inc. Please go ahead.

Speaker 3

Hey, good morning, guys. Thank you for taking the call. Absolutely. Yes. So a couple here.

Speaker 3

So first of all, I do notice that you guys did some cost cutting during the quarter. The both the programming and technical expense line and SG and A and corporate line, I think, were down a little bit. What other levers do you have that you can pull to kind of control costs as the year goes on and in the future?

Speaker 1

Yeah. I mean, I said last conference call that we did a bunch of year end last year cost cutting measures and I think it saved us about $5,000,000. We are focused on taking another look at that for this year. We haven't got there yet. Probably we'll focus on that so that it's done by the middle of the year.

Speaker 1

Really focused on kind of like an June execution date on that. And so look, don't want to go into specifics. Quite frankly, I don't have all of the opportunities off the top of my head. And even if I did, I certainly wouldn't want to announce them on a conference call. Yeah.

Speaker 1

Yeah. Let's say we do believe that there are other opportunities and plan to take advantage of them but we're really managing to our guidance and then looking to see if we're doing better. Our guidance of 75 does not include any back half cost cuts that we might find.

Speaker 3

Got it. Got it. That's helpful. Thank you. So that's a great segue into my next question, which is, I feel like you had indicated that we should expect the majority of EBITDA to come in the second half of twenty twenty five.

Speaker 3

Am I saying that again?

Speaker 2

On. Yes. Sorry,

Speaker 3

I apologize. I said I feel like you had indicated that you're expecting the majority of EBITDA this year to come in the second half of the year. Is that do I remember correctly? Is that accurate?

Speaker 2

Yes. So more than half for sure.

Speaker 3

Right, right. Can you give any guidance for what you think the second quarter has in store as far as EBITDA

Speaker 1

expectations?

Speaker 2

I don't think we're going to give specific guidance. I think from the pacing, Alfred said that radio is weak and right, we're relative to where we were last So we should expect that to be down. Digital almost all of that profit is forecast to be in the back half of the year. So not going to be strongly profitable in the second quarter. And then TV One ratings down a little bit, down a bit being compensated for by Clio.

Speaker 2

We're hitting our budgeted numbers in terms of delivery. And so there might be some upside in the back half of the year, but looking at where radio is at, that might need to wash against radio. So I think Q2 will be a little bit better than Q1, but similarly weak and then we got to deliver in the back half of the year there.

Speaker 3

Got it. Got it. And then finally, obviously, have been additional debt repurchases. I know that the market likes to see those. Should we expect further debt repurchases as the year goes on?

Speaker 3

Or is it more?

Speaker 1

I've been told many times before, the best predictor of the future is our actions of the past.

Speaker 3

You've heard that too?

Speaker 1

I have. I have. Yeah, I mean, look, we try not try, we deliberately are opportunistic. We don't like it when announce, hey, we're going to go in the market, and then everybody looks at that as an opportunity for our debt to trade up and expects us to pay more. So we're in, we're out, we got a price that we want to try to get it at.

Speaker 1

It's nothing personal to debt holders, but at the end of the day, buying back debt at a discount for those funds that want to sell ultimately helps the company. And so, we'll continue to do that. Almost always though, any time we go into the market, the price goes up. Just because we're the most motivated buyer. And I think at the end of the last conference call, debt had been trading at like 49.5.

Speaker 1

And then when we got to the market literally that same day or shortly thereafter, I think our cumulative purchases during that period of time were almost at 52. And it's good for everybody. But as you can see, the vast, vast, vast majority of our capital going to that. We took out tens of millions of dollars of debt since the last call. And look, unfortunately, I think we're continuing to still be in a position to be impactful with that.

Speaker 3

If you were to draw the revolver, I don't think that would restrict you at all in debt buybacks, would it?

Speaker 1

No. No. Yeah. I mean I mean, there yeah. Look.

Speaker 1

It's not most of most of people on this call are, you know, are are are are are and smart investors. And so, it shouldn't be lost on anybody that we do have an undrawn revolver, right? So, that capital is available for all things, including if we used all of our cash to buy back debt and we needed operating funds, right?

Speaker 2

To do that.

Speaker 1

So our liquidity position remains very, very solid and gives us some options.

Speaker 3

Okay, all right. I think that's gonna be all from me right now. I'll give some other people the chance to ask questions.

Speaker 1

Thanks, Ken. Thank you very much. Next question, operator?

Operator

Our next question will come from the line of Aaron Watts with Deutsche Bank. Please go ahead.

Speaker 1

Hey, Aaron.

Speaker 4

Hey, guys. Thank you for having me on. A couple of questions around the ad environment on the radio side. I think you noted additional weakness crept in between your last call and today.

Speaker 3

To the

Speaker 4

extent we continue to get positive headlines out of D. C. Like what happened this week, Do you think advertising can flip back positive as quickly as it softened? What do you think your ad partners need to see or hear to start ramping spend back up?

Speaker 1

I mean, I think they need to know what their expense profile is going to look like going forward. And with the tariff picture moving weekly, changing weekly, difficult to forecast that. So, unfortunately, Procter and Gamble and General Motors don't share their ad strategies with us. Actually, it's really interesting. I've had a couple high level conversations with some monstrous advertisers.

Speaker 1

You know, and and, you know, most of these big guys, they don't wanna disclose what their ad budgets are. Right? Like, you know, those that, you know, that's proprietary information. Right? How much you're you're spending, to compete in the marketplace.

Speaker 1

So, strategy, really core strategy that would result in how much money is going into the ad market into which verticals is not readily available. And I get it. It's really kind of a trade secret for them. So, we just don't have visibility into that. But I can tell you, we do know when their ad budgets are getting cut or put on hold, and then they will tell you it's because of uncertainty.

Speaker 1

It's no secret that you've seen reports that the consumer is cooling down, cooling off or whatever, spend is slowing down, uncertainty. At the end of the day, regardless of where the tariffs land, they're going to land at some higher level than they were before. Right? And I saw something this morning on CNBC where they were talking about the forecast of some of these companies out there, which assume that they're going to take all of the additional tariff expense and roll it into pass ons to price increases, which ultimately is inflationary, which one would think there's a knock on effect on the recession. But I'm not an economist.

Speaker 1

I don't know if this economy has been chopping down trees and plowing through all kinds of headwinds. So far be it for me to predict what's truly gonna cause a recession and what its ultimate impact on the ad market now is. It's not positive at this point in time. And so I guess in a roundabout way, this is just Alfred Liggins' opinion period in this story. I do not think you're going to see a positive ad rebound this year.

Speaker 1

Once you take expense off the table in a corporate environment, it generally stays off the table for the remainder of that budget cycle.

Speaker 4

Yeah. Now that all makes sense. So more a hope of stabilization than any real positive, significant bounce this year.

Speaker 1

Yeah. Yeah. Okay.

Speaker 4

And I I did hear you talk about national being a driver of of the weakness right now. How have your more local SMBs you work with been behaving comparatively? And if you have it, I don't know what's your split between national and local these days?

Speaker 1

What is it, Peter? Is it seventy fivetwenty five or 5?

Speaker 2

It's more seventy fivetwenty five. 70 fivetwenty five. That's sort of excluding the I

Speaker 1

went through with the radio guys and I have a weekly call with them now. And look, they were crowing, Yeah. Local's actually not doing that bad. Right? Like, I think they were, you know, telling me that our local, you was only down it was, like, less than 2%.

Speaker 1

Was, like, one and a We were looking at pacings, you know, about, you know, a week ago or two weeks ago. The driver for us is national, and, also, we're having digital issues for a couple reasons, and I articulated them about changes in our podcast and streaming deals that are out there. And also the fact that we're underpenetrated in our local digital efforts. And so, the answer to your question is local radio business is down, but it's not down double digits, not down as dramatically.

Speaker 1

It's down low single digits. So, I would say that that's a positive sign. We're going to lap our digital issues, and we're looking to improve our digital efforts. And so, one would think that I mean, you've got two things that drive national ads, right? You've got the market sentiment, And when I say market, consumer sentiment, what advertisers think about consumer activity and their prospects for business.

Speaker 1

But you also have the continued digital transition away from analog into digital platforms. So national definitely is the negative spot right now. And I hope that abates at some point in time after stability comes into play.

Speaker 2

And just to clarify, just in terms of national dollars and radio dollars for radio, it's two to one. So for every dollar on national, we do roughly $2 of local. The difference in the 75, 20 five year old is digital on other. So as a percentage of the total is a different number, but relative to each other, it's two for one.

Speaker 4

Okay. Got it. And Alfred, just one last one on what you were saying there at the end around digital. Once you iron out your kind of issues that you highlighted, do you still see growth opportunity across podcast? And I know digital means different things to different radio groups, but podcast, local digital, whatever it means for you, market services.

Speaker 1

Yeah. Look, our growth area for us is we have not played in the local digital area. We've had all of our efforts focused on our national digital. And I wanna say all of our efforts, yeah, because we've got we do have a local digital business, but we're probably doing high single digits of revenue when our competitors are doing, having it be 20% of their revenue. And so, yeah, I do think that there are areas of growth for us in that area doing a better job there.

Speaker 1

We don't cross pollinate our national products into the hands of our local sellers intentionally at this point in time. IHeart does, Odyssey has started to do it as well. And we've got a lot of national products that would give local sellers some great tools to go out and help local advertisers. So that's something that, we're focused on, and will create a growth opportunity as well.

Speaker 4

Alright. Great. Appreciate all the time. Thanks

Operator

And our next question comes from the line of Ken Silver with Stifel. Please go ahead. Ken, your line might be on mute.

Speaker 5

Hey. Now I'm I'm I'm here. Thanks. Sorry about that. Hey, Alfred and Peter.

Speaker 5

Thanks for the time.

Speaker 1

Sure.

Speaker 5

I guess a few few questions. One is if we look at the cable TV revenue, can can you break it out between, you know, carriage fees and advertising?

Speaker 1

Sure.

Speaker 2

Obviously, for the quarter, we do that on page five of the press release.

Speaker 5

Oh, did I miss that? Okay.

Speaker 2

Yeah. So you can you can see that if we go to page seven. I don't know if you have it in front of you, but you

Speaker 5

I do. Okay. I will. I apologize. If you broke it out, I will go.

Speaker 2

No, no. That's okay. But it's there and if you need to know roughly what we think it's gonna be for the year, can just reach out and I'll

Speaker 5

Sure. Sure. And on the carriage side, do you have what is your renewal schedule with all the large cable and other MVPDs?

Speaker 1

Charter is up in the fourth quarter. October, is it?

Speaker 3

In the year.

Speaker 1

It's in the year. Charter is up at the end of the year. And and Verizon is up, but they've got an option. Yeah. And and and then we have NCTC, which is in September.

Speaker 1

So we have NCTC, Verizon, and Charter, you know, up this year.

Speaker 5

And then what about and next year, is it heavy or light next year?

Speaker 1

Comcast comes a year later. Right?

Speaker 2

DirecTV or AT and T and Comcast.

Speaker 1

AT and T and Comcast a year later.

Speaker 5

Okay, got it. And then you mentioned in your prepared remarks that ratings were down at TV One. Can you just help us understand that a little bit better?

Speaker 1

Said they stabilized, right? Oh, Sorry. Yes, they were down a lot last year, what, 20%? And they bounced up off of their lows of fourth quarter. And I think we budgeted what our ratings were in fourth quarter for all of '25.

Speaker 1

And fourth quarter was kind of a low, and we're actually exceeding that year to date, exceeding that budgeted number. So we're averaging higher than our fourth quarter low, which, you know, is which is good. In Clio, especially. And and and and and on our second network, Clio,

Speaker 5

Okay. And then, obviously, you're using a lot of cash flow for bond buybacks, which I think we all think is a good use of capital. But are you in terms of programming spend, is it sort of steady as she goes? Or do you have sort of, you know,

Speaker 1

potential to to grow it a lot? It's it's it's it's actually it's actually down a bit, I wouldn't say majorly. I would say maybe down 10% programming spend.

Speaker 3

Oh, yeah. Well, the the biggest down the biggest drop quarter over quarter was For January.

Speaker 1

Yeah. Yeah. So we we have an annual award show that we didn't do.

Speaker 3

Yeah. And then for the year, yeah, 10%. Ten % for the year. Real And

Speaker 1

and and

Speaker 5

no I mean, obviously, there's a lot of content out there. No plans to to sort of try to reinvigorate the business and spend a lot of money on programming.

Speaker 1

Well, the problem no. There's not a plan. Look. We've we've got we are thinking through now what our options are to grow our TV business because we have to get more delivery. But the idea that you go spend more money just to put it on your linear networks when the universe is shrinking on its own means that you're just going to lose on those content investments because you're going to lose audience regardless of any way you look at it.

Speaker 1

However, there are multiple new ways of delivering content. We continue to expand our fast channel distribution. We're looking at other ad supported distribution opportunities and potential business models. And so I think that is critical that we invest and move in that area. You will not see us just investing in content just to put it on this existing platform.

Speaker 1

You will potentially see us investing in content in combination with an expansion of new distribution opportunities in the FAST and AVOD environment, because we need other places to be able to monetize that content. And so we're formulating those strategies right now. And you gotta approach that at the same time you're continuing to manage your balance sheet, etcetera.

Speaker 2

Ken, just going back to your original question, I was just looking at the relative breakout for the year, a little over 50% TV One's revenue will be ad dollars and a little under 50% will be affiliate. And that's flipped from a few years ago where we used to be like 55% affiliate, 45% ad. Obviously, attrition has reduced the affiliate line.

Speaker 5

And

Operator

that will conclude our question and answer session. I'll turn the call back over to Alfred Liggins for any final comments.

Speaker 1

Thank you, everybody, for your support and continued interest in the story, we'll talk to you next quarter.

Operator

That concludes today's call. Thank you all for joining. You may now disconnect.

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Urban One Q1 2025
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