Cumulus Media Inc.

Welcome to the Cumulus Media Quarterly Earnings Conference Call. I'll now turn it over to Colin Jones, Executive Vice President of Strategy and Development and President of Westwood One. Sir, you may proceed.

Thank you, Operator. Welcome, everyone, to our first quarter 2024 Earnings Conference Call. I'm joined today by our President and CEO, Mary Berner, and our CFO, Frank Lopez-Valboa. Before we start, please note that certain statements in today's press release and discussed on this call may constitute forward-looking statements under federal securities laws. Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management's current assessments and assumptions, and they're subject to a number of risks and uncertainties as discussed in our filings with the SEC. In addition, we will also use certain non-GAAP financial measures. We believe the supplementary information is useful to investors, although it should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks, as well as financial reconciliations to non-GAAP terms, are in our press release and SEC filings. And that press release can be found in the investor relations portion of our website, and our Form 10-Q was also filed with the SEC shortly before this call. A recording of today's call will be available for about a month via a link in the investor portion of the website. Now with that, I'll turn it over to our President and CEO, Mary Berner. Mary?

Thanks, Colin, and good morning, everyone. This morning, I'm very pleased to let you know that we've refinanced our capital structure to secure five-year maturity with very favorable terms through a successful debt exchange and ABL facility upsize and extension. which is an excellent outcome for the company given the generally difficult financing environment for legacy media companies. Specifically, with the completion of these transactions, we've extended maturities to 2029, reduced the principal amount of debt outstanding by approximately $33 million, secured attractive interest rates, maintained covenant-like terms, and increased our AVL facility availability by 25%. Importantly, by addressing the 2026 maturity wall, we now have considerable additional runway with which to continue executing against our strategic, operational, and financial priorities, including accelerating digital growth through ongoing investment, particularly digital marketing services, reducing fixed costs to further enhance our operating leverage, which will be a big benefit to us as broadcast radio demand improves, and continuing to reduce debt to delever. Since our last call, in parallel to refinancing our debt capital structure, we continue to make considerable progress against these priority areas, with the benefit of that progress reflected in our Q1 results. In Q1, in line with pacing guidance, total company revenue was down 2.7 percent, which represented a marked improvement from 2023 trends, and EBITDA was 8.4 million. Overall, digital continued to be an area of strong growth, increasing 7 percent year over year. Once again, our digital marketing services revenue was the lead growth driver, up 25% in the quarter, clearly demonstrating the positive impact of the investments we've made to date. These investments included the expansion of our digital sales force to capture more of the growing DMS space and the ramp up of Cumulus Boost, our portfolio of presence products. which serves as a low-price entry point for advertisers who are new to the company. And as two-thirds of our originally Boost-only clients have added broadcast radio or other digital products to their buys, the benefits of the Boost strategy are compelling. Our digital results also reflect our differentiated go-to-market strategy, which centers on a versatile and well-connected feet-on-the-street sales team offering a suite of digital, audio, and digital marketing solutions. Our ability to walk this full product set into the customer's door continues to pay off as our customers value the personal relationship and our salespeople's ability to tailor and adapt solutions that fit their particular business needs while remaining responsive to the continually changing dynamics of the digital ad market. This approach is yielding impressive increases in both new clients and the proportion of formerly radio-only clients who now buy digital products as well from us. Specifically, in the first quarter, we increased total DMS customers by over 25%. Additionally, we drove a 12% improvement in the percentage of our previously radio-only customers who now buy DMS as well. And we continue to see the ability to upsell these legacy advertisers as a very large opportunity. While we're still in the early stages of executing our DMS growth plan, we remain very bullish about this strategy. Our other two digital revenue streams, podcasting and streaming, also grew up in the quarter, up low single digits year over year. Podcasting revenue performance continued to improve sequentially on a quarter over quarter basis. As I mentioned on our last call, first quarter streaming revenue was impacted by the expiration of a third party fixed rate ad sales contract. However, we remain confident that taking back sales responsibility for our station streaming inventory It's a smart move, both strategically and financially, especially given our successful experience with taking control of the NFL streaming inventory two years ago. In fact, by applying the same approach that drove our success with the NFL stream to the management of our NCAA streaming rights, we increased our streaming affiliates by almost 60% during March Madness and the Final Four run. In aggregate, despite the difficult comp from the expired sales contract, our streaming revenue grew in the quarter, an indication that our new streaming strategy is working. Moving to broadcast radio, the Q1 trends in our national spot and network business significantly improved from 2023. In aggregate, these two national businesses were down mid-single digits during the quarter. As a reminder, our national spot revenue is embedded in the spot revenue line in our earnings press releases. And the combination of it and network revenue makes up about approximately 50% of our total broadcast revenue. Spending by advertisers in certain key categories, including consumer packaged goods and insurance, continue to show meaningful growth. In insurance specifically, a top vertical within the financial category, which is a top five category for us, we're encouraged by the return of several large clients who sat out most, if not all, in 2023. Additionally, we saw strong increases in the food and restaurant, pharmaceutical, and retail categories, as well as a heightened interest in live sports given its strong listener trends. As mentioned on our last earnings call, we booked the most revenue ever to the Super Bowl, and after that, we achieved similar levels of success with the NCAA Men's and Women's March Madness Championships. However, despite these positive indicators, The recovery in national advertising remains very choppy as advertisers across several key categories, including mortgage, banking, and home improvement, continue to cite the overall interest rate environment as a significant obstacle to spending. With respect to local spot, while still dumb, the revenue performance improved from Q4 of 2023. Given historical trends, we would expect that local broadcast radio, which did not drop off as quickly and as significantly as our national radio broadcast revenue, will see a recovery that is more gradual and muted than the rebound we may be starting to see in national. Regarding political, revenue for the quarter was $2.2 million, down 55% from 2020, reflecting less competitive presidential primaries. Looking ahead, national advertisers are continuing to voice a desire to increase spending, but many still cite the uncertain macro environment as an impediment to a consistent return to more normal spending patterns. Further, as we saw in the first quarter, both local and national broadcast clients continue to book quite late, reflecting their lack of visibility into the course of the economy. With that backdrop, our revenue is currently pacing down low single digits for Q2. In this context, we remain acutely focused on disciplined expense reductions. In Q1, results included approximately 4 million fixed cost reduction versus the prior year, which was on top of the 120 million or 26% of our total fixed costs we had already taken out since the pandemic through the end of 2023. We've significantly improved the operating leverage of the company, which will drive EBITDA growth as the advertising environment continues to recover And reducing expenses across multiple facets of our business continues to be one of our primary operating goals. To wrap up, I want to emphasize that given the continued uncertainty of the advertising outlook, our successful completion of what is effectively a full capital refinancing was a critical step and a big achievement for the company. Again, we extended maturities to 2,029. reduced the principal amount of debt outstanding by approximately $33 million, secured attractive interest rates, maintained covenant-like terms, and increased our available ABL liquidity by 25%. Our new capital structure provides us with additional time and flexibility to execute against our key business priorities, celebrating digital growth, reducing fixed costs, and continuing to de-lever our balance sheets. each of which is foundational to our ability to build long-term shareholder value. And with that, I'll return it over to Frank.