Saga Communications, Inc.

Good morning, everyone, and welcome to the Saga Communications second quarter 2024 earnings release and conference call. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Chris Forgey. Sir, the floor is yours.

Thank you, Matt, and thank you to everyone who's taken time to join the Saga Q2 earnings call. We appreciate your continued interest, your questions, your support, and your participation in what we believe is the best media company ever. on the planet. You know, it's been an interesting week this week. Monday marked the largest single-day decline in stocks in Japan since 1987. There have been talks of a recession, a U.S. recession may continue. Tech stocks are overpriced. There's political uncertainty, and there's a rising risk of a wider conflict in the Middle East. The speed and depth of this recent global sell-off is compounded by both the aforementioned and a thinner than usual volumes in the month of August, which traditionally is a quiet trading month. And the Fed's delay in lowering interest rates has probably indicated and impacted the media sector more than any of the other previous countervailing forces I mentioned. Interest rates influence two of the main economic indicators in the media sector, housing starts and automotive purchases. Media tends to feel the impact of this going into and coming out of the economic downturn earlier than other businesses. In other words, we saw this coming. But guess what? We don't control any of it, so we don't spend a lot of time with it. We focus on the things we can control, which we will share with you shortly. But make no mistake, what we are experiencing is not a Wall Street thing. It's a Main Street thing. To illustrate, the categories that experienced the largest decline in Saga during Q2 were restaurants, recruitment, automotive, and grocery. Consumers eating out less, businesses cutting back on hiring, and in many cases, laying off employees, buying fewer cars, and going to the grocery less often. Recently, one of Saga's top performing leaders shared with me that after 20 months of pristine performance, his markets, was now starting to experience some economic downdraft, particularly in one of Saga's core revenue verticals being local direct. He said it's not the big spending local clients who are holding back, it's the clients who spend that $2,000 to $4,000 per month or in that $36,000 per year range who have taken a pause. He said they've assured us they'll be back and will return, so it's not a question of if but when they will return. That being said, this level of Spend makes up the largest percentage of business in our Saga markets, those customers who invest that $2,000 to $4,000 per month in advertising. So in an effort to mitigate some of these types of circumstances over the past 20 months, Saga has been preparing to exit these economic headwinds better trained, better resourced, and better equipped to come out on the other side and super serve our customers and our communities. This is that transformational change and growth you've heard about and heard us talk about. for some time. As you know, Q1 for Saga was a bit of a rough quarter. Q2, as you will hear, is much better. So before Sam gets into the details of Saga's Q2 performance, I just wanted to highlight some of the progress we've made in those areas in which we have created and we control. Our digital or interactive space is up for the second quarter, year over year, $822,000, or 33.4%. E-commerce, which feeds into our local direct silo, is up for the second quarter year-over-year, $348,000, or 98.5%. Even national, thanks in part to our new national sales strategy and the Cats Alliance Network, which was up $440,000, is flat. Nationals, as a result, is flat, slightly up year-over-year for the quarter. Streaming is up for the second quarter, $382,000, or 34 percent and our best of program which is a community online voting process that is used to determine the best dentist the best burger the best pizza etc in a select market this vertical is up 50 percent for q2 and in just the first six months of 24 has surpassed its entire 2023 output in 2023 we did 1.2 million all of 2023 and in 2024 the first six months we've already done 1.3 million in that space. And the online news service, which we will discuss in greater detail following Sam's remarks, was up 344,000 or 159% for the quarter ending June 30, 2024. As an aside, currently users of the online news service total 1.15 million. There are currently 3.7 million page views, 50,000 email subscribers, 19,000 app subscribers, and 193 follow the sites on Facebook. And we're just getting started. So that gives you a little bit of highlight. Sam's going to get into more of the details. So Sam, the floor is yours.

Thank you, Chris. This call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factor section of our most recent form, 10-K. This call will also contain a discussion of certain non-GAAP financial measures. Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data tables. For the quarter ended June 30, 2024, net revenue decreased 1.5% to $28.7 million compared to $29.2 million last year. Political did not have a major impact. As for the quarter, we had $288,000 in gross political revenue this year compared to $108,000 for the same period last year. Station operating expense increased 5.1% to $23.5 million for the three-month period. Station operating income, a non-GAAP financial measure, for the quarter was $6.4 million, and net income was $2.5 million, or 40 cents per fully diluted share. Also, you should note that we recorded a $1.1 million in the second quarter in other income, which was cash received for the redemption of stock that we owned in BMI and when the music licensing organization was acquired. With the purchase of the five stations in Lafayette, Indiana on May 31, 2024, we are now back to reporting on a same-station basis. I'd be remiss if I didn't add Boiler Up to my friends in Lafayette there.