Saga Communications, Inc.

release. 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 Borgi. The floor is yours.

Thank you, Matt, and good morning to everyone who's taking the time to join Saga's 2025 Q1 earnings call. We appreciate your continued interest, support, and participation in what we believe is the best media company on the planet. It's been an interesting few months at the Sagaverse. headlined by several spirited conversations and strong opinions expressed on multiple topics surrounding Saga Communications Incorporated. You know, times like these could create a cause to check one's strategy, one's resolve, and ultimately yourself. But before, during, and after the recent conflict occurred, I was constantly reminded of the Stockdale Paradox. You may have heard it. It goes like this. In order to navigate difficult times, You must first confront the brutal facts, accepting the current reality, even if it's difficult. You must maintain faith by having an unwavering belief that you will prevail, no matter how long it takes. You must be consistent, continuing to work through pain and uncertainty. You must acknowledge your mistakes and accept that failure and bad decisions are inevitable. And then acknowledge it to yourself and to the rest of your team. We must overcome temporary difficulties by embracing challenges as temporary constraints and develop to plan to live in the disruption. Finally, we must stay focused and maintain a personal sense of resolve, spirituality, morality, values, and meaning. And we have to review some of those push points that included Saga's potential sale of non-core assets and what to do with the proceeds from those potential sales. For example, we've had multiple interactions with companies that have been interested in one or more of the towers we own. We are currently evaluating a non-buying letter of intent to purchase some of our tower sites. The board is committed to using a significant portion of the proceeds from such a sale for stock buybacks. This may include open markets, block trades, or other forms of buyback as a part of our overall capital allocation plans during the course of the year. Another one was our board composition and refreshment. We're delighted to welcome Mike Scafidi to the board of directors, as Marshall Levato retires from the Saga board. Thank you, Marshall. I wanted to express my gratitude to you personally and professionally for your 40-year contribution to Saga Communications. You will be missed. We will continue to refresh the board through 2025 and beyond. And what seems to be the main push point Saga's digital strategy. I believe this is primarily because of faulty assumptions that reflect a general misunderstanding of Saga's business and the landscape in which we operate. I also believe it's important to further enlighten our shareholders on what our digital strategy is and what it is not. And we'll be doing so in the spirit of an old Chinese proverb that says, tell me and I forget, show me and I remember. involved me and I understand, I think it's important that all of those involved in support and participation of Saga Communications understand what our digital strategy is and is not. Internally, the word we use to describe our digital process is blended, which refers to the blending of radio, search, and display. More on that later, but first I'm going to turn it over. I'm going to take a look at Saga's first quarter performance. In Q1, Saga's top three largest advertising verticals were home improvement, professional services, and automotive, which recently crept back into the top three. The top three fastest-growing advertising verticals were home improvement, healthcare, and real estate. Saga's rapidly growing digital platform is also gaining momentum. In all of 2024, Saga produced $5 million in digital ad revenue. which is defined as search, display, and social. As of today for 2025, we've already generated $5.3 million in search, display, and social, and it's only May 8th. Saga has also experienced four straight months of significant growth in digital ad revenue, February through May. And in the month of May 2025, it will be the largest single month ever in digital ad revenue in Saga's history. Total interactive revenue, which includes streaming, e-commerce, online news, and digital ad revenue combined. Gross revenue in all of 2024 was $14.2 million. As of today, Saga has already written $12.5 million in total interactive revenue. And again, it's only May 8th. So Sam, I'm going to turn it over to you for more detail and some color on Q1, as well as a look ahead to our forward pacing. Sam?

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. So the quarter ended March 31, 2025. Net revenue decreased 4.3% to $24.2 million compared to $25.3 million last year. Station operating expense decreased 2.2% to $22 million for the three-month period. For the quarter, we had an operating loss of $2.3 million compared to $2.4 million last year. Station operating income, a non-GAAP measure, was $2.2 million for the quarter. Capital expenditures were $700,000 for the quarter compared to $1.1 million for the first quarter last year. We had net loss of $1.6 million for the quarter, which was approximately the same as last year. On a same-station basis for the quarter ended March 31, 2025, net revenue decreased 6.6% to $23.6 million, and station operating expense decreased 5% to $21.3 million. Reflecting on operating expenses, it was good to see a 2.2% decrease in station operating expenses for the first quarter. This was the result of an increase in operating expenses of approximately $619,000 for the Lafayette acquisition and a decrease in same-station operating expenses of approximately $1.1 million. The decrease in same-station expenses was primarily due to a reduction in compensation and compensation-related expenses, bad debt, and digital services. as we are now doing some of our digital ad placement in-house. Corporate expenses increased 84,000. This included a 110,000 expense relating to a threatened proxy contest initiated by one private shareholder. There will be additional legal proxy consulting and annual meeting expenses reflected in the second quarter results relating to the resolution of this issue. In addition to what Chris has already said, and we'll talk more about it shortly, I want to point out that for the quarter, Total interactive revenue was up 14% with a 51% profit margin. The profit margin does exclude sales commissions at this time. While still in its infancy from a total dollar standpoint, our online used initiative revenue almost doubled from $285,000 in the first quarter of 2024 to $562,000 for the first quarter this year. Pacing for the second quarter is still uncertain, but is improving over Q1's results. For the second quarter, we are currently facing down mid-single digits. That said, April was not a great month, facing down high single digits, but May showed improvement to down low single digits, and June is currently flat with last year. We expect to continue to see improvement as the year progresses. Interactive spacing is strong for the second quarter, being up 18.4%. It was also encouraging to see that with our ongoing blended initiatives, local direct is also improving from being down high single digits in April to being down mid-single digits in May and down very low single digits in June. Local radio, as you have heard Chris repeatedly say and will continue to hear him say, is what starts the whole blended advertising process. The company paid a quarterly dividend of 25 cents per share on March 7, 2025. The total dividend paid was approximately $1.6 million. To date, Saga has paid over $137 million in dividends to shareholders since the first special dividend was paid in 2012, as well as bought back over $58 million in socket stock. The company intends to pay regular quarterly cash dividends in the future. Further, as a part of our overall capital allocation plan for 2025, Saga intends to use a portion of the proceeds from the potential sale of non-core assets to fund stock buybacks, which may include open market purchases, block trades, or other forms of buybacks. All said, we believe Saga is in a strong financial position to improve profitability as our digital initiative improves both local radio and interactive revenue. As an update for our year-end conference call, and as Chris and I have both talked about, we have entered into a non-binding order of intent to sell some of our tower sites, which we are currently evaluating. We will release more information when it is appropriate as both Saga and the prospective buyer continue the due diligence process. The company's balance sheet reflects $27 million in cash and short-term investments as of March 31, 2025, and $27.2 million as of May 5, 2025. We currently expect to spend between $4 and $4.5 million for capital expenditures in 2025. We also currently expect that our station operating expense will be approximately flat, or decreasing 1% for the year as compared to 2024. This takes into consideration the expense reductions we have and are making in addition to any costs incurred as the expenses are reduced as well as our continued investment in the ongoing revenue initiatives. We anticipate that the annual corporate general and administrative expense will be approximately $12 million for 2025 compared to $12.6 million in 2024. Our tax rate is expected to be 27% to 30% with a deferred tax of 2% to 6% going forward. And with that, Chris, I'll turn it back over to you.