Saga Communications, Inc.

Good day, everyone, and welcome to the Saga Communications fourth quarter and year-end 2025 earnings release and conference call. At this time, all participants are placed on a listen-only mode. It is now my pleasure to hand the floor over to your host, Chris Sporge. Sir, the floor is yours.

Thank you, Matt, and it's good to have you again as our host for the conference call. And I want to thank everyone who's taken the time to join Saga's 2025 Q4 and year-end earnings call. Trust me when I say it is great to be here with all of you today. We appreciate your continued support, your interest, and your participation in Saga Communications. What we believe is the best media company on the planet, and not to mention the most pristine balance sheet to match. So before I make my remarks, I'd like to turn the floor over to our Saga's EVP and CFO, Sam Bush for his comments. 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. For the quarter ended December 31st, 2025, net revenue decreased 2.7 million or 9.3% to 26.5 million compared to 29.2 million last year. A large part of the decline in the quarter was due to reduced political revenue. For the quarter in 2025, gross political revenue was 254,000 compared to 2 million for the fourth quarter of last year. Station operating expense decreased 1.9% or approximately $400,000 to $22.9 million for the three-month period. For the 12-month period into December 31, 2025, net revenue decreased $5.8 million or 5.1% to $107.1 million compared to $112.9 million last year. Almost half of the decrease was due to reduced political revenue. For the year in 2025, gross political revenue was $650,000 compared to $3.3 million for 2024. Station operating expense was flat with 2024 at $91.8 million. We had two unusual factors that negatively impacted our fourth quarter and year-end results, a non-cash impairment charge as well as the previously disclosed retroactive industry-wide rate settlement with two of the music licensing organizations. Recorded in the fourth quarter and also impacting the year ended December 31st, 2025, we recorded a non-cash impairment charge of $20.4 million, which included a charge of $19.2 million, which represents all the remaining goodwill that was previously included on our balance sheet, along with a charge of $1.2 million, representing a reduction in the value of our FCC licenses in one of our markets. We recorded an operating loss of $9.5 million compared to operating income of $1 million for the fourth quarter. Without the impairment charge, operating income would have been $10.9 million for the quarter. We reported a net loss of $6.9 million for the fourth quarter compared to net income of $1.3 million last year. Without the impairment charge, we would have reported a net income of $8.2 million, or $1.27 per share, compared to $0.20 per share for the same period last year. For the year ended, December 31, 2025, we recorded an operating loss of $11 million compared to operating income of $2.4 million for 2024. Without the impairment charge, operating income would have been $9.4 million for 2025. We reported a net loss of $7.9 million for the year ended, December 31, 2025, compared to net income of $3.5 million last year. Without the impairment charge, we would have reported a net income of $7.2 million, or $1.11 per share, compared to $0.55 per share for the same period last year. The music licensing settlement also impacted the operating income as it increased year-end 2025 station operating expense by $2.2 million. Station operating expense for the year would have decreased by 2% in comparison to 2024 instead of being flat year-over-year. We spoke about this more in our third quarter release and conference call. As stated in the press release, the company closed on the sale of telecommunications towers and related property on October 17, 2025. This has actually been in the works for quite a few years, and finally we're able to get the transaction we thought was the best for us and move forward on it and pull the trigger on the closing. We recognized a gain of $11.6 million. The total proceeds including both cash and non-cash was $15.1 million. The non-cash proceeds are the recognized value of the long-term nominal cost leases we entered into as a part of the transaction as we continue to operate at each of the sites we sold. The net cash proceeds from the sale after expenses was $9.8 million. This does not include the approximately $400,000 being held in an escrow account pending finalizing the landlord's consent to the transfer of one final tower. We anticipate this transfer will take place in the second quarter of 2026. This transaction allowed the company to monetize 24 owned towers that were not reaching the full potential of tower space leased to external tower space users. Additionally, the towers were monetized at a significantly higher valuation than was being recognized in the company's overall market valuation. We will have a non-cash expense reported of approximately 50,000 per quarter in 2026, or 200,000 for the year, based on the accounting treatment required to record the non-cash gain given the favorable lease terms we have as we continue to operate on the towers we sold. The company paid a quarterly dividend of 25 cents per share on December 12, 2025. The aggregate value of the quarterly dividend was approximately 1.6 million. The company declared a quarterly dividend of 25 cents per share on February 12, 2026, with a record date of February 26, 2026, and a payable date of March 20, 2026. With the most recent declared dividend, Saga will have paid over $143 million in dividends to shareholders since the first special dividend was paid in 2012. The company also repurchased 219,326 shares of its Class A common stock, for $2.5 million during the year ended December 31st, 2025. The company intends to pay regular quarterly cash dividends in the future. Consistent with its strategic objective of maintaining a strong balance sheet and with returning value to our shareholders, the board of directors will also continue to consider declaring special cash dividends, variable dividends, and stock buybacks in the future. The company's balance sheet reflects $31.8 million in cash and short-term investments as of December 31, 2025, and $31.5 million as of March 9, 2026. The company expects to spend approximately $3.5 million to $4.5 million for capital expenditures during 2026. I want to emphasize that for the quarter, total interactive revenue was up 25.8%, and for the year, up 19.1%. The first quarter is currently pacing down mid-single digits with interactive up 26.4%. We still have a ways to go before the increases in interactive revenue outpace the decline in traditional broadcast revenue. Including political revenue, the second quarter is currently pacing down and we expect to end up down mid-single digits. We are expecting return to revenue growth including political in the second half of 2026 with revenue increasing in the range of mid-single digits. To increase the pace of the transition, we are continuing to move forward with a plan to add resources to build the digital infrastructure we need to process the interactive orders that the blended sales process is developing as well as to provide our local management teams in a number of markets that don't already have them with sales managers as well as digital campaign managers. This will allow our media advisors to spend more time calling on existing and potential clients to solicit new business as they will now have the assistance they need to help build the unique blended campaigns that are required to grow our digital business and mitigate the decline in radio ad spend. It also allows us to have the talent to monitor the performance of the blended campaigns, which will allow us to retain a higher percentage of return blended clients. The expense of this initiative will initially be more costly than the revenue it will bring in, but it is a necessary expenditure to be competitive with other digital companies and to better serve our clients in meeting their advertising needs. In totality, this will increase our market expenses 1.5 million for 2026. We have already hired most of the digital infrastructure team and are in the process of finding the right individuals for sales and campaign management. These hires will occur in the second and third quarters. We expect that having the infrastructure team in-house will reduce our digital fulfillment costs going forward. 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. We currently expect that our station operating expense will be flat for the year as compared to 2025 when not considering the digital initiative expenses and up 3% to 4% when including an estimate for the digital initiative. We anticipate that the annual corporate general and administrative expenses will be approximately $12.3 million for 2026, and flat to 2025. And with that, Chris, I will turn it back over to you.