Saga Communications, Inc.

Good day, everyone, and welcome to the Saga Communications first quarter 2026 conference call and earnings release. 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 Forgey. Sir, the floor is yours.

Thank you, Matt, and thank you to everyone who has taken the time to join Saga's 2026 Q1 areas call. We appreciate your continued support, your interest, and your participation in Saga Communications. Again, what we believe is the best media company on the planet. With that, I'm going to turn it over to Sam Bush, our Executive Vice President and Chief Financial Officer. Sam, the floor is yours for now until I take it back from you.

Very good. 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. Before the quarter ended March 31, 2026, net revenue decreased 1.3 million, or 5.6%, to $22.9 million compared to $24.2 million last year. Political is not a factor in the quarter. As for the first quarter in 2025, gross political revenue was $271,000 compared to $275,000 in 2026. For 2026, we currently have $1.4 million in gross political revenue on our books compared to gross political revenue of $650,000 for the whole year in 2025 and $3.3 million for the year in 2024. Digital revenue was up 900,000, or 25.2%, to $4.4 million for the first quarter of 2026, compared to $3.5 million for the same period last year. This growth was not enough to surpass the decline in our traditional advertising revenue, including national, local direct, and local agency. Also, other income was down approximately $200,000. This was primarily due to the reduction in rental income we previously received for the tower sites we sold in the fourth quarter last year. Chris will be adding more color to the various revenue line items, both traditional and digital in his upcoming comments. Station operating expenses were approximately flat with the same quarter last year at 22 million. We do expect our station operating expense to increase 1.5 to 2.5% for the year when including the added expenses that we are taking on to build out the infrastructure related to our digital transformation. We continue to expect that our corporate general and administrative expense to be approximately flat with last year at $12.3 million. As stated in our year-end filings for the company closed on the sale of telecommunications towers and related properties on October 17, 2025, recognizing a gain of $11.6 million. The total proceeds, including both cash and non-cash, were $15.1 million. The net cash proceeds from the sale after expenses was $9.88. This does not include the approximately $400,000 being held in an escrow account pending finalizing the landlord's consent to transfer of one final tower. We anticipate this transfer will take place in the second quarter of 2026. Due to the sale and our continued ability to operate it, we historically have these tower sites we sold. We have a non-cash expense report of approximately $50,000 in station operating expense in the first quarter. We will continue to have a non-cash expense based on the accounting treatment required to report the non-cash gain in each of our future quarters, which will be disclosed in our ongoing releases of violence. The company paid a quarterly dividend of $0.25 per share during the first quarter on March 28, 2026. The aggregate value of the quarterly dividend was approximately $1.6 million. The company also issued a press release this morning simultaneous with an earnings release that Saga's board of directors declared a quarterly dividend of 25% of 26 cents per share on May 6, 2026, with a record date of May 22, 2026, and a payable date of June 12, 2026. With the most recent declared dividend, Saga will have paid over $145 million in dividends to shareholders since the first special dividend was paid in 2012. The company intends to continue to pay regular quarterly cash dividends in the future. The company's balance sheet reflects $30.4 million in cash in short-term investments as of March 31, 2025, and $27.8 million as of May 4, 2026. For the quarter ended March 31, 2026, the company recorded capital expenditures of $780,000 compared to $700,000 for the same period last year. The company expects to expend approximately $3.5 million on capital expenditures during 2026. We also continue to evaluate our non-productive assets with the intent of monetizing those assets at a value that is higher than is recognized in Saga's stock price. This also allows us, from a cash perspective, to offset the cash spend on some, if not all, of the capital expenditures required to continue to operate our core business, as well as invest in our digital transformation. As reported in the fourth quarter, we sold excess land at one of our Iowa Tower sites for a little over $200,000. At the end of this quarter, we sold our old studio site in Springfield, Mass., for approximately $500,000. We expect to be able to report more on this initiative with our second quarter earnings release. The second quarter is currently pacing down, high single digits with digital up 10.2%. We continue to have a ways to go before the increases in digital revenue is larger than the decline in traditional broadcast revenue. To increase the pace of the transformation, 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 creating, 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 ads spent. 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 blended clients. The expense of this initiative will initially be more costly than the revenue it will bring, but it is a necessary expenditure to be competitive with other digital companies and to be better and to better serve our clients in meeting their advertising needs. In totality, this will increase our market expenses approximately $1.5 million for 2026. We have already hired most of the corporate digital staff and are in the process of continuing to find the right individuals at a market level. All said, we believe Saga is in a strong financial position to improve profitability as our digital initiatives improves both local radio and digital revenue. And with Chris, I'll turn it back over to you.