Urban One, Inc.

Ladies and gentlemen, thank you for standing by. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties referred to in the 10 Ks, 10 Qs, and other reports it periodically files with the Securities and Exchange Commission, could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of May 5th, 2022. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Urban One may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release which can be found on its website at www.urbanone.com. A replay of this conference call will be available from 12 p.m. Eastern Time, May 5, 2022, until 11.59 p.m. May 9, 2022. Callers may access the replay by calling 866-207-1041 in the U.S. International callers may dial direct area code 402 The replay access code is 744-5259. Access to live audio and a replay of the conference call will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or may be relied upon. I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter D. Thompson, Chief Financial Officer.

Thank you very much, Operator, and welcome to our first quarter results conference call. Also joining Peter and myself are Christopher Simpson, who is our General Counsel, Karen Wishart, who is our Chief Administrative Officer, and Jody Drewer. He is the CFO of TV One. You saw the press release. Really excited about the extraordinarily strong quarter that we had across all of our business units. Big performance, well in excess of I think what most analysts had predicted. We had guided to mid-teens revenue growth in the radio business, but digital came in very strong, and so did TV One. And so really... Really strong performance from our team across all divisions. Very proud of them. I'm going to hit what I think are kind of like the two highlight areas of conversation. First here, our guidance for the year and also an update on Richmond. Given the strength in Q1, we do feel that we will exceed the top end of our $145 to $150 million of EBITDA guidance for this year. Not sure exactly where it's going to land, but we'll beat that. However, it should be noted that we are seeing less robust pacing going forward, and we're We articulated that in the press release, radios pacing mid-single digits. We're also going to start to lap tougher comps from last year. So even with all of that, we still feel like we're going to exceed the top end of our guidance. But I just want to let people know that there are tougher comps coming, and you are starting to see a moderation increase. in the growth rate, in particular in radio. We don't know where the macroeconomic winds are going to blow, but we should be in good shape by the end of this year, but don't just extrapolate Q1's performance forward for the next three quarters. Moving to Richmond, a question that people get, Um, uh, you know, the question that we get, you know, all the time, what's going on. So let me, um, just, uh, articulate, you know, specifically, um, so everybody knows that, um, yes, you know, we had been moving forward to get a second referendum scheduled. The city council of the city of Richmond voted to, um, uh, to petition the court for a second referendum that was back in January. We then went to the Virginia Lottery to get pre-certification for our second referendum. We got that in April, beginning of April. Actually, I think it was beginning of April. Then we went to the Circuit Court of Richmond and petitioned the court for the second referendum to be scheduled. And they granted that for November of this year. And on the 18th of April, that court order became final and unappealable. So there is a referendum scheduled. However, there are still hurdles. There's still a movement within the General Assembly. to put language in their budget that would attempt to block the second referendum and not let us run again until November of 23. And we are in the process of trying to lobby to get that language taken out. Not sure that we will be successful, but that is one avenue. The other avenue is that the governor also has the opportunity to veto language or amend language in bills, including the budget bill. We believe that we have an extraordinarily strong legal argument that the court order is final and unappealable and that the General Assembly cannot retroactively undo a court order. We've spent a lot of time with lawyers looking at this, but by the way, we're probably the only entity that has looked at this in depth. I do believe that it is now starting to come into focus at the legislature level. Because they still don't have a budget deal yet. They're in the process in the Virginia General Assembly trying to negotiate the budget. But there's a strong chance that this language could be in there. And if it is, we're not able to get it either vetoed out or taken out by the legislatures. legislators, then there's probably going to have to be some sort of adjudication process. Not sure exactly how that's going to work yet, if in fact that happens. We think that if that happens, we've got the stronger argument. We're very optimistic that we're going to be running a second referendum, but I don't want to lead anybody to believe that it is a slam dunk. And quite frankly, it's probably uncharted territory. Probably never before Has there ever been an effort to use budget language to retroactively thwart a final and unappealable court order? So some judge may have to make that decision. That's kind of like the worst case scenario. I don't know how that works out on timing. In the meantime, we're doing everything that we can to continue to convince legislators that we've got the stronger position and they should just back down and let this move forward. We're also going to try to convince the governor's office that this is a legal right that they don't want to take away from the citizens of the city of Richmond, Virginia. The city feels like it has, you know, is compelled to move forward with this referendum from a legal standpoint. They've got a court order that is compelling it to do so. And so that's where we sit. You know, it's a better position than we were in in December of last year, for sure. We keep making progress towards it. And I also want to caution people, and I think everybody knows this, The referendum that we ran last time, we lost it 50.85 to 49.15, so a very close vote. We're focused on what can we do differently to get it over, give it over the finish line should we get the opportunity for sure to run it again. But it's a 50-50 proposition. So not dead by any stretch of the imagination, but not a slam dunk proposition. So that is in detail exactly where we're at today. I can't tell you when we'll have certainty on if we're running for sure or not because it's an iterative process of lobbying the legislature, the governor's office, and then ultimately if there is some sort of judicial procedure, I don't know what the timing is on that either. Okay. With that, I'm going to turn it over to Peter so he can give you the details on the quarter and then we'll come back for Q&A.

Thank you, Alfred. So as Alfred said, the first quarter of 22 finished very strongly with net revenue and adjusted EBITDA up across the board over prior year. Consolidated adjusted EBITDA was $42 million for the quarter, up from $30.2 million in 2021. and up from $27.7 million in pre-pandemic 2019. That revenue is up by 22.9% year-over-year for the quarter at approximately $112.3 million. Net revenue for the radio segment increased 13.3% year-over-year in the first quarter. Local ad sales, excluding political, were up 14.8%, and national ad sales were up 6.9%, excluding political. Most of the major advertising categories were up from last year, with the exception of government and public, which was down 13.7%, and automotive, which was down 14.3%. Food and beverage was down 5.9%. We saw a decrease in government-funded pandemic outreach and political spending was down given the Georgia runoff election that occurred in Q1 of last year. was our biggest ad category, driven by a return of spending by law firms and an increase in spending from tax services. That was up 23.3%. The entertainment category was up 116%. Healthcare, retail, financial, travel, and transportation all saw double-digit increases compared to last year. Telecoms was flat. As Alfred mentioned, the second quarter of 22 is currently pacing up in the mid-single-digit percentage range. Net revenue for Reach Media was $10 million in the first quarter compared to $7.8 million in the prior year. The revenue increase was due to strong demand to reach the African-American audience, which drove improved pricing. The biggest revenue increases were on the Ricky Smiley Morning Show and the D.L. Hughley Show. Adjusted EBITDA in our REACH segment was up by 43% for the quarter. Net revenues for our digital segment increased by 49.6% in first quarter to $15.5 million. Sponsored and branded content were the primary direct sales drivers in Q1, as traditional budgets continued to shift to digital and video. Adjusted EBITDA increased for the quarter by 94%. We recognized approximately $56.4 million of revenue for our cable television segment during the quarter, an increase of 22%. Cable TV advertising revenue was up 46.9% excluding political, with a favorable rate volume impact of $5 million, $700,000 of free video on demand, FBOD, $1.5 million increase for Clio TV advertising, and 1,006,000 favorable ADU burn-off and increased advertising related to U1 honors, Urban 1 honors. Cable TV affiliate revenue was up by 1.9% for the quarter, driven by rate increases and converting some free subs to paying subs, which was partially offset by churn. Cable subscribers for TV1, as measured by Nielsen, finished Q1 at 46.8 million, compared to 49.3 million at the end of Q4. And Clio had 41.8 million Nielsen subscribers. We recorded approximately $2 million of cost method income, less administrative expenses for our investment in the MGM National Harbor property for the quarter, compared to $1.7 million last year and $1.7 million in 2019. Operating expenses, excluding depreciation, amortization, impairments, and stock-based compensation, increased to approximately $73.3 million in Q1, compared to $65.2 million in Q1 of 2021. As a result of the continuing reopening of the economy and increase in revenue, the following operating expenses increased from prior year. Programming content and amortization at our cable television segment increased by $2.2 million, Outside services, including contract, talent, and consultancy fees, increased by $2.1 million. Marketing and promotional spending increased by $2 million. Revenue variable expenses increased by $1.9 million. Employee compensation increased by approximately $933,000. Casino chase costs were down by $1.1 million, but are added back to adjusted EBITDA. Radio operating expenses were up 1.3%, with 90% of the revenue increases falling to adjusted EBITDA. Expenses relating to the revenue increase, such as music licensing fees, sales commissions, and bonuses were up. Successful collection efforts drove a favorable bad debt allowance adjustment. Reach media operating expenses were up by $1 million, against a revenue increase of $2.2 million. Affiliate fees and commissions drove most of the increase. Operating expenses in the digital segment were up by $2.8 million, driven predominantly by variable expenses related to traffic acquisition and sales, and also increased video production costs. Cable TV expenses were up $4.6 million year over year. Programming content expense increased by approximately $2.2 million. Sales and marketing spend at TV One was up by $1.9 million. Operating expenses in the corporate and elimination segment were down, including a favorable year-over-year variance for the Richmond Casino Chase costs of $1.1 million. For the first quarter, consolidated broadcast and digital operating income was approximately $48.4 million, an increase of 33%. Interest expense was approximately $15.9 million for the first quarter, compared to approximately $18 million for the same period in 2021. The company made cash interest payments of approximately $30.6 million in the quarter since semiannual debt service payments are due in Q1 and Q3 of each year. Provision for income taxes was approximately $5.6 million for the quarter. The company paid cash taxes net of refunds in the amount of $2,000. Net income was approximately $16.4 million or 32 cents per share compared to $7,000 or 0 cents per share for the first quarter of 2021. Capital expenditures were approximately $1.6 million. The company executed a stock-fest tax repurchase of 2,649 shares of Class D common stock in the amount of $10,000. As of March 31, 2022, the total gross debt was $825 million. Our ending cash balance was $166.4 million, resulting in a net debt of approximately $659.1 million compared to $162 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.07 times. And with that, I'll hand back to you.