Urban One, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Urban One's second quarter earnings call. All participants are in a listen-only mode and this call is being recorded. 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 August 8, 2024. 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 5 p.m. Eastern Time today, August 8, 2024, until 11.59 or midnight on August 15, 2024. Callers may access the replay by calling 866-207-1041 from the U.S. International callers can call direct at 402-9700-847. The replay access code is 1733-886. 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. and 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. This time I'll now turn the call over to Alfred Liggins, Chief Executive Officer of Urban One, who is also joined by Peter D. Thompson, Chief Financial Officer. Please go ahead.

Thank you very much, Operator, and welcome everybody to our Q2 results conference call. Also joining Peter and I are Karen Wishart, our Chief Administrative Officer, Jody Drewer, who's the Chief Financial Officer at TV1, and Christopher Simpson, who's our General Counsel. We've sent out the press release on our Q2 results, largely in line with, you know, how we've guided in terms of the different segments. Radio, you know, coming in at... minus three with political, minus 5.6 on a same-station basis, ex-political. That's not including the acquisitions that we made with Houston, Texas. It's been a challenging environment in our cable television segment. mostly because of churn and audience delivery, something that's happening throughout the pay TV ecosystem. Peter's going to go into more detail about those results in Q2 in his comments. Q3 radio currently is pacing down 6.9% on the same station basis. It's going to be up 7%, you know, as reported. If you include Politico, it's pacing down mid single digits. However, we are, you know, feeling pretty optimistic about the strength of political and we're starting to see registrations and orders coming in on hold. We actually think it's going to be much more robust than we have currently forecasted. It's real-time action right now in terms of getting it laid in. The new political landscape and the closeness of the current race, I think is going to bode well for us, you know, given our audience. So, uh, that is, uh, yet to be determined. You know, we're not, you know, we're not forecasting, uh, a big, uh, a beat on our political budget as of yet. Um, but, um, but we're very optimistic, but even with the optimism and, uh, in political ad spend coming, uh, There's still softness in our cable television segment, which we have to address. Ultimately, we've got to find more impressions to offset the churn that we're experiencing. and we've got upside coming in terms of our connected TV offering as we switch ad servers that will allow us to better monetize the CTV inventory that we have on some of the new over-the-top platforms. That's not in place yet. We haven't had the benefit of that so far this year, but we will in the second half of this year. But given the softness in the cable TV segment, I think that we are more likely to finish 2024 at the lower end of our EBITDA guidance, which was 110 to 120. And again, we're not sure exactly what we think that the upside on political is yet. We think there is some, but we just want to give an indication that we feel at this point that we're more likely to finish on the lower end of the guidance than the upper end of the guidance. So we can talk more about that during the Q&A. And so at this point, I'd like to turn it over to Peter to go into the details of the numbers, and then we can switch to Q&A. Peter?

Yeah, thank you, Alfred. I'll just walk through the press release numbers. So consolidated net revenue was down by 9.2% year over year for the quarter end of June 30, 2024, at approximately $117.7 million. Net revenue for the radio broadcasting segment was $42 million, which was an increase of 7.2% year over year, but was down 3% on the same station basis, excluding political Net revenue was up by 4.7% year over year, but down by 5.6% on the same station basis. According to Miller Kaplan, our local advertising sales were down 8.5% against a market that was down 7.1%. National ad sales were down 1.6% against a market that was up 7%. Net revenue for the reach media segment was $18.9 million in the second quarter, down 5.6% from the prior year. And adjusted EBITDA was $3.7 million for the quarter, down from $4.6 million last year. Net revenues for the digital segment decreased by 16% in the second quarter to $15.9 million. Direct national sales were down, driven by decreased advertiser demand. but connected TV and podcast revenues showed growth compared to last year. Adjusted EBITDA was $2.9 million, down 52.5%. We recognized approximately $41.5 million of revenue from our cable television segment during the quarter, a decrease of 20.9%. Cable TV advertising revenue was down 26.7%. Delivery erosion continued, down 2%. 30% in total day, persons 25, 54, resulting in an increase of $4.7 million to our audience deficiency reserve. Increased volume through promo conversions partially offset the delivery shortfall. Cable TV affiliate revenue was down by 12.9% with contractual rate increases being offset. by approximately $3.3 million in net subscriber churn impact. Cable subscribers for TV1, as measured by Nielsen, finished second quarter at $39.8 million, compared to $40.7 million at the end of Q1. And Clio TV had 38 million Nielsen subscribers. Operating expenses, excluding depreciation and amortization, stock-based compensation, and impairment of goodwill, intangible assets, and long-lived assets decreased to approximately $93.3 million for the quarter ended June 30, 2024, down 0.4% from the prior year. Radio operating expenses were up 6.4%, or $1.9 million. The Houston radio acquisition, which was effective August 1, 2023, added approximately $2 million of expense year over year. On the same station basis, event expenses were up $700,000, driven by two of the company's tentpole events, which was Birthday Bash in Atlanta and Women's Empowerment in Raleigh. While variable expenses related to revenue, such as sales commissions, bonus compensation, bad debt, and national rep fees were all down, the marketing costs were also down. Reach operating expenses were down by 1.3%. driven by reduced talent compensation and affiliate station fees. Operating expenses in the digital segment were up 1.5%, driven by increased cross-platform marketing expenses and third-party cost of sales on audience extension revenue for digital audio. Operating expenses in the cable TV segment were down 4.7% year-over-year, driven by about an $800,000 favorable programming expense, related to acquisitions that expired in 2023, and reduced sales and marketing expense, which was offset by increased operations costs associated with connected TV and VOD support. Operating expenses in the corporate and elimination segment were down by approximately $900,000, primarily as a result of a $4.5 million decrease for the CEO's TV One Award, offset by a $3 million increase in third-party consulting and audit expenses. For adjusted EBITDA, we added back $4.1 million for non-recurring professional fees related to the mediation and audit efforts. However, the $6.3 million non-cash benefit for the TV1 award is not added back for the current year when assessing adjusted EBITDA. Consolidated adjusted EBITDA was $28.4 million for the second quarter, down 24.2%. Consolidated broadcast and digital operating income was approximately $34.2 million, decrease of 27.7%. Interest income was approximately $1.8 million in the second quarter compared to $1.9 million last year. Decrease was due to lower cash balances in interest-bearing investment accounts. Interest expense decreased to approximately $12.4 million for Q2, down from $14 million last year due to low overall debt balances as a result of the company's debt reduction strategy. The company made cash interest payments of approximately $1 million in the quarter related to the repurchase of the notes. During the quarter, the company repurchased $35.5 million of its 2028 notes at a price of 78% of the past. An impairment charge of $80.8 million, which was non-cash, was recorded in Q2 entirely for the broadcasting licenses in nine of the 13 radio markets in the broadcast segment. The primary factors leading to the impairments were decline in projected gross market revenues and operating profits and an increase in the discount rate. The benefit from income taxes was approximately $18.5 million for the second quarter, and the company paid cash income tax in the amount of $600,000. Net loss was approximately $45.4 million, or $0.94 per share, compared to net income of $70.4 million, or $1.48 per share, for the second quarter of 2023. During the second quarter, the company repurchased $449 million 1,277 shares of Class A common stock in the amount of approximately $900,000 at an average price of $2.06 per share, and 113,283 shares of Class D common stock in the amount of approximately $200,000, an average price of $1.57 per share. Capital expenditures were approximately $2.2 million in the second quarter. As of June 30th, 2024, total gross debt was $614.5 million. The ending unrestricted cash balance was $131.9 million, resulting in net debt of approximately $482.6 million, compared to $110.5 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.37 times, And finally, we'll be timely filing the 10Q tomorrow at some point. So good that we're back on track in terms of meeting our deadlines and filing timely. And with that, I will hand back to Alfred.