Urban One, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Urban One 2024 fourth quarter earnings call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement. 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 March 27, 2025. 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 the conference call will be available from 2 o'clock p.m. Eastern Daylight Time, March 27, 2025, until 1159 p.m. Eastern Daylight Time, April 3, 2025. Callers may access the replay by calling 800-770-2030. International callers may dial direct 609-800-9909. The replay access code is 340-7726. Access to live audio and a replay of the conference 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 will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Thank you very much, operator, and welcome to our fourth quarter conference call. Also joining us, as usual, is Jody Drewer, who's the Chief Financial Officer at TV1, and also Karen Wishart, who's our Chief Administrative Officer. As the press release stated, we ended up coming in at the middle of our guidance for adjusted EBITDA at $103.5 million. That number in Q4 was boosted by a pretty strong performance with our political advertising efforts. However, we did see continued headwinds in our cable TV business due to churn and underdelivery. That actually has started to stabilize in Q1, so that's good news. Unfortunately, the radio business continues to see downdrafts in Q1 with pacings currently minus 13.6. However, they are improving going into Q2 with patients down just 1.7. We're optimistic that things will continue to improve in our radio business, but with the downdraft, we've been taking precautions with our cost containment and further debt reduction. We had a staff reduction in Q4 of about 5%, which is about 64 people of our workforce, which has saved us about $5 million a year. Going into 2025, it's going to be all about cost containment and also continued debt reduction. We're standing in a pretty strong liquidity position as of the end of the year with about $137 million. of cash on hand. We are prepared to offer a 2025 guide even though it's early in the year, but we are going to guide to $75 million of adjusted EBITDA down from the 103.5 in 2024. It's going to be a combination of the weaker radio, primarily driven by a lack of recurring political advertising. We're going to be down a bit in TV, but again, we feel like that that is stabilizing as well. So a $75 million guide for 2025, down from the 103.5 in 2024. continued cost containment and debt reduction. We're going to be able to talk about more when we get to the Q&A section, if anybody has questions. Right now, I'm going to let Peter go through the numbers from 2024 and the quarter.

Thank you, Alfred. So, consolidated net revenues were down 2.7% year-over-year the three months end of December 31st, 24. approximately $171 million. Net revenue for the radio broadcast segment was $47.7 million, an increase of 14.5% year-over-year. Excluding political, net revenue was down 5.1% year-over-year. According to Miller Kaplan, our local ad sales were up 0.1% against our markets that were down 5.2%. and national ad sales were up 35.4% against a market that was up 28.4%. Political advertising drove the growth in the national marketplace and for our stations and was our largest advertising category for the quarter. Second largest category for us was services, which was up 12%, driven predominantly by legal services. Healthcare, retail, auto, financial, food and bev, all down year over year. Telecom, travel, and transportation categories were up. Net revenue for the REACH media segment was $9.6 million for the fourth quarter, down 10.7% from prior year. Adjusted EBITDA was $2.9 million for the quarter, a decrease of 15.4%. While REACH benefited from $1 million in political advertising, client attrition and lower average unit rates offset those dollars. Net revenues for the digital segment were down 3.1% in Q4 at $20.5 million. Direct national sales were down, driven by decreased advertiser demand. However, political advertising was $2.4 million, and both connected TV and podcast revenue were up from the prior year. Adjusted EBITDA was $5.3 million, which was an increase of 50.7%. We recognized approximately $39.8 million of revenue from our cable television segment during the quarter, which was a decrease of 15.9%. Cable TV advertising revenue was down 21.4%. Delivery declined 36% in total day, persons 25, 54. We had approximately 6% fewer units converted to ad inventory, about 4,000 more units allocated to to help mitigate the delivery impact, and that was partially offset by favorable AVOD and FAST revenue of $1.3 million. Overall, that resulted in an ad revenue decline of $5.8 million. Cable TV affiliate revenue was down by 9.9%, driven by the increased subscriber churn, which was a $3.3 million loss. partially offset by $1.3 million in subscriber rate increases and the launch of Now TV. Full-year subscriber churn was minus 9.5%. Payable subscribers for TV1, as mentioned by Nielsen, finished Q4 at $37.2 million compared to $39.1 million at the end of Q3. Clio TV had 36.4 million Nielsen subs. Operating expenses excluding depreciation and amortization, stock-based compensation and impairments of goodwill, intangible assets and long-lived assets decreased to approximately $91.1 million for the quarter ended December 31, 2024, which was a decrease of 13.8% from prior year. The overall decrease in operating expenses was primarily due to lower corporate SG&A expenses driven by a reduction in the CEO's TV1 award and lower overall expenses in the digital segment due to lower sales and marketing related costs. Radio operating expenses were down 5.4% or $1.9 million driven by a favorable adjustment to the bad debt reserve. Reach operating expenses were down by 7.8% driven by lower talent and staff incentive based compensation. Operating expenses in the digital segment were down 16.1%, driven by lower sales and marketing costs and lower performance . Operating expenses in the cable TV segment, up 4.1% year over year, driven by increased rating service costs and connected TV support costs. Operating expenses in the corporate and elimination segment were down by approximately $10.2 million, primarily as a result of the reduction to the CEO's TV1 award. Consolidated adjusted EBITDA was $26.9 million for the fourth quarter, down 0.9%. Consolidated broad digital operating income was approximately $38.6 million, an increase of 1.7%. Interest income was approximately $1.1 million in the fourth quarter compared to $2.5 million last year. Decrease was due to lower cash balances in interest-bearing investment accounts. Interest expense decreased to approximately $11.5 million per quarter, down from $14.2 million last year due to the lower overall debt balances as a result of the company's debt reduction strategy. The company made cash interest payments approximately $347,000 in the quarter, and during the quarter, the company repurchased $15.4 million of its 2028 notes at an average price of 69.8% par, bringing the balance down to $584,575,000 at year end. In January 2025, the company repurchased an additional $17 million in notes at a price of 62.5%, bringing the current balance on the debt to $567,575,000. $24.2 million in non-cash impairment charges were recorded in the fourth quarter. $4 million of that was associated with the TV-1 brand name, and $20.2 million was for goodwill associated with the TV-1 reporting unit. The primary factors leading to the impairments were a decline in projected gross market revenue and operating profit margin for TV-1. The income taxes was approximately $27.6 million for the fourth quarter, and the company paid cash income taxes in the amount of $130,000. Capital expenditures for the quarter were approximately $1.3 million. Net loss was approximately $35.7 million, or 78 cents per share, compared to a net loss of $11 million, or 23 cents per share, for the fourth quarter of 2023. During the three months ended December 31st, 2024, the company repurchased 1,386,544 shares of Class A common stock in the amount of approximately $2.1 million at an average price of $1.50 per share, of which 908,894 shares of Class A stock were held in Treasury stock as of December 31st, 2024. During the three months ended December 31st, 2024, the company repurchased 703,292 shares of Class D common stock in the amount of approximately $700,000 with an average price of $1.02 per share. During the three months ended December 31st, 2023, the company did not repurchase any shares of Class A or Class D common stock. As of December 31st, total gross debt was approximately $584.6 million, and ending unrestricted cash balance was $137.1 million, resulting in net debt of approximately $447.5 million, compared to $103.5 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.33 times. On March 16, 2025, The company began investigating an incident involving an unauthorized third party who had gained access to and infiltrated certain information from our information technology systems. Upon discovery, we activated our incident response team, which is comprised of internal personnel and external cybersecurity experts. As of today, the incident has not impacted the company's operations or ability to conduct business in the ordinary course. At this time the incident has not had a material impact on the company's financial condition and the results of operations. All our investigation is ongoing.