Urban One, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Urban One 2025 First 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 May 13, 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 and 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 .urbanone.com. A replay of the conference call will be available from 2 o'clock p.m. Eastern Daylight Time, May 13, 2025, until 11.59 p.m. Eastern Daylight Time, May 20, 2025. Callers may access the replay by calling -770-2030. International callers may dial direct -800-9909. The replay access code is 796-8738. Access to live audio and a replay of the conference will also be available on Urban One's corporate website at .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 everybody to our first quarter 2025 results conference call. As usual, joined with Peter and I are Jody Dror, who's our TV1 Chief Financial Officer for any TV questions, Karen Wishart, Chief Administrative Officer, and also Christopher Stinson, who is our General Counsel. You've seen the earnings release, Q1 results, largely in line with the guidance that we gave. Q2 radio pacings weekend since our last conference call, they're roughly down about 9% now. However, as I said on the conference call last quarter, our TV ratings seem to have stabilized in Q1 and Q2 in our line with what we budgeted. So with that, we're continuing to reaffirm the guidance that we gave of $75 million of EBITDA, something again to note on our 2024 EBITDA, which was about 103, almost 10 million of that was a non-cash adjustment for the TV1 award associated with my contract. So if you're looking at apples to apples, it's roughly about $92 million of cash, EBITDA down to $75. Still not a stellar -over-year performance going backwards, but what we have expected. So with that, we have said that we're going to continue to focus on our cost controls, manage our leverage, and maintaining a strong liquidity position. One of the things that came up in the last conference call is what were we going to do with our $137 million of year in cash? Since that conference call, we've actually bought back in the open market $88.6 million of our debt at an average price of about $53.9. We've reduced our gross debt down to $495.9 million, and we're still sitting on about $80 million of cash on hand at present with an un-drawn revolver. So we continue to be focused on deleveraging and maintaining the liquidity position. So in a difficult environment, you've got to make sure that you're prudent and you keep you in the best possible position of flexibility in terms of leverage and expense control. That's what we're really focused on. So with that, I'm going to turn it over to Peter to get into the specific detail of the numbers, and then we'll

come back to you. Thank you, Alfred. So consolidated net revenue is approximately $92.2 million, down .7% -over-year. Net revenue for the radio broadcasting segment was $32.6 million, a decrease of .3% -over-year. Excluding political, net revenue was down .7% -over-year. According to Miller-Caplan, local ad sales were down .8% against our markets that were down 13.2%. National ad sales were down .6% against our markets, being down 11.6%. Our largest radio ad category was services, which was up 11% driven by legal services. Travel and transportation was up 17%, but that's our smallest category. Telecom financial categories were up low single digits. All of the other major categories were down, including healthcare, entertainment, retail, government, auto, food and beverage. Net revenue for each media segment was $5.9 million in the first quarter, which was down .9% from the prior year. Adjusted EBITDA outreach was a loss of $600,000 for the quarter. A combination of client attrition and lower average unit rates drove that decline. Net revenues for the digital segment were down .2% in Q1 at $10.2 million. Audio streaming revenue was down by $2.1 million in the quarter, due to the renegotiation of an exclusive third-party deal. That impacted adjusted EBITDA, which was $58,000 compared to $2.3 million in the prior year. We recognize approximately $44.2 million of revenue from our cable television segment during the quarter, a decrease of 7.9%. Cable TV advertising revenue was down 6.3%. TV1 delivery declined 18% in total day persons, 25.54%, which is partially offset by an increase in Cleo TV, which was up 29% in total day persons, .54% delivery. And also favorable A-Log and Fast revenue of $1.1 million, which resulted in a net ad revenue decline of $1.7 million. Cable TV affiliate revenue was down by 10%, driven by subscriber churn, which is about $3.3 million, partially offset by $1.3 million, which is a combination of subscriber rate increases on the launch of now TV. Cable subscribers for TV1, as measured by Nielsen, finished Q1 at $35.6 million compared to $37.2 million at the end of Q4. Cleo TV had $35 million Nielsen subs. Operating expenses, excluding depreciation and amortization, stock price compensation and impairment of goodwill and tangible assets and long-lived assets, decreased to approximately $80.7 million for the quarter, a decrease of .6% from the prior year. The overall decrease in operating expenses, primarily due to lower third-party professional fees in the corporate segment, lower content expenses for cable television, and lower employee compensation as a result of recent cost savings measures. Radio operating expenses were down 2.9%, or approximately $0.9 million, driven by lower employee compensation costs. Reach operating expenses were down 1.7%, again driven by lower employee compensation costs. Operating expenses in the digital segment were up 3.2%, and that was driven by higher traffic acquisition costs, partially offset by lower employee compensation. Operating expenses in the cable TV segment were down 10.8%, year over year, driven by lower programming content expense, on-air promotions, and employee compensation costs. Operating expenses in the corporate and elimination segment were down by approximately $3.8 million, driven by lower third-party professional fees. Consolidated adjusted EBITDA was approximately $12.9 million, down 42.2%. Consolidated broadcast and digital operating income was approximately $23 million, a decrease of 28.1%. Interest and investment income was approximately $1 million in the first quarter compared to $2 million last year. Interest expense decreased to approximately $10.9 million from Q1, down from $13 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 of approximately $21.6 million in the quarter. During the quarter, the company repurchased $28.2 million of its 2028 notes at an average price of 58% of par, bringing the balance at quarter end to ,348,000. In April, the company repurchased an additional $60.4 million in notes at an average price of 51.9%. As Alfred said, that brings the current balance on the debt to ,930,000. We recorded $6.4 million in non-cash impairments in Q1 against the carrying value of FCC licenses in five of our radio markets, which were Dallas, Indianapolis, Raleigh, Philadelphia, and Cleveland. The provision for income taxes was approximately $15.7 million for the first quarter as we booked an additional $14.6 million valuation allowance against our NOL balances. The company paid cash income taxes in the amount of $33,000. Capital expenditures were approximately $2.5 million. Net loss was approximately $11.7 million, or $0.26 per share, compared to net income of $7.5 million, or $0.15 per share for the first quarter of 2024. During the three months ended March 31, 2025, the company repurchased 449,200 shares of Class A common stock in the amount of approximately $700,000, an average price of $1.48 per share. And we also repurchased 303,622 shares of Class D common stock in the amount of approximately $300,000, an average price of $0.87 per share. As of March 31, total gross debt was approximately $556.3 million, ending unrestricted cash was $115.1 million, resulting in net debt of approximately $441.3 million, compared to $94.1 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.69 times. And finally, we recast the comparable periods for 2024 to reflect the move of $7.9 million of CTV revenue from digital to TV, and also the apportionment of cross-platform sales and marketing expenses. We talked about that on the last earnings call. A number of questions came up, so we thought we'd just give you comps from prior quarters with those recast numbers. With that, I'll hand back to you all. Thank you very much, operator.

I'll go to the lines for Q&A.

We will now begin the question and answer session. If you'd like to ask a question, simply press star, then the number one on your telephone keypad. Our first question will come from the line of Ben Briggs with Stonex Financial, Inc. Please go ahead.

Hey, good morning, guys. Thank you for taking the call. Absolutely. So a couple here. First of all, I do notice that you guys did some cost cutting during the quarter. Both the programming and technical expense line and the SG&A and corporate line, I think we're down a little bit. What other levers do you have that you can pull to kind of control costs as the year goes on and in the future? Yeah,

I mean, I said last conference call that we did a bunch of year-end last year cost cutting measures, and I think it saved us about five million bucks. We are focused on taking another look at that for this year. We haven't got there yet. We probably will focus on that so that it's done by the middle of the year. So we're really focused on kind of like an end of June execution date on that. And so, look, I don't want to go into specifics. Quite frankly, I don't have all of the opportunities off the top of my head. And even if I did, I certainly wouldn't want to announce them on a conference call. Yeah, let's say we do believe that there are other opportunities and plan to take advantage of them. But we're really managing to our guidance and then looking to see if we're doing better. Our guidance of 75 does not include any back half cost cuts that we might find.

Got it. Got it. That's helpful. Thank you. So, you know, that's a great segue into my next question, which is I feel like you had indicated that we should expect the majority of EBITDA to come in the second half of 2025. Am I remembering that correctly? Hang on. Yeah. We're getting capsized. Repeat that. Sorry. I apologize. I said I feel like you had indicated that you're expecting the majority of EBITDA this year to come in the second half of the year. Do I remember correctly? Is that accurate?

Yeah. So more than half, for sure. Right.

Right. Can you give any guidance for what you think the second quarter has in store as far as EBITDA expectations?

I don't think we're going to give specific guidance. I think from the pacing, Alfred said that radio is weak and dry. We're relative to where we were last time, so we should expect that to be down. Digital, almost all of our profit is forecast to be in the back half of the year, so not going to be strongly profitable in the second quarter. And then TV. TV1 rating is down a little bit, down a bit, being compensated for by Clio. We're hitting our budget numbers in terms of delivery. And so there might be some upside in the back half of the year, but looking at where radio is at, that might need to wash against radio. So I think Q2 will be a little bit better than Q1, but similarly weak, and then we've got to deliver in the back half of the year then.

Got it. Got it. And then finally, obviously there have been additional debt repurchases. I know the market likes to see those. Should we expect further debt repurchases as the year goes on? As I've

been told many times before, the best predictor of the future are actions of the past. You've heard that too? I have. I have. Look, we deliberately are opportunistic. We don't like it when we announce, hey, we're going to go in the market, and then everybody looks at that as an opportunity for our debt to trade up and expects us to pay more. And so we're in, we're out, we've got a price that we want to try to get it at. It's nothing personal to debt holders. But at the end of the day, buying back debt at a discount for those funds that want to sell ultimately helps the company. And so we'll continue to do that. Almost always though, anytime we go into the market, the price goes up. Just because we're the most motivated buyer. And I think at the end of the last conference call, the debt had been trading at like 49.5. And then when we got to the market, literally that same day or shortly thereafter, I think our cumulative purchases during that period of time were almost at 52. We're okay with that. We had some big trades of people who wanted to exit, wanted to see some sort of uplift. And it's good for everybody. But as you can see, the vast, vast, vast majority of our capital is going to that. So we took out tens of millions of dollars of debt since the last call.

And

fortunately, I think we're continuing to still be in a position to be impactful with that.

Okay. If you were to draw the revolver, I don't think that would restrict you at all in debt buybacks, would it?

No. Yeah. I mean, look, it's not. Most of the people on this call are investors and smart investors. And so it shouldn't be lost on anybody that we do have an undrawn revolver. So that capital is available for all things, including if we've used all of our cash to buy back debt and we needed operating funds to do that. So our liquidity position remains very soft and gives us some options.

Okay. All right. I think that's going to be all from me right now. I'll give some other people the chance to ask questions. Thanks again. Thank you very much. Next question, operator. Our

next question will come from the line of Aaron Watts with Deutsche Bank. Please go ahead.

Hey guys. Thank you for having me on. A couple questions around the ad environment on the radio side. I think you noted additional weakness crept in between your last call and today. To the extent we continue to get positive headlines out of DC like what happened this week, do you think advertising can flip back positive as quickly as it softened? What do you think your ad partners need to see or hear to start ramping spend back up?

I think they need to know what their expense profile is going to look like going forward. And with the tariff picture moving weekly, changing weekly, it's difficult to forecast that. So unfortunately Procter & Gamble and General Motors don't share their ad strategies with us. Actually, it's really interesting. I've had a couple high-level conversations with some monstrous advertisers and most of these big guys, they don't want to disclose what their ad budgets are. That's proprietary information, how much you're spending to compete in the marketplace. So strategy, really core strategy that would result in how much money is going into the ad market and to which verticals is not readily available. And I get it. It's really kind of a trade secret for them. So we just don't have visibility into that. But I can tell you we do know when their ad budgets are getting cut or put on hold. And then they will tell you it's because of uncertainty. I mean, it's no secret that you've seen reports that the consumer is cooling down, cooling off or whatever, spend is slowing down, uncertainty. I mean, at the end of the day, regardless of where the tariffs land, they're going to land at some higher level than they were before. Right? And I saw something this morning on CNBC where they were talking about the forecast of some of these companies out there which assume that they're going to take all of the additional tariff expense and roll it into pass-ons to price increases, which ultimately is inflationary, which one would think there's a knock on effect on the recession. But I'm not an economist. I don't know. This economy has been chopping down trees and plowing through all kinds of headwinds. So far be it for me to predict what's truly going to cause a recession and what its ultimate impact on the ad market now is. It's not positive at this point in time. So I guess in a roundabout way, this is just Alfred Ligon's opinion period in this story, I do not think you're going to see a positive ad rebound this year. I think a lot of these guys have already – once you take expense off the table in a corporate environment, it generally stays off the table for the remainder of that budget cycle.

Yeah, that all makes sense. So more a hope of stabilization than any real positive significant bounce this year. Okay. I did hear you talk about National being a driver of the weakness right now. How have your more local SMBs you work with been behaving comparatively? What's your split between National and local these days?

What is it, Peter? Is it 75-25 or 85? It's more 75-25. 75-25. That's sort of excluding the digital. I

went through with the radio guys, and I have a weekly call with them now. And look, they were crowing. Local is actually not doing that bad, right? I think they were telling me that our local was only down like less than 2%, like 1.5%. We were looking at pacings about a week ago, two weeks ago. The driver for us is National. And also we're having digital issues for a couple reasons. And I articulated them, about changes in our podcasts and streaming deals that are out there, and also the fact that we're under-penetrated in our local digital efforts. And so the answer to your question is local and the radio business is down, but it's not down double digits, not down as dramatically. It's down low single digits. So I would say that that's a positive sign. We're going to laugh our digital issues, and we're looking to improve our digital efforts. And so one would think that – I mean, you've got two things that drive national ads, right? You've got the market sentiment, and when I say market, consumer sentiment, what advertisers think about consumer activity and their prospects for business. But you also have the continued digital transition away from analog into digital platforms. And so national definitely is the negative spot right now. And I hope that abates at some point in time after stability comes into play.

And just to clarify, just in terms of national dollars and radio dollars for radio, it's two to one. So for every dollar national, we do roughly two dollars of local. And the difference in the 75, 25 is digital on how they're arrived. So as a percentage of the total, it's a different number, but relative to each other, it's two for one.

Okay. Got it. And Alfred, just one last one on what you were saying there at the end around digital. Once you iron out your kind of issues that you highlighted, do you still see growth opportunity across podcasts? And I know digital means different things to different radio groups, but podcasts, local digital, whatever it means for you, market services?

Yeah. Look, our growth area for us is we have not played in the local digital era. We've had all of our efforts focused on our national digital. And I want to say all of our efforts because we've got we've got we do have a local digital business, but we're we're probably doing high single digits of revenue when our senators are doing having it be 20% of their. You know, and so I, yeah, I do think that there are areas of growth for us in that area doing a better job there. Our, our, our, you know, we don't cross pollinate our national products into the hands of our local sellers. You know, intentionally at this point in time, you know, I heart does. Odyssey has started, you know, to do it as well. And we've got a lot of national products that would give local sellers some great tools to go out and help local advertisers. So that's something that we're focused on and will create a growth opportunity as well.

All right. Great. Appreciate all the time. Thanks again.

Again, for any questions, press star one. And our next question comes from the line of Ken Silver with Stiefel. Please go ahead. Ken, your line might be on mute.

Hey, now I'm here. Thanks. Sorry about that. Hey, Alfred and Peter. Thanks for the time. I guess a few few questions. One is if we look at the cable TV revenue, can you can you break it out between, you know, carriage fees and advertising?

Sure. So are you obviously for the quarter, we do that on page, I think it's page five of the press release. So you can see that if we go to page. Page seven. I don't know if you have it in front of you. I do. Okay.

I apologize. If you broke it out, I will go. No,

no. That's okay. But it's there. And if you need to know roughly what we think it's going to be for the year, you can just reach out. Sure, sure.

And on the carriage side, do you have like what is your renewal schedule with all the large cable LRMDPDs?

Charter is up in the fourth quarter. October is it? It's in the year. Charter is up at the end of the year. And Verizon is up, but they've got an option. And NCTC, which is in September. So we have NCTC, Verizon and Charter up this year.

And then what about next year? Is it heavy or light next year? Comcast comes a year later, right? AT&T

and Comcast.

AT

&T

and Comcast a year later. Okay, got it. And then you mentioned in your prepared remarks that ratings were down at TV1. Can you just help us understand that a little better?

I said they stabilized.

They

were down a lot last year, what, 20-ish percent? And they bounced up off of their lows of fourth quarter. And I think we budgeted what our ratings were in fourth quarter for all of 25. And fourth quarter was kind of our low. And we're actually exceeding that year to date, exceeding that budgeted number. So we're averaging higher than our fourth quarter low, which is good. In Clio especially. And on our second network, Clio especially.

Okay. And then now you're using a lot of cash flow for Bond Bad Bags, which I think we all think is a good use of capital. But are you, in terms of programming spend, is it sort of steady as she goes or do you have potential to grow it a lot?

No, it's actually down a bit, I would say majorly. Maybe down 10 percent. Programming spend. Oh, yeah. The biggest drop, quarter over quarter was program honors. Yeah. So we have an annual awards show that we didn't do. And then for the year, yeah, 10 percent. About 10 percent for the year.

And obviously there's a lot of content out there, no plans to try to reinvigorate the business and spend a lot of money on programming.

Well, the problem, no, there's not a plan. Look, we've got, we are thinking through now what our options are to grow our TV business because we have to get more delivery. Right? But you need, the idea that you go spend more money just to put it on your linear networks when the universe is shrinking on its own means that you're just going to lose, you're going to lose on those content investments because you're going to lose audience regardless of any way you look at it. However, there are multiple new ways of delivering content. You know, we continue to expand our fast channel distribution. We're looking at, you know, another, another, you know, add supported distribution opportunities and potential business models. And so I think that is critical, you know, that we, that we invest and move in that area. So I don't, you will not send us, you will not see us just investing in content with just to put it on this existing platform. You will potentially see us investing in content in combination with an expansion of new distribution opportunities in the fast and avod environment because we need other places to be able to monetize that content. And so we're formulating those strategies right now. And you got, and you got to, you got to approach that, you know, at the same time you're continuing to manage your balance sheet, you know, et cetera. Right now.

And Ken, just going back to your original question, I was just looking at the relative breakout for the year, a little over 50% of TV1's revenue will be ad dollars and a little under 50% will be affiliate. And that's flipped from a few years ago where we used to be like 55% affiliate, 45% obviously as attrition, attrition has reduced affiliate life.

Okay, great. Okay. Thanks so much. Appreciate it.

And that will conclude our question and answer session. I'll turn the call back over to Alfred Liggins for any final comments.

Thank you everybody for your support and continued interest in the story and we'll talk to you next quarter.

That concludes today's call. Thank you all for joining. You may now disconnect.

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