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 www.urbanone.com. A replay of the conference call will be available from 2 o'clock p.m. Eastern Daylight Time, May 13, 2025, until 1159 p.m. Eastern Daylight Time, May 20, 2025. Callers may access the replay by calling 1-800-770-2030. International callers may dial direct 1-609-800-9909. 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 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 everybody to our first quarter 2025 results conference call. As usual, joined with Peter and I are Jody Drewer, who's our TV1 Chief Financial Officer for any TV questions, Karen Wishart, our Chief Administrative Officer, and also Christopher Simpson, 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 year-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, managing 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. And since that conference call, we've actually bought back into open market, you know, $88.6 million of our debt at an average price of about 53.9. And 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 undrawn revolver. So, you know, we continue to be focused on deleveraging and maintaining the liquidity position. And so in a difficult environment, you've got to make sure that, you know, you're prudent and you – And you make moves that keep you in the best possible position of flexibility in terms of leverage and expense control, and 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 details and numbers, and then we'll come back and talk about leverage and leverage.

Thank you, Alfred. So consolidated net revenue is approximately $92.2 million, down 11.7% year over year. Net revenue for the radio broadcasting segment was $32.6 million, a decrease of 10.3% year over year. Excluding political, net revenue was down 7.7% year over year. According to Miller Kaplan, our local ad sales were down 12.8% against our markets that were down 13.2%. National ad sales were down 14.6% 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 health care, entertainment, retail, government, auto, food and beverage. Net revenue for each media segment was $5.9 million in the first quarter, which was down 30.9% 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 16.2% 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, and that impacted adjusted EBITDA, which was $58,000 compared to $2.3 million in the prior year. We recognized approximately $44.2 million of revenue My cable television segment during the quarter, a decrease of 7.9%. Cable TV advertising revenue is down 6.3%. TV1 delivery declined 18% in total day persons, 25.54, which is partially offset by an increase in Clio TV, which was up 29% in total day persons, 25.54 delivery. And also favorable AVOD 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 and the launch of Now TV. Cable subscribers for TV One, as measured by Nielsen, finished Q1... at 35.6 million compared to 37.2 million at the end of Q4. Clio TV had 35 million Nielsen subs. Operating expenses, excluding depreciation and amortization, stock-based compensation and impairment of goodwill and tangible assets and long-lived assets, decreased to approximately $80.7 million for the quarter, a decrease of 8.6% 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. The decrease was due to lower cash balances and interest-bearing investment accounts. Interest expense decreased to approximately $10.9 million for 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 in the balance at quarter end to $556,348,000. In April, the company repurchased an additional $60.4 million in notes at an average price of 51.9%. And as Alfred said, that brings the current balance on the debt to $495,930,000. We recorded $6.4 million in non-cash impairments in Q1 against the carrying value of the FCC licenses in five of our radio markets, which are 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 26 cents per share, compared to net income of $7.5 million, or 15 cents per share, for the first quarter of 2024. During the three months ended March 31st, 2025, the company repurchased 449,200 shares of Class A column 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 stock in the amount of approximately $300,000, an average price of $0.87 per share. As of March 31st, 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 reapportionment 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 a comp from prior quarters with those questions. with those recast numbers. And with that, I'll hand back to you, Alfred. Thank you very much.

Operator, 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. Yeah. Uh, so a couple here. So first of all, um, I do notice that you guys did some cost cutting during the quarter. Um, the, uh, you know, 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, um, 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 $5 million. We are focused on taking another look at that for this year. We haven't got there yet. Probably we'll focus on that so that it it's done by the middle of the year. So, you know, really focused on kind of like an end of June, you know, 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, you know, off the top of my head. And even if I did, I certainly wouldn't want to announce them on a conference call, you know.

Yeah.

Yeah. You know, let's, 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 pass cost cuts. that with my time.

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 close. I'll 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... as far as expectations?

I don't think we're going to give specific guidance. I think from the pacing, Alfred said that radio is weakened relative to where we were last time, so we should expect that to be down. Digital... almost all of that 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 budgeted 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 that the market likes to see those. Should we expect further debt repurchases? as the year goes on, or is it more?

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.

Yeah, I mean, look, I mean, we... we try, not try, we deliberately, you know, are opportunistic, right? Like, you know, we don't like it when, you know, we announce, hey, we're going to go in the market. And then everybody looks at that as an opportunity for, you know, our debt to trade up and expects us to pay more, right? You know, and so we're in, we're out, we 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, you know, um, uh, you know, ultimately helps the company. Um, and so, yeah, you know, we'll, we'll, we'll, we'll, we'll continue to do that almost always though. Anytime we go into the market, the price goes up, right. Just because, you know, you got, um, you, you, you, you, you, you were the most motivated buyer, right. Yeah. I mean, yeah. And, uh, I think at the end of the last conference call, you know, um, you know, the debt had been trading at like 49 and a half, you know, and then when we got to the market, you know, literally that same day or shortly thereafter, I think our cumulative purchases during that period of time were kind of like almost at 52. Right. Yeah. So, yeah. Um, yeah, you know, We're okay with that. We had some big trades of people who wanted to exit and 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, I mean, yes. We took out tens of millions of dollars of debt since the last call. And look, unfortunately, 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, 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, right? So that capital is available for... you know, all things, including if we used all of our cash to buy back debt and we needed operating funds, right, you know, to do that. So our liquidity position is, you know, remains, you know, very, 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, guys. Thank you. 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, Aaron. 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 D.C. like what happened this week, Do you think advertising can flip back positive as quickly as it's 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. With the tariff picture moving you know, weekly, right? You know, changing weekly. Difficult to... Difficult to forecast that. So, unfortunately, you know, Procter & Gamble and General Motors don't share, you know, their ad strategies, you know, with us. You know, they'll tell... Actually, it's really interesting. I've had a couple... high level conversations with some monstrous advertisers. And, you know, and you know, most of these big guys, they don't want to what their ad budgets are, right? Like, you know, that's proprietary information, right? How much you're spending, you know, to compete in the marketplace. So strategy, you know, really core strategy that would result in how much money is going into the ad market and to which verticals, you know, is not readily available. And I get it. You know, it's really kind of a trade secret for them, right? You know? and so I 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 you know 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 you know, 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, you know. 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. you know, because I think a lot of these guys have already, you know, once you take expense off the table in a corporate environment, it generally stays off the table for the remainder of that, of, of, of that budget cycle.

Yeah, no, that, that all makes sense. So more a hope of stabilization than any real positive, significant bounce this year. Yeah. Yeah. Okay. Uh, and I, 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? And if you haven't, I don't know. 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 piece.

I went through with the radio guys, and I have a weekly call with them now. And, look, they were crowing. You know, local's actually not doing that bad, right? Like, I think they were, you know, telling me that our local was only down... It was like less than 2%, like 1.5%. We were looking at pacings, you know, about, you know, a week ago, two weeks ago. The driver for us is national. And also we're having digital issues, you know, for a couple of reasons. And I had articulated them, you know, about, you know, changes, you know, in our podcast and streaming deals, you know, that were out there. and also the fact that we're under-penetrated in our local digital efforts. And so the answer to your question is, you know, local and the radio business is down, but it's not down, you know, it's not down double digits, not down as dramatically. It's down, you know, low single digits. So I would say that that's a positive sign. We're going to lap our digital issues. you know, 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, okay, and when I say market, you know, consumer sentiment, what advertisers think about consumer activity and their prospects for business. But you also have the continued digital transition away from analogs 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 on national, we do roughly two dollars of local. Okay. And the difference in the 75, 25 is digital on other, right? 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 area. We've had all of our efforts focused on our national... I don't want to say all of our efforts because we do have a local digital business, but we're probably doing high single digits of revenue when our competitors are having it be 20% of their revenue. I do think that there are areas of growth for us in that area, doing a better job there. we don't cross-pollinate our national products into the hands of our local sellers intentionally at this point in time. iHeart does. Odyssey has started 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, you know, a growth opportunity as well.

All right, great. Appreciate all the time. Thanks again.

Again, for any questions, press star 1. And our next question comes from the line of Ken Silver with Stifel. Please go ahead. Ken, your line might be on mute.

Oh, hey. No, I'm here. Thanks. Sorry about that. Hey, Alfred and Peter, thanks for the time. I guess a few questions. One is, if we look at the cable TV revenue, can you break it out between carriage fees and advertising?

True. So, are you... Obviously, for the quarter, we do that on page, I think it's page five of the press release. Oh, did I miss that? Okay. Yeah, so you can see that if we go to 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. 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. On the carriage side, what is your renewal schedule with all the large cable and other MVPDs?

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. Okay. And NCTC, which is in September. So we have NCTC, Verizon, and Charter up this year.

And 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.

I said they read that they've stabilized, right? Okay, sorry. Yeah, they were down a lot last year, what? 20 ish 30 or 20 ish percent. And, and they bounced up off of their lows of fourth quarter. And we budget I think we budgeted what 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 obviously you're using a lot of, cash flow for bond buybacks, 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?

It's actually down a bit, I wouldn't say majorly. I'd say maybe down 10%. Programming spend? Oh, yeah. The biggest drop quarter over quarter was Yeah, so we have an annual award show that we didn't do. And then for the year, you had 10%? About 10% for the year.

And, I mean, obviously there's a lot of content now. There are no plans to sort of try to reinvigorate the business and spend a lot of money on programming.

Well, the problem – no, there's not a plan – Look, we are thinking through now what our options are to grow our TV business because we have to get more delivery. But 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 know, you're not, you're going to lose on those content investments because you're going to lose audience regardless of, you know, any way you look at it. However, there are multiple new ways of delivering content. You know, we continue to expand our fast channel, you know, distribution. We're looking at, you know, another, you know, ad-supported distribution opportunities and potential business models. And so I think that is critical, you know, that we invest and move in that area. So I don't, you will not see us just investing in content 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've got to approach that At the same time, you're continuing to manage your balance sheet, et cetera.

Ken, just going back to your original question, I was just looking at the relative breakout for the year. A little over 50% of TB1'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% ad. Obviously, attrition has reduced the affiliate line.

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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