UONE - Earnings call transcript Q2 2018

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Operator

Welcome to the Urban One’s 2018 Second Quarter Earnings Conference Call. I have been asked to begin the call with the following safe harbor statement.

During this call Urban One may share with you certain projections or forward-looking statements regarding future events or its future performance. The company cautions that you – you that certain factors, including risks and uncertainties referred to in the 10-Ks and 10-Qs and other reports periodically filed at 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, 2018. One in duty this Urban forward-looking update that made statements presentation. note disclaims to any any Please In this call, non-GAAP financial Urban One may in about also talking its performance. measures discuss some during be to or will the release, the found press can company’s of website measures These at in GAAP either www.urbanX.com. this the reconciled call be on which course of www.urbanX.com also Urban One’s on audio of under Investor An the available replay page. the be conference the Relations section website call at web will corporate made the on be X for the after will days replay The available website call. be call No upon. other of copies recordings or are this authorized or may relied I’ll now call Alfred to C. turn the over Liggins, Officer Executive joined who is by Peter Chief Urban of D. One, Thompson, the Financial company’s Officer. Chief Mr. Liggins?

Alfred C. Liggins

doesn’t Officer sitting the have and second questions the the to our is Financial is operator Chief Group also call. in, CEO in quarter of a you, our and radio Also audience, usually Reach as welcome any Kantor, today, we David Media who from case Radio who at conference One. Thank we join and TV the results got Drewer, joining us guest call, Jody

is press call release in with radio that got with April operators. what tough but now gave along all seen really guide month flat. right out. though last expectation, of pacing was of it in better So the line lays performance way, the the in other from we and the kind kind conference it QX I’ve line QX was a the

mid $XXs We So TV doing talked the in call QX our EBITDA. last about optimistic is big quarter we’re that in for political. and about obviously then One million conference

off we with We Part a to digital, the couple still that of million year. from starting of mid affiliation but TV $XXs are them agreement, million we netted us an million. that benefit results quarter of for We of overall $XXX – We released that. feel our our with do again of big very, on commitments this that not in agreement tough guide is for a affiliation which track had which feel very the a comfortable had a QX a of which issue QX QX is partners. in dollars. and little one EBITDA of the with to factors July, One, unexpected comfortable our well. of did do very continue this MVPD continues to In true-up churn we got still bit for yesterday, very another just strong. booked they in $XX million. them, MGM numbers We’re

be just us. good revenue XX%, to they very going and and be well very, investment gaming continue XX% year-over-year that’s a we to for up to So feel continue like do

is opportunities. As the into expenses is growth feel about to can feel down continue and I X.XX. delever, that said Xs about QX to a levered that, we hold delever and and our we were at that. our the very the end market I are our main we to by year-end at where in have got to low control path reduce radio, at X.XXx pay the I good still But expenses QX, down we’ve to in we stated get in debt, for look and task share goal – hand

additional to which be second content color. a produce. complementary food, Networks, us know can we Afro-Latino can of of you platforms. to black want so far lower women network a platform called As as for opportunities, women beauty which of travel, a are will Cleo, network future for that Scripps friendly, does One, lifestyle And TV which second so lifestyle growth a two kind network very to It think how-to of those home, women, launching content, for monetize are and be mean, advertiser is which announcing will investments we cost across we give what will you who

January MVPD as that grow I also major in to have We mentioned launch in network, It’s expect partners license previous a with network there. calls. two free and fee from it

to and models the I’m network further and and the company. free distribution from look going make it’s in we’ll business operators this got got that, different And order You to maximize we evolution a our to it. at talk on turn the With we detail. over and numbers to be about of good to money in next Peter the in advertising let diversification him it more step selling and will strategy think

Peter D. Thompson

be segment were on operate Thank market segment markets XX, for were $XXX.X Radio by of can down million. quarter. by X.X% X. the ended you, X found X.X% net found Page the in revenues source XX.X%. in down The we Page the which on with Atlanta press Breakdown revenue of quarter approximately the down a X.X% and second revenue for be was Alfred. the June quarter breakdown release down Net XXXX at can

conditions respective and were outperformed Cincinnati, Dallas, Cleveland, clusters markets. Detroit, their market Philadelphia, Louis While all DC St. difficult, Washington

received the automotive million while healthcare, the and down. political sector, were advertising. retail, telecommunications, government/public and transportation sectors we were in beverage, sales approximately travel food services, quarter, the During and entertainment, Advertising $X.X up and in

was digits. during up quarter, television increase major an to affiliate recognized the audience quarter. with unit staff segment XX.X savings driven with and was Net content final reduced mainly growth down double expenses National technical decreased markets. by XX.X amortization due be And projected were an X.X%. rebound in became are sales segment technical investment reporting up from was at contractual leaseback savings second to some excluding timing primarily to primarily operating and and by talent rates fees down lower decreased Cable at of due revenues The depreciation, by deliveries digital this second The a in were and for of $XXX,XXX outside X.X% by TV income for in offset units. QX by spend with MGM in difference measured talent on an of end by Maryland, approximately in Reach the the are from number but as driven Net to revenue X.X%. by by million quarter adjustment year-over-year flat. to downward marketing due primarily of pressure. to to declined advertising to mentioned, expenses X.X% those lower million, in non-cash were to and up of expense QX. the estimated Cable of method increase stations advertising the half decline $XX.X expected approximately SG&A bonus the expenses by $X revenue digital were compensation is investments of units amortization, due Tom state a July down from XX.X% due revenue spend. million expenses cable SG&A programming to to performance second a driven year-over-year down casino But commissions, by increase revenue of cost Morning Corporate a our previously Reach promo for QX down in iOne X.X%, and BHM expenses revenue Digital, quarter lower to Operating adjusted and after of tower equity EBITDA lower partially driven converting As $XX costs reported savings, of X% increase expenses second at Alfred We $X.X $X.X million staff X% expenses. the for for and also quarter and expense of planning full the due and ad Operating on-air lower Reach and Media direct the X.X% higher third from declines impairments down data subscribers, the the programming were down by and expenses the first in and research sales available. currently revenue marketing allowing down and post is annual Show, compensation. Cable event pricing also as stock-based quarter SG&A radio of consumer segment expense. increase a net the favorable our million MVPD finished X.X% revenues million, the driven Radio quarter. Nielsen, was related and decline which the accrual our Joyner savings costs. strong million equal We our in compensation, currently TV were quarter. mainly certain to recorded increased at units Harbor of is expenses, offset XXXX. XX% XXXX approximately reductions gaming pacing costs Media by were talent radio for to X.X% second some

taxes income $XX.X was stock Class $XX discount, in for approximately operating XXXX. million for quarter, and repurchased $XX.X XXXX. amount paid shares at Company approximately which X.XX% million EBITDA Net resulting the in a gain cash of approximately and million D $X.X million approximately repurchased million a approximately July second million of in million of of broadcast to consolidated was million Interest in and share on million quarter the approximately $XX.X quarter. second $X.XX the the stock taxes million common from the in for or of to expenditures were Company digital For expense was in to was quarter of adjusted XXXX. compared second X.X% increase amount benefit of or $XX.X Class approximately Consolidated income compared $X.X shares also share $XXX,XXX X.X% an year-to-year. of And XXX for common QX the A $XX.X period XXXX. the our non-cash repurchased $X.XX of interest same net quarter. a million $XXX,XXX $X.X the approximately repurchased compared $XX.X additional $XXX,XXX million. an those were cash or approximately in the recorded in was XXXX approximately Company of a notes XXX,XXX we $X of income quarter in made XXXX $XX.X in debt retirement and notes of in payments the the $XX amount of X. approximately a of income Capital million,

in months in company Company also of the purchased equity shares million. Educational compared EBITDA the Class will was obligations stock stock company tax X.XXx. amount $XXX.X close about for of in million $XXX.X satisfy amount a debt approximately GAAP covenant approximately Media common August D covenant, of X.XXx with $XXX.X On Michigan on approximately leverage million. employee of total forma later of June ended X.XXx. Bank the three Net million radio senior During $X.X Detroit, connection against EBITDA XX, ratio bank of total was $XX,XXX WPZR the LTM of approximately the repurchased the million. awards today, XXX.X California XXXX, previously-announced of an pro XX,XXX to share-based plan. perhaps, for to the XXXX its Foundation to or was $XX.X one approximately its of adjusted sale assets so FM of stations, leverage Net FM, LTM consideration X, of

service will that of these area that its also part three combined the deal, Praise FM As will translators multicast Detroit FM be Detroit with Metropolitan receive the existing translator the company signals Network. to and

of approximately On the that to enter upon of Broadcasting And also closing radio August postgame XXX the and so of with as we its million The the ensure assets on Team Washington So XXX. $XX.X an close company receiving. from that as on acquisition that value The previously-announced or the remain consideration agreement station, into are Team Redskins of the that, company well with $XXX,XXX games, FM tomorrow, is approximately WTEM Alfred. XXX three the is and I’ll of will all programming will $XX.X translators AM million back and about X, pregame to will the Zebra hand Redskins Red cash,

Alfred C. Liggins

questions. Operator, Thank up for you, the open let’s Peter. audience to it

Operator

going Thank Juliano is to from Descartes Trading. of line from you. [Operator Instructions] the Our come first ahead. Torii Please go question

Juliano Torii

do question. the continue for back Well, subordinated how good and I – up morning How you considering options tie to have buy it refinancing refinancing? thanks does see are to with bonds. that my that have just about I executing mean, taking at the seems a plans stage, you for question your for it? essentially of what any come kind your you plans closer you and

Alfred C. Liggins

and to and I a been options. great think, of with continue We conversations timely our lenders all Yes, various We’ve – consider question question. in consider advisers. a

it, would a I on options. specifics, about. out. focused I favorable those talk about talk by think may at It’s and diligently we should we which go And point probably we towards to earnings on in premature have the path are of but the have call, think we continue to to say about premature notes we work refinancing some outcome this next it’s talk we think I that any down, concrete time to

Juliano Torii

on do Okay. follow-up of next call? And earnings mentioned just you call, time you your a see by earnings the that, next so when

Peter D. Thompson

Early November.

Juliano Torii

November. Early

Alfred C. Liggins

– mean we’re as giving going have just I I’m I day. Yes, yes. think long, to to don’t a that wait backstop

Juliano Torii

Okay. Thank you.

Operator

We Instructions] Securities. [Operator the question Briggs of with you. have Thank Ben from GMP ahead. Please go line a

Ben Briggs

Thanks structure the detail cap taking for for the on morning, guys. Good questions. the there. Thanks

a Just and Cleo network any – any costs on associated expenses with the quick – color there one on are revenue. that just and

Peter D. Thompson

yes, we new are we are provide not look going Yes, – to network. a look we’ve not that. got – It’s

now, do planning going programming, we’ve One been acquired we’ve known stuff. it of but XXXX, years. rights suffice hope. fair been programming. also around not We into have with had of we’ve has – for so library of wild a of stuff we’ve run obviously known We’ve a done that this business we – launching to say XX to while got acquiring. been it’s are a the that flow be cash we it to to will some it kind unnecessary But grow original – We delever the also library amount secured this we been a have that since swings We programming so that and lifestyle know we take and network’s early the so in our lifespan, programming, of TV

its will as ad distribution grow. be programming investment grow its So its and the plan sales Cleo for to

people move. degree. And the So you the in to investors anyone’s over in EBITDA and should slowly the investment quite our spending worried and we’re wildly great not interest. that gear WG a potential distribution have be that’s all your a of frankly, a seen America best opposite cable now programming of audience. issue our in going sudden where That’s should financial no we’re to and on do to not programming time depressing network size grows I’ve great some

be platforms. details. will bit is yes, we’re making be of we give any – the influx, making It’s used investment. So still stuff that the able other new to will not prudent to And a thing will that on will be stuff to – we’ll we going be able be but some it a – both that be

platform, well So TV pass, investing more way distribution of the is environment which of it’s as this also in in even content uncertain a important. as One new Cleo

having So network second sake second you it. for just don’t to a want the monetize to create avenue content way that the us a of creating gives to and without monetize

Ben Briggs

Okay. And color I Empire later of Thanks give performing? library the programming. that related – just year? appreciate what You have you yet guys that. just or very on me entire how to follow-up much. can status the is, coming one that the that’s I is know in

Alfred C. Liggins

the October, seasons, we we’re summer we will first XX entire now our to it the use highest for season have And the – add one we – four just week. acquisitions, still – XX. has subsequent declined library. over but given – But will quarter to Right the months. first costs. delivery performing the a from get whatever just the get performing is every fourth we five years a to Obviously we seasons best still Yes, get the the from is our just up now standpoint, it the broadcast performance like it’s some it’s especially of it in

don’t And we max our it. use out I why wouldn’t of so see

Ben Briggs

guys. I much. very appreciate Thanks Great. right. it All

Operator

you. Thank

of have line go from ahead. Ben question from Please We Brogadir a Capital. the Odeon

Ben Brogadir

the you question. Thank taking Hi. for

your on current get Just environment. M&A current the want to thoughts

radio particularly made the on nice side. have deleveraging tuck-in, acquisitions, some guys You

about of in Radio, there right today’s you of you’re in wondering, out CBS environment. Beasley, what thinking kind Just We M&A wondering that a few saw about guys it thinking kind are Just participating and now? how some seeing how transactions? you’re

Alfred C. Liggins

kind small delevering market done. radio will up. much But to it, pay – target deals, the be end that to that it’s that articulated that for just problematic. They’ve In got we’ve you continue end add things likely because And market for kind for too you been we are and I acquisitions. most space look we’ve if similar of the in that of deals guided the the also that’s think but they fashion

to we selective. we that no probably So that strategic likely revenue market to be not There acquisition a we’re top being are the feel also have line where that got in markets in from to is And you make grow. standpoint. knowing

and opportunity the should in there your more will picked basically clusters and that I an that lower We you that station the business, for we that power flow we so And factor there’s that. that lower to clusters. paired fourth profitable because more power us build in three to be unique which deploying a of city, going that projection cash sold intact. them the stations covering to power be. But opportunity we’re with had that because really in parts different participate to and a really In think deregulation give swap radio revenue we’re of business format plan it think all property and what intellectual we are full operating. still will station we lower over a people up stations. around into of do and will keep That that power stations back and resulting four Michigan, the was Detroit,

had the in of really we’ve how there the so we assets cluster And operating past. same view it that as

cash media produces path half. to flow. consolidation opportunity the that the environment going as also it digital a to on business and depending flow delevering. one Xx we We’ve XXXX of be Harbor But disrupted us to free is what I we’re real a just the to we’ve at credit, and free That’s by our there a MGM, to end we maturity know. stake a going way, in MGM an going a is debt $XXX the that’s pay really have mean challenging anywhere think And at that’s delevering. our do to got down. and that think lot we that media, strong is the in even And comes tackle put to space and all EBITDA the across space million grade ability in now, the to I of doesn’t refinancing to worth TV allow the market million. and between, that and folks down investment got whatever to block continue year, we’re a future We’ve got focused National that all be – of Internet you going cable Basically in And $XX to got we’ve for be believe, report what on improve, had year the cash a view. that’s but analyst even just if and selective.

So of to take get glide get we’re that off that path. that off not unnecessary going that us any – of risks us

So us we’re for make that have at easier all glide how and actually path looking to it. acquisitions that’s

Ben Brogadir

all Understood. color. I that appreciate

of business me. once buildout for One, congratulations it is announcing of if opportunistic on more longer-term of think it is an out, one With towards XXXX, Clea, call Just you or kind just kind XXXX, the Media about of built that fully Urban endeavor, Clea of cable, between is view? end pie wondering of there radio, caught that more you just are of kind Urban kind Reach One ideal an steering of the digital, mix

Alfred C. Liggins

right, to radio know had cable a we’re a I to there, be to goal view You think and XX-XX TV, now. what, originally, mix and we diversify

But then traditional investors right. our radio had I which investor digits. we well, talking a So like, were show still was cable few mean, lot media, better, things, yes, non-deal business its low-single whatever refi conversation of we on actually The had about I business, a – it’s another has for been remember holding magazine, at through options bunch cetera. one right. a with business people And – about I we who in sentiment through is compared cable traditional funny say down of to investors’ road But X%, were. the guy et it’s pretty connotation. it’s to up radio got a other newspaper, other a mediums. that negative looked what is challenges our good markets dag we But Can’t went little QX were that’s where some the our great. very because

year-over-year pay my and distribution. got drop the oh advertising god, even industry. own You cable still ecosystem people as an industry, as you, But streams positive revenue is now could television, it’s up in two under some an MVPD cord Jody, It’s cutting. believe, from pressure your TV don’t an still you though

cable business because of better got another views; your two one was distribution was better guy radio guy because I different thinking model. So point thinking diverging own you and of that its

I’m So I that know, but happy don’t diversified. we’re just

opportunity so feel got of I and how I don’t in itself as and – you to about do at that. look And good think acquisition event discrete each you a

– so I more And in one steering see I get could likely in probably it’s near-term, because the there. hurdles think so or the because TV the arena no us scale we – regulatory – don’t there’s that we’re towards more other.

I timing, a you assets, et my certain cetera. have I I of like think to and not in our I I like view, mix said. really that’s the kind path – You mean in radio of – business, de-reg like on But have for something change to order dramatic that’s really

Ben Brogadir

luck Understood. Appreciate those guys. and thoughts of best

Alfred C. Liggins

you. Thank

Operator

from King of line question New you. go a Instructions] ahead. [Operator the We from York. Thank have [ph] Please Alan

Unidentified Analyst

my for thanks taking guys Hey, question.

model only foreseeable in EBITDA refinancing? an the future? part any Thanks. expect contributor do just wondering when I have you meaningful into shape refi or it’s Just And form however that you at an can. timeline as it Cleo that look of an add-on, become model close a one ad fairly do the if revenue from launch, to then more you just will I revenue If take, the be plans your par. a that affiliate to date for head Cleo callable on XXXX to to I’m at for bonds to the Cleo switch

Alfred C. Liggins

Cleo And if we’ve fully financing grow from we will point we platform allow coming, break Cleo that we our a affiliate it. gate. big view of not didn’t cognizant refi of distribution refi of I have us that’s so can be be periods it got only are going refi efforts, this content ad fortunately meaning a but launch that of we expect fan network while what’s from in revenue even have model. I’m One, forever. a it even for launch hurt coming, not the long an believe environments. so to It’s deficit – not I breakeven to, But of investments mean, believe, to time uncertain exist a and that to the we to that TV we on we going

Unidentified Analyst

ask as at it’s helpful. look more to be currently to the cash That’s Note anticipate we refinancing company Do the unrestricted are the obviously sitting the that of to in just just you looking valuable subsidiary. should a of National at maturity. an it. Got Realize regard options par? or it’s one stake refinancing you on Comcast was effort. going at that quite repay Harbor, And outflow XXXX will a separately, and I from follow-up guys part just XXXX variety with that a

have into you that of wondering a part bring that the to group the as – restricted if refinancing? Thanks. plan Just if

Alfred C. Liggins

off due. Comcast it Two when comes things. One, going pay just to we’re

options the a and to outflow. contributing sort of it aiding looking So at And Harbor National all our relates just we’re of as in package. cash refi that’s some

and us obviously So it’s helps options that know when people to it to giving comes valuable refi.

Unidentified Analyst

clarification. it. is That’s helpful. this Got more And a just of then lastly,

can one Just your adjustments go that financial on contract was what was of year-over-year? what just with the the MVPD again, contracts, the side, and over of cable major that impact you

Peter D. Thompson

we in positive was was what it affiliate a which revenue what adjusts a line, It essentially the one-time in thought the was for was versus nature subs difference MVPD and $X the billable reporting. impact million in

between and a the a that. was so contract resolving and issue our really their of an view of just view And accounting it contract around

Unidentified Analyst

Will in it be assume to away goes correct that QX?

Alfred C. Liggins

onetime an Yes, account, it was yes. so

Unidentified Analyst

much Thank And luck. you very best of guys.

Alfred C. Liggins

Thank you.

Operator

have at questions queue. And no time, in you. Thank further this I

Alfred C. Liggins

Great. joining Peter as I usual, All questions for any additional you. are Thank and might right, have. you folks, and you available for that offline thank

Operator

And participation conclude ladies does and our for Thanks you. that gentlemen, for Executive using AT&T conference Thank and today. for Teleconference.

disconnect. You now may

Urban One (UONE) 11 Aug 182018 Q2 Earnings call transcript