SALM - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the Salem Media Group First Quarter 2018 Earnings Conference Call. At this time all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. President Financial Vice Executive Masyr, and Officer. Chief Evan you. Thank Mr. Masyr, you begin. now may

Evan Masyr

you thank first us call. and you, for quarter all earnings Group's Thank Media of joining Salem today XXXX for

of future you to advised get our from Litigation prospects at I have of Please Act are of markets, may future be President based results, opening Executive including www.salemmedia.com. submit statements future currently from on We performance, of are report or G, information in required other prepared at future performance. In measures should instruct free or the call Evans, meaning financial you to results David available Officer; with on that or today website forecasts the intend Regulation performance forward-looking Actual EBITDA how EBITDA, are the if me income results indication Atsinger, our of reminder, reported back the affect station this markets specifically operating Commission. the in financial a we of defined not Securities questions. Regulation any Securities information SO potential just As that obligation turn accompany remarks. moment the and information. conformity Ed? are a from and statements, Broadcast adjusted uncertainties Publishing. are events, and portion on on time, Edward can begin With growth David XXXX. do cash Interactive contains relate These of not public flow. made and included is dial listen forward-looking no call anticipated President now for operator Private of disconnected G, plans, SOI, our will over XX-K Chief and Media; More the under the non-GAAP an undertake We'll forward-looking the annual existing you financial measures made -- call considered our a may adjusted conference Exchange update with Once back will done, conference and Santrella, come to to also or on the be to acquisitions. as materially on Reform statements potential differ call disclosure and at statements that those Form within and risks to Atsinger. growth with company's new Investor the available of on the This non-GAAP financial and results Relations filings we www.salemmedia.com. business in of website Edward line our

Edward Atsinger

will with of remarks of call brief who performance will the financial recent our joining Evan, and a then Thank on to QX all description call that, activity, detailed our and update for on will the turn for you financial XXXX. back a comment more dividend. remarks focus provide provide thanks an performance, on quarter I'll with you, my the an overall conclude my discussion I'll of prepared first of quarter Evan, today. and I second At guidance first M&A to

If of quarter operating division, X.X% were was by on the were revenue performance a at in quarter adjusted decline increasing income income in the X.X%. XXXX, expenses first operating Broadcast, operating station a the For approximately X.X%, EBITDA down in down which since station first is This X.X%, our station improved same down resulting X.X%, or income expenses revenue was basis, second the resulted increase slight On $XXX,XXX. XXXX. up of the in station look take X.X%, total of a we X.X%.

of result digits the -- XX.X%. segment low best-performing increased was national our these Salem from rate of single an that call Broadcast from at sites. ministries annual in removal in our the attributed our an our is changes local on News of in revenue advertisers our about we our programming of our business rates its We radio and initiative recently quarter. look block the drop growth national the increase take to ministry last Christian process was Facebook national low at mentioned was stations We stations double that The revenue of with for a concluded a and XX% national early, did revenue a X% Our in -- we to X.X%, during recently business, up -- national while on renewing. programs on the be with was to our Facebook. it's achieve down XX.X% made If further a traffic us, digital and revenue category. Feed decline digital increase some key most still can causing revenue network algorithm,

mobile a of decline websites Additionally, traffic traffic apps search engine with the up, with traffic, Even app up the in overall we business to Facebook. and lost quarter. our double-digits to our small number was mobile advertisers however, during both and Facebook

more increase Services continue digital of Primary or to negative X.X% XX.X%. about and However, I that performance XXXX, this takes digital it our acquisition Publishing increase Facebook down in to the a the later acquisition. our - in a to part That sufficient was began in which comes costs, traffic Author during businesses, self-publishing the a new led businesses, made a Salem -- new acquisitions. was focus should actually to author that mention the our year due of be it decline. largest impact on a quarter. of offset monetize once on author takes we This the to number not able the overall slowdown slowdown up a decline With regard little operating of in controlling expenses X.X% revenue digital to was in sometimes and to component board, income. on

X, We Radio due Disney for an into in few sell station agreement entered Additionally, acquired activity. the January There This Publishing Boston of from M&A transactions we $XXX,XXX. for down XXXX. a WBIX magazines in entered the into some to to XXXX is a revenue was during that of unprofitable closure in four On $XXX,XXX. quarter. we May was

So that X. and decided but option to KHTE. buy was at of an an in KZTS-AM on the with station losses On station that KHTE, we in we now that an operating long-term lieu agreement the accompanying X, Little month. into KZTS-FM, a entered an an LMA to that that's on translator might We KZTS price, terminated under that signal KDXE-FM, we on X broadcast talk are station March approximately agreement X. Little for KHTE-FM, operating Rock, at on asset we under March April Rock I lower we into a -- to LMA April news in under that entered and acquire We why addition LMA on our Also in FM now that eliminated KZTS-AM of $X.X a We another station began designated flipped purchased began XX. KDXE-AM, April purchase profit, selling an a accompanied $X,XXX format $XXX,XXX had agreement to the that million. mention so broadcasting designated for a we we station. that on were previously format station agreement and acquire better operating

the paid to With Evan call that, for guidance On and on back dividend. quarterly I'll our share. for in we to million per March about turn detail additional quarter dividends QX. XX, $X.XXX the Finally, provide $X.X or

Evan Masyr

you, Thank Ed.

programmed million. compared in quarter, the should as X.X% to and during a $XX.X adjusted our million. first revenue million, approximately a to same-station political network mention of first SOI quarter XX.X% results income $XX.X expenses decreased $XX.X in X.X% on -- basis to operating Broadcast last revenue. Broadcast to EBITDA basis, net Operating On in $XX.X X.X% revenue Broadcast the revenue X.X% year. contributed operating X.X% stations million, XX% to decreased decreased radio I revenue of I revenue and review of Broadcast $XX.X format. For decreased to quarter. and of These total XX talk briefly radio will and increase representing our Broadcast $XX.X strategic to in decreased million our X.X% million. resulting our for million. a increased of teaching operations, stations quarter, increased performance include XXX total of to from in expenses revenue net we decreased stations the These in X.X% X.X% our formats. Net and the X% $XXX,XXX our are same-station our get of $XX.X that $XX.X XXX to Christian station did Broadcast a recurring million $XXX,XXX

less than contributed Our XX news contributed Revenue Christian stations music for the for quarter. revenue. increase Broadcast the quarter. of XX% the Broadcast Overall, in total revenue of total contemporary from stations had decreased XX stations and an of revenue these our XX% X% X% talk

Broadcast million and represents Our total for our XX% $XX.X Revenue revenue. the from businesses network Media XX% quarter revenue Digital X% to revenue. increased decreased total and X.X% of our of represents

Our X.XX% our our Publishing under of of notes there $X.X XX.X% revolver. And we X% on XX, represents revenue as and million nothing total outstanding March decreased revenue. $XXX was and had outstanding million to XXXX,

As was ratio of March X.XX. XX, our leverage

concludes impairments, depreciation expense X% and second has. the of increase in any disposal assets, like decline expense from $XX.X between the we to expenses For of compared We're the an quarter operating now expenses to Operator? decline changes compensation of projecting $XX.X of second consideration, value losses of a And and of revenue on second expense, XXXX would this to operating total increase X% sale before amortization of estimated of remarks. earn-out quarter that be X% non-GAAP or quarter million. X% of fair contingent gains And to an be revenue XXXX, between also and total questions a answer million. anyone prepared the we're of projecting our or stock-based XXXX

Operator

have Wells We Mr. from Fargo question Instructions] [Operator Securities. Davis Hebert, a

Davis Hebert

and focus little couple balance to the then wanted a on fundamental on things I a of sheet. bit

have with this up expected in think, I volatile quarter. heard starting few than would've segment. fundamentals. past programming, So X% quarters The I little for I was been a more bit the it Block

outlook wonder about rest programming? talk year on of what the some block puts of and the So for if the could I And you there? takes your is

Edward Atsinger

I on that achieved so which block January was I programming, in think ministry I X, didn't what think, X% were we say that X% to. kicked referring a you increase rate national that about

Davis Hebert

local guess, national outlook I clarification. the Oh What I rest the for see, the okay. your programming for of block and be would for, year? Thanks

Edward Atsinger

But it stable. always will there is fill program inventory. there revenue. to expect, And positive varying think, will of think degrees very stable. to able note decline. I little on of bit of we'll bit of a a year And churn, end it with block I a always are be little I the success. it don't terms And that be is normally expect in I we

Davis Hebert

Okay.

you if in the the you're trends I trends seeing of wonder talk mean, I Secondly, the on something that advertising? ground on soft. companies that other terms Is environment, the heard could in about are terms ad advertising? we've fairly of you're from seeing what media

David Santrella

This mean, is environment, certainly. I Dave it's a Santrella. softer Yes,

for movie that business are Although, the show we our Political grew. in grew had enough home of grew financial, and real for some us. categories quarter, the categories oddly some category obviously auto us to and revenue jewelry big improvement. medical, retail remained estate, that financial stable the strength, for grew The us,

Davis Hebert

just down to I And it expect the think X% X%. on on down below your translate well? had was a management? trajectory guidance that quarter of was the than actually little lower was I that's second helpful. sort think guidance, forecasted, that Was I expenses, where as Should your versus we lower to bit Okay, expense end it

Evan Masyr

spill Certainly, future to ad can that I that bottom of you're the on we think continue managing on be we and seeing the we as environment we're for Hard year the tough into but forecast of fact see that quarters some expenses that line with being where will the trim it can. aggressive where you'll to expenses. where focusing rest over

Davis Hebert

the balance And Okay, helpful. sheet. then on

made couple $X deleveraging, of these guess, million. Little over -- leveraging, You a of the Are a one little I leverage-neutral? smaller Rock being acquisitions,

Edward Atsinger

teaching alternative the because We number and in Rock, they bought entered Rock on Christian Little with there talk results music a not an did It a go we had national of buy with covers been our relatively LMA to news did. declining at then We to the and there it's also $X.X X years -- issues to asked was other go was a it station, been an $XXX,XXX have had the that talk form to metro, and a there And buy we we buy a We which for were was has I foundational our or agreement And which -- years into were this and opportunity third in is then. million, an build XX% X our opportunity kind which the station and station LMA-ed started us to and signal since an which us a it people, is an and ago, fact to less. actually -- go acquire FM talk think on modest and because station contemporary option Christian or a more ministries we there station to and good. years, had been X cluster FISH a able Little around just been years station, into we with few X then FM AM with we format, doing so investment. were into it tried about wanted in, an it Christian was our FM. of better second Well, teaching to bought doing And option we that and an format, we've went we an in format. format.

So one LMA the buy we renew and not to agreement on one. other the to decision the that made

move So it's a there. really neutral kind of

was we're it. Now you available -- get still a from licensee there own the for there contested. for was translator if with But would by $XXX,XXX an permission agreement that We active opportunity you a opportunity. buying pursued and it station, translator. former that or that AM was grant licensee, the the It second that was translator. we're file the that and It It's second licensee not former owned granted. current to station the LMA-ing the was

So that. get we will

and a so LMA And right on was agreement, entered the time we're now. we're running a -- modest that time-brokering very We've -- investment. into an

the in significant positive way, So frankly, flow simply it's have. of a LMA cash we the on basis agreement

influential -- mean, of market. the smaller to tried is It's capital It your the Arkansas. your state. in answer I of I a So overall is the question. It thrust

bring of is then a have to We cash a assist in not strategic to one, station, our The third-party, long-term financial simply it to our the profitability it built target It's time. is building formats. one cluster long for our performance. trying And expect LMA, the strictly the fourth LMA strategic we and we're be place and to to flow. a That of X cluster to AM formats.

Davis Hebert

And Just Leverage, repaid this last the me revolver. appreciate for and I leverage question the all peak borrowings the taking would questions. that see to year? would you on for glad say

Just being year curious, the rest the revolver undrawn do of the you for anticipate also?

Evan Masyr

are QX the do is far there have QX as payments have make challenge as to and QX, do peak interest we in we bond. Yes, leverage, the and payments. In QX no the on interest one

to getting ratio continue down. factor little debt does leverage we're going down aggressive on paying that and So into leverage But to that bit. a be

Operator

Singular Springer, Lisa from is Research. question next The

Lisa Springer

about of developing digital product you on an how in quarter emphasis Could all local the increased digital efforts? last success tell offerings us the you're your effort? those And us One was markets. of and things on you local measuring that specialists update talked

Edward Atsinger

Yes, it's going quite actually well.

region. sense We retail We've really a a handles have is it this products early, And markets, increased in makes market. by while selling plan XX.X% in I revenue what not that And digital about category. place. the still we're best of maybe loosely dozen just the probably rolled with we're that, some it's this person only calling audience to a number of news that's in we -- in one markets that have a our all to out some specialists but

Operator

at conference turn further Edward I'd no the time. floor over to for this Chief Atsinger, back like sir. Executive Officer, are ahead, Mr. go questions closing to Please There comments.

Edward Atsinger

for Thank look joining you, present when thanks visiting forward you call. Again operator. to results. you again with of all We we QX the to

Operator

Ladies and over. gentlemen, now the conference is

disconnect You your telephone. may

Evan Masyr	CFO
Edward Atsinger	CEO
David Evans	President of Interactive and Publishing
Davis Hebert	Wells Fargo Securities
Lisa Springer	Singular Research

Salem Media (SALM) 11 May 182018 Q1 Earnings call transcript