SALM - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, greetings and welcome to Salem Media Group, Inc.

First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this program is being recorded. pleasure your my EVP Evan now CFO. and is to host, introduce Masyr, It you. Thank

begin. may You

Evan Masyr

Thank you Earnings and Media you thank Group's today's us First Salem for Quarter XXXX Conference all Call. for joining

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

Edward Atsinger

you, joining us this quarterly Evan. of for Thank update. thanks to And you all for

policy. then comment distribution or XXXX. more I I'll Evan, performance. the I'll call As normally with activity. bring up the quarter dividend a do, date I financial recent And to on second of the there, I'll our financial on also a quarter to review of make finally, turn begin for cash performance first Once M&A on back who specific performance. provide provide will guidance you quarter's will then, information

of an So performance. the financial let's with begin overview

For decreased leading quarter a revenue adjusted XXXX, to the first of XX.X% X%, total decreased EBITDA. X.X%. in Expenses decline

$XXX,XXX of quarter miscellaneous revenue Let's biggest several was the decline XXXX. factors look quarter. broadcast contributed $X.X for further political revenue, political In includes and the of due revenue. $XXX,XXX quarter balance to There the the the stations the local decline. the spot, of absence division. radio revenue. performance to X.X% recognized compared for revenue On for that our local were a by from revenues of XX% the of of or revenue a X.X%. X.X% which first example, local only is Broadcast same-station The decline into down is down Local first About is XXXX, down that million. basis, to program came little

principally Facebook revenue and Google. local lose to continue we digital, First, to

the a our of advantage. they've for pricing in per other And related competitors share a by stations competitors advantage we markets, of into basically, have we cluster, and ratings, that other there they've Additionally, got advantage packaging an for seeing play in taken several where we're larger free. buy

a big Salem this quite to seeing is Surround revenue To distraction been have growing some been and sales seeing in caused staff, we cannibalization a some has Finally, favorable. the time. that other initiative. as emphasis certain Surround. But initiative, on results placed local a This extent, from distraction digital our agency terms of we're we've also digital Salem have of streams

Our the $X And offset good the showed revenue almost local This million has XX%. Salem revenue or for a modest grew a portion first local by of Surround digital time. decline. profit

our year, loss down from stations. of the Medved Sebastian Show is block Revenue revenue network doing programming stations National decline our Our Gorka. with on and Most replaced on Michael of this we is Omaha change our some primarily goal X.X% to of the to our that. sale it, due cluster declined in hosts. X.X%, the revenue well is Dr. to business-formatted the the Xst completely and network related The in we programming way Effective quarter. this are offset of of of

As we're ahead the nicely. as the with in which two X%. well expected, growing This Much we're division for or to declined encouraged Salem profitability increase of due In in national was our timing by is of of we to initially attributed growing with Easter, We time the Surround. did quarter quarter can said, first revenue a the reach in And decline progressing issues: decline affiliates digital so first quite during some that of Broadcast Salem the be the the schedule. first lost the caused $XXX,XXX. revenue X.X% but $XXX,XXX first quarter, progress. is XXXX. I of approximately Surround, and of developing change, the affiliates increased investment number expenses

quarter, $XXX,XXX. it'll by comparison, the it's course, up but show Of disadvantaged about quarter-by-quarter second in

down management, programmatic in were X.X% I division this media platforms Expenses and income largely resulted division national newsletters. and the of These digital add, increasing Facebook careful Secondly, to however, operating to in X%. business ours due are ChildrensMinistryDeals.com expense Hilary offset like Kramer's declines the two by were acquisitions, losing might Google's products. in financial digital digital which

declined two Dennis our in follow-up second have Bible: QX the strongest Finally, again Publishing Pence's timing first this the Charlotte both is were Rational quarter. books the revenue This a issue. Bundo's of Life Day in of Exodus Both are released President. Marlon that titles the Vice the A sellers to XXXX, decline XX.X% related quarter and In Prager's in being year.

The first second well, again we in largely And due $XXX,XXX. was again, the in is, year. one quarter-by-quarter so quarter acquisition, was decline that schedule comparison, of issue, extent print expenses largely XX.X% a it due then to first reduced pjmedia.com, for should But only - is the quarter the reduced up. quarter small pick With the this to to to M&A, made timing respect disadvantaged.

February We side And XX, sold are HumanEvents $XXX,XXX. more for the $XXX,XXX. quarter. Eagle we during sales March active On the website for XX, we on on the Wellness sold

in to an $XXX,XXX. the station We time on station brokerage under D.C. operating WSPZ-AM Washington March XX on agreement sell And April XX, agreement. a radio into also entered for buyer began the

close the expect the next FCC to sale, to we as days. - expect approved couple close that We of that in

to for the During to to free our sales dollar. proceeds in brings debt on these open of cash total an of price $X.X asset dollar. on $X.XXX our or the market in the for $X.XXX repurchases million $X.X flow repurchase million from an average used quarter, price $XX.X first bonds the million cash along which $XX.X That the average with cash of equates million, we

cash more we more our generate conclude or to will prepared a intend dividend delevering. brief distribution. cash As on free our appropriately, remarks we continue I flow, with my comment

worth Evan details have that based free additional XXXX. And generated quarter's in months, we to favorable the above, mentioned second to quarterly attractive per share back on per I provide for annually, share. a quarter $X.X the the this price. stock more currently a an as on our - turn million noting and current million As It's the I'll to dividend last in capital returns of paid At free characterized the share represents yield distributions treatment. March attractive flow XXXX. or dividends in $X.XX $X.XX and quarterly for tax call XX.X% stock on with $XX.X current of We upon That therefore, yield XX, flow cash the equates Evan? price. or based very XX.X% cash have are guidance performance $X.XX per also that, XX

Evan Masyr

Thank you, Ed.

a million, $X.X $XX.X decreased X.X% million, first quarter, the For basis decreased resulted adjusted increased to $XX.X broadcast a of million. on EBITDA basis, to $XX.X Net million. recurring revenue Same X% SOI broadcast broadcast XXX of from in revenue to Station in $XX.X resulting X.X% revenue total decreased million, million. million, total and which revenue stations radio expenses X.X% revenue to million. Operating These performance decreased decrease XX% are teaching in broadcast These X.X% operating and Christian will SOI and XX% formats. of to results to in of XX $X.X our radio net revenue. operations XX.X% network Station a expenses our of X.X% and programmed contributed $XX.X XXX our include revenue decreased our decreased talk the broadcast our stations and stations format. to quarter. for representing foundational strategic review briefly Same our $X.X of I On broadcast XX.X%

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

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

$X.X to revenue. XX.X% decreased and of revenue Publishing represents total X% Our million

million XXXX, revolver. $XXX.X XX, we outstanding outstanding March and of As under on bond million had the our $XX

leverage ratio was X.XX. Our

an of from XXXX second of revenue X% $XX.X quarter of projecting be the of and X% decrease to million. between quarter increase total For revenue XXXX, total a second we're

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

will back turn operator. I it to the Adam? So

Operator

and Q&A line from Ladies we Capital Markets. of you. from our question first Thank Kupinski session. Noble now Michael be Our will [Operator gentlemen, Instructions] comes the conducting

now are live. You

Michael Kupinski

you. Thank

of couple may that questions invest a quarters. if like In I to little but there, you a offering. was into Surround sounds Just you the it particular, go growth quick we little your a bit strong give light as around wondering of of obviously, give very more color bit kind here, can more subsequent

where about maybe into thought you some us think if give can revenue you you do can wondering, for be might and that XXXX just So opportunity look XXXX?

David Santrella

and services Yeah, offer Michael, growing XXXX Salem grow pleased momentum Dave with the We the we're to we're we're of see different really significant in having and of digital be the now, based couple project for the just business Santrella. a healthy that about next we'll that now. area XX that. on we're part with for very our with track numbers it years, on products Yeah, in at Right it's progress right seeing Surround.

a departments our of those and advertisers necessary that clients. We and don't marketing who very number with for the direct therefore, are have, have relationships accounts, sophisticated welcome have services larger

Michael Kupinski

wondering a for books. looking what down in discuss quarter, than spot in block you can first the of revenues. the that in then, radio, little should of a the for. like down more radio on your the if maybe sales, the if us It you. maybe on a the I maybe QX better just it while I was the you're Got looks on just I quarter, based timing market, the the different that color growth break just seeing little was just have was stronger me. trends a and wondering bit like sounds maybe bit And But the you on guidance division, color second division divisions. can little was Publishing give kind

David Santrella

that go reported a the Salem's we we to try that share of very two more And larger Yeah, assets going spot about get difficult continues have there's environment. market us. for those play tough ratings-generated those case, talked right doing a on to typically, maybe use spot a assets business. a market Most be of few Anytime environment, can And market have the predatory of for tough for that. now. have the they're the are lot that are up who against one, assets and in in a business. there that. the spot market And places practices have There broadcasters

to to spot to that at we're of of multiple all the are of give so, business. a most And share a free willing away those or radio bit get for stations disadvantage that

to Surround. we a as challenge, which continue we're Salem road is why, so So, of running down aggressively that see again, the

Evan Masyr

just in - on revenue QX. timing books add division the digital saw side. of got the when to his what to Obviously, a we timing to if little you a of perspective And more mentioned I gave than expecting projections by compared each better favor Publishing, Easter from we which our at the in we're alluded the working on on do QX, Michael, We've these prepared Ed remarks. look bit color, division to already

should division better each So than have a we see QX. QX just that

Michael Kupinski

terms the But like asset in few kind - obviously, there portfolio. for D.C. of in asset or might are Or terms you still a there us your pipeline, the of Are year? give you in are sales? of little be for of should sales, bit that repositioning the earmarked? Where in others a final potentials Obviously, are you we flavor question, remainder talk other it you. Got that sales? you're - asset like look Washington some that what of looks have about can the a you're pipeline you And mentioned,

Edward Atsinger

for can to to we critical during a The we? than a their I that those. up that willing at number that them conversations Evan of call, them? number And pay - at we we've and but would a a markets, are on. said, of a to that, little do just price a at report, a our there spin than some are And a can there cases, operating a what handful we're assets have would In we performance, question We look willing better identified call. return stations got And conversations Are yes, As point we've call would to going we number on. firm we got more in at that's call, those we had we anything that be will for off. number sell multiple better us be called of looking buyers there buyers don't And have of and of get is, people a be scale. a want it we've clustered of if this additional going that identified have last lot non-mission formats.

Michael Kupinski

question. final And Ed,

In into was terms couple the now stations, obviously, percentage that kind the so what those Disney a and are of mark, and Can speak, terms thing? in you that the hitting acquisition to wondering, years of anticipate profitability, the of we're us the in give stations are that then flavor and progress showing breakeven sort of of where of progress? a you stations

Edward Atsinger

thereafter exception the money station we added shortly translators. they're we We and probably station Louis. making second of St. a all two in acquired with Well, the developed

varying them. one Arkansas may work translators, one. work so it's station in So in satisfied We we Most a stations. and up we're AM bought that's continue additional then added more to we we up progress. because those of clustered and two progress. simply ones And and are But Disney, It's the but we others that we added that's two good to additional profitable with stations, be and FMs we've at from because, added clustered reasonably we've not bought, a very so only Disney. of breakeven, degrees, scale. added work to an But that's the some Little get in the Rock, a first -

couldn't others, some quite more been don't more is than we but it. Atlanta all in I station have it some bit A is are others the to off good. got much very productive. We do Pittsburgh. Denver making Boston, And spun breakeven, I underperform. with okay. did with We're little think pleased because okay fine. money, the think and -

satisfied with we're those - acquisitions. So that

Michael Kupinski

all Thank right. had. That's you. All I Okay.

Edward Atsinger

Thank you.

Operator

Thank you.

line question Research. with comes the of next Lisa Our Singular from Springer

You're now live.

Lisa Springer

Turner Thank what of might building to and about products you. area. that investment wanted mean ask Mike that I the sale assets the just for

David Evans

the a It business piece us. of was small for very

back him taking subscriptions. handed fulfilling products essentially responsibility we for to full all So those existing Turner, on with the Mike

disposition disposal impact publications more acquisition the offset immaterial than more significant with the that So well. much the business that are Kramer - Hilary financial was those extremely had on And portfolio. and of newsletters, performing newsletters a

year. good the some very So over we've last that business made definitely in progress

Lisa Springer

Okay. Thank you.

Operator

and Thank time. we turn closing. you. back for CEO, floor to further over queue at gentlemen, Edward I'd have questions to the no Ladies Atsinger, like in this

Edward Atsinger

joining thanks look meeting and for with Well, you our give we you, operator, performance. again, all to financial to you again We quarter forward when thank of us. second

Operator

and This ladies does our you, gentlemen. conclude teleconference for today. Thank

and this now You day. line disconnect you Thank for time. have your wonderful may at your a participation,

Salem Media (SALM) 11 May 192019 Q1 Earnings call transcript