SALM - Earnings call transcript Q3 2019

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Operator

Greetings, and welcome to Salem Media Group's Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Evan Masyr, CFO. ahead. go Please

Evan Masyr

thank Salem And for us joining Thank Group's you third for Media call. quarter today you. all XXXX earnings

reminder, disconnected get dial listen if time, our a from www.salemmedia.com. can or back at at website you in As any you

Atsinger, Edward well. done, David how remarks. Evans, begin but Publishing. Executive Officer; conference President on of in town, of line Broadcast the moment are a President will once back today call the and Interactive as We'll of me questions. Chief With out are call and come Santrella, with our operator David Media, And to we prepared instruct to just on the you is submit on

results, made this forward-looking to that are on that forward-looking the advised statements as statements be information. defined based are Please These Securities currently of on XXXX. or available Act prospects Litigation under statements Reform performance events, call financial Private relate future plans,

results from growth intend Actual be future the and results not future markets, our acquisitions. materially obligation indication differ undertake do new for considered of forward-looking or may and markets, no those potential forecasts of to growth should future We performance, of potential including an opening existing update not of performance. statements, the reported the anticipated, from

website Regulation available financial EBITDA adjusted required of on and information This financial Regulation www.salemmedia.com. conference In non-GAAP free income is non-GAAP disclosure company's adjusted G, EBITDA, call the Relations cash also meaning measures with the of the portion conformity operating within measures SOI, contains to the G, specifically of or flow. Investor accompany at station

the turn call to over I Ed? Edward will Atsinger. now

Edward Atsinger

to financial begin activity, time for update. you call and guidance this update M&A Evan also you, I'll quarter with provide of Evan performance and that the on quarter all I'll we'll of and and a last quarterly cash remarks At detailed join and the then us distribution. to taking year. explanation the you recent our with the prepared turn overview proceed provide third thanks on an a conclude more to the for on quarterly back point, Thank for my information to who quarter of brief comment third will

the With bit revenue the our third last our and decline in was between we for call. at suggested X% of a provided X%. said, guidance better that a quarter XXXX, earnings than The of pacing revenue that time on

than provided. within Recurring were However, only we were quarter predicted we to of expenses able a better the a guidance operating finish was which X.X%, X.X%. decline the little with down

quarter, the was XX%. EBITDA down For adjusted

numbers me of break by revenue and Let those down terms division in expenses.

Broadcast radio sold the decline in meaningful Omaha or revenue For stations the this was A of to same-station on down considered or basis, Broadcast When markets. $X.X a Miami fact quarter, revenue was due the in amount million. that the X.X% declined X.X% and we $XXX,XXX.

revenue year, political and sales political radio of reduction but of quarter of million. political revenue, the $X in $XXX,XXX in for the million station the revenue third from year, year. revenue of to our $X.X that of of impacted revenue non-election the stations addition quarter impact In In impact this or a only revenue, third absence the of this the increased the division revenue was sold, also Adjusting political this the last by of Broadcast had in X.X% were $XXX,XXX. Broadcast decline actually

up political X% is revenue, revenue, local X%. including when a down national, basis with Broadcast out. revenue performed division, excluding was of network component and total On revenue however, well, spot and same-station factored political The the

Sebastian launched program, been the of with especially which Gorka's First We've achieved with the only by we XXXX. of pleased success pleased January network talent, in our growth America

million quarter, total or well Salem XX.X% Surround. up Local $X.X $X.X In to investment our perform revenue to due digital third largely million. in to the revenue was continues digital

in Salem the Additionally, been growth expectations. Surround has our with of consistent profitability

We're X.X% which a has only increased increased structure. efficient higher cost for revenue, despite in the expenses ways digital looking and to continually expenses. contain Broadcast growth the be more

by XX% digital This were least cut national We down views up. for offset page million led both revenue, and revenue division, decline. continued able Facebook. of however, from of was programmatic to quarter revenue were declining at in or advertising revenue the and Direct the level revenue to part Google third $X.X of the our XXXX. due to expenses In X.X% competition to

our posted increasing book strong schedule entirely with result Regnery, XX.X% traditional strong quarter. came million. publisher, a or growth almost our as results, a publishing division Publishing the revenue third from of The in Finally, by quarter $X book

All particular, had And in finally, the on done Greg those Trial: Laurie's strong In the The and America's of Hemingway's and also from Michelle Justice Borders Funding Carrie Malkin's the and well Severino Confirmation Open have quarter. American Cash: Inc.: Supreme an Destruction? Icon. Mollie we from Redemption Kavanaugh books Court Who's of book The Future sales Johnny

finally, and Pence's Back Reason of The on lineup David Why and have Democrats add Left's Win. Limbaugh's We should be Donald Included America, also The We Charlotte Trump, a How fourth released our we Not Take in Country. lineup of Karen Marlon Bundo's Gorka's Assault Sebastian for quarter. scheduled War books are Christmas the the Ever the solid in Insanity: Soul: Guilty Best to that then And Must and America's By

Expenses the in due division the to of X.X% Publishing revenue sales to growth. the were related cost up

to generated in profit the the last quarter, division of $XXX,XXX only a QX For compared $XXX,XXX of year. almost Publishing

to XXth, $XXX,XXX. report. take look for WORL-AM sold activity. the We Orlando in Let's a September a M&A at we quite had On bit

is Tampa; deal that now radio FCC might we WOCN-AM, that September, XXth, WZAB-AM fact Despite WLCC-AM, Miami and was XXrd, four WTKA-AM, proceeds and stations in in the in were until September completed. issued. for held $X.X escrow did sold closed million. not proceeds we October WWMI-AM add in until formerly finality the the Accordingly, stations, on receive Additionally, I but

Atlanta; KTEK-AM KDTM-AM Portland. two formerly sales and KXFM-AM in later KRDY-AM of have use to Louis; of Also, in Seattle KPAM-AM proceeds WAFS-AM Denver; we in pending. on September this close the next in nine Boston; Houston; selling expecting down in the Dallas; pay currently million. WHKZ-AM transaction The St. WWDJ-AM San to we We're $X.X Louis. be sold finalized WSDZ-AM week debt. stations Cleveland; or for St. KTNO-AM, in KEXB-AM, and intend in in swap this XXth, in fund for in radio We and Antonio; to We're week, early are all to KKOL-AM stations in

On the Florida, with XX-acre is and equipment associated of transmitter for October entered license site sell $XXX,XXX. suburb Salem the a to site. transaction Orlando, XXst, in FCC Apopka, transmitter retaining we also a into WBZW-AM

close We expect first on to the half this of transaction XXXX. in

items two bought $XXX,XXX. had Productions, from July digital from XXth, also journeyboxmedia.com XXth, Steel House acquired the and we On acquisitions. for We selected content for Inc. July $XXX,XXX we in library small website on cash

we return news with quarterly; price. cash the per cash of attractive distribution, paid million not our it's a represents September XX.X% it, per to it's a XXXX. $X.X $X.XXX At course, dividend call share, Finally, capital. dividends $X.XX or a And stock on current dividend; regard yield on upon distribution very of annual of XXth, share based

performance to back to And quarter's turn you, for QX. the guidance Evan, details provide the I'll call with and for on additional that,

Evan Masyr

loss, part, we allowances of to we Ed. the address to allow large recorded had earnings you, million resulted This get started stations, cumulative during $X.X to some a against necessity in of Because detailed required being the on pretax three-year before delay analysis were Thank reviewing deferred valuation release. in allowances in a perform in sale our I And the the me due our third valuation additional the quarter. tax numbers, assets.

to back results. turning Now,

the which basis resulted in X.X% total Operating expenses adjusted in million. $XX.X to million. million, revenue For $XX.X third to a decreased XX.X% quarter, a to EBITDA $X.X on recurring decreased X.X% decrease

million, of million Net to resulting expenses X.X% million, $XX.X station income Broadcast XX.X%. X.X% of revenue or decreased and increased Broadcast operating in decline $XX.X a operating to $XX.X

On operations radio Broadcast results and from XX% to million. million, $XX.X decreased Broadcast These XXX same-station of $XX.X of our about to basis, include SOI net our a Broadcast stations same-station XX.X% in net represents XXX revenue revenue. revenue our network decreased and X.X%

of talk quarter Christian our programming due review briefly total in X.X% X.X% strategic contributed event XX% decreased of our performance and stations our programmed a I'll part, large revenue and stations block and to driven, formats. foundational in for the national a XX These in revenue radio revenue format. reduction teaching revenue. Broadcast timing of in are by decrease

XX.X% Our revenue XX had news a decrease talk the stations for of in quarter.

stations lack for the temporary political decrease of these revenue. Overall, Broadcast the XX% stations revenue. our total this decreased Broadcast XX Revenue was revenue of of contributed contributed and XX% from Christian total due music of X.X% quarter. Some to

total Broadcast Media XX.X% Revenue million XX% political for with revenue and the and our quarter represents of $X.X X.X% national in business Our decreased network our XX% of from factored decreased total revenue. to represents Digital revenue.

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

As XXth, the of outstanding and had outstanding $XXX.X XXXX, September on under our revolver. we million bonds $XX.X million

leverage was Our ratio X.XX.

decrease we're of fourth $XX.X X% from revenue revenue X% total to And XXXX between for the quarter of quarter total and XXXX, fourth projecting million.

of recent X%. flat decrease to are be revenue a projecting Excluding and revenue and between total the and of political impact acquisitions we dispositions,

of increase expense of between contingent and We're to compared X% depreciation also and of estimated losses projecting the of changes $XX.X quarter earn-out gains expenses a assets, impairments, in of before compensation consideration, stock-based amortization million. on operating disposition of XXXX decrease fair operating or X% expenses be value expense, the fourth an expense non-GAAP to

this to you may and remarks concludes our have. questions any prepared And answer now like we'd

over to it here? turn So, take the operator. from can call I And you Brock, will back the

Operator

time, question-and-answer this a At be [Operator you. Thank Instructions] we'll conducting session.

ahead. from Our Markets. question Capital going NOBLE of Kupinski is first Michael today Please

Michael Kupinski

fact if cash your it all bit the Thank will prospective in have goals shortly. that be where like year-end? are station by you. sales, looking debt was you're And leverage looks going wondering, maybe about the I given And free talk a just to can little you be you XXXX? closing to what these planned QX, here flow first,

Evan Masyr

Yes.

continue QX, of our down guidance get So, We're down we'll already leverage probably or should to to still of along be all, on next our with to getting had, gave, leverage to of first we Ed with as our that Leverage that that use the goal end the the will proceeds given we going an be that, low north here in we at six be focus is so. as possible. as additional in million -- the paying debt. mentioned, but still respect to week plans, $X.X really

Michael Kupinski

point, this no dividend this on to at at cutting thing, And point. there's on of aggressive sort the more paydown, that debt plan be

Edward Atsinger

Our quarter. every Board looks it at

look a And past, recent -- it Board in and We it a will have been that has issue in meeting that on they'll an Board is take every time. that sure, I'm as December. be our at they'll meeting next early -- object make at decision in

Michael Kupinski

how network you. affect planned the that effect at sales does Got have And all? station any your business? Does

Edward Atsinger

we No. were Most sold at not formats. that the of of stations we stations lot what the Disney picked mission prices. A from consider key stations up attractive in were very we

so not significant network. of And were in most terms of them

Michael Kupinski

can sorry. talk then -- And you I'm Okay.

Edward Atsinger

I up was we flow just with going cash to them give of lot a say, didn't either.

Michael Kupinski

price there price us you. And a of if Can some XXXX? can particular, in going just prospect is increase increase? would little you a color there? of your absorb maybe be programming to kind a bit about a Got block talk January And about planning give health Are that just of you you the into talk XXXX, you of then ministries? some could they the into heading able

David Santrella

Yes, hear and the noise me, begun process. you the isn't it's bad. all not too ambient is renewal Dave. -- just We've this can Hopefully, too

do year. it's go going because year we every increases and exceptionally do doing -- for We well. we'll So again I this be they're far, necessary, that rate think

process so And far, been that good. has

are ministries we strategically healthy, very with and them. Our work

season this there. we good So, anticipate another being

Michael Kupinski

question. Got enter it's little Can and you you color final an did segment? that well a this you. you the in And to cycle, surprising kind do book bit tend more Publishing then on add election of just know quarter. the that Typically, I so a as well

on what frame Or up? it pick segment? Is just the time when starts could could Publishing in to this the some maybe you quarter. when we expect Publishing if into next happened wondering was follow-through I the continued year more is

David Evans

strongest schedule. Well, had of released. was good books the we of year release book It that terms quarter was with strong a year we the the publishing. in a QX have

tend years pleased little year. definitely performance with to years, election So, this Political the years, bit a do even-numbered better.

some at do look to XXXX. have X% history, look years tend years, tougher even-numbered is odd-numbered But we If you something XXXX be forward better to. back from about comps than to so

little a tough year. much of as the from XXXX expect comps expect of So, you'd from not yes, I bit do this but growth XXXX because to as

Michael Kupinski

That's you Thank that all color. you. I Thank Appreciate have. for it.

David Evans

you. Thank

Operator

of from is question next Singular The Lisa go ahead. Research. Springer Please

Lisa Springer

about advertising. been Thank on for pressure Or pressure around a opportunity the There's Does are ads? of Facebook you. you? political the news create that feeling lately you on lot the any regarding same political kind

David Santrella

On answer Broadcast the I'll David, quickly Broadcast side, on I to then would give side -- and you. it the

think we revenue. see On that, that opportunity the increased Broadcast certainly, political to do side, provides

Lisa Springer

Okay.

David Evans

digital Facebook the side, definitely political to is to and has that. benefit any very place, going spend of On closely, ads take is made political hope from to political the Twitter still scrutinizing a not nature. ads. decision anything That take we

Lisa Springer

in way I Spaces. books leveraging any new lineup. if And -- to any from movie? you're Okay. out, Dennis to the the seems with Is the got the success Prager he's going movie documentary that doing came any that Safe fairly new there No wonder well be be

David Evans

already one Exodus; the year, Dennis, book No his first on year, we've then, two XXXX; did the most -- two and we bible, one another we've the recently, of the commentaries XXXX; Yes, with Spaces. Safe books published Genesis movie, books and publish last of this

and we that book a participated are level. that on yes, in have in participating publishing So,

Lisa Springer

you. Thank great. Okay,

Operator

question ahead. next Steve The of go is Calamos. from Please Bassett

Steve Bassett

of on two acquisitions, high Hi. the that -- buyers And the a discussed, that to they pay pretty A larger that of of or run assets? larger asset why of One, of the the that questions. -- such a were multiples at EBITDA. feel is you've on couple of -- indicated Are sales going they stations? Do you rate those to the reformat multiple high willing EBITDA? have for those acquisition

be question of are there any assets And where is may in you any if look you underperforming relatively that looking you then, stations terms that more I as that -- be aggressive XXXX, second to well? part more into can guess, have, the is, those of that monetize there

Edward Atsinger

all reformatted properties. stick they They the of and one They good large essentially valuable and paid -- radio, have the properties. AM properties they all of for relevant were It's but they group were stations. values properties,

a have So, a have we more it. We very pleased don't they good whole and with be may more. few were command that did a lot candidates. price, could We

that the a are very radio if key you'd format, like you a Even probably and when you XXX have them though you offer, not stations, performing at network can And a attractive find always selling weren't we'd affiliate level few them. to. they got consider

course, today, So, yes, we have when develop, a few but don't have anything to that those I but of can the announce it mention we'll public. situations

Steve Bassett

leverage. maybe lastly, Okay. little in color but at year that it? you the seven the and what the will what times to you a Thanks. At it's guidance on provide discussion point and which dividend, we looks say around for details profile? or And Board million, profile the I fact do just decision, high and $XX of you minus understand circling that's back leverage a And have of gets too based for terms QX, could quarterly at cut what be bit just what EBITDA on to like it and plus leverage

Evan Masyr

Well, my in in that in to the let We, to sometime XXXX when we want just sit but a a XXXX in in I me that XXXX, in to do as -- meetings to company, that. really and perspective again position when be have the Board give on it well, refinance discussions. will you happen, we're place likely is a as listen safe

we they the where decisions. that to we as Board and to where make going to be be, their continually So, going out present EBITDA think is is model debt

not -- looking when going the is be make So, we're in looking be we're position, it's refinance. to leverage where where decision. going to but a today, think it where gets a don't that's when assume we're if I we to Board And safe a really where to at point would

Edward Atsinger

Board year. meeting, is considers the quarterly of next looks year factors meetings that but major budget every end like what particularly the And add I one the at might in for

proposed when factor the look I year. a that it. an we So, for We'll be election major be of assess December, year. the will in made. whatever decision think And It the we upcoming in at strength is budget a taking meet is will

Steve Bassett

you. helpful. Okay. Thank That's

Operator

is Jefferies. question your open. next is line Petrone go Please ahead. Anthony from The Petrone, of Mr.

to move next we'll Instructions] the Okay, question. [Operator

Our next question go Jeff Financial. from is Menapace ahead. Please of FTN

Jeff Menapace

Hey guys.

sheet? Florida Just say, a from proceeds on for ones balance the couple the the sale that X/XX of quick you me. Did Edward, weren't

Evan Masyr

That's correct. finality, -- That's got held this FCC money that on October until It and Evan. in was is XXrd. we escrow granted

Jeff Menapace

what can the with end at -- what ABL, the either Okay, at you end? availability, was me borrowing the was or quarter great. borrowing And of tell then to respect net quarter what base base,

Evan Masyr

don't have $XX number to million I exact me, usually but $XX somewhere the million range. in it's that on

Jeff Menapace

And are of you $XX of are Are availability I'm take million anything borrowings. so less availability, there is considering? LOCs $XX.X further $XX I million, $X or there reduce? had is then million I take that -- Okay. Is should -- can Or not reducing million there -- $XX.X availability? about million

Evan Masyr

September think back million since I returned XXth, at has to was been but there $X that us. LOC,

million the today's could purposes, minus $XX proxy. for So, million $XX as use a you

Jeff Menapace

million respect from just sale? you million. mentioned October -- $X you then then proceeds the got of in About with And go Okay. Florida $X ahead. And

Evan Masyr

we week have next or another million And the so. $X.X coming into

Jeff Menapace

characterize right, or moves respect of acquisition And you so In these opportunistic yes. -- to with lot a the then activity. divestiture quarter, fourth as Would Great. obviously, strategic?

Edward Atsinger

And a with very of Well, very price. and found both. to with were do business that I particular in goals how they would business, the We maintained. before, been have they're a the large like satisfied with done had that objectives buyer that way interested satisfy stations we've the in. probably and they're like they company it's we We're able cities they say and were very we the -- group properties a

both for and us. opportunistic it So, strategic I think was

Jeff Menapace

great. and then was and And the what FM? Okay, count quarter end the at between mix station AM

Evan Masyr

about about FM, and a many FM AM. for I AM. XXX have maybe how forma sales, the AM, in -- bit more little neighborhood, probably stations. We third don't somewhere that remember pro two-thirds It's a

Jeff Menapace

I all great. Okay, guys. Appreciate it. That's have. Thanks

Edward Atsinger

Most have do we number have FM We the translator also translators. large stations have, very companion -- translators. AM of a of

Jeff Menapace

have. much. Okay. I That's Thank all very you

Edward Atsinger

Thank you.

Operator

like questions remarks. would Atsinger additional at to to for the back time. I no are Edward There this call closing turn

Edward Atsinger

of for look us talking call. joining operator. to the thank call. Thanks all year to the you Well, our results for about next you, We forward on end

Operator

This concludes conference. today's

You your lines may you disconnect time. at participation. for this Thank your

Salem Media (SALM) 13 Nov 192019 Q3 Earnings call transcript