SALM - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the Salem Media Group Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn Masyr, host now CFO. will conference your over Evan I you. Thank

You may begin.

Evan Masyr

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

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

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

David Santrella

back Thanks of for remarks financial on developments financial over After Evan developments of review fourth with more start a results of our the are conclude being I'll I'll this earnings that, XXXX. our our on who highlighting on quarter detail sales. at land today's fourth revenue. quarter to will for quarter call. for call had the prepared fourth first three We and I'll worth with guidance and that growth my thanks the call. including some then in beginning provide of and turn digital provide the quarter, positive an the Evan, update performance discuss in all positive

revenue and years When total way fourth of years you this of XXXX. revenue That National in revenue revenue ago, digital is division, faster quarter X.X% radio First which book was business. is justXX expect growth five of segment our total XX.X% ago. factor compared fourth total continue of we and our the XX% digital as and of the publishing publishing. XX.X% the was In quarter digital the a and is to million, XX% increase in is represents combined By division, an $XX.X the continued revenue digital from of growth our of our fourth revenue XX.X% revenue, our in the comparison, our of revenue, onlyXX.X% plus the revenue in our just of to revenue Digital that from of total is traditional over in quarter evolve company. was digital we into digital revenue, total broadcast within quarter, multimedia XXXX,

is we news a acres X.X Florida estate good couple $XX.Xmillion. of to of in land On acres of in moving Also, debt XX market. XX, development in the Tampa, Salem piece sales. for we sold Phoenix, locations we're Arizona land second real closing sold leverage. radio of November other of for and $X million significant on the on both The The In final January stations is Transmar our XX. our cases,

During EBITDA, been with the remaining coupled since adjusted is in X.XX. the sheet. $XXX.X XX, XXXX million. cash repurchased$XX.X and ratio XXXX leverage and growth million our the This XXXX. of bonds have our we leverage a a resulted of fourth reduced we debt This burden, using quarter, total balance $XX.Xmillion notes from XXXX, in December lowest of debt our had debt of On

comps. me Expenses did increased review to total of was X.X%. The performance. EBITDA adjusted to fourth increased a the fourth let our XXXX, X.X%, bit we have Compared quarter revenue XXXX financial which due X.X%. of but revenue, impactsXXXX the Now in of still significant increasing political soft amount pandemic, resulting quarter a

EBITDA of we Compared effect of to the We despite headwind, a of as XXXX, increased revenue. growth internally of take compared just QX revenue to to QX revenue focused that years X%. had X.X%, million the resulting out political the in two of the in increased comparisons Despite XXXX pandemic fact million remain XXXX. purposes, adjusted later, economy an X%. is had the not comparative increase completely still total fourth in total still of $X.X almost that in For X.X% $X.X XXXX Expenses we to open. quarter on

adjusted and higher compared performing to report XXXX X.X% numbers for is full of see to year, eclipsed we've XXXX. is It's In than the full revenue toXXXX, of that also in fourth rewarding I'm year $X.X than that year XXXX. XXXX full pre-pandemic to the pleased million quarter EBITDA better addition the or X.X%higher XXXX,

This of continues in to performed quarter. the growth comparing to $XXX,XXX of QX Broadcast XXXX Now, let's QX in compared numbers, to compared was impacted increased each spending spot last pre-pandemic improved revenue X.X%. political had Thelargest first increasing total we comparing more digital year. QX its meaningful XX.X%. a in in When to advertising was was is XXXX.Combined, revenue XXXX, quarter the digital X.X%. XXXX. to hadrevenueof$X.X as operation, X, look driven XX.X% by the QX at division division million. $X.Xmillion XXXX, national in how Broadcast impacted compared Broadcast the political increased with In fourth decreased digital division less compared up Broadcast Broadcast QX fourth growth component When as revenue the be revenue XXXX. also Salem to XXXX XXXX. our quarter revenue and initiatives, Salem by decreased Network alone, which revenue Podcast but to This of of recent revenue on and Surround the generated XX% X.X%in Local spot including launched while X.X%, January digital some year we being by revenue Network, amount of spot of was Podcast In QX Salem

have advertising advertising would X.X%. have increased mobile would XX.X%, declined political, revenue and national Excluding

advertising the Ministries. to concluded were X.X%. process Christian and Nationally, locally, We quarter fourth XX.X%in the block fourth pre-pandemic total compared our XXXX increased XX.X% the to just increased due compared Overall, with advertising programming it was to economy. up Comparing XX.X%. programming toQX still Advertising, to In spot we able political, National Excluding quarter. XX.X% back total XXXX. the to XXXX, year. rate increase quarter increased revenue prior total, X.X% its annual of of is levels the renewal not block in the however, decreased rates

mentioned last an block I we're demand importantly, programming seeing More our our airtime. for as on very in call, increase limited

more to With some Christian increase expect we the Ministry rate from some programming National launch expansion increases, of block XXXX. and in the than ministries existing new programs, X%

political We rate. positive to Now was revenue when this quarter XX% this had as fourth was at impact compared business quarter a a by growth broadcast XXXX. is given important has This renewal of having look our revenues. that Network down year. network last The a impacted as political this well. on revenue the quarter XX.X% generally in long-term strong

down was station of salary was down comparing digital XXXX. up X.X%, revenue At to fourth X.X%. was compared division associated XXXX, division, QX the XXXX, quarter When expenses when of income in X.X% only to X.X%. X.X% of Salem The operating increased XXXX, fourth revenue increased due quarter sales network increase with Network largely network political, restoration was down the the commissions. broadcast of Expenses national revenue expenses expenses the in increased reductions and X.X%, fourth XXXX. quarter SOI resulting the Excluding to in to compared increased were and taken our in compared Podcast the X.X% of

revenue decline decreased last digital in year X% and a national the Excluding the in strong This containment is we year the efforts. X%. cost made which rates. election, to to This to the some advertising division in Expenses QX impact ongoing had in websites, programmatic division to of of the due quarter compared growth our increased is performance the XXXX. due due acquisitions a political last

division Eric XXXX. This increased had -- Is Publishing of Rigged publishing Hemingway. of by XX.X% growth Dead primarily traditional The driven a increase the D'Souza, by by our top-performing the Mollie Voddie were in sales. We already Dennis Books. directly related quarter and was Guide contract book compared Metaxas the titles our Regnery a publishing the Bee business, Salem in Pandemia included QXXXXX, David have compared for Babylon and to Limbach, Alex expenses revenue from few Berenson, to fourth Wokeness. up Finally, Baucham, to books Atheism Publishing Greg Prager, Laurie. Dinesh and including to XXXX, quarter authors under XX.X% increase by

I Phoenix. million. sales for at have the pending, the area our I Now land had still nothing want the provide and acquisitions updates Denver We already quarter on have We no during M&A activity in this point. acres one and quarter. sale the some to $X.X Tampa X during in in mentioned pending

KRKS-AM this quarter's And this continue details of QX on and from Evan and call for that, after XXXX. closing. XXXX. We I'll for with turn the broadcasting both expect additional the quarter close to the on We'll KBJD-AM second back transmitter site guidance to performance in

Evan Masyr

Dave. Thank you,

XXX a fourth operating and $XX.X adjusted $XX.X increase radio SOI revenue to increased basis, net our of revenue our Broadcast Broadcast $XX.X X.X% X.X% revenue million. operations, increased X.X% Broadcast X.X% to million. on our income increase the same-station X.X%. Broadcast $XX.X increased to quarter, X.X% an $XX.X a results expenses same-station of million, to $XX network increased in recurring XX resulted $XX.X station operating of total million, revenue. Operating million, of from increased representing basis expenses On to X.X% X.X% XX.X% resulting in million.Net million in which Broadcast stations net to EBITDA increased in to and a These include For $XX.X million, revenue

strategic I'll revenue and revenue Broadcast XX increased These look our our Now stations of stations the quarter. are talk performance and X.X% of foundational Christian to programmed of total briefly in format. formats. teaching our XX% at radio contributed for

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

million digital revenue our revenue. Broadcast represents increased XX.X% to $X.X and total XX% broadcast Our of

the due $XX.X million to total and network for National decreased represents and prior represents XX% Media Our of quarter the political revenue our quarter Revenue the revenue XX% Digital primarily revenue. division total this same Broadcast increased from of XX.X% revenue, was year. to our to of decrease and compared X.X%

our levels Publishing Our already more a provide our and and represents of detail at leverage on $X.X debt. debt I'll mentioned XX.X% our total bit are lowest XXXX. that increased we million revenue. revenue little Dave to since X%

of million, was million made $XX As drawn our $XX.X X.XXX%, of X.XXX%, had up revolver. XXXX our notes. of nothing notes We XXXX, December $XXX.X XXXX million $XXX.X XX, our on of ABL and debt million total

agreement. leverage X.XX. credit would our ratio X.XX defined net as ratio have But by cash, was leverage been our of Our

$XX.X of generated cash of subsequent land, $X.Xmillion an notes extra from today. to we bonds XXXX to of year-end. brings as Phoenix the the the With our of repurchased This sale the additional balance million

Looking forward, to we're first $XX.X of of projecting XXXX quarter first million. the total X% XXXX, increase the total revenue quarter X%and from of between for revenue

our of value impairments, sale increase gains of or X% it operating the amortization over in prepared XXXX non-GAAP to assets, and earn-out to you, estimated questions. Hillary. and quarter of stock-based changes like We and before disposal I'll compensation expenses X% are operating $XX.X answer losses the million. we expense or on contingent projecting any the and expense, expenses depreciation expense turn between compared would consideration, And fair to now concludes also back first remarks, to of this

Operator

be Please is conducting [Operator will question Thank you. from At time, this we Kupinski question-and-answer Instructions] session. a Michael proceed your Noble of question. Capital first with Our Markets.

Michael Kupinski

great A beating Thank questions. all, off you. couple first And first of expectations. of job. congratulations – A on

the wondering, a Dow, you FM you maybe moving on to stations signal? little land clarification. just transponders? how just those – from or proceeds broadcasting still just the sales are that I'm was just So a you you're the I in Are And the working your nice and surprise. are mentioned understand trying off AM

David Santrella

No, thanks for we in area and question. frequency band we're our AM tower diplexing transmitter still words, in transmitter that of but the stations. still use off – the have same the the in radio those diplexing on Mike, signal another cases, and other fact, We're broadcasting we're In basically that's tower. the

Michael Kupinski

there have Got of other Because estate you're the And terms in of estate real do require are Denver, wondering towers that about? typically lot prospects stations a lot know – out I just you. land, that still you you thinking AM projects require still I of right? sales – of other outside still a real was

David Santrella

an We're—it's land suddenly us today from year will and a for valuable maybe become ongoing that now process not Yeah. valuable. is

And so additional every now couple we're –the fruit top the sale to that do weeks. opportunities we'll for land literally But be of sales seem of and it's right look the at to lowest-hanging making continue so of us. kind

Michael Kupinski

me I back gearing on can of Got the for do a to book in much were is how And I And political you. election firepower are typically, give how quarter curious book at I'm division? If last you guess, thing better, or stronger of kind than environment, you sense looking for election was due the sales just this you because interesting the you And just I years. the is that, season believe, that And year? kind just XXXX? look you're up publishing holding some for.

David Evans

We've good released firepower. have So we're with the new to back be They holding got titles. not cycle. timely

Typically, QX. to function did not quarter. good have they're going released we very we're That have of We in So a titles. was that many four when a go. a books titles to ready strong strong

XXXX. our up that it successful a on Greg very title. we're single We've about results. Dennis radio with D'Souza, So a own election, good It and side, mid-term It's titles good And got QX for from Bakken pleased multiple was like wasn't Christian usually excited just having that's publishing lined business. host, Laurie. Dinesh the our titles Prager, folks Body book pretty [ph]

to have XXXX at So about is under up. we just talk Too early. contract literally books about point, feel way XXXX.We lining good XXXX this early pretty the no for too

Michael Kupinski

you. Got

I just quick a side, of have radio questions. the On couple

talk the radio On successfully you side, up slots have wondering, could your the had the just radio how of obviously, we network to just been thoughts me conservative where if been? Rush had time passing Ruslan give you about performed? Have Bone. I your business of able was formats overall? some And pick

David Santrella

costs which and Charlie day offer Rush we the two ago. that same We forever, Limbaugh, Dennis launched network then different Yes. Kirk, two just Prager, are about so hosts, been part there who in years as has

Rush we if them, Limbaugh, passing. gave least from really would I gone Rush Limbaugh's couple share I can picked now, be they number We've if But some dozen Michael, picked don't of of a guessing since up they've some. picked of the so people. couple got up a lion's syndicators think Rush between number. other at different I of -- And a two so right -- that have anybody speak. the have picked of a affiliates you departure, And to affiliates Limbaugh's some kind up to some claim up Cumulus affiliate

very strong. our listeners for scratching And kind in are So the we're right to network now. -- of itching be, continues charged It's really ears host apolitically us, of the and business -- very, environment.

Michael Kupinski

-- in of you're you Obviously, are your been this terms leverage? little sales has flow. terms have -- nice a in real thoughts -- your cash And about thoughts like What allocation estate of in you significant. what be of see reduction targets talked we free terms to reduction. do your debt Evan, where would accelerated leverage? Are And there generating where debt this capital? like Where debt anticipate your bit you. do here company in to are that of you of Got terms going some then

Evan Masyr

Yes.

paring a As wireless say When a to target that said our allocations right acquisitions really, target, debt all we I we've can retirement is to can we we one about debt. will if and Obviously, being continue capital at of will far untilled get would capital. so continue for it different our some other to equal, use to good four. then get acquisitions. leverage of into as as play maybe under But now, point, get But now, you'll on right focus think number there things. leverage under that else down see are four, us be the look

Michael Kupinski

one And final just question.

On so there? little we the competition of digital little for with grow not starting the What had little national there? forth. is can bit kind a thoughts where to ease as talk easier? you you I fierce bit the or gotten know a about to issues business that things bit competition front, you see and Facebook a that are your is Are ability

David Santrella

I call Yes, wouldn't necessarily it competition.

like algorithm in able is the content two how word to Google. algorithm on constantly from of e-mail In we're people to against It see. some seems Facebook our people that, we the big to on those work over. and approach reduce kind in down media volatility reliant To favor. we're their to into reliance a and upon are newsletter we we're likes I are then in reliant pick from say We to In of Facebook somewhat e-mail growing the traffic strategy to have calmed that search And from it's case I'd communities. And their less the upon of organic news letters. between these of In constantly changing those the Facebook, Google, e-mail case hope is We it's traffic from is subscribers, inbox would big Google. -- two changes quarters, delivered algorithms. Facebook of massive does XXXX the other subscribe quarters, to upon But and effort organizations volatility receive reliant changing. of engine having the And algorithm where the traffic social our then. adjust traffic. our works based advantage seem be And since to putting our on saw media the Facebook, social us. their and constantly platforms XXXX.

there So changes to I and going and that. have expect to continued to we're be react to respond

Michael Kupinski

for color clarification, the That’s Thanks you. Dave. the have, and all Thank

David Santrella

Thank you.

Evan Masyr

Thanks.

Operator

next Springer of question. Our your with Lisa proceed question from Research. Singular is Please

Lisa Springer

a nice on Congratulations very quarter.

David Santrella

you. Thank

Evan Masyr

you. Thank

Lisa Springer

My and up digital that was year-over-year. with sequentially bump wondering there the was margins, margin. question what can if is both nice operating comment drove you media in improvement a I

David Santrella

this. Well, broadcast you both I be-- side, you on the might answer David, and and

we've side, broadcast taken the that of more On in-house.

owned to are that simply operated, something keep that. So our have do display lot reduced ourselves, a other ad need that owned assets, margins can we third-party time we of is we and something fulfill third-party it's of a buying words, when and a fulfill digitally, to to our Or operated Every use in more we we if it. that a either money. own one don't on sell

for all was there operated -- business lot of higher-margin so is and and owned ad-injected And us. streams, and sales, sales aggressive more a and that stream

David Evans

growth importantly, operating revenue margins. improved drives But probably more

business. our digital We have profit incremental solid margin a in very

grow able in than expenses, that to faster So if good operating there's revenue we're business. leverage

driver. revenue the growth big combined mix, probably with revenue but revenue is growth So

Lisa Springer

color. Well, Okay. for you the thank

David Santrella

you. Thank

Operator

question. of with Barry Please from your Our proceed Sine next question Spartan is Capital.

Barry Sine

couple Hello. Good afternoon. A questions. of

us impacted guidance, underlying much to how could that on X? the growth, I all, normalized don't M&A of growth you and that a between to First X% difference give X% rate? number? be the that the normalized by What's revenue would first Is material transactions. know quarter the X

Evan Masyr

X same station think to done X, materially approach X acquisitions haven't X number. we reasonable Barry, so I to the would it change of way same-store is Yes. kind of type that a from much or in

Barry Sine

That answer. Okay. was easy an

us if you overall a M&A In I strategy back sense what of the is. could terms step strategy, of wonder kind and of your give

On the and monetize looks sales looking on assets, so you're always side, you land have the like books. to on it excess that

-- types market year, be to? acquisitions side, that look any purchase pretty of we to are if you surprised looking are? there this the is And looking out you're there add the are much additional how we or acquire, On see to there? does you happy assets where Should

David Evans

XXXX. is Probably the best to indicator actually back at look

we and to that did two was in other stations think San Shift XXXX, media a then of Center we churches. I Line and acquisitions of digital in who assets, That video $XXX,XXX producers Francisco. resources radio both sell Worship and three couple digital content

digital that all we those So We've find assets. tuck-in attractive got we is And areas radio in looking those portfolio, for our stations, we into focus. that delevering. acquisitions the are the of easily what media are can complement radio fit think acquisitions two What common are very immediately space of if existing the they're in multiples. stations have

delevering. they neutral or were leverage either So

those say pretty tying back acquisitions. our that kind I'd comment getting to we're on criteria So Evan's about goal leverage to we're going be four, below focused of about disciplined of current are

Barry Sine

my a maybe and history? correctly, a I you than actually last for broadcast of us the presidential were last election. the give bit I And higher midterms the environment recall spending advertising kind prior digital. of think on political question Could Okay. is if both

political that ad you still if we elections these are be So should thinking are maybe of don't about still year? seeing investors to rest for that but they early, may primary I trends And were at? going spend be the And the it's can for indications indications any early we're So then in of most start that for the investors see offices? early seeing are what any for when midterm. know looking you again this

Evan Masyr

historical let me may some that help. you Barry, numbers Yes. give

back last to was million. way, cycle $X.X by the million. had The If the the midterms XXXX, we previous million. So the previous presidential was in I last $X.X $X.X were about And presidential, go it $X.X midterms million.

stronger. seems I'll cycle bit it political. seems a right But on David and be maybe like getting now, Dave little to comment let So every

David Santrella

Yes.

On dollars are digital not at our to way. starting this pitch, on a little increasing see side? It's fever come we the side, more at almost yet a point. but it's I David, mean... broadcast bit some digital the weekly

David Evans

Very of spending. political little political terms activity at this in point

Barry Sine

questions. taking for you Thank my

Evan Masyr

Thank you.

David Santrella

you. Thank

Operator

next [Operator Riley Eddie is with Please from question question. of [indiscernible] Instructions] Our proceed your

Unidentified Analyst

Hi, guys.

Just into in you for some think driving going guidance you the to you’re give X% QX QX, us strongest insight what that growth to expecting over segments could X% be are in XXXX

David Santrella

Yes, Eddie, is, there's categories. to a few. now. more any People lessened, big being see it, not and it And a if from going of mask The very are these having to indication right? requirements you're are back, news continuation QX the some is wear of of – Home is gathering. a of right I vaccination Events ad comfortable think improvement

People couple events, education both seeing sending school things they're that's good. very on is rethinking Recruitment of digital. is and schedules, like last And their seeing advertising are result right ad kids that we're and at we're that years, very So to concerts, creating where based institutions, over is high comeback. Real in broadcast and happened an what's the some for estate big. all-time now. opportunities

David Evans

slightly our give vis-à-vis a segments. let different And business perspective kind me that on just of

to Our weakest publishing. segment is be going book

last releases year. year a lighter this than schedule of We have

terms to to in So very quarter I a And but be leading publishing the to solid surprise, we segment, expect expect down. be would digital of have no block also be our expect I strongest way, is to programming revenue. book digital. going

the kind So of color of that segments. revenue kind our in would commentary terms be of

Unidentified Analyst

Got it. Got it.

advertising home to advertising, a expecting rebound say I'm to you're the little what all guess And recruitment bit? improvement, so trying events, these see so really spot is in will --I a

David Santrella

spending see categories expect at a for spending fact hole, leads yes, to Yes. to these a ad not to of are spot Well, level, that to so opportunity now spending spending. improved And of continue local see advertising money greater COVID money longtime it the were money and crawl out many of to I ad our we speak. kind so the think, or

David Evans

kind spend. those facing causing there marketing supply issues, to chain ad them are on Obviously, particular where some are supply still those categories and chain hold back issues are industries of

ongoing there an So is of challenge because that.

Unidentified Analyst

And a in on it. you question for corporate more the unallocated elaborate bit sequential last jump little Could Got guys just me. expenses?

Evan Masyr

comparing to QX? You're -- QX from

Unidentified Analyst

Yes.

Evan Masyr

Yes.

bonuses the senior throughout of bigger we -- started that as We you'll year, for we results see kind accrue paying planning issues of the until to were saw improving management the bonuses. weren't on One is bonuses that.

one you'll the that's So of see. things big

Unidentified Analyst

Got Thank you, it. Okay. guys.

David Santrella

you. Thank

Operator

the now back have remarks. session. reached David over question-and-answer for to We call Santrella end I closing of the will turn the

David Santrella

and part being for months. everybody, thanks, you few see of Well, a call, the we'll in more Thanks.

Operator

This conference. concludes today's

You time. your your Thank lines participation, may great a you for at disconnect day. this have and

Salem Media (SALM) 4 Mar 222021 Q4 Earnings call transcript