SALM - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to the Salem Media Group, Inc Q1 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Evan Masyr, CFO. Please go ahead, sir.

Evan Masyr

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

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

David Santrella

recently Evan, I'll D'Souza and Evan, on focus for our Thanks, I'll my conclude call. call collaboration on remarks, results, update and to then provide and M&A all financial Vote. discussion give back our QX. including an performance, financial will of on QX more thanks growth first the released of and Dinesh produced movie continued quarter True being with you Evan with prepared our digital, turn the today's provide on for The to in who in guidance will In detail

Digital I an million, the Before Broadcast the revenue numbers, XXXX, Salem's first total into digital our of quarter discussion division increase is the get was revenue. highlight company of want plus revenue to of in total from $XX.X represents revenue, that a quarter division, revenue a the XX% from digital I overall of continued the XX.X% within now national of XXXX. revenue growth continues. as evolution Salem's the into digital first In combined our multimedia digital the

$X.X to more adjusted this first $X.X X.X%. million decline of increased worth I'll to that Salem's in With growth the XX.X% million. decline X.X%, publishing of book expect Compared in income, XXXX, let revenue in the or detail for increased Expenses some resulting which in revenue noting in It's said, EBITDA. the We a operating of level quarter discuss time. quarter. elevated first for continue quarter the to of total performance turn me

of book EBITDA and highly adjusted is So for X.X% total publishing and would success up been book the was X.X%. quarter. EBITDA the have dependent down to XXXX, the of releases, revenue Compared excluding which QX adjusted division, was impact timing the flat on

this ministries. X Now the due demand is principally areas was mentioned up from on let's note compared traditional growth programming have in division block dollars that national calls, that ministries of plus was it's how limited block programmers look the will quarter XX% last last program increase so from some and for in in X.X% result on increase a the is to up and XX.X% that impact this was radio growth I Local first ministries] block terms [X the in programming largest airtime the generally National first XX% up and have national of on and of earnings The division the to broadcast at X Broadcast Salem's this elevated radio footprint each rate we was in our block Christian year, for that. mind growth this quarter. XX.X% revenue. the in biggest driver business, expanded their will in renewal a of long-term encouraging Keep evidence Revenue division to revenue, in of positive revenues. this performed a programming.

many spot had to national in about due to its national X.X% local National ad improvement reasons spending levels. cautious down slightly, is for the spot still was down XX.X% the advertising and down this advertisers economy. spot growth revenue a revenue. is as concerned of revenue concerns with network X.X% to the Salem recovery, yet pre-pandemic of advertisers was due not just spot COVID is over are their same the economy. Additionally, Much the advertising being local by back Also, inflation state

decided Salem leave read network hosts, pursue to of Salem radio and Elder, have other opportunities. one that Larry the national may You

to X did decline network in While Salem replacing p.m. Governor. to we Carl as just Tatum move Elder. the on Larry's We be Brandon Eastern once announced on, a filling Time with on decision for do Jackson not permanently disappointed Larry's are significant again Larry joining X the revenue. radio over run he we during will has that been expect in slot

be X.X and former our with We network. million addition, Brandon Salem political be podcast Instagram will doing subscribers followers. daily In he'll on officer well-known great for commentator Network. believe a fit police YouTube a Podcast a the is he and XXX,XXX

again. Finally, primarily the within division the of the bad in resulted XX.X% X.X% of in Broadcast revenue Expenses driven growth expenses revenue income. decline Townhall employees increases XXX(k) match, the in in Broadcast conservative in operating expense the million year. debt quarter and by big a XX.X% Salem are at increases in Surround. quarter to reintroduction X opinion of traveling increased which digital $X.X a increased to are Revenue increases the drivers X.X% division at exclusive Salem's in the first a last is station first travel Media, expenses news and service Salem's now which compared digital group group that division content. VIP, Townhall of subscription increased entertainment for saw from the and national websites, of

We from the digital a also ad saw growth in an in increase division rates.

Finally, the Children's both increase Church Sunday Church more open staffing, now meaningful Products job in deals which are in Ministry in postings. had growth schools received business as a large

to newsletters Worship, of Salem's in Media digital impact by were in of the and some Shift Expenses offset partially the have revenues. the X for some X.X% the investment driven division reduced noted acquisitions in increases due year, down increase last broadcast Centerline spend division. as marketing Finally,

with now the some we The activity. sold release site. revenue $X book land by division the There KXXT-AM. The was transmit being The Corporate the station compared in for release in of quarter Dennis in for Haggadah of now scheduled the lighter and book and X.X compared one XXXX broadcasting The was on continued management the The will and by X for million area I'll in the operating level the were in expenses match signal this XX, Closing improved stations KRKS-AM in $X.X acres books close expenses January loss publishing in still heavily of Book operating is quarter This sale which KXXT. in by book continue million relocated used KPXQ-AM year. a books process increased in for also of $X.X KBJD-AM Rational acres accrual Stanley; in said, the sold. discussion is Zelensky were: make due last from mentioned, had $X.X The Passover On the XXX(k) both XX.X% is Mollie book briefly by That occur work owns due quarter, the XXXX in whereas, during result division being progress, in sales. income our June. already an publishing expected XX.X% evenly of as to did an for first will on senior Denver is to Retirement reduction distributed. I had which X, publishing backloaded, quarter Hemingway; a first retirement X M&A Financial Eagle million. the to site first quarter site of Charles of this not to bonuses million in Rigged diplex quarter closing. Salem transmitter Urban. Airmen on significantly after Prager; acquired $XXX,XXX. last year. actually Andrew the reduced acquisition schedule quarter did to the websites as more small was year. down an Media, top XX.X% our Lastly, turn to May the Phoenix for last in Lost

multimedia in Trump, producer that, some example video This generating and almost very back but expect and in solid congressional released and display representatives. want was and in XX% theaters for will media exciting the early properly back I too and sole and The the investor both of seats. Evan The will from film call Donald additional turn at the to of in the movie we documentary, X-night revenue sold this to And Mar-a-Lago this I and It's by phone evidence QX. of a $X.X hosted a at Salem's approach impact many fraud XXXX XXX turn investment the for QX executive quarter's a movie. news. for is President guidance Wednesday make prominent XXXX to of premiere I another in was Salem The with up, movie carpet before date movie on red profit is estimate performance included revenue. call Now pleased with Mules. conservative the the window personalities, election. available share in results million to and end special where the last great certainly release mobile to details film voting event Salem's are is the Evan, presidential in out to

Evan Masyr

you, Thank Dave.

their to the to our earnings million. $X.X calls For million. It's a total expenses on X.X% revenue a in revenue recurring XX.X% on of many resulted levels. increased are to adjusted noting which basis they worth $XX.X Operating quarter, EBITDA XXXX peers increased closing how in $XX.X million, X.X% in first on are decrease broadcast mentioning that

For third this Salem, XXXX. ahead the of quarter is with revenue the consecutive in corresponding quarter

net broadcast include revenue. of same-station of XX results net digital decreased basis, contributed Broadcast comparing revenue I teaching talk these from represents total same-station revenue operating X.X% income news broadcast a the $X.X $XX.X QX of Overall, contributed stations for stations the net our quarter. Christian revenue XXXX XX.X% Salem's $XX.X broadcast formats. represents XX increased and XX.X% stations broadcast year, $XX.X the and XXXX, briefly for our broadcast $XX.X for quarter. revenue foundational revenue. million XX% our increased Compared contemporary total of radio of programmed and X.X% of a performance revenue strategic broadcast XX.X% XX% to SOI As format. in our review had million, of X.X%. Christian increased total million and expenses These stations last our Dave of broadcast These station increased decreased contributed XX% revenue the and to talk increased to XX.X% of XX% radio Salem's QX X.X%. mentioned, network XX increase total in increased from On XX broadcast million stations resulting stations and $XX.X to and broadcast operations decrease and to to revenue X.X% to total music in revenue. XXX Revenue will an revenue of the of million, operating XX% revenue quarter. XX.X% are million.

to represents total revenue. the network of decreased increased digital X.X% $X.X revenue total our the $XX.X broadcast XX% to revenue. represents publishing and national and revenue from Our million division revenue. and total XX.X% of for represents Book of X.X% Revenue XX% million decreased quarter X%

$XX X% Salem up ratio increase XXXX million second As ABL on Salem revenue credit of Notes. quarter XXXX, Salem to and the second quarter debt projecting was of operating expenses amortization assets, of to between gains was Operator? to in our disposal XX, XX% million. of had XXXX, contingent of total losses million, compared as and of to by value of is now expenses X.XX% March XXXX leverage expense, second quarter impairments, looking X% is prepared expense projecting this $XX.X of and the non-GAAP of and X.XX before increase and changes sale $XX.X million total would the consideration, $XX.X million. revenue $XXX.X estimated million And remarks, for of between our X% the drawn And also questions. fair expense like stock-based defined or made total we on agreements. of XXXX revolver. nothing its Notes $XXX.X The forward, XXXX from concludes depreciation answer compensation any operating earn-out

Operator

line Instructions] [Operator Markets. NOBLE with Michael Capital comes of the first Kupinski from Your question

Michael Kupinski

the So start the -- with guidance. let's

now guidance was drivers can a than of number little Maybe us if could I then some versus the what I thought are are what the talk titles environment -- year, about just little that? And looks to give just have little you for And you a was we the a bit is there. about the in wondering stronger with I cycling questions. expecting. So key books' a further titles, -- better last

Evan Masyr

this revenue part Broadcast the seems about in of is have may little it. XXXX little everyone That's Mules. is Obviously, that for doing a to else indicators. be QX. That film, -- Evans Digital a better. David it's strong. of something bit to doing positive a just -- Yes. titles. some want nominal amount also bit kind a the wasn't different revenue But in we also in QX revenue, or in Certainly, that's QX some than mention QX. guidance talk is of Publishing better getting book of

Michael Kupinski

sense for in And you. what of of you looks year? guys can that Got titles, the like us balance give the a the

David Evans

are one is in soft on Schlichter, QX. book book Limbaugh, So of got are lined publishing, but publishing scheduled in and the up Kind Kurt ahead, for Ted QX Cruz, QX who's all Bee, Dennis those writers titles our from Townhall, Babylon David books big still Prager, looking of QX. QX. all We've of books the and top

in likely It's flat that QX, expect down to year increase from a at. be a big of even wouldn't book So I publishing you half should the bit. second be looking more the or little

Michael Kupinski

commoditize Just Got -- in $X.X little you was film, you're talk have And expecting? you. And of contemplating a of some of what Do point. sense some type to then it can you're you million you, theaters your understand a this platforms? bit, revenues cost kind was terms you're bit about other I of return in the how at the and the film? further little on then what XXX guess, that of

David Santrella

[indiscernible] production was the for XXX investment premiered So it It moved of both The film. in the film the the yes, initially a there. premiere on at this Las showing a was also on as And transactional as platform at SalemNOW, in virtual to which Mar-a-Lago, of theater as as release is had well then video-on-demand investment our about in off, -- million screens $X.X Michael, of theaters, days. and then XXX an Salem's paid marketing was then first available X Rumble/Locals Vegas. film the Saturday,

it available the and kind and of that's was of which significant Rumble's -- as well available film. right sales, on are DVD as now, Sunday, is on SalemNOW as So and for

gone with kind of that's we've it. So where

that right that And it's now. tell terms that nice I where really expect But our profit and you there. the a on is. pleased see to seeing pace to very we're In we're with -- will revenue, early the of speculate

Michael Kupinski

documentary, of recall. do us David, how thoughts are of are view And on a more into I if in kind your mean, of trying getting I'm What how kind you SalemNOW? you to plan Obviously, you movie content? thoughts of give adding understand, SalemNOW? thinking develop I you're you can your business? more to terms the But it's just

David Santrella

give as Yes. few David are That's those But specific to calling we interested and some color and card make content groups. appeal related to fact comments, again, Christian, that very to a well. values. And what the conservative have is Evans best is family-themed that do we some I'll I'll appealing in Salem's audience to

And so us as in it a result allows of be the produce. that, things to kinds targeted of really we that

followed Adam that those. up being of of XXXX other to that last movie, and invest or Uncle to audience And platform. That Prager a significant in Larry appeal a able so that hit. year We've content this Tom. Carolla. We will another Safe SalemNOW us of lesser the Dennis course, with And and had it great acquire is with put did No than was example of movies on from hit Mules, just is Spaces Elder's SalemNOW which now, either

additional So from and on at anything Michael, that? in look from available to put add the both investment can going we content existing we potentially movies continue an forward. that to documentary-style that's other then to site David, content, curating

David Evans

Yes.

I end expect to highly us pool. kind into We're think the should be of the summing movie not you into to jump selective. going deep of the business just

resonate we'll is. know We with we looking that who a audience our are them. fit for We for So know our audience. be fantastic think what movies topics

topics audience, right timing. is going by right we're audience So with on focused interested our our talking the you be about in, very to the sweet right to the that spot brought talent

of right the now. think And Dinesh see a get Mules on D'Souza. of The our movie all fit much XXXX topic is is D'Souza that I very of think our the have we and audience great with Dinesh minds to aligned. things you audience. those I for

very selectively. of a movie So small about thought expect investments number all

Michael Kupinski

News of updates Salem my to can related then thoughts you're the much news question. in Got XX% to how expenses growth that And to Any Channel? much elevated be final just about, of give talking related X% of then the expenses channel. you. might some that us if kind the on you on how QX, And

David Santrella

Channel make the progress. Salem continues to News Well,

That's We have video to our addition podcast an the Wilkow. first Salem We video-only D'Souza put, with program Channel. on as Dinesh have in version. that, edited the on Andrew News now also

hosts to have video-only now few in which So our a are network there, programs. addition we

out We have expenses. slowly we'll rolling those control launching, additional video-only be some to programs of that kind

where with pleased with we're So we're Channel. Salem the News headed

beginning the product there sales good are right. moving be get in wanted be to effort starting the forward. aggressively as We that really and more is more we signals we'll sales significant moving process just in the We're to right product

Evan Masyr

some Salem I the Michael, relate News to to in of increased weren't certainly expenses XXXX QX in that was related say expenses going around to Channel.

the to personnel run video-only some Andrew Wilkow the News and the show example, Salem of of needed Channel. For

that does elevated of expenses in quarter So some of XXXX. impact second the

Michael Kupinski

out elevated that break breaking to way expenses time? not you're a or out this there is at And those

Evan Masyr

point. not out separately We're News expenses Salem Channel breaking No. at this

Operator

Your next comes with Lisa question from Research. Singular Springer

Lisa Springer

couple more abortion the potentially meaningful of Supreme wonder have thinking political taking spending, the ad about again, up half. questions Court I issue political towards impact ad that of any to second spending? have kind I the with you on a expect do

David Santrella

lot that to it of perfectly A impact I've ad fair transparent, given question to and thought be political would how one spending. a not

of button both of Roe a and increase v. to Roe aisle the was of. play So guess, obviously, impact hot seeing because in up in political mean, Whether probably QX it it becomes would we're spending, says Lisa, Wade Wade my tell the v. or political I this, already want sides but significantly, that year. of would ad an I ad can intuition that look, will off issue reversal this you I spending,

parties. for the of I it So ad spending will increase intensity probably political think both

Lisa Springer

about ad to could Okay. true, going I expecting to is is heavily towards margins? impact with And be the have compared next more And that cycles? cycle question how weighted than are you your if broadcasting this political previous that it's that digital

David Santrella

political together. have digital. of slightly political vehicles great about vehicles margin budget their with is creating ample that so are any them come Well, talk all general, smaller we amount off, in at news -- them advertising, into and Those the The and the digital of an now. we increased I action great been and and a radio go effective the think to ad first has do robust talk we that advertising, time the about a digital radio trend very offer digital Radio creating combination than potent effective combination. always awareness, does. X But of

And season offer this to so we have. we we because look more have forward than actually political to ever

Operator

question with comes Spartan Barry Sine Your Capital. from next

Barry Sine

on But generate. giving know much through how of the XXXX us you I estimates not Mules if revenue mathematics. First, could you're kind could walk

we were over make do the I would $XX own what, do and I on do of revenue? $XX of think know might to economics And many people economics stream estimate of to stream our all movie If that kind SalemNOW. as get the movie the how it's, flow-through that How an can kind that so assumptions? complex. math quarter, work own our I

Evan Masyr

It Barry. you that the first the you're accounting. production is money the back right, when then But a talk marketing about movie complicated And first. cost. the paid is second, gets And thing issue happens Yes.

interest money $X.X So proceeds. Salem a the will little get of of plus million on first that bit

us. will that come to So

that Salem into on streams the will split rest that from And LLC, the percentage a film. The film. the of there, the get proceeds being participate the which of for owner certain is there's the well. after we anyone Additionally, a SalemNOW, in that of as distributor go then

Barry Sine

first that million show recovery, up chunk, that revenue? So the $X.X does as

Evan Masyr

the LLC and in that. control like auditors and things we're to question discussing still a figure to wrestling the outside out with how is one that and accounting. do financial exact correct established lot our It great with with has a That's

was there in no QX. revenue So

QX. something get we So we'll as this resolved is into have certainly

Barry Sine

of I seen relates Okay. also, you've SalemNOW, question to and larger a issues around this And kind macro on publishing guess, Regnery. at

as you becoming a over term, don't more of or movie authors publishing? not Prime have allowed the I next would they're banned traditional if shown, larger to even A just or see movies, opportunity? population blocked Are in or as themselves publishing but movies kind the several significant is that a proportion described other that you've platform, this welcoming large And be of know driver canceled titles, conservative. As growth do the creating on you whether get in new years? Amazon seen longer houses, or

David Santrella

I'll let David address publishing the address David -- Evans the part.

On of say the SalemNOW a Barry, I couple part, things. would

First off, general be they before can appeal banned be would that site other or marketplace on just content very we would into for put to content SalemNOW even get you may on millions easier films there's -- it a be it platforms, on more of to, on we platforms. that and it's unique audience through -- that them find than our titles sifting some that

so largely all show Christian other and culture. site up at certainly, maybe general SalemNOW find home content just can do politically well. that becomes cancel audiences audiences platforms But our then just interest wouldn't on for beyond home conservative to that, due for a on and And content the a

and say we that shows will to if still side. book you that's I on very content. to sure take that David, our seriously, is content any I address Salem that However, up don't site responsibility, make know and And the this, want it responsible has publishing a

David Evans

those conservative that's the think And be of also books. definitely written. what we that a book fill. proud offers, and Dave gap our seen And recognizing -- kind certainly to us. turn there's we've sought or opportunity think we York publishing that's We're of we we the But good there, New we've fit been are for want a for an Well, general cancel authors well of opportunity number books and publish. away we're and and we've an certainly that that selective, signed and up market every we said, those are very audience a publishers to

movies. So books an in and opportunity in is both it

Barry Sine

Okay. in X-part free question help flow, can actually that around you forecasting if X cash to last and there's question. And question, parts my a us

video I upgrading stations of add to First you're the of all, many radio capabilities. know

both operating to going So expense. capital expense presumably, elevate that's and

can you know linear. also And interest not any if color on So give us that. on I then expense. cash that's

I higher think that XQ. tends in XQ be and to

there like give outlook what of for look the could and some there, you If rest cycle some us will help the that year.

Evan Masyr

Yes.

certainly are in TV-friendly but sorry, Washington, we on studios. radio, upgrading that some Los and Channel. have air, D.C. on on in backdrops and have York -- are also I'm D.C. to New for the our Washington, Salem So our more We already kind News of Angeles hosts of

more see this for in the CapEx. cause Not more necessarily certainly line. much CapEx some You'll year of that a and the elevated in will be OpEx,

I tend June interest you're -- June right, with then down, million is to $X or interest, talking the that. our far payer as just And as will and think with where pay our you see interest every you're over we December X interest every X. And debt payment in and December.

with basis you're $XX.X million. our on combined debt, a looking, So current

Operator

Riley Hutton. Edward [Operator next comes EF Your from with question Instructions]

Edward Riley

the question. piggyback going the like allocation Would more allocation below capital the to thereafter. to ratio of by year to reach throughout your on X year. if And you what capital CapEx on looks you're the love kind leverage target of and hear Just think end

Evan Masyr

some M&A sure and I'm right it good see see the see. default but this We And not paying remainder of any certainly look CapEx we the we this debt the to -- We'll makes to capital question, that at is point. we still continues But we've we're at have elevated I year. to get if X far don't round Obviously, X? of We'll down of opportunities opportunities. year your at pass focus level going of have we end I as up to doing below at towards debt you'll And year, things the you some kind how lot I point. as look we're what leverage then, us that. continue be don't And to upgrades. by will that made to think much but hit Yes. studio sense. working that's going additional guess, allocate our what the very when target, on below retirement, them, out out see that due of yes, on to like look end now, a decisions on we'll capital there. really unless allocation, we

get thing there. first to just The is

Edward Riley

Got particularly maybe of you. subsequent terms use look quarter what quarters a we And like improvements? on should tenant guide the as first CapEx, in the for

Evan Masyr

decent Yes, that's a number. probably

thing same for and higher automation is of the that various the we're be also automation the to of of that we're say a will getting one be we're the vendors other all our The the that vendor. process will systems it systems year bit in different our in in half right all of But probably have little process automation upgrading back on doing uniform X the now, system. we them markets, in

will as So associated some that be there with well. CapEx

Operator

is question from next Kupinski Markets. a follow-up Capital NOBLE with Michael Your

Michael Kupinski

like update are just land I a rabbit seems additional pulling you maybe any you It so us sales sales. of sales wondering on was hat the if in out finding of guys of asset or some and can give forth. land visibility

David Santrella

for continue we other Michael, to Yes. opportunities. look

our it, if relocated for getting division what and opportunities transmitter or were is diplexed to same And the sites. those are for then that we sell always the is what updates whatever. or on real land are values Our time, what the estate marketability at being

we're grabbing we'll I now, available, those of move all from then the think there. to low-hanging we And want get forward that's and fruit right completion to that.

Operator

call like end closing And turn David back session. we gentlemen, to the question-and-answer the of remarks. to reached Mr. for Santrella have the Ladies and I'd

David Santrella

next Salem appreciate for for the Group, to We questions. call. forward speaking Thank you your your on and interest Well, being look the quarter. to I in again you Media thanks, everybody,

Operator

This concludes conference. today's

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

Salem Media (SALM) 14 May 222022 Q1 Earnings call transcript