Earnings call transcript Q1 2023

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Evan Masyr

This is Evan Masyr. I'm the CFO of Salem Media Group, and I thank you all for joining us today for our First Quarter 2023 Earnings Call.

As a reminder, if you get disconnected at any time, you can dial back in or listen from our website at www.salemmedia.com. I'm traveling this week, but I'm joined on the call by David Santrella, Chief Executive Officer; and David Evans, Chief Operating Officer.

We will begin in just a moment with our prepared remarks. conference line, actually you and to questions. the staying I'll on done, submit the on I we're call know, operator be how Once will instruct

results from relate no statements reported or statements prospects are considered are statements, indication These available Litigation forward-looking acquisitions. future those update under currently the this Please and markets, Reform performance, financial be anticipated, defined should not opening performance existing an of future made information. as forward-looking the of based or may Private advised not plans, events, on that potential do the call be of differ We growth Actual intend our forward-looking growth that markets potential the to statements including of from Act future obligation performance. future results, forecasts XXXX. and materially for on undertake results Securities of to new

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

the And Dave with call now that, I Santrella. will turn to over

David Santrella

for update the Thanks, guidance and I'll results. more details quarter I'll Evan, on start our us a financial to back the first provide and today. I'll of thanks, and quarter performance to debt. the Salem's first call discuss quarter. an everybody, the my provide with call on for on then give joining Evan M&A review prepared second turn remarks some

annually difficult performance XX.X% declined on X.X%. for of XX.X%. March expect our containment revenue through total the addition state economy, but up save $X.X approximately quarter this about representing increased to cost the adjusted necessary associated million million. decision we severance the EBITDA total, workforce were $X late were to to recognizing the other in made the actions. in expenses. The quarter off lay of and In we XX Based in Overall, these positions, Expenses and X% first first cutting cost

As the remind revenue. our the footprint. digital calls, in in digital with of recent revenue revenue to overall overall revenue of When quarter now you and XX% on I've the summarize total I Broadcast to X.X% magnitude we digital division, of digital our National done combine want our increased the first included represents Digital division

continued invest and it in continue growth. opportunity We digital see for to the as best

each quarter. QX. review I'll had division of first financial of division in The decrease the the performance in Now Broadcast slight a X.X%

us increased We causing saw during in This by block X.X%. overall showing industry National While is economic both is noticeably which, spot programming it due pullback. for than for the X.X% is national cause is which Miller advertiser the again of weakness increase spot by markets revenue. biggest challenging is the broader decreased economy, XX.X%, decline, the the it Kaplan, decline where to X.X%, resilience traditional local times. spot we industry, it better declined to The operate. a once according while the in and

improvements, from mentioned News Channel. growth, the Salem XX%. continuing growth the I the in X.X% growth. within network Broadcast continuing This overall and of popularity. shows Salem by their Network growing continue very digital came X.X%. of Network also grow division to businesses included these nice revenue that rate to revenue Podcast that digital a our number This from earlier increased Salem revenue had are results in invest We're revenue to Surround,

Salem continued News initiatives. in our XX.X%, the due increased the investment largely On other the expense side, and broadcast Channel expenses to digital

certain planned eliminated said back and have have we scaled a of As positions earlier, number I investments.

QX, in to We're That at the other Revenue websites. X% less changes has present Salem's by of Townhall some change algorithm third-party political-related still division significant traffic Facebook on XX% opinion to news and made our headwinds conservative demise and led Facebook and cookie from facing decline approximately Digital of in content. the National increased a

the advertising acquisition Additionally, have in the overall associated softness Line revenue however, Gilder Products George these dollars in Investment declines, the Offsetting with declined February due to is the economy. of of XXXX.

strong Eric increased we're first Book marketing. Grant Newsham. by division to Metaxas XX.X% up Attacks quarter Letter Digital due after the of Rosen, Life marketing and Gilder. to costs. were Book the quarter, division George XX.X% increased sales. primarily from in Publishing by due biggest the by James The titles by and When in to revenue American Josh variable Church were increased to In a Expenses by second X.X%, backlist Publishing the in year Manhood revenue Scalia Expenses increased primarily increased the Col. publishing expenses due China sales and Capitalism Hawley and the in

on purchase for formatting the and deferred Miami talk and X radio February for WMYM-AM,WWFE-AM for news licenses the Products pay to X, stations and period X of in of translators closed January XX% in subscription On the X the million liability $X.X in generated from conservative Also, Spanish acquired Line we on revenue for language year. formats. the related conservative Investment WRHC-AM acquired Gilder the assets -- for of we assets broadcast no talk We a assume of seller M&A and the cash. stations FCC front, Christian and George net the news will

net XXXX and of drawn X.XXX% notes the out $XXX.X in addition remarks now update capital million in with revolver, used $XX.X XXXX XXXX I had have In conclude which issued our the March prepared structure. our to want X.XX% notes. on We million take XX. remaining in March, to we my a to notes proceeds $XX.X brief million new as

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

Evan Masyr

you, Dave. Thank

recurring on quarter, million. basis first increased to expenses XX.X% X.X% the increased adjusted to $X.X and a million Operating For to $XX.X total $XX.X EBITDA decreased revenue million.

broadcast revenue of decrease net a broadcast X.X% million million, and of decreased station year, $XX.X XX.X%. $XX.X decreased to On million, include to to network radio X.X% expenses decreased revenue XX representing the million, net revenue Compared results same-station of XX.X% broadcast our $X.X our million. XX.X% basis, a stations broadcast from and XX.X% SOI increased $XX.X operating operating broadcast to XXX resulting in operations, and same-station last These of income to revenue. net $X.X

XXXX $XX.X we bond in As million The Salem's XXXX. at senior XXXX March of On outstanding defined secured redeem $XX.X million, debt on credit $XX.X loan million, XX, of XX, XXXX $XXX.X X.XXX%. in leverage up X.XX made million $XXX.X X.XXX% total X.XXX% discount $XX.X March used on as and the of of notes proceeds an X.XX% million a a new agreements. in facility. asset-based notes for of of was notes million ratio resulting senior issued XX, of XXXX, remaining of March due due closed this effective the We notes the XXXX. redemption the to yield The portion was

currently new revolver. working a on We are

Our XXXX. in March of current revolver matures

update. as soon will more we As an have we information this, certainly on provide

and to amortization value of or the is Looking X% contingent disposal on between total revenue Salem of of projecting second estimated million. compared XXXX expense gains depreciation also total forward, of Salem assets, operating projecting second and compensation between from legal sale before is $XX.X quarter the for quarter and X% increase earn-out expense, changes expense or non-GAAP losses consideration, revenue expenses XXXX to X% of of quarter stock-based settlement, X% in to fair operating the impairments, million. expenses $XX.X decline XXXX, second the

concludes this prepared our Now we remarks, answer will any and questions.

Evan Masyr

for call with open Instructions] at to [Operator Kupinski that, And I we the -- think NOBLE. Michael can

get open you speak. Michael's Let me if I talk. line if able to to see hear Mike Mike, we so I he hear, Mike. know We're don't can if can could can

David Santrella

Folks, earlier, our we as service some conference call is mentioned experiencing problems.

because questions. on end do they're open us we're company. ask on don't with with having to problems. the to that is call your that Lucas ourselves but so caller's to the something Michael So we Kupinski conference I the they're some line, do know trying you up have if Lucas, us, there's line can this

Evan Masyr

try Mike, can speaking more time? one you

Yes. I can stand resolved. and this if just told, about get XX by pause seconds please mean this, for I was see let's we

Difficulty] [Technical

Evan Masyr

the but can Michael's really open. question, I hear I who's can't if get line first can at you got say least you,

Operator

Yes.

Michael Kupinski

you me? hear Can

Evan Masyr

Yes.

David Santrella

you. Yes. hear We can

Michael Kupinski

Yes.

a clarifications. I Okay. couple of have

of How much First down? repeat that mentioned all, the in was you that decreased. How Can national local in much quarter? just please? me, you spot for

David Santrella

Yes.

Let there. me get back

Michael, increased, XX.X%, local spot national So X.X%. decreased by whereas spot

Michael Kupinski

you. Got

here. Okay. A couple of questions

opportunity. us some have will probably So as seems stations a swing I Can thoughts. you was wondering if sooner in can you Miami, and you've what think a for you than normally that you've unique And like acquisitions. And there give that I is the station unique that more if profitable, know discuss how acquired opportunity market. performing? benchmarks there's market building obviously been those up you that

David Santrella

we've We in place. we're a on some market there. We've have doing. do it's and she's made with that other pleased to late taken Yes. in that leader moves of been with specific great in the a seen got Well, think already some you're with right, growth market. And we're that opportunity as strategic Miami Michael. pleased great market in Rabassa, we've that revenue other dynamics Monica We're what pleased based also

but quickly optimistic the of than right that profitable pro now, become I get we're to that that showing, would which profitability, that's now, I would terms right cautious say we're we'll speed In more say formas our with we'll optimism.

Michael Kupinski

But look money cycling us how the And the for nature When Salem for about to should increases? News. the thought of you're of News? expenses give you know expense that just And Salem how give some can do thought the discuss process you I year? point? a of can investing us Okay. kind about balance you And kind of has expense start then at the will of lot the just with a this

David Santrella

year also here. terms revenue that would we And Evan as XXXX made in a in chime some can and in aspects digital what David But and we investment Michael, digital of digital we're decision overall, other doing an use infrastructure advertising generation. Yes. of our in and

and a marketing with bigger side, means audiences downloads social instance, are build that podcast social audiences to and marketing because that working our for more hosts media more of for bigger hosts people more effective the on media number network revenue on us. for episode So mean the in our with specialty them of we've all hired podcast

On that fill. the number News positions of we needed to Salem Channel, a

business, media other aspects and And to as the video just of technical that world -- of the building well other other in positions so for. on audience some hire side, as them particular OTT in over social we needed an

that, with comes better building of believe, all a current pain we future year. the but So is in

David Evans

additional investments, cycling those terms QX at next And looking through those of you expenses, year. additional in tell I'd of

Michael Kupinski

a little that But break declined any about Is talk one just if Okay. you driving of the or there performing. was I know And just the revenue I segments, could of just then bit the you of for each if color, in And quarter? to but just X%. -- the parse if that, us us you piece that decline kind to out don't you are and X% a the how revenues maybe give that what out added decline the can. nature might then expense be wondering little can typically

David Evans

it's advertising no surprise think and no it's mortgages. the surprise area again, the is I category, local weakness, of spot weakest

David Santrella

Right.

Michael Kupinski

tone in particular the is of mean, of in the give general? now? nature advertising then you the environment of kind terms anything I of there the And can right us environment Yes. in

David Santrella

business Well, business. little and I start because It's that be tough, of been radio prospecting smarter really comes coming more on stations reliant a smart to have even ever to even business. more think than lot aggressively got going now it gets for after new generation, from right agency-based you've business to when we when need traditionally direct a -- business be

direct in the So competition the business. heats up

of what so creates of there. in and to than smarter need it presentations a be for a how that And focus business we lot prospect terms our ever and like look

David Evans

economy. the to concerned They're response state government's Advertisers, to of concerned economy. the about economy, the the the Fed's about of state the response they're the

So decisions. are spending advertisers cautiously, delaying

So tough it's environment. a

David Santrella

us, that deals is are be less the are that for probably their There's typically auto about of spending People interesting people now. money. not QX in on cars to not found but new that's one categories cars. Michael, category really confident on right grew a was parts. to their hanging it And Yes, advertising huge

are so going cars, And piece fixing their parts they're of auto interesting means which some up, information.

Michael Kupinski

an for mentioned you then savings or saying you annualized cost about that million annual basis? initiated full could $X first you split? Are Yes. And quarter. the from be cuts And do evenly you XXXX some your year how on then cost that Would in savings? will savings most you in -- -- much guidance QX? just expense fall tell the of think do of or are us when terms in that will for think the that And how of if you

David Evans

number. say I an would that's Yes. annual

So -- that that see we over figure will you late quarters. split of in March, action evenly March, the next took most X kind late very of

So that's quarter. what's first for our guidance in the

David Santrella

Michael, get Evan, we -- we can do on we on... you could another might have the question phone. another question, be only we Do have get the

Operator

Our next of the line comes Edward EF Hutton. question from from Reily

Edward Reily

Can you hear me?

David Santrella

We can.

Edward Reily

political back if yet? been should this half of And at advertising we you've wondering anticipate year for for maybe Just next any the getting inquiries year? any if

David Santrella

yet so the now, by both lot going PAC's, There's campaigns of kind request would and proposal, a us lot but RFP, spade an taking strong being of we're forth well or not right done where and as work I say too point back as politically by the is of questions some inquiries word. place. getting the a at for conversations and we're probably

David Evans

we QX and expect revenue in coming And QX. do political

the of of series year. the from a debates think through and the end Republican there'll debates off I in be kick August, August

bunch be our want candidates a and they'll So to to it presumably, running, of there'll mark audience.

Edward Reily

Great. bit by you a outlook more maybe if segment you little quarter business down if could. in Okay. break fashion, And granular wondering second can

David Santrella

schedule to we Yes, can QX give has by the segment publishing of usually 'XX. just we break QX guidance. the down I a 'XX decline of you lighter don't We in than one that of is when drivers tell overall. give

than so there that seeing business. in we're And of the a bigger other decline is areas

David Evans

area digital. strongest The continues to be

Operator

line Our David comes question next from of the from Marsh Research. Singular

David Marsh

me? hear you Can

David Santrella

I've season, with earnings issue first should had this some I the stock. maybe Chorus AT&T buy Not common

David Marsh

looks you with of Evan. it's flow kicking have wondering be us going And you get can the the in. like was political year balance to a year, just this year free until provide cash it with you kind of like feel to liquidity I the if regard tough to but starts update, liquidity year, adequate the a stuff through

Evan Masyr

the which Yes. do Dave, we're rest We at the liquidity. base asset of year. provide for the have will liquidity looking certainly line,

it able to respect We as else particular few also are been the where makes at in monetize, looking in and at in opportunistic what sense. done we We've some might past. last looking asset sales some years, sales we've be to on estate pretty the with we're real

David Marsh

particular, order look perhaps you in what so, look nicely then dovetails was follow-on types actually which space be pretty assets of estate, relative into divesting of terms With estate still decent anything in you kind you seeing of That selling? that to what going own? you if regard things divest? of my to And And what would at be pecking real terms would to question, you bids around in assets the the may might be considering are in real else? for to

Evan Masyr

is we real it's versus of whether can is math in get same. the estate value giving the flow. are still think It's cash of up how we way the or I much kind free Well, what a business

radio whether be that our even maybe So at. do be have that we it's of a to or it it sale pay one leaseback looking a math estate, same real station kind rent, and we're of whether where

amount of up we'll So free concrete, when attractive an us, have we're provide And something we more looking for least flow. the most giving the update. what's at cash certainly

David Marsh

picture. million the more last in timing I the timing us -- LLC on? bullet the curious, press that little for picked on the and might color be the invested and in of a have, around expected that the about bit you I give was production what so And question I motion Could release just the $X.X up

David Evans

producer last Dinesh So financier if It X,XXX you tremendous for in the D'Souza, with movie. recall, us. a Mules. year, invested executive was We we movie a sole of the were that success and

Last was for again, topic. partnered early come that scheduled and on the his more But excited take to we we forward success with So success, Dinesh Dinesh great news with to him. a would, another be role movie we're tentatively again. very that movie we're next looking with XXXX, great to agreed precise for

Operator

Santrella would call remarks. David over now to I like the for turn to closing

David Santrella

Okay. talk a was I and call Well, my We'll a the trial call so next being to conference better sorry you thanks And such remarks, quarter. today, closing guess here. technical for Bye. again have we'll hopefully, experience.

Operator

you ladies conclude you, for Thank your does today's gentlemen. and call. Thank This participation.

now disconnect. may You

Salem Media (SALM) 9 May 232023 Q1 Earnings call transcript