CMLS - Earnings call transcript Q1 2020

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Operator

Welcome to the Cumulus Media Quarterly Earnings Conference Call. I’ll now turn it over to Collin Jones, Senior Vice President of Corporate Development & Strategy. Sir, you may proceed.

Collin Jones

Thank you, operator. Welcome, everyone, to our first quarter 2020 earnings conference call. our Lopez-Balboa. CEO, by our Berner; today Frank CFO, joined President Mary and and I’m

of start, to note may management’s based we may implied and and under Before in please assumptions, securities current differ discussed a press in federal are risks These results they on assessments release materially today’s forward-looking from and and this expressed Actual statements. uncertainties. on call laws. constitute number the statements that forward-looking subject results certain or statements are statements

will addition, are well measures. GAAP. not with measures In financial as our although useful certain We the believe also non-GAAP accordance as and release press should we use to A reconciliations to non-GAAP full the SEC be it in is to filings. in financial considered description superior supplementary terms of information presented risks investors, these

release The call. Details will our Form for month. and for our can in also portion SEC about replay be access website. be Relations how before can found also the of on press today’s found that the a call website recording with of our shortly was be XX-Q available Investor to filed A this

and I’ll it to that, CEO, over With Mary our turn Mary? President Berner. now

Mary Berner

Cumulus, and good decisively, afternoon, de Thanks, move Collin, mantra everyone. our focus management acutely, At is facto and efficiently. execute

us time. for. decisively that during practices what execute and move payoff our have has and challenging looking are These been this with matters, efficiency valuable culture, it our a this but served into this focus that get More attentiveness embedded because particularly to acutely deeply are the effort always importantly, on is mindset will we’re well every practice to difference, where make

from comp importantly, crisis XX% taken such, nearly matching Most emerge freezes, help hiring substantial programs. this to reductions of and reduced of swift in corona actions, furloughs, million the in an us elimination over and our both As crisis HSA to strong abates. ranging a weather we of through including as the fixed impacts position and cost have actions we array the XX%, $XX by executive XXX(k) our and

more also provided advantage position and tactics deploying by working our identified generated by manage on the year than million our taking further the improve capital, We of new the including tax XX%, to by several our additional ways and CapEx lowering cash Act reduction meaningful drawing down our to cash ABL liquidity, for enhanced We opportunities. $XX we’ve revolver. other cost benefits CARES by planned

in to but industry personnel, operations listeners, the employees advertisers developed allowing all we and revenue to while serve broadcast performance. moving remote optimize We to for normal sales our lead strategy and to new central us the protect a our continuing

the positioned we this disruption. over also It’s strategic meaningful cultural, past that note us to important shifts deal operational, to and few with made years well have and the navigate through

EBITDA free We team performance, who for adjusted growth company a straight generation. strategies, and strong company’s for for management disciplined record of turnaround consistently cash including delivering the battle-tested and through consecutive two built ex-political, have track its financial years flow growth a revenue execution three shepherded significant years, the

ago. mix solutions the expanded portion an services. nearly business growth than become comprised mobile, our digital from to coming XX% company X% lines years radio of portfolio assets marketing higher media revenue voice-activated broadcast, less and three we’ve increased on-air We’ve to And from our our just total audio-first foundation media digital, integrated of of of from and revenue digital

and by and centralization reduced of operational digital we blocking XXXX as with We a leverage well function of debt cost over XXXX reengineering process business and balance as and through of bonds XXXX and June our turn refinanced sheet in traffic term tackling $XXX the true by full like hubbing profile. operations, a million maturity reduced the and restructuring in and loans net since covenant-lite

million estate pipeline portfolio. upsized we monetize sources, our including potential and ABL our and liquidity a real and Nashville additional of have to like non-core substantial tower Moreover, $XXX our asset DC sales

So decisively, any and the of furthest are from or focus move we normal I is in have disruption not. obviously, whether acutely, us ever normal we execute said, we regardless And coronavirus as this is operating we efficiently experienced. thing environment that the of

EBITDA full businesses. grew, February single of those and seeing in were financial continued mid-teens. growth we on the up station low increases both revenue quarter Through reflects that a impact. digits across EBITDA with nice was results and The up same basis, also profitable driver revenue Political digital a and our

heavily the fall to revenue January XX.X%. erased to EBITDA quarter for the COVID-impacted February March the XX.X% full causing and by results However, and decline year-over-year growth,

will exclusive majority the of revenue the have quarterly Frank of quarter, but the the note accounting cancellation the the Tournament, rights, on decline. I’ll national for detail that provide Basketball impact, NCAA biggest top the line for which we more produced

for decline from significant of having cancellations. year-over-year That up businesses several of in our and EBITDA revenue years. revenue broad-based experienced a including quarter, contribution built these businesses which also March, We last importance wave the the both to said, grew digital pandemic-driven over in the underscores

on costs cash strong. with position million end, quarter On $XXX the expeditiously balance as earlier, I of is at we reduce over expense side, highlighted the acted sheet liquidity and our to a

we While comfortable advertiser pandemic returns. remain the of demand as our advantage this to feel of and to duration take uncertain, trajectory the it financial weather and crisis with ability

long-term, we no how the things our is else’s. over for than crystal As clearer ball anyone evolving see

generate and and those However, we will us. will be things do know the many risks opportunities for in different both future changes

intend of other being efficiently. we’ve in our those and the which XXXX, and on to from in multiple XXXX mitigating allow identified risks that opportunities, work various we will turnaround us projects advantage taking stages to of company’s among As proactive benefits already planning more execution the are with

see where While tighten areas we many areas, reduce and leaning we we opportunities. up be to expect into in cost also

listening content and number voice-activated new the are solutions. developing we advertising capitalizing to streaming example, a device For shift of in by on voice-activated

also revenue and now, year-over-year March growth focused which our be is the XX% that are QX in leveraging highly We potential substantial to into especially business, alone continuing QX. delivering in proving podcast on of is and resilient over

Also, XX% over end were by This is than XX very news news April, up had million quarter. year-over-year, of of as on in top the supported the more podcast with our QX podcasts the of strong Apple. XXX in the X downloads which, of top X XX and portfolio

the where second a QX impacted we specifically, a and April earlier our predictor pacing highly month. meaningfully finish. to is bookings visibility of might result, and given particularly mentioned I still environment, our regard as unreliable With become wave tough The a fluid limited the quarter was has cancellation very

the ultimately, for For depend the how May pacing and full quarter, will business the rest play out trends quarter total the heavily June. currently low XXs, down on in of for is results but the

would parallel over in [ph] see March, declined the been data of of after report because from tracking weeks, significant the increase listenership. variety week the we of has first (XX:XX) However, drive radio On expect, time last three a a listenership, the Nielsen as sources shutdown a and return that listening of steady result driving as daily broadcast you substantial of directive. listenership decreases in there

just been I to policy a after Frank late want the company. the with turn March, to company starting few from word instituted call we our a since new a say do across the about had Frank, over work So days I has before CFO. home

forced be ground the Although virtual have hasn’t since running. that CFO him circumstances him joined, stopped to a he from hitting

Sachs. that, I prior onboard. CFO EVP Senior financial decision-making Univision previously and be to we pleased has and Frank have enormously was of and spent waters, at contributed Communications as more years not Goldman to to a management. as Banker And could uncharted already these He than XX him more navigate our Investment

Frank, over to you.

Frank Lopez-Balboa

whirlwind. months Mary. today. first been speaking I’m you, certainly pleased Thank with be to of These have couple a everyone

can all strength of helped to virtual, the the speed efficacy approach the been Cumulus onboarding While quickly. which to to and of I both management me up have team, get the in of to jump has very challenges, to the of attest

of significant a M&A over As when through of Red number this the quarter the City sale transactions first in York Media. you last company year’s we WABC-AM completed including year, know, the in Apple executed New

the of station same on a Mary speak basis. as I’ll So did financials

was total or million QX, from revenue the XXXX. down $XX.X QX XX.X% In for quarter

the of XX.X%. we quarter on year. growth and Mary track than in million As million Political expected quarter heavy $X.X Bloomberg to received $X.X of growth This was last till quarter the year, a EBITDA campaign. noted, X.X% February, nice the as thanks was expense with bit the revenue more in with the compared to a tailwind,

on the of fees, Drilling revenue to attributable decline side as Mary Tournament. the to with There’s the that offset other than more half down costs. a the production, was quarter in an and loss mentioned, the NCAA bit, the rights expense of

the of had tournament loss to EBITDA a impact versus the year. negative However, last

significant business spot decline across We national local quarter. also in saw both in while grew channels digital the a and

prior Moving quarter driven was largely by the largely to one-time comparisons revenue as trade were to that lower year. there reduction had periods declines: of of from that one-time earnings or BMI compensation variable the P&L, reductions costs, down X%, $X.X expenses, expenses that expenses. which industry-wide items $XX.X sports-related in approximately the by declined is credits we loss mentioned Included and call, million a relates several negative million of created the hit the costs million. last $X related in benefited prior for and Also, in a on lower certain that settlement, the

EBITDA to XXXX. Putting down or revenues XX.X% in and of QX expenses together, $XX.X million comparison finished

revenue As Mary the our declines liquidity noted, to bolster we swift mitigate and action took position.

taken expenses the $XX cost On compared side, will fixed the XXXX. million fees reduced with reduce when date year to entire approximately over sports our plus by actions

cost variable with also declines will revenue. naturally We that occur experience declining

million than focusing flow. or million non-operating $XX laser-focused our (XX:XX) projection our that items more on Additionally, are been free critical. approximately cash items on XXXX of only and cut are the by We mission affect $XX that [indiscernible] we’ve XX%

year minimal only million. we is this Although are taxes compared be our will $XX.X year’s cash cash the of expectation that last to taxes second in quarter,

for Additionally, XXXX. with million us more potentially in refunds of the paid XXXX, for to CARES received refunds allowed Act in file to $X.X has amounts be approximately

an from in We to our taxes XXXX. get expect benefit approximately to $X payroll the defer million ability

its year concentrating balance and loan with covenant-lite. until company Lastly, it don’t XXXX recapitalizing significant management great today new fully capital working with progress made and intensely half, on the seen secured from a senior efforts. those and sheet and we that The last are notes benefits a over has mature had term are

In early March, million. our facility we completed a $XXX and to ABL upsized it refinancing of

of the leverage net times balance on drew $XX ABL facility Given environment, economic basis. liquidity the the add trailing at sheet. a the to mid-March, X.X in finished million uncertainty in to we QX XX-month

pandemic the we from ensuring While we on more leverage liquidity over to committed to long-term attractive to we levels. very weather fallout impacting the focusing the continue and appropriate that’s economy, are sustainable have the reduce to remain

we’ve have to government we prudently shutdown actions our do in with evaluate you earlier Given we all non-core I’ll continue was to delayed ways the if remind assets. it but it DC, sense because liquidity closing will to sale so. end, economic opportunities and date, monitor calls, makes that business Montgomery that land County. comfortable To monetize to conditions several to and do feel as discussed our the we on In of enhance

to expect open courts able once back that the be close up. We to

also call, marketing exploring process for and tower robust As last already our alternatives our portfolio mentioned we’re a underway. have on strategic

able Nashville in We to property more estate also valuable typical have potentially that be monetize we once of levels. commercial a approaches real may activities piece

state environment this the we to to the market wouldn’t expect right short-term. very take now, of in Given the the

the stabilizes. so be property we However, do will value we’re when market and from to ready the to preparing realize

and Finally, ruling foreign been to and our a for the is government we’ve in related for that shutdown. to well the waiting given petition ownership cap the delayed stock final as declaratory order lifting issue SEC our employment,

that, With the open can now for we Q&A. Operator? line

Operator

from of Your Instructions] first Janedis with question line [Operator John comes the Wolfe Research.

is line now open. Your

John Janedis

me. Hi. Thank two from you, just

It quarter? may similar $XX you and just million of in in is cadence how like there First, fixed have the could us realized much savings, in was the of that the sounded tell sports this quarters first for remaining there of some been cost the year? the savings

the the couple exposure incremental declines largely assume And you. the by Thank Tournament for about quarters? I then but can talk were driven network NCAA you next sports in of separately,

Frank Lopez-Balboa

It’s... Okay.

Mary Berner

over it turn go I’ll Yeah. – oh, Frank Frank. to ahead, to

Frank. virtual the Sorry. This is of ahead, perils Go call. earnings

Frank Lopez-Balboa

you. Thank Yeah.

Sorry, Mary.

the out Okay, so Tournament we There the really of so furloughs costs, on of into of fourth and it and quarter falling came the employment most quarter NCAA the third in sports the the first of in fees some the most and started over of in year, quarter kind in actions second took balance spread balance were terms that that and second year the and first some the the naturally of quarter. costs will be of employees. the

Operator

next line with Kupinski Capital Your the from [Markets]. question Michael Noble of Market comes (sic)

Your now line open. is

Michael Kupinski

Can us you. the Can I questions got a here. Thank a you and current the stand head of how that there. sense you run bit just the might count about Just of like talk you employee, kind give we more quick a look little guess, a rate now? bit where of give us I into compensation, go color little third as couple quarter?

Mary Berner

every We we We period. – view weeks furloughs by employees took I bird’s did giving employee of would that do affected. it three-month to most most just as COVID. of and the eye how not you single employees layoff But start kind employees. affected a three was within a did approached actions relates

As you have very we we so is the this should we always do see X,XXX run as to we over With unfolds. approximately of head like a count, employees. have pain spread next thing how and couple months shop regard first the lean know, we felt the

Michael Kupinski

and of... then in Got you terms

Mary Berner

Frank?

Michael Kupinski

Frank. sorry. ahead, ...I’m Go

Frank Lopez-Balboa

[Indiscernible].

Mary Berner

know if Collin or Frank wanted anything, yeah. add don’t I

Frank Lopez-Balboa

Yeah.

full-time We have about and rest, about X,XXX X,XXX part-time. employees, the

Michael Kupinski

things Got I of that that certain you at will those can you. that revenues we have we up in those probably that see bring about rebound back shake feel of kind how terms back those assume layer terms that talk of hopefully furloughed And in a as how for metrics revenues. come so in advertising? hit of anything in you’ll kind you’ll there Is you employees then employees

Mary Berner

relentlessly take new opportunities what advantage ultimately but but are I look think going will long-term I risks as all and do positioning know to mitigate ourselves different that know as the don’t are to of how will like would start key about by to we so look emerge. saying we it well normal thinking the we well that

anyone well have, don’t at category we be on you as else. The We So the I by point by say, view is us as than ready category trajectory channel. for by market, better to a market would look same data revenue do. the ad

look how fluid this that’s do it things looking and the all the could so do, won’t might it’s ongoing and it’s And – we should uncertain. and at all do, actions We we’re do, very situation. at an a

Michael Kupinski

that and sense And Got obviously, of on are can things? you with you’re having your they into are Are you are bit of seeing very short just us on mean just us how seeing things Are in terms a key some a you. looking give a are things you a them how sense stronger advertisers, little sense And progressing are pacings point getting I head of how like? conversations getting kind times? you better, June? at looking. as this things give lead

Mary Berner

fluid very it’s It very, a the as ad on and channel really market. said, I depends

remarks, we just moment It second now, unreliable time. is than the I’d a now was. pacing is always right said say on books flat. As more in was in it the ever business in quarter prepared

the because small by good so have of we, point we’re better we seeing in small in direction. recovery. a where else, ads the but and not into some might everyone third finish right it’s shape offset improvement, We visibility the this [ph] it’s modest quarter Pacing again, but lack the at indication is cancellations like of

that of huge ensure enough from companies different marketing expectations the that reopening, and thinking their are general business those And want there’s radio know be world that. is that it’s their you’re returning that they are that research let lot to out and do consumer in I that going there customers and bodes safety simply that specifically, have more is we a that their to a are says to doing I one about not of that they’re understand a that on acknowledge think it how well customers to focused would say the that’s thing hearing advertisers it’s for to let what shift. advertisers know

well-positioned with can with of to our execution the get radio we creative air. And the because I is speed spots flexibility which and on think regard

to advertising We’re and the help in community. a good support position

frankly better The reaching to they is we’re can are did efficiently what the as coronavirus all other And back mention was. what they and on necessity, I as boxes radio other is customers media as as by than as any just hearing effectively and us of checks many they advertisers thing obviously that before cheaply can. as we any knew basics, would going focusing as is which potential can,

say you gamut. when are they depends. the it not, runs So or It optimistic

Michael Kupinski

and just in last question. for driven you I the first can that political one then visibility if Bloomberg this stronger whether secondly, then you expected. you the much much or year Political about the point. and than talk not Was Got is at by quarter have on

Mary Berner

when you’re XXXX, mean I comping that of We We’ve seen a last that I mark say We was minute. caveat for at in it we’re million $XX is we’ve a for in so was the had said would banner activity. well-positioned high us. XXXX, lot this a publicly a year believe us. that with against A placed revenue. of lot Yeah. but that

that pricing in our the overlap against well manage contested a should of as We strength than better initiatives and news would and lot US talk in years. on utilization our to pricing which allow inventory Cumulus, past inventory about these much talked to the XXXX calls, relates we’ve it of also Senate positions We I but the have good of of number races. reach, course, think us platform our note us

rate and in be going uncertain So that’s important, we this the be to really and especially platform able environment. spillage should to maximize across minimize

very, lot our for a – Bloomberg was a in wind go quarter at circle, first a wind Yes, [ph] the industry’s of back first, well. full the very and back so to as at our

going but was it break the said, not it increases we I’m out, As to was big. – quarter-over-quarter

Michael Kupinski

I Thanks for you. questions. appreciate it. Thank the

Operator

Your FBR. the next with question Silver Riley Zack of comes B. line from

open. is line Your now

Zack Silver

Thank Great. questions. taking you for the

if mentioned related, me, just in you this normal The and expand to Mary, on your then first a just revenue of or strange for And can about if in optimize or remarks those started somewhat those versus about prepared wondering you trying environment was shocked, performance when new strategy, that. within sales been more can reopen talk markets more a that have you you sort Thanks. have to the ad trends view think you markets? have on that remain open

Mary Berner

example, the for trends, distancing on professional we’re markets seem seeing I more entertainment, with people, have for have of that involve in shallower a that a ostensibly are, who the example, denser pressure bottom, that would them standpoint say very aggregations obviously actually much difference the last actually. ad from problems opened. Georgia, needed may seen the local But does bit still resilient for not in we’ve of yet certain more category. category categories. which and [ph] little example, much communities others that in services are are saw a a travel, those It social more that fewer the We businesses we’re months not was (XX:XX) may couple but

stage time negative larger, even that say so definitive performance meaningful more trends, We markets. slightly at don’t I’d searching know. isn’t lot except appears for denser spend a just from be our we haven’t really we this but seen uniform But anything that for to of

We’re That part of not question was your the normal. oh, new yet. the was, other and seeing one patterns

Zack Silver

Yeah.

Mary Berner

level, the and new it support to people market just the had back spoken I into a just actual – training I’d previously high includes about say how that at initiatives is what Yeah. of go sales different. range address a very

engagements. customize was starting we about rules them to CCC, We’ve to before supporting update are capability. our our calls campaign on it’s of partners. We’re than – an different us each organization automated called that our so reflect And spoken training also allows and which sales prior to creative includes and it help these of new customization every help to it

on parts many, an what and normal but So effectively any that and the it’s marketer for a both acknowledgement focuses country. is new a many in strategy us

Zack Silver

helpful then could. Got and it. That’s more one if I

guys there done it it tower Just potential in (XX:XX) there, on this could [indiscernible] I mean does modernization get I be you initiative year – mean could guess more or nature? is the long-term

Mary Berner

Collin take or Frank that. let I’ll

Frank Lopez-Balboa

Okay.

unfolds we’re early on but the that to attractive, on get year. it��s could aggressively. a process It do depends have pursue in we’ll something we be calendar if just and it possible done So it process, this how the

Zack Silver

Got welcome Frank, Thanks, and aboard. it.

Frank Lopez-Balboa

Thank you.

Operator

presenters. I now the the over to This call concludes turn will Q&A our session. back

Mary Berner

your Thanks, speaking and your day to and look time you the good Appreciate good of with you have everybody. soon Thank for week. and forward we again rest a time.

Operator

And today’s joining concludes thank today. you call. us for This conference

You may now disconnect.

Cumulus Media (CMLS) 12 May 202020 Q1 Earnings call transcript