iHeartMedia, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Debt Exchange: Successfully completed a comprehensive exchange transaction extending majority debt maturities by 3 years, keeping annual cash interest expense flat, and reducing total debt.
• Organizational Modernization: Flattened organization, eliminated redundancies, targeting $200 million annual cost reductions with net savings of ~$150 million after $50 million add-backs.
• Fourth Quarter Financials: Adjusted EBITDA was $246 million, up 18.2% vs prior year. Consolidated revenues up 4.8% vs prior year, ex-political down 1.8%.
• Digital Audio Group: Best full-year performance on record, number one podcast publisher in US, podcasting EBITDA margins accretive, and launched redesigned iHeartRadio app.
• Multiplatform Group: Broadcast radio has more listeners today than 20 years ago, and audio added to social media campaigns boosts response rates.
• Audio and Media Services Group: High growth, with broadcast radio inventory being integrated into programmatic digital buying platforms.

Segment Performance

• Digital Audio Group: Fourth quarter revenues were $339 million, up 6.7% vs prior year, representing approximately 30% of the company’s revenue. Adjusted EBITDA was $119 million, up 2.1% vs prior year, with margins at 35%. Full year for this group saw over $1.1 billion in revenue and ~$380 million in adjusted EBITDA. Podcast revenues grew 5.7% vs prior year, and non-podcast digital revenues grew 7.1% vs prior year.
• Multiplatform Group: Fourth quarter revenues were $684 million, flat vs prior year. Excluding political, revenues were down 5%. Adjusted EBITDA was $150 million, up 5.9% vs prior year. Broadcast radio has a strong audience and advertising growth opportunities with audio added to social media campaigns.
• Audio and Media Services Group: Fourth quarter revenues were $98 million, up 44.7% year-over-year. Adjusted EBITDA was $49 million, up 136% from prior year. Excluding political, revenues were down 1.6%. Broadcast radio inventory will be available on programmatic platforms like Yahoo! DSP and Google’s DV360.

Guidance

• Q1 2025: Consolidated adjusted EBITDA expected in range of $100 million to $110 million. Consolidated revenues expected down low single digits. Digital Audio Group revenues up low double digits (podcasting up high teens), Multiplatform Group down mid-single digits, Audio and Media Services Group down ~15% due to political.
• Full Year 2025: Consolidated revenues flat vs 2024, adjusted EBITDA ~$770 million, free cash flow ~$200 million. Net debt to adjusted EBITDA ratio expected ~5.5x by end of 2025, aiming for 3.2x by 2028.

Risks

• Economic Uncertainty: Potential tariffs, inflation, and higher interest rates impacting business.
• Los Angeles Wildfires: Disrupted largest revenue market and national sales team base, affecting revenue beyond LA.
• Debt Transaction Impact: Fourth quarter free cash flow negative due to fees, interest payments, and restructuring expenses.

Question and Answer

Q: Talk about monetizing broadcast listening, programmatic ramp.

A: Programmatic is essential to fit broadcast inventory into digital buying systems. Making progress on automated platforms, with broadcast radio inventory being integrated into digital buying platforms. Expect revenue this year with impact seen next years.

Q: Video podcasting opportunity.

A: Some podcasts have video, open to it, but most users prefer audio; focus on consumer preference as podcasting is about companionship.

Q: Impact of LA wildfires.

A: Disrupted LA market, but traffic jams (beneficial for radio) and return to normalcy expected.

Q: Automated buying and political advertising.

A: Automated buying includes SmartAudio and programmatic. Political campaigns are more data-driven, working on improving for mid-terms to absorb lessons learned.