URBAN ONE, INC. Q4 FY2023 earnings call

• Completed year-end 2023 audit and first quarter 2024 audit, back in compliance with NASDAQ.
• Provided 2024 adjusted EBITDA guidance of $110 million to $120 million, noting the political landscape impact.
• Houston Radio acquisition added expenses, but normalized expenses showed decreases in some segments.
• Operating expenses analysis: Radio operating expenses were up, Reach operating expenses were down, Digital operating expenses were down, and Cable TV expenses were down. Content amortization and professional fees impacted adjusted EBITDA.

Radio Segment: Q4 2023 net revenue was $41.7 million, a 12.4% year-over-year decrease; on a same-station basis, it was down 23%. Local ad sales were down 6.8% against the market (market down 7.2%), and national ad sales were down 37.2% against the market (market down 24.5%). Political advertising in the Radio division decreased by $6.6 million (76% year-over-year) in Q4. Q1 2024 net revenue for Radio was $36.4 million, a 3.3% year-over-year increase but a 7.9% decrease on a same-station basis. Local ad sales were down 1.9% against the market (market down 7.9%), and national ad sales were down 18% against the market (market down 4.3%). Reach Segment: Q4 2023 net revenue was $10.8 million, a 9.7% year-over-year decrease. Adjusted EBITDA was $3.4 million, a 10.6% increase for the quarter. Q1 2024 net revenue was $8.5 million, a 22.4% year-over-year decrease. Adjusted EBITDA was $1.8 million, a 47.7% decrease for the quarter. Digital Segment: Q4 2023 net revenue was $21.2 million, a 12.5% year-over-year decrease. Adjusted EBITDA was $3.5 million, an 82% increase. Q1 2024 net revenue was $14 million, a 7.3% year-over-year decrease. Adjusted EBITDA was $3 million, a 20.1% decrease. Cable Television Segment: Q4 2023 revenue was $47.3 million, a 4.9% year-over-year decrease. Cable TV advertising revenue was up 1.9%. Q1 2024 revenue was $46.2 million, a 6.9% year-over-year decrease. Cable TV affiliate revenue was down 12.8%.

• 2024 adjusted EBITDA guidance: $110 million to $120 million.
• Political advertising was expected to be a driver, but the primary season wasn't as robust as hoped.

• Shifts in advertising distribution to digital platforms (Google, Meta) affecting traditional media.
• General ad recession impacting performance.
• Tail-off in diversity dollars affecting digital and Reach segments.
• Leverage ratios and potential impact of market fluctuations on M&A decisions.

Q: How should I think about the fixed charges for 2024, specifically CapEx and the taxes?

A: CapEx is penciled out at around $9 million this year, including a consolidation in Indianapolis. Cash taxes are penciled out at about $3 million.

Q: Can you just touch a little bit on kind of like – I know you guys kind of said that national ad was down a little more than the general market in the fourth and first quarter. Can you just describe a little color just on what you're seeing there? Do you expect that to kind of persist?

A: National ad sales were down more than the market due to client losses. Over time, it's expected to normalize, and in Q2, national ad sales are doing better relative to local.

Q: Could you just talk a little bit more about what's been sort of driving the softness in digital? And I guess a little bit to a lesser extent, reach for the last 2Qs. And just what you're sort of like going to be focusing on or trying to work on this year to sort of reverse some of those trends or improve performance there?

A: Drivers include a shift to digital platforms, general ad recession, and tail-off in diversity dollars. The strategy to turn it around isn't fully in place yet.

Q: And I guess my only other one is just sort of where sort of the cash balance now like as of today? And I hear you, it sounds like you're very focused really mostly sort of on kind of continuing to manage leverage down and all of that. I guess one asset that's been sort of thrown out or recently talked about was sort of Bounce TV and Scripps might be marketing that. And I'm just curious if – do you have any thoughts on that asset?

A: We signed the NDA, are going to participate in the process, and are looking for synergies for accretive acquisitions.