Urban One, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financials: Consolidated net revenues were down 2.7% year-over-year for the 3 months ended December 31, '24, approximately $117.1 million. Consolidated adjusted EBITDA was $26.9 million for the fourth quarter, down 0.9%.
• Cost Containment: Had a staff reduction in Q4 of about 5% (64 people) saving ~$5 million a year. Focus on cost containment and debt reduction in 2025.
• Liquidity: Standing in a strong liquidity position with about $137 million of cash on hand as of the end of 2024.
• Incident: In March 2025, an unauthorized third party gained access to IT systems; investigation ongoing, no material impact on operations or finances yet.

Segment Performance

• Radio Broadcast: Net revenue was $47.7 million, an increase of 14.5% year-over-year. Excluding political, net revenue was down 5.1%. Local ad sales were up 0.1% against markets down 5.2%, and national ad sales were up 35.4% against a market up 28.4%.
• Reach Media: Net revenue for the fourth quarter was $9.6 million, down 10.7% from prior year. Adjusted EBITDA was $2.9 million for the quarter, a decrease of 15.4%.
• Digital: Net revenues were down 3.1% in Q4 at $20.5 million. Adjusted EBITDA was $5.3 million, an increase of 50.7%.
• Cable Television: Net revenues were $39.8 million, a decrease of 15.9%. Cable TV advertising revenue was down 21.4%, and affiliate revenue was down 9.9% due to subscriber churn.

Guidance

• 2025 adjusted EBITDA guidance is $75 million, down from $103.5 million in 2024. Driven by weaker radio (lack of recurring political advertising) and slight decline in TV, but TV is stabilizing.
• Radio pacing: Down 13.6% in Q1, improving to down 1.7% in Q2, with improvement seen in Ohio markets lapping sports betting comps.

Risks

• Unauthorized third party access to IT systems in March 2025; investigation ongoing, no material impact on operations or finances to date.
• Radio business facing downdrafts in Q1, though improving.
• Cable TV business facing churn and under-delivery initially, but started to stabilize in Q1.

Question and Answer

Q: Clarify 1Q radio pacing down 13.6%, what was the equivalent performance in 4Q?

A: Peter Thompson explains that excluding political, net revenue was down 5.1% in 4Q.

Q: Insight into radio weakness from 4Q to 1Q and improvement in 2Q?

A: Alfred Liggins and Peter Thompson discuss broad softness in advertising due to uncertain economy, with improvement seen in Ohio markets lapping sports betting comps.

Q: Capital allocation plans, focus on debt vs. stock repurchases?

A: Alfred Liggins and Peter Thompson state 95% of capital will go to debt reduction, with some stock repurchases but prioritizing debt repurchases.

Q: Digital segment revenue breakdown and reclassification?

A: Peter Thompson explains connected TV revenue will be reclassified to TV segment from digital, and podcast/streaming revenue renegotiation impacting digital revenue.

Q: Free cash flow and cost savings for 2025?

A: Peter Thompson projects ~$25 million free cash flow from $75 million EBITDA, with ongoing cost save opportunities being explored.

Q: Assets sale and leverage management?

A: Alfred Liggins mentions potential asset sales if accretive to deleveraging, and ongoing dialogue with debt holders regarding leverage profile.

Q: Cash balance and thoughts on cable network spinco?

A: Alfred Liggins states no minimum cash balance target, and discusses skepticism on cable network spinco being end buyers for cable assets due to valuation issues.

Q: EBITDA guide and CEO award liability?

A: Peter Thompson explains 2025 EBITDA guide excludes noncash CEO award impacts, and the liability fluctuates with TV One's valuation.

Q: Casino process and digital headwinds?

A: Alfred Liggins talks about paused bricks-and-mortar casino efforts but ongoing iGaming lobbying, and digital facing headwinds from traffic decline and softening demand.