Urban One Inc (UONEK) 2025 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Urban One 2025 third quarter earnings call. (Operator Instructions)

We will begin this call with a with the following safe harbor statement. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance.

Urban One cautions you that certain factors including risks and uncertainties referred to in the 10-Ks, 10-Qs, and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements.

This call will present information as of November 4, 2025. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation.

In this call, Urban One may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course or this call or in this company's press release, which can be found on its website at www.urbanone.com.

A replay of the conference call will be available from 2 p.m. Eastern Standard Time, November 4, 2025 until 11:59 p.m. Eastern Standard Time, November 14, 2025. Callers may access the replay by calling 1-800-770-2030. International callers may dial direct 1609-800-9909. The replay access code is 7,822,067.

Access to live audio and a replay of the conference will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for 7 days after the call.

No other recordings or copies of this call are authorized or may be relied upon. I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who was joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Thank you very much, operator, and welcome everybody and. Usual we're joined by other team members here Jody Drewer, our Chief Financial Officer for TV1 and Cleo in case we've got any questions, on the cable business. Karen Wishart, our Chief Administrative Officer, Chris Simpson, our Chief Legal Officer, and also Veron Veronica Taki, who is our our Chief Accounting Officer, and. So thank you very much again for joining us this quarter. You've seen the press release, hopefully that we put out, business came in, a bit softer, for the quarter than, we, had accepted across the board, core radio, pacings going forward, are facing big political headwinds.

So looking about, minus 30, right now, however, ex-political, we're down to almost mid single-digits, 6.4%, which, is better, it's an improvement. But because, the revenues have come in lighter with Q3, we are, adjusting our guide, for the year. Last quarter we guided to a $60 million dollar even do number. We generally usually give a range. We gave a hard number last quarter. We're adjusting that guy down to $56 to $58 million.

For the full year as we, come to the close, with, within our third quarter, and last quarter I said that we were going to look to do another round of cost saves and we actually did that, in in 3, which resulted in about $3 million of annualized expense savings. This is in addition to the $5 million that we had done, earlier in the year. Peter's going to talk about the the impact on the numbers in Q3 of that in terms of severance and so with that I'm going to turn it over to Peter so he can go into the details of the numbers and then we'll come back to Peter.

Thank you, Alfred. So consolidated net revenue is approximately $92.7 million which was down 16% year over year. Revenue for the radio broadcasting segment was $34.7 million decrease of 12.6% year over year.

Excluding political, net radio revenues were down 8.1% EUR EUR a year, and according to Miller cap and our local ad sales were down 6.5% against a market that was down 10.1%, so we outperformed on local and on national ad sales we were down 29.1%. Against the market it was down 21.5%, so we underperformed on national.

Our largest ad category was services, which was up 22.9%, driven by legal services. Financial was up 17.9%, but all the other major categories were down, including government, health, retail, entertainment, auto, telecoms, food and beverage.

Net revenue for the Reached segment was $6.1 million in the third quarter, down 40% from the prior year. And just a bit it reached was a loss of approximately $200,000 per quarter.

And that was really a lower overall network audio, market, lower national sales renewals, and probably a drying up of DEI that drove the decline at reach.

For the digital segment were down 30.6% in Q3 at $12.7 million.

Direct and indirect digital sales down by approximately $4.4 million. That decline was the result of decreases in DI money back to school, political, and overall sof decline in demand.

Audio streaming was down by $1.3 million.

Just a bit that was approximately $0.8 million compared to $5.3 million last year.

We recognized approximately $39.8 million of revenue from our cable television segment during the quarter, a decrease of 7%.

Cable TV advertising revenue was down by 5.4%. Total day delivery declined by 29.4%. 2,554, which was partially offset by an increase in CTV and third revenue share. Cable TV affiliate revenue was down by 9.1%. Driven by subscriber churn.

Cable subscribers to TV1 as made by Nielsen, is Q3 at 34.1 million compared to 34.3 million at the end of Q2. Cleo TV had 33.5 million Nielsen subs. Operating expenses excluding depreciation and amortization, stock-based compensation and impairment of goodwill and intangible assets decrease to approximately $83.7 million for the quarter, a decrease of 4.2% from the prior year.

There was some noise in the expenses. We had a notable expense decrease in corporate and professional fees and overall payroll expenses. Also cable television content amortization was down, but we had the August R MLC settlement with ASCAP and BMI that resulted in an average royalty rate increase of 20% retroactive to January of 2022. So we recorded approximately $3.1 million of retroactive royalties in Q3 and you see that in the programming and technical expense and the radio segment.

We did add that back to a just a wee bit.

The company, as Alfred said, completed a second reduction in force in October. It's part of the ongoing cost reduction efforts. And as a result, we had 106 of employee severance costs which we recorded in 3rd quarter, but we also added that back to the adjustede bit for the quarter.

Radio operating expenses were down 5% or $1.7 million driven by lower employee compensation, sales commissions and a favorable change in the bad debt reserve compared to prior year, which operating expenses were up by 8%, and that was due to a favorable change in the bad debt reserve that we took in the prior year.

Operating expenses in the digital segment were down 2.6%, and that was driven by lower employee compensation. Operating expenses in the cable TV segment were down 2.4% year over year driven by lower programming content amortization due to fewer premierre hours compared to last year.

Operating expenses in corporate were down by approximately $1.5 million. The third-party finance and accounting professional fees were down significantly year over year.

Consolidated just the EBITDA was $14.2 million for the third quarter, down 44.1%. Consolidated broadcast and digital operating income was approximately $20 million a decrease of 43.6%. Interest and investment income was approximately $0.5 million in the third quarter compared to $1.1 million last year. Decrease was due to lower cash balance, lower cash balances and interest-bearing investment accounts. Interest expense decreased to approximately $9.4 million in Q3, down from $11.6 million last year due to lower overall debt balances as a result of the company's debt repurchase.

The company made cash interest payments of approximately $18.2 million in the quarter, and during the quarter, the company repurchased $4.5 million of its 2028 notes and an average price of 52%, bringing down the gross balance on the debt to $487.8 million as of September 30th, 2025.

Our depreciation and amortization expense increased $4.9 million as a result of the company's change to the useful life of TV One trade names and our FCC licenses, which we moved from indefinite lives to finite live.

Benefit from income taxes was approximately $1.1 million for the third quarter, and the company paid cash income taxes, net of refunds in the amount of $0.1 million. Capital expenditures were approximately $3.1 million.

And net loss is approximately $2.8 million or $0.06 per share compared to net loss of $31.8 million or $0.68 per share for the third quarter of 2024. During the three months end of September 30th, 2025, the company repurchased 176,591 shares of Class A common stock in the amount of approximately $0.3 million. At an average price of $1.75 per share.

And the company also repurchased 592,822 shares of Class D Common stock in the amount of approximately $0.4 million an average price of $0.73 a share.

As of September 30th, 2025, total gross debt was approximately $487.8 million. Our ending unrestricted cash balance was $79.3 million. Resulting in net debt of approximately $408.5 million. We compared to $67.9 million of LTM reported adjusted EBITDA, given a total net leverage ratio of 6.02 times, and with that I'm back to Alfred.

Thank you very much, Peter. Operator, can we go to the lines for questions, please?

Thank you. (Operator Instructions) Ben Briggs, StoneX Financial.

Good morning guys.

Thank you for thank you for doing the call.

Have a couple of questions here. So first of all, and I know we're looking forward, a little ways, but, and we're only, part of the way through the fourth quarter, how are you guys thinking about 2026, and what demand looks like there and what listenership may be kinda how the how the pieces of the puzzle are going to fit together then.

Yeah, we feel, good about 2026, for a number of reasons. One, yeah, obviously we're going into a political year, but two, a number of the places that we've had challenges this year, we, have.

Changed our operating strategy, to address that, I would say, most notably, where, Reed has had a very tough year because we got caught, flat footed, with, a big decline in our largest advertiser, yeah, in the company.

Unexpected cancellations and these were you cancellations across the board, when I say across the board, across the whole audio sector and quite frankly we weren't, able to replace those ad dollars, once you know we committed that that that inventory so we're able to get ahead of that, we saw, Reach Media and I one had contributed probably. Excuse me, had benefited the most from the rise in DEI advertising and we just got way too concentrated at Reached with with two particular advertisers one, of those actually stood out, more than the other, so we'll be more prepared, for that, going forward this is also.

He navigating reach without our former, President of the audio division David Cantor who actually founded and created Reach, so trying to make that transition was also, you know was difficult even though.

We knew it was coming and we prepared for it and so I think we're better positioned there also there have been a number of things that we're doing in our radio markets where we you know think that we will you know perform better. In particular in Washington DC, we just, rearranged some of our formats, there, and we launched a new format targeting the Hispanic, community which.

I, has become, a very large segment in the DC area. It's almost close to 20% of the marketplace I means like 18.5% of the marketplace, and we positioned ourselves, recently as a, as a major player, down there which is going to broaden our offering.

In the DC market in addition to some changes that we've made in terms of management and beefing up our sales staff, etc.

And so we got a few other changes, that we've made in some of the the markets where you know we think it's going to improve performance in a mean. Away, yeah, as well and TV One's been holding in there you know this year and so we think that, given those things I just outlined we're feeling good about a rebound in 2020.

Okay, that's, that, that's good to hear and that's great color. Thank you.

Next thing for me, and I guess this is this is kind of focused on post 4th quarter plans as well, but are you thinking of any kind of M&A activity or you know larger than usual kind of I know you guys swap radio stations here and there on a pretty regular basis, but are you thinking about anything more transformative, for the future? I know every now and then then things get kicked around. I'm just curious if there's anything else ?

I think everybody in the industry is focused on de-reg and what's going to happen. You've seen a number of deals that have been filed already. In the radio space looking for waivers to exceed the current ownership gaps.

FCC has signaled you know that they think the ownership rules are antiquated and people in TV and in radio have submitted deals to be approved for waivers there is also a notice for.

Proposed rule making, out, that, I know that the industry is going to comment on if they haven't already, about the reg and you know they. I think everybody in the industry is going to be. Prod reg when I say everybody I'm sure it's not necessarily going to be 100% but that's going to create some opportunities for people to align assets in markets in a much more efficient manner and yes we're looking at that there's nothing you know that is large and transformative that we're working on now because this is all very new.

But we tend to TRY to think ahead and be intellectually creative in what the next move is and so all along, we've had conversations and thoughts and conversations with people about the art of the possible.

Because historically you know we haven't been up against the ownership cap so we probably had the ability you know to to to to grow or do M&A that that that others haven't even though in a de-reg environment that will be enhanced but what you know is a governor is leverage and is any transaction going to be delevering right? You know and even.

When you look at these transactions you gotta, think about it against a backdrop, just be just because you have de-reg doesn't, solve necessarily your top-line, secular trajectory, right? So you just gotta be careful. You know about how you underwrite, and eliminate transaction, but with that said, I do think it's going to create some significant opportunities, to build stability, in these businesses at the end of the day these are the radio businesses.

Largely a local business, so you've got an opportunity to provide more different demographic targets to advertisers, local advertisers, I think that makes you a stronger player. We've seen that in our Indianapolis market, our Houston market, our Charlotte market where we've spread out in different format demographics and you know that's one of the things that.

We just did like I articulated earlier in DC, that I think is going to, not help significantly so you know there's no M&A deal that we are currently working on that's transformative as we speak, but I'm sure that we will explore opportunities to be able to to rearrange the deck chairs in order to to make us a stronger entity.

Okay, that's all very helpful and then, next thing I want to ask about is I think at the top of a lot of investors' minds. Is your debt buyback activity, obviously you stated in the press release this morning, that you did a little bit of buybacks in the third quarter. Are you expecting to continue, to execute on those that buybacks and.

Yeah, that look, I thought I figured we would get that question because of, yeah, because we've been more acquisitive in the past but because of this heat up. In potential de-reg and and stuff moving around we decided, to sit pat and build a little liquidity as we get to the end of the year, see how that all shapes up and figure out also how that is going to play out you know we are always and have been focused on. Yeah, delevering in the best way to delever so we, one way to delever is buy back debt at a discount.

Another way to delever, yeah, and we've done it, a number of times, including in Houston. I, through, delevering M&A activity so we've decided to keep our powder dry a little bit here, to see what opportunities are going to present themselves, in the near term.

Okay, alright, that's extraordinarily helpful. Thank you guys for taking the questions and good luck on the fourth quarter, and going forward.

Thank you.

And there are no further questions at this time. I'd like to hand the call back over to Alfred Liggins.

Thank you very much, operator, and again, as always, Peter and I are available for, calls, afterwards, now, emails or calls, directed to us, thank you for your support and we'll talk to you next quarter.

This concludes today's call. You may now disconnect.