Urban One(UONEK) - 2025 Q1 - Quarterly Results

Executive Summary Urban One, Inc. reported a net loss and significant declines in key financial metrics for Q1 2025, with the CEO reaffirming full-year guidance and highlighting debt reduction efforts Q1 2025 Financial Highlights Urban One, Inc. reported a decrease in net revenue and operating income for Q1 2025 compared to Q1 2024, resulting in a net loss, with Adjusted EBITDA also seeing a significant decline | Metric | Q1 2025 (approx.) | Q1 2024 (approx.) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Revenue | $92.2 million | $104.4 million | -11.7% | | Operating Income | $2.1 million | $12.9 million | -83.7% | | Broadcast and Digital Operating Income | $23.0 million | $32.0 million | -28.1% | | Net (Loss) Income | $(11.7) million | $7.5 million | N/A | | EPS (basic) | $(0.26) | $0.15 | N/A | | Adjusted EBITDA | $12.9 million | $22.3 million | -42.2% | CEO Commentary and Outlook CEO Alfred C. Liggins, III noted that Q1 results were in line with expectations, despite declines in core radio and cable TV advertising, reaffirming full-year Adjusted EBITDA guidance and highlighting significant debt repurchases and a strong liquidity position - Core radio advertising finished at (12.4)% excluding digital, and Cable TV advertising was (6.3)% in Q1 2025[1] - Cable TV ratings stabilized significantly in Q1 2025 and are performing in line with the 2025 budget[1] - Q1 2025 digital revenues were down (16.1)% due to expected weakness in streaming and podcasting[1] - Reaffirmed full-year guidance of $75 million in Adjusted EBITDA[1] - Cumulative debt repurchases in 2025 totaled $88.6 million at an average price of 53.9%, reducing gross debt to $495.9 million[1] - Approximately $79.8 million of cash on hand[1] Consolidated Financial Performance Consolidated financial results for Q1 2025 show a net loss, decreased revenue, and lower operating income, alongside reductions in cash, assets, and debt Consolidated Statements of Operations The consolidated statements of operations show a significant decline in net revenue and a shift from net income to net loss in Q1 2025 compared to Q1 2024, primarily driven by lower revenues and higher income tax provision | Metric (in thousands) | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | :--------- | | NET REVENUE | $92,235 | $104,410 | $(12,175) | -11.7% | | Total operating expenses | $90,137 | $91,522 | $(1,385) | -1.5% | | Operating income | $2,098 | $12,888 | $(10,790) | -83.7% | | Interest expense | $(10,924) | $(12,998) | $2,074 | -16.0% | | Gain on retirement of debt | $11,587 | $7,874 | $3,713 | 47.1% | | Provision for income taxes | $(15,658) | $(2,502) | $(13,156) | 525.8% | | NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $(11,742) | $7,493 | $(19,235) | N/A | Selected Other Financial Data Per share data reflects the net loss, while Broadcast and digital operating income and Adjusted EBITDA both decreased substantially year-over-year, indicating weaker core operational performance | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | :--------- | | Net (loss) income attributable to common stockholders (basic) | $(0.26) | $0.15 | $(0.41) | N/A | | Broadcast and digital operating income | $23,016 | $32,014 | $(8,998) | -28.1% | | Adjusted EBITDA | $12,857 | $22,257 | $(9,400) | -42.2% | - Adjusted EBITDA definition was immaterially changed in 2024 to add back loss from ceased non-core operations, with all historical periods recast[7] Selected Consolidated Balance Sheet Data The balance sheet shows a decrease in cash and cash equivalents, total assets, total debt, and total stockholders' equity as of March 31, 2025, compared to December 31, 2024 | Metric (in thousands) | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents and restricted cash | $115,568 | $137,574 | $(22,006) | -16.0% | | Intangible assets, net | $474,007 | $490,024 | $(16,017) | -3.3% | | Total assets | $890,551 | $944,790 | $(54,239) | -5.7% | | Total debt, net of issuance costs | $551,494 | $579,069 | $(27,575) | -4.8% | | Total liabilities | $727,595 | $765,857 | $(38,262) | -5.0% | | Total stockholders' equity | $159,238 | $170,945 | $(11,707) | -6.9% | - The company's senior secured notes due February 2028 have a fixed interest rate of 7.375%[8] Segment Performance Analysis Segment performance analysis reveals reclassification of CTV offering, with all segments experiencing decreased net revenue and most showing Adjusted EBITDA declines in Q1 2025 Segment Reclassification Effective January 1, 2025, Urban One modified its reportable segments by transferring the CTV offering from the Digital segment to the Cable Television segment, and recast prior period segment information for Sales and marketing and General and administrative expenses to align with the Chief Operating Decision Maker's evaluation of performance - The CTV offering was transferred from the Digital segment to the Cable Television segment, with prior periods reclassified to conform[3] - Prior period segment information for Sales and marketing and General and administrative expenses was recast to conform to the presentation used by the CODM[3] Net Revenue by Segment All operating segments experienced a decrease in net revenue in Q1 2025 compared to Q1 2024, with Radio Broadcasting and Cable Television seeing the largest absolute declines | Segment (in thousands) | Q1 2025 Net Revenue | Q1 2024 Net Revenue | Change ($) | Change (%) | | :--------------------- | :------------------ | :------------------ | :--------- | :--------- | | Radio Broadcasting | $32,610 | $36,351 | $(3,741) | -10.3% | | Reach Media | $5,853 | $8,472 | $(2,619) | -30.9% | | Digital | $10,212 | $12,189 | $(1,977) | -16.2% | | Cable Television | $44,193 | $48,004 | $(3,811) | -7.9% | | Consolidated | $92,235 | $104,410 | $(12,175) | -11.7% | Adjusted EBITDA by Segment Adjusted EBITDA declined across most segments in Q1 2025, with Radio Broadcasting and Reach Media experiencing significant drops, while Digital remained positive but small, and Cable Television maintained the largest segment Adjusted EBITDA despite a revenue decrease | Segment (in thousands) | Q1 2025 Adjusted EBITDA | Q1 2024 Adjusted EBITDA | Change ($) | Change (%) | | :--------------------- | :---------------------- | :---------------------- | :--------- | :--------- | | Radio Broadcasting | $2,848 | $5,634 | $(2,786) | -49.5% | | Reach Media | $(551) | $1,830 | $(2,381) | N/A | | Digital | $58 | $2,347 | $(2,289) | -97.5% | | Cable Television | $18,592 | $19,301 | $(709) | -3.7% | | Consolidated | $12,857 | $22,257 | $(9,400) | -42.2% | Detailed Financial Discussion This section details the drivers behind the Q1 2025 net revenue decline, changes in operating expenses, interest and tax impacts, and capital allocation activities Net Revenue Drivers Net revenue decreased by $12.2 million, or 11.7%, in Q1 2025, primarily due to weaker market demand for radio advertising, attrition of advertisers in Reach Media, decreased national digital sales (partially offset by podcast revenue), and subscriber churn in Cable Television Net Revenue by Source (in thousands) | Net Revenue Source | Q1 2025 | Q1 2024 | $ Change | % Change | | :------------------------- | :------ | :------ | :------- | :------- | | Radio advertising | $36,217 | $41,341 | $(5,124) | (12.4)% | | Political advertising | $150 | $1,237 | $(1,087) | (87.9)% | | Digital advertising | $10,211 | $12,167 | $(1,956) | (16.1)% | | Cable television advertising | $25,425 | $27,144 | $(1,719) | (6.3)% | | Cable television affiliate fees | $18,717 | $20,787 | $(2,070) | (10.0)% | | Event revenues & other | $1,515 | $1,734 | $(219) | (12.6)% | | Total Net Revenue | $92,235 | $104,410 | $(12,175) | (11.7)% | - Radio Broadcasting revenue decreased by $3.8 million, driven by weaker overall market demand from national advertisers and lower political revenues[10] - Cable Television revenue decreased by $3.8 million, primarily due to subscriber churn[10] Operating Expenses and Impairment Operating expenses (excluding certain items) decreased due to lower costs across most segments, professional fees, and lease costs, while depreciation and amortization increased due to TV One Trade Name amortization, and a significant impairment loss was recognized for broadcasting licenses - Operating expenses, excluding depreciation and amortization, stock-based compensation, and impairment of intangible assets, decreased by approximately $7.6 million to $80.7 million in Q1 2025, primarily due to lower expenses across most segments, lower third-party professional fees, and lower office space lease costs[12] - Depreciation and amortization expense increased by approximately $0.5 million to $2.3 million, driven by TV One Trade Name amortization following its reclassification to a finite-lived intangible asset[13] - An impairment loss of approximately $6.4 million was recognized in Q1 2025 for broadcasting licenses within the Radio Broadcasting segment, compared to no impairment in Q1 2024, due to a continued decline in projected gross market revenues and operating profit margin[14] Interest and Taxes Interest and investment income decreased due to lower cash balances, while interest expense decreased due to debt repurchases, and the provision for income taxes significantly increased, resulting in a high effective tax rate, primarily due to a valuation allowance for net operating losses - Interest and investment income decreased by approximately $1.0 million to $1.0 million in Q1 2025, driven by lower cash and cash equivalents balances[15] - Interest expense decreased by approximately $2.1 million to $10.9 million in Q1 2025, following the repurchase of approximately $28.2 million of 2028 Notes at a weighted average price of 58.0% of par[16] - A provision for income taxes of approximately $15.7 million was recorded on pre-tax income of $3.9 million in Q1 2025, resulting in an annual effective tax rate of 399.5%, including $14.6 million of discrete tax expense related to a valuation allowance for net operating losses[17] Capital Allocation Capital expenditures increased slightly, and the company continued its share repurchase program for both Class A and Class D Common Stock in Q1 2025 - Capital expenditures were approximately $2.5 million in Q1 2025, up from $1.8 million in Q1 2024[18] - In Q1 2025, the Company repurchased 449,252 shares of Class A Common Stock for approximately $0.7 million (average price $1.48/share) and 303,622 shares of Class D Common Stock for approximately $0.3 million (average price $0.87/share)[19] Additional Information This section provides an overview of Urban One's business, definitions of non-GAAP financial measures, forward-looking statement disclaimers, and conference call details Company Overview Urban One, Inc. is the largest diversified media company primarily targeting Black Americans and urban consumers in the United States, operating across television, radio, syndicated programming, and digital platforms - Urban One owns TV One, LLC, a television network serving over 35 million households[25] - As of March 27, 2025, the company owned and/or operated 72 broadcast stations (Radio One) in 13 urban markets[25] - Through Reach Media, Inc., it operates syndicated programming like the Rickey Smiley Morning Show and the DL Hughley Show[25] - iOne Digital is its wholly-owned digital platform serving the African American community with various websites and brands[25] Non-GAAP Financial Measures The report defines and explains the non-GAAP financial measures 'Broadcast and digital operating income' and 'Adjusted EBITDA,' emphasizing their use by management to evaluate operating performance and their differences from GAAP measures - Broadcast and digital operating income is a significant measure used by management to evaluate core operating segments, providing information apart from expenses associated with fixed assets, goodwill, income taxes, investments, impairment, debt, corporate overhead, and stock-based compensation[26] - Adjusted EBITDA is defined as net (loss) income plus various add-backs (depreciation, taxes, interest expense, impairment, stock-based compensation, etc.) and less certain deductions (other income, interest and investment income), used to evaluate overall business operating performance[26] Forward-Looking Statements This section provides a standard cautionary note that the press release contains forward-looking statements, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements represent management's current expectations and are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[9] - Important factors that could cause actual results to differ are described in Urban One's SEC filings (Forms 10-K, 10-Q, 8-K)[9] Conference Call Details Urban One, Inc. scheduled a conference call for May 13, 2025, at 10:00 a.m. EDT to discuss its Q1 2025 results, with replay options available for a week - Conference call for Q1 2025 results was scheduled for Tuesday, May 13, 2025, at 10:00 a.m. EDT[23] - U.S. callers could dial toll-free (+1) 888-596-4144, international callers (+1) 646-968-2525, with Access Code 7968738[23] - A replay was available from May 13 to May 20, 2025, via phone (+1 800-770-2030 or +1 609-800-9909, Access Code 7968738) and on Urban One's website[24]