Urban One(UONE) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company experienced a significant decline in Q1 2025 net revenue and a shift to net loss, accompanied by reduced assets and a positive operating cash flow Condensed Consolidated Statements of Operations Urban One reported a Q1 2025 net loss of $11.7 million, a reversal from prior year's net income, driven by decreased revenue and an impairment charge Consolidated Statements of Operations Highlights (Q1 2025 vs Q1 2024) | Financial Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $92,235 | $104,410 | -11.7% | | Total operating expenses | $90,137 | $91,522 | -1.5% | | Impairment of intangible assets | $6,443 | $0 | N/A | | Operating income | $2,098 | $12,888 | -83.7% | | Gain on retirement of debt | $11,587 | $7,874 | +47.2% | | Net (Loss) Income | $(11,739) | $7,735 | N/A | | Net (Loss) Income Attributable to Common Stockholders | $(11,742) | $7,493 | N/A | | Diluted (Loss) Income Per Share | $(0.26) | $0.15 | N/A | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $890.6 million, primarily due to reduced cash, while total liabilities also declined Balance Sheet Summary (as of March 31, 2025 vs. Dec 31, 2024) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $115,084 | $137,090 | | Total current assets | $263,596 | $305,379 | | Total assets | $890,551 | $944,790 | | Long-term debt, net | $551,494 | $579,069 | | Total current liabilities | $89,037 | $114,302 | | Total liabilities | $727,595 | $765,857 | | Total stockholders' equity | $159,238 | $170,945 | Condensed Consolidated Statements of Cash Flows Net cash from operations turned positive in Q1 2025, while financing activities used significantly less cash, leading to a $22.0 million decrease in total cash Cash Flow Summary (Q1 2025 vs Q1 2024) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,085 | $(2,477) | | Net cash (used in) provided by investing activities | $(2,547) | $406 | | Net cash used in financing activities | $(21,544) | $(75,753) | | Net decrease in cash, cash equivalents and restricted cash | $(22,006) | $(77,824) | Notes to the Condensed Consolidated Financial Statements Notes detail the company's multi-media segments, a $6.4 million radio license impairment, TV One trade name reclassification, debt/stock repurchases, and an ongoing IT security incident investigation - The company operates as an urban-oriented, multi-media company with four reportable segments: Radio Broadcasting, Reach Media, Digital, and Cable Television, primarily targeting African-American and urban consumers[33][35] Net Revenue by Segment (Q1 2025 vs Q1 2024) | Segment (in thousands) | Q1 2025 Net Revenue | Q1 2024 Net Revenue | | :--- | :--- | :--- | | Radio Broadcasting | $32,610 | $36,351 | | Reach Media | $5,853 | $8,472 | | Digital | $10,212 | $12,189 | | Cable Television | $44,193 | $48,004 | | Consolidated Total | $92,235 | $104,410 | - The company recognized a $6.4 million impairment loss on radio broadcasting licenses in five markets due to declines in projected market revenues and operating profit margins[71][73] - Effective January 1, 2025, the TV One Trade Name was changed from an indefinite-lived to a finite-lived intangible asset with a 20-year amortization period, resulting in $0.6 million of amortization expense in Q1 2025[78] - In Q1 2025, the company repurchased approximately $28.2 million of its 2028 Notes for $16.4 million, resulting in a net gain of $11.6 million[87] - The company is investigating an IT security incident where an unauthorized third party accessed its systems around February 10, 2025. The investigation is ongoing, and the financial impact is not yet reasonably estimable[128] - Subsequent to the quarter end, the company repurchased an additional $60.4 million of its 2028 Notes at an average price of 52.0% of par[129] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q1 2025 revenue decline to weaker ad demand and subscriber churn, with operating income significantly impacted by a $6.4 million impairment charge, while liquidity remains stable Results of Operations Q1 2025 net revenue decreased by $12.2 million (11.7%) across all segments, with a $6.4 million impairment charge causing operating income to plummet Net Revenue by Source (Q1 2025 vs Q1 2024) | Revenue Source (in thousands) | 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)% | | Total Net Revenue | $92,235 | $104,410 | $(12,175) | (11.7)% | - Selling, general and administrative (SG&A) expenses decreased by $5.5 million (9.9%) primarily due to lower professional services and office lease costs at the corporate level[149] - A gain on retirement of debt of $11.6 million was recognized in Q1 2025 from repurchasing $28.2 million of 2028 Notes at an average price of 58.0% of par[157] Non-GAAP Financial Measures Non-GAAP measures show Broadcast and Digital Operating Income decreased by 28.1% to $23.0 million, and Adjusted EBITDA declined to $12.9 million in Q1 2025 Non-GAAP Performance Metrics (Q1 2025 vs Q1 2024) | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Broadcast and digital operating income | $23,016 | $32,014 | | Adjusted EBITDA | $12,857 | $22,257 | - The decrease in Broadcast and digital operating income was driven by lower performance in the Radio Broadcasting, Reach Media, and Digital segments[165] Liquidity and Capital Resources As of March 31, 2025, liquidity is supported by $115.6 million cash and an undrawn $50.0 million ABL facility, with ongoing debt and stock repurchases - Primary sources of liquidity are cash from operations and the $50.0 million Current ABL Facility, which was undrawn as of March 31, 2025[171][182] - In Q1 2025, the company repurchased $28.2 million of its 2028 Notes at an average price of 58.0% of par[181] - Under the 2024 Stock Repurchase Program, the company bought back 449,252 Class A shares for ~$0.7 million and 204,646 Class D shares for ~$0.2 million in Q1 2025. Approximately $12.7 million remains under the authorization[176][177] - The company's ownership in Reach Media increased to 94.6% after paying $3.2 million to non-controlling shareholders who exercised their annual Put Right[192][215] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for smaller reporting companies - Disclosure is not required for smaller reporting companies[221] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to identified material weaknesses in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025[223] - A material weakness was identified in entity-level controls, including the control environment, identification of control activities, and monitoring activities[225] - A material weakness was identified in IT general controls related to user access, program change management, and IT operations[226] - A material weakness was identified in control activities, specifically regarding the financial statement close process and management review over transactions requiring significant judgment[228] PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal proceedings not expected to materially affect its financial condition or operations - The company states that the outcome of routine legal proceedings is not expected to have a material adverse effect on its business[230] Risk Factors No changes to risk factors have occurred since the filing of the 2024 Form 10-K - No changes to risk factors have occurred since the filing of the 2024 Form 10-K[231] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 449,252 Class A shares at $1.48/share and 303,622 Class D shares at $0.87/share under repurchase programs Issuer Purchases of Equity Securities (Q1 2025) | Period and Class | Total Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | Class A | 449,252 | $1.48 | $12,752 | | January 2025 | 327,525 | $1.50 | $13,030 | | February 2025 | 70,099 | $1.42 | $12,865 | | March 2025 | 51,628 | $1.43 | $12,752 | | Class D | 303,622 | $0.87 | $12,752 | | January 2025 | 165,023 | $0.97 | $13,030 | | February 2025 | 79,067 | $0.81 | $12,865 | | March 2025 | 59,532 | $0.67 | $12,752 | Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[233] Mine Safety Disclosures This item is not applicable to the company - Not applicable[234] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025[235] Exhibits The report lists filed exhibits, including CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL financial information