MediaCo Holding(MDIA) - 2023 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for the three months ended March 31, 2023, show decreased net revenues, an increased operating loss, and a net loss attributable to common shareholders of $(2.7) million, with total assets of $104.5 million and total liabilities of $33.5 million Condensed Consolidated Statements of Operations For Q1 2023, MediaCo reported net revenues of $7.3 million, an operating loss of $(1.9) million, and a consolidated net loss of $(2.1) million, with net loss per share at $(0.11) Q1 2023 vs Q1 2022 Statement of Operations (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Revenues | $7,335 | $8,113 | | Operating Loss | $(1,906) | $(1,112) | | Consolidated Net Loss | $(2,107) | $(4,293) | | Net Loss Attributable to Common Shareholders | $(2,697) | $(5,131) | | Net Loss Per Share (Basic & Diluted) | $(0.11) | $(0.68) | - The significant decrease in consolidated net loss was primarily driven by a reduction in interest expense from $(2.1) million in Q1 2022 to $(0.1) million in Q1 2023[9] Condensed Consolidated Balance Sheets As of March 31, 2023, total assets increased to $104.5 million and total liabilities to $33.5 million, while total equity decreased to $44.1 million Balance Sheet Summary (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $24,150 | $26,255 | | Total Assets | $104,485 | $96,705 | | Total Current Liabilities | $10,642 | $11,098 | | Total Liabilities | $33,479 | $23,390 | | Total Equity | $44,077 | $46,976 | - The significant increase in both Other Assets and Operating Lease Liabilities is due to a new lease for radio operations and corporate offices that commenced in February 2023[11][67] Condensed Consolidated Statements of Changes in Equity Total equity decreased from $47.0 million at year-end 2022 to $44.1 million as of March 31, 2023, primarily due to net loss and preferred stock dividends, partially offset by stock issuances Changes in Equity Q1 2023 (in thousands) | Description | Amount | | :--- | :--- | | Balance, December 31, 2022 | $46,976 | | Net loss | $(2,107) | | Repurchase of class A common shares | $(571) | | Preferred stock dividends | $(590) | | Balance, March 31, 2023 | $44,077 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $1.0 million for Q1 2023, with net cash used in investing and financing activities, resulting in an overall cash decrease of $0.3 million Cash Flow Summary Q1 2023 vs Q1 2022 (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $978 | $4,661 | | Net cash used in investing activities | $(549) | $(816) | | Net cash used in financing activities | $(718) | $(1,209) | | Increase in Cash, Cash Equivalents and Restricted Cash | $(289) | $2,636 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, the sale of the Fairway outdoor advertising business, composition of intangible assets, revenue sources, long-term debt, leases, and related party transactions - The company sold its Fairway outdoor advertising business on December 9, 2022, now treated as a discontinued operation, reflecting a strategic shift to focus on its two New York City radio stations, WQHT(FM) and WBLS(FM)[21][22][23] Disaggregated Revenue by Source (in thousands) | Revenue Source | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Spot Radio Advertising | $4,769 | $6,177 | | Digital | $974 | $730 | | Syndication | $605 | $413 | | Events and Sponsorships | $156 | $7 | | Other | $831 | $786 | | Total net revenues | $7,335 | $8,113 | - As of March 31, 2023, the company's only long-term debt was a $6.0 million convertible promissory note payable to Emmis, maturing in November 2024, following the full repayment of the Senior Credit Facility in December 2022[56][57][59] - The company entered into a new long-term lease for its radio operations and corporate offices in New York City, commencing February 1, 2023, which significantly increased its right-of-use assets and lease liabilities[67] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on its New York City radio stations, reporting a 9.6% decrease in Q1 2023 net revenues, increased operating expenses, and a smaller consolidated net loss due to reduced interest expense, with stable liquidity of $15.0 million Known Trends and Uncertainties The U.S. radio industry faces challenges from new digital media and audience fragmentation, with MediaCo's Q1 2023 gross revenues declining 13.1% in the New York market, prompting digital presence development - The U.S. radio industry is mature and faces challenges from new media, including internet and social networks, and audience fragmentation due to satellite radio and streaming services[93] - The New York radio market revenue, per Miller Kaplan, was down 5.5% for Q1 2023 year-over-year, while MediaCo's gross revenues reported to Miller Kaplan were down 13.1% for the same period, largely due to lower healthcare advertising spend[96] - The company is actively working to harness broadband and mobile media distribution by developing interactive websites, mobile applications, and streaming content to engage listeners[95] Results of Operations Q1 2023 net revenues decreased 9.6% to $7.3 million, operating expenses rose 9.3% to $7.2 million, and the operating loss widened to $(1.9) million, though a 95.0% decrease in net interest expense narrowed the consolidated net loss to $(2.1) million Q1 2023 vs Q1 2022 Results of Operations (in thousands) | Metric | Q1 2023 | Q1 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $7,335 | $8,113 | $(778) | (9.6)% | | Operating expenses | $7,237 | $6,623 | $614 | 9.3% | | Corporate expenses | $1,884 | $2,487 | $(603) | (24.2)% | | Operating loss | $(1,906) | $(1,112) | $(794) | 71.4% | | Interest expense, net | $(103) | $(2,077) | $1,974 | (95.0)% | | Consolidated net loss | $(2,107) | $(4,293) | $2,186 | (50.9)% | - The decrease in net revenue was primarily due to substantial declines in healthcare spend as COVID-19 vaccination awareness campaigns slowed, as well as lower online gambling advertising[103] - The sharp decrease in interest expense was due to the repayment of the senior credit facility in December 2022 and the conversion of SG Broadcasting promissory notes in July 2022[110] Liquidity and Capital Resources As of March 31, 2023, the company had $15.0 million in cash and equivalents, with net working capital of $13.5 million, and cash flow from continuing operations decreased to $0.8 million, primarily due to lower accounts receivable collections Liquidity Position (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $15.0 | $15.3 | | Net working capital | $13.5 | $15.2 | - Cash flows from continuing operating activities decreased to $0.8 million in Q1 2023 from $4.6 million in Q1 2022, mainly due to higher collections in accounts receivable in the prior year[116] - Cash used in financing activities of $0.7 million in Q1 2023 was attributable to repurchases of Class A common stock and settlement of tax withholding obligations[118] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is an emerging growth company and is therefore not required to provide information for this item - As an emerging growth company, MediaCo Holding Inc. is not required to provide quantitative and qualitative disclosures about market risk[119] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[121] - No changes occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[122] PART II — OTHER INFORMATION Item 1. Legal Proceedings According to management, there are no pending legal proceedings against the company that are likely to have a material adverse effect - Management believes there are no pending legal proceedings that are likely to have a material adverse effect on the Company[124] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2023, the company repurchased 395,813 shares of its stock at a weighted average price of $1.44 per share as part of a publicly announced program Share Repurchases for Q1 2023 | Period | Total Shares Purchased | Weighted Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2023 | 354,921 | $1.45 | | Feb 2023 | 24,042 | $1.44 | | Mar 2023 | 16,850 | $1.22 | | Total | 395,813 | $1.44 | Item 5. Other Information There is no other information to report for this item - None[126] Item 6. Exhibits This section lists the exhibits filed as part of the quarterly report, including officer certifications and Inline XBRL documents - The report includes a list of exhibits filed, such as Certifications of the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL documents[127]