Urban One(UONEK) - 2021 Q4 - Annual Report

PART I Business Urban One, Inc. is a diversified multi-media company primarily targeting African-American and urban consumers - Urban One is a multi-media company targeting African-American and urban consumers through four main segments: radio broadcasting, cable television, syndicated radio (Reach Media), and digital platforms[19][31] - The COVID-19 pandemic negatively impacted revenues by causing advertisers to reduce spending, altering radio listening habits due to changes in work commutes, and leading to the cancellation of special events[21] - In January 2021, the company completed a major debt restructuring, issuing $825 million in 7.375% Senior Secured Notes due 2028 to refinance and consolidate multiple existing credit facilities and notes[27][28][30] - The company completed an asset exchange with Audacy, Inc. in April 2021, acquiring several stations in Charlotte while divesting stations in St Louis, Philadelphia, and Washington, DC[25] Radio Station Portfolio Overview (as of Dec 31, 2021) | Market | Number of Stations* | Urban One Audience Share (12+) | Market Rank by African-American Population | | :--- | :--- | :--- | :--- | | Atlanta | 5 | 12.3% | 2 | | Washington, DC | 6 | 10.8% | 3 | | Houston | 4 | 9.5% | 6 | | Baltimore | 5 | 14.9% | 11 | | Charlotte | 7 | 18.6% | 12 | | Richmond | 6 | 18.1% | 23 | | Total Stations Owned/Operated | 64 | | | - The company's business is subject to extensive regulation by the Federal Communications Commission (FCC), which governs licensing, ownership, programming, and operations[55] Risk Factors The company faces significant risks from public health crises, economic volatility, intense competition, high leverage, and extensive FCC regulation - Public health crises, such as the COVID-19 pandemic, can significantly disrupt business operations and reduce advertising demand from consumer-focused companies[95] - A disproportionate share of radio revenue is concentrated in four markets (Houston, Washington, DC, Atlanta, Baltimore) and the Reach Media segment, making the company vulnerable to adverse conditions in these specific areas[109] - The company faces intense competition for audiences and advertising revenue from other radio stations, television, satellite radio, and a wide range of digital platforms, including social media and streaming services[110] - The business is dependent on maintaining FCC licenses, and failure to comply with FCC rules on indecency, ownership, and other matters could result in fines or loss of license[126][138][139] - Future impairment charges on the carrying values of FCC licenses and goodwill, which represent a significant portion of total assets, could adversely impact financial results[122][123] - The company's Chairperson and CEO together hold over 75% of the voting power, making Urban One a "controlled company" under NASDAQ rules and giving them control over management and corporate decisions[154][155] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[157] Properties The company's properties consist of offices, studios, and transmitter/antenna sites required for its media operations - The company typically leases its studio, office, and main transmitter/antenna sites, with lease terms generally ranging from five to 10 years[159] - Substantially all equipment, including transmitters and studio equipment, is owned by the company and is generally in good condition[160] Legal Proceedings Urban One is involved in routine legal and administrative proceedings incidental to its business - The company is involved in various routine legal proceedings but does not expect them to have a material adverse effect on its business[161] Mine Safety Disclosure This item is not applicable to the company - Not applicable[162] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A (UONE) and Class D (UONEK) common stock are traded on the NASDAQ Stock Market - The company's Class A (UONE) and Class D (UONEK) common stocks are traded on the NASDAQ Stock Market[164][166] Quarterly Stock Price Range (Class A - UONE) | Period | High ($) | Low ($) | | :--- | :--- | :--- | | 2021 | | | | Q1 | 8.87 | 4.16 | | Q2 | 20.95 | 4.56 | | Q3 | 9.01 | 6.40 | | Q4 | 11.43 | 4.47 | | 2020 | | | | Q2 | 36.30 | 1.06 | - The company has not declared any cash dividends on its common stock since its public offering in 1999 and does not plan to in the foreseeable future[169] Selected Financial Data This section is not required for smaller reporting companies - Not required for smaller reporting companies[170] Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated net revenue increased to $441.5 million in 2021, yielding net income of $38.4 million and adjusted EBITDA of $150.2 million Summary of Performance (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Revenue | $441.5M | $376.3M | | Broadcast and digital operating income | $179.2M | $163.9M | | Adjusted EBITDA | $150.2M | $138.0M | | Net income (loss) attributable to common stockholders | $38.4M | ($8.1M) | - Consolidated net revenue increased by 17.3% in 2021 compared to 2020, primarily due to the mitigation of COVID-19's economic impacts and increased demand for minority-focused media[199] - In January 2021, the company completed a major debt refinancing by issuing $825 million in 7.375% Senior Secured Notes due 2028, using the proceeds to repay and terminate multiple existing credit facilities and notes[223][224] - Critical accounting policies involve the valuation of goodwill and radio broadcasting licenses, which totaled $728.6 million (57.8% of total assets) at year-end 2021. No impairment was recorded in 2021, but an $84.4 million impairment charge was taken in 2020[243] Quantitative and Qualitative Disclosure About Market Risk This section is not required for smaller reporting companies - Not required for smaller reporting companies[306] Financial Statements and Supplementary Data This section presents the consolidated financial statements for 2021 and 2020, including balance sheets, income statements, and cash flows - The auditor, BDO USA, LLP, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[341][348][349] - Critical Audit Matters identified by the auditor relate to the valuation of radio broadcasting licenses and the radio goodwill impairment assessment, due to the subjective and complex judgments involved in estimating their fair values[353][356][358] Consolidated Balance Sheets As of December 31, 2021, total assets were $1.26 billion, with cash at $132.2 million and total liabilities at $990.0 million Consolidated Balance Sheet Highlights (as of Dec 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $132,245 | $73,385 | | Goodwill | $223,402 | $223,402 | | Radio Broadcasting Licenses | $505,148 | $484,066 | | Total Assets | $1,261,108 | $1,195,487 | | Liabilities & Equity | | | | Total current liabilities | $106,471 | $106,909 | | Long-term debt, net | $818,616 | $818,924 | | Total Liabilities | $989,973 | $995,888 | | Total Stockholders' Equity | $254,120 | $186,898 | Consolidated Statements of Operations For 2021, net revenue was $441.5 million, operating income $118.5 million, and consolidated net income $40.7 million, a significant improvement Consolidated Statement of Operations (Year Ended Dec 31) | Line Item | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net Revenue | $441,462 | $376,337 | | Total operating expenses | $322,919 | $344,741 | | Operating income | $118,543 | $31,596 | | Consolidated Net Income (Loss) | $40,667 | $(6,569) | | Diluted Net Income (Loss) per Share | $0.71 | $(0.18) | Consolidated Statements of Cash Flows Net cash from operations was $80.2 million in 2021, with investing activities providing $1.7 million and financing using $3.5 million Consolidated Statement of Cash Flows (Year Ended Dec 31) | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $80,150 | $73,867 | | Net cash provided by (used in) investing activities | $1,714 | $(3,413) | | Net cash used in financing activities | $(3,504) | $(30,142) | | Increase in Cash, Cash Equivalents and Restricted Cash | $78,360 | $40,312 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[308] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[309] - Based on an assessment using the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2021[312] - There were no changes in internal control over financial reporting during the year ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[313] Other Information The company reports no other information - None[314] PART III Directors and Executive Officers of the Registrant Information regarding directors and executive officers is incorporated by reference from the company's proxy statement - Information required by this item is incorporated by reference from the company's 2022 proxy statement[317] Executive Compensation Information regarding executive compensation is incorporated by reference from the company's proxy statement - Information required by this item is incorporated by reference from the company's proxy statement[318] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the company's proxy statement - Information required by this item is incorporated by reference from the company's proxy statement[319] Certain Relationships and Related Transactions Information regarding related party transactions is incorporated by reference from the company's proxy statement - Information required by this item is incorporated by reference from the company's proxy statement[320] Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's proxy statement - Information required by this item is incorporated by reference from the company's proxy statement[321] PART IV Exhibits and Financial Statement Schedules This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K - This section lists all financial statements and exhibits filed with the Form 10-K, including the independent auditor's report, consolidated financial statements, and various material agreements[324][325] Form 10-K Summary No Form 10-K summary is provided - None[334]