Urban One(UONE) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated net income reached $0.46 million in Q1 2021, a turnaround from a $23.06 million net loss, driven by the absence of prior-year impairment charges and a major debt refinancing Consolidated Statements of Operations Net revenue slightly declined to $91.4 million, but operating income improved to $23.8 million due to the absence of a prior-year impairment charge Consolidated Statements of Operations (Q1 2021 vs Q1 2020) | Financial Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net Revenue | $91,440 | $94,875 | | Total Operating Expenses | $67,683 | $122,162 | | Impairment of long-lived assets | $0 | $53,650 | | Operating Income (Loss) | $23,757 | $(27,287) | | Interest Expense | $18,045 | $19,138 | | Loss on Retirement of Debt | $6,949 | $0 | | Consolidated Net Income (Loss) | $461 | $(23,058) | | Net Income (Loss) Attributable to Common Stockholders | $7 | $(23,187) | | Diluted EPS | $0.00 | $(0.51) | Consolidated Balance Sheets Total assets decreased slightly to $1.17 billion, while liabilities decreased to $957.2 million, and stockholders' equity increased to $198.8 million Consolidated Balance Sheet Highlights | Account | March 31, 2021 (Unaudited, in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $56,814 | $73,385 | | Total current assets | $203,893 | $222,966 | | Goodwill | $223,402 | $223,402 | | Radio Broadcasting Licenses | $484,066 | $484,066 | | Total Assets | $1,168,751 | $1,195,487 | | Total current liabilities | $77,973 | $106,909 | | Long-term debt, net | $809,857 | $818,924 | | Total Liabilities | $957,185 | $995,888 | | Total Stockholders' Equity | $198,831 | $186,898 | Consolidated Statements of Cash Flows Operating cash flow decreased to $14.3 million, while financing activities shifted to a $30.1 million outflow due to major debt refinancing Cash Flow Summary (Q1 2021 vs Q1 2020) | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $14,293 | $22,035 | | Net cash flows used in investing activities | $(804) | $(1,905) | | Net cash flows (used in) provided by financing activities | $(30,060) | $12,714 | | (Decrease) Increase in Cash | $(16,571) | $32,844 | - Financing activities in Q1 2021 were dominated by a large-scale debt refinancing, including proceeds of $825 million from new 2028 Notes and repayments of multiple facilities totaling over $852 million[27] Notes to Consolidated Financial Statements Details business segments, the January 2021 debt refinancing, Q1 2020 impairment charges, and ongoing At-The-Market stock offering programs - The company operates as a multi-media entity targeting African-American and urban consumers through four main segments: radio broadcasting (Radio One), syndicated programming (Reach Media), digital platforms (Interactive One), and cable television (TV One, CLEO TV)[30][33] Net Revenue by Source (Q1 2021 vs Q1 2020) | Revenue Source | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :--- | :--- | :--- | | Radio Advertising | $33,340 | $38,417 | | Digital Advertising | $10,353 | $6,289 | | Cable Television Advertising | $20,702 | $21,033 | | Cable Television Affiliate Fees | $25,486 | $26,207 | | Total Net Revenue | $91,440 | $94,875 | - In January 2021, the company issued $825 million of 7.375% senior secured notes due 2028, using proceeds to repay and terminate several existing debt facilities, resulting in a $6.9 million loss on retirement of debt[94][95] - Due to COVID-19's economic impact, the company recorded a non-cash impairment charge of approximately $53.6 million in Q1 2020, with no impairment recorded in Q1 2021[87][89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net revenue decreased 3.6% due to radio segment decline, offset by digital and Reach Media growth, with operating income improving significantly Results of Operations Net revenue declined 3.6% to $91.4 million, while operating income improved to $23.8 million due to lower expenses and no impairment charge Net Revenue Change by Source (Q1 2021 vs Q1 2020) | Revenue Source | Q1 2021 (in thousands) | Q1 2020 (in thousands) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Radio Advertising | $33,340 | $38,417 | $(5,077) | (13.2)% | | Digital Advertising | $10,353 | $6,289 | $4,064 | 64.6% | | Cable Television Advertising | $20,702 | $21,033 | $(331) | (1.6)% | | Cable Television Affiliate Fees | $25,486 | $26,207 | $(721) | (2.8)% | | Total Net Revenue | $91,440 | $94,875 | $(3,435) | (3.6)% | - The radio broadcasting segment's net revenue decreased by 20.4% year-over-year, while the digital segment's net revenue increased by approximately $4.1 million, and Reach Media's revenue grew by 16.9%[200] - A loss on retirement of debt of approximately $6.9 million was recorded in Q1 2021 associated with the settlement of the 2028 Notes offering and the repayment of previous debt facilities[209] Liquidity and Capital Resources Liquidity is supported by operations and a new $50 million asset-backed credit facility, following a major $825 million debt refinancing in January 2021 - In January 2021, the company completed a major debt refinancing by issuing $825 million in 7.375% notes due 2028, simplifying its debt structure and extending maturities[222][223] - A new $50 million asset-backed credit facility was established in February 2021 to provide for working capital needs, replacing a previous facility[226] - The company utilized At-The-Market (ATM) stock sale programs, completing a $25 million program in January 2021 and raising approximately $2.8 million in net proceeds from a new program as of March 31, 2021[221] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk exposure remains materially unchanged since the disclosures in the 2020 Annual Report on Form 10-K - There have been no material changes in the company's exposure to market risk since December 31, 2020[265] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance of achieving desired control objectives[266][267] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[268] PART II. OTHER INFORMATION Item 1. Legal Proceedings Routine legal proceedings are ongoing but are not expected to materially affect financial condition or operations - The company is involved in routine legal proceedings that are not expected to have a material adverse effect on its business[271] Item 1A. Risk Factors For a comprehensive understanding of potential risks, refer to the risk factors detailed in the 2020 Annual Report on Form 10-K - For a detailed discussion of risk factors, the report refers to the company's 2020 Annual Report on Form 10-K[272]