Salem(US:SALM)2019-11-14 01:47Financial Data and Key Metrics Changes - For Q3 2019, total revenue decreased by 2.2% to $64.1 million, while adjusted EBITDA fell by 13% to $9.0 million [9][25] - Recurring operating expenses decreased by 0.1% to $55.1 million [25] - Net Broadcast revenue decreased by 2.3% to $47.7 million, with Broadcast operating expenses increasing by 0.4% to $37.3 million, resulting in a station operating income decline of 11% [25] Business Line Data and Key Metrics Changes - Broadcast revenue declined by 2.3% or $1.1 million, with a same-station revenue decline of 1.4% [10][11] - Digital revenue increased by 68.3% to $3.7 million, driven by Salem Surround [13] - Publishing division revenue increased by 15.3% to $7.3 million, with a profit of almost $800,000 compared to $100,000 in Q3 of the previous year [15][18] Market Data and Key Metrics Changes - Political revenue in the Broadcast division decreased significantly from $1.2 million in Q3 2018 to $200,000 in Q3 2019 [11] - National digital revenue decreased by 12% to $9.1 million, representing 14% of total revenue [29] Company Strategy and Development Direction - The company is focusing on paying down debt, with plans to use proceeds from recent station sales for this purpose [19][33] - The company is also looking to continue its M&A activity, having sold several radio stations and planning further sales [19][20] Management Comments on Operating Environment and Future Outlook - Management anticipates total revenue to decrease between 4% and 6% in Q4 2019 compared to Q4 2018 [30] - The company expects to maintain a leverage ratio above six by the end of Q4, with a goal to reduce it further [33] Other Important Information - The company recorded $5.4 million in valuation allowances against deferred tax assets due to a three-year cumulative pretax loss [24] - A quarterly cash distribution of $1.7 million was paid, representing a 16.4% dividend yield based on the current stock price [23] Q&A Session Summary Question: What will debt leverage be by year-end? - Management indicated leverage will likely be above six at the end of Q4, with a focus on reducing it [33] Question: Will there be a plan to cut the dividend for debt paydown? - The Board reviews the dividend quarterly, with discussions ongoing regarding future decisions [35] Question: How do planned station sales affect the network business? - Most sold stations were not in key mission formats, thus not significantly impacting the network business [36] Question: What is the outlook for block programming in 2020? - The renewal process is going well, and rate increases are anticipated [40] Question: How did the Publishing segment perform this quarter? - The Publishing segment had a strong release schedule, with Q3 being the strongest quarter of the year [42] Question: Does the scrutiny on political advertising create opportunities? - Management believes it may provide opportunities for increased political revenue [47] Question: What was the rationale behind recent asset sales? - The sales were both strategic and opportunistic, with good prices achieved for the properties [69]