Salem(SALM) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the second quarter decreased by 4.2% to $65.8 million, while operating expenses increased by 5.2$63.1 million, resulting in a 77.2% decline in adjusted EBITDA [53][58] - Net broadcast revenue decreased by 5.3% to $49.7 million, and broadcast operating expenses increased by 4.8$43.5 million, leading to a station operating income decrease of 43.5% [58][44] - Total debt as of June 30 was $182.0 million, composed of$159.4 million of 7.125% 2028 Notes and $22.6 million outstanding on the Asset Based Loan Facility [59] Business Line Data and Key Metrics Changes - Broadcast division revenue declined by 5.3$1.5 million to $0.3 million year-over-year [41][58] - Book Publishing revenue decreased by 3.5$20.8 million, representing 31.6% of total revenue, with growth slowing to 0.5% [54] Market Data and Key Metrics Changes - The advertising market remains sluggish, with national advertising spending impacting local markets, leading to expectations of a challenging third quarter [26] - Political revenue is anticipated to increase in the second half of the year, with early spending observed in primary states, although the company has not yet seen significant revenue from political advertising [35][70] Company Strategy and Development Direction - The company is implementing cost-cutting measures, including eliminating the 401(k) match and restructuring management positions, aiming for approximately $10 million in annual savings [53] - The focus remains on digital growth, with investments in in-house digital expertise to reduce third-party marketing costs [48][54] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the tough economic environment and high interest rates affecting revenue and expenses, projecting total revenue to decline between 3$0.3 million so far but anticipates an increase in late Q3 and Q4, with next year expected to be a significant political year [70] Question: Can you provide insights on expense growth and initiatives? - The company is investing in digital personnel to improve margins and reduce third-party costs, which is expected to lead to better profitability in the long run [63] Question: What is the current state of the advertising market? - Management described the advertising market as sluggish, with national spending impacting local markets, leading to expectations of a challenging third quarter [26][67]