Urban One(US:UONE)2023-12-07 19:28Financial Data and Key Metrics Changes - Consolidated net revenue for the first half of 2023 increased by 3.8% year-over-year, with the Indianapolis radio acquisition contributing approximately $7.6 million and the Reach cruise event generating $10.1 million [12][19] - Net income was approximately $67.4 million or $1.42 per share, compared to $32.8 million or $0.64 per share for the same period last year [19] - Adjusted EBITDA was $8.1 million for the first half, down from $8.6 million last year [30] Business Line Data and Key Metrics Changes - Net revenue for the cable television segment was $102.1 million for the first half of the year, a decrease of 6.8% [6] - Net revenue for the radio segment increased by 8.3% year-over-year, with a decrease of 1.3% on a same-station basis [12] - Net revenue for Reach Media was $31 million for the first half, including $10.1 million from the cruise event, compared to $21.1 million last year [13] Market Data and Key Metrics Changes - Local ad sales were down 4.6% against a market that was down 2.7%, while national ad sales were down 2.4% against a market that was down 7.7% [29] - Cable subscribers for TV One decreased to 45.1 million at the end of Q2 2023 from 46.5 million at the end of 2022 [32] Company Strategy and Development Direction - The company is focused on debt paydown as a top consideration following the failed Richmond referendum for casino investment [2] - Management is exploring opportunities for cash deployment, including potential acquisitions that align with their core business [21][39] - The company aims to maintain a defensive posture by continuing to deleverage while seeking opportunities that can yield a 20% return [24] Management's Comments on Operating Environment and Future Outlook - Management noted that the radio business showed softness in the second half of the year, while the cable television business struggled but stabilized going into the latter half [27] - The company anticipates a softer Q4 due to a lack of political advertising, projecting around $10 million in political revenue for the radio business [65] - Management expressed confidence in the potential for future growth in the digital segment, which has been performing better than expected [27] Other Important Information - The company repurchased $25 million of its 2028 notes, resulting in a net gain on retirement of debt of approximately $2.4 million [7] - As of June 30, 2023, gross debt was $725 million, with unrestricted cash of $230.7 million, resulting in a net debt of approximately $494.3 million [53] Q&A Session Summary Question: How does the company view the IRR on open market debt purchases versus other cash uses? - Management indicated that while a 12% IRR is attractive, finding opportunities for 20% returns is challenging in the current environment [21] Question: What is the company's commitment to the media business versus diversifying ventures? - The company prefers to invest in tangential businesses that leverage existing assets and expertise, maintaining a focus on media [39] Question: What are the expectations for political advertising revenue in 2024? - Management expects political advertising revenue to be around $10 million, down from $18 million in 2022 due to fewer significant races [65] Question: What is the company's leverage target? - Management aims to reduce leverage to the low-3s, currently projecting a year-end leverage of around 3.8 [68] Question: Is the casino investment idea completely off the table? - Management remains open to future opportunities in gaming, particularly with potential iGaming developments in Maryland [73]