0:03

This is the RBR tvb R in Focus Podcast. Here's your host, Radio

0:09

and Television Business Report Editor in chief Adam R. Jacobson. Hi, and

0:14

welcome to the in Focus podcast, which is presented by dot fm streaming social

0:19

podcast broadcast. Get a dot fm domain name, heading over to get dot

0:23

fm. Today and today is May ninth, twenty twenty four, and what

0:26

a busy day for quarterly earnings calls. Indeed, Q one earnings reports from

0:33

town Square Media and iHeartMedia came out at exactly the same time, with each

0:39

company holding their quarterly earnings calls simultaneously. With that, we are pleased to

0:46

offer excerpts of the iHeartMedia Q one twenty twenty four earnings call, held right

0:52

in early this morning, May ninth, twenty twenty four and eight a m.

0:57

Eastern time. Let's jump right into their call right now. Mike McInnis,

1:00

head of Investorations. Good morning, everyone, and thank you for taking

1:04

the time to join us for our first quarter twenty twenty four earnings call.

1:08

Joining me for today's discussion, Bob Piman, our chairman and CEO, and

1:12

Rich Presler, our president, COO and CFO. And now I'll turn a

1:18

call over to Bob, Thanks Mike. We're pleased to report that our first

1:22

quarter twenty twenty four results were in line with our previously provided adjusted EBITA and

1:26

revenue guidance ranges. As expected, we saw February March improve over the January

1:30

pace of business. Although the marketplace continues to be dynamic with a changing outlook

1:36

on interest rates, inflation trends, and global and domestic uncertainty, we remain

1:41

confident that this is a recovery year, highlighted by the strong momentum in our

1:45

podcast business and the sequential improvement of our multi platform groups year over year adjusted

1:49

EBITA performance. We also see material upside from political advertising in the back half

1:55

of the year and the benefit of our ongoing focus on cost efficiencies as well.

2:00

Now, let me take it through some of the key financial results of the quarter. In the first quarter, we generated adjusted EBITA of one hundred

2:06

and five million, in the middle of the guidance range we provided of one

2:08

hundred to one hundred and ten million. Our consolidated revenues for the quarter were

2:13

down one point five percent compared to the prior year quarter, within the guidance

2:16

range of flat to down two percent. Our q one free cash flow is

2:21

negative eighty one million, a significant improvement compared to the negative one hundred and

2:24

thirty three million in the prior year. As a reminder, Q one is

2:29

our seasonal low point for free cash flow in the year, and we will

2:31

generate positive free cash flow in each of the remaining quarters in twenty twenty four,

2:37

with each quarter increasing sequentially. We anticipate our full year free cash flow

2:40

to be significantly higher than last year. Turning now to our individual operating segments,

2:46

the Digital Audio Group generated first quarter revenues of two hundred and thirty nine

2:50

million, up seven percent versus prior year, and represented thirty percent of the

2:54

company's total revenue for the quarter. The Digital Audio Group generated a just sixty

3:00

eight million, up twenty six percent versus prior year. The Digital Audio Groups

3:05

adjusted to even the margins were twenty nine percent, up from twenty four percent

3:08

in Q one twenty twenty three, marking the Digital Audio Group segment's highest Q

3:14

one EBITA margin ever. Within the Digital Audio Group, our podcast revenues grew

3:19

eighteen percent versus prior year. Podcasting continues to be the hottest new consumer medium,

3:23

and we are the leader in that medium in every key metric audience,

3:28

revenue, and earnings. Podcasting remains a strong growth engine for the company,

3:31

and our financial discipline and podcasting expenses continues to pay off, as our podcasting

3:38

ebit of margins remain accreative to our total company adjusted even to margins. In

3:43

March, iHeart was once again ranked the number one podcast publisher in the US,

3:46

with more monthly downloads than the next two largest podcast publishers combined, according

3:52

to podtrack. Our leadership position in podcasting is in part the result of the

3:57

power of our broadcast radio assets. As a reminder, we've used those assets

4:01

to build not only the podcast business, but also the iHeartRadio app and our

4:05

marquee live events business, which includes the recent iHeartRadio Music Awards and the iHeart

4:12

Country Festival. In addition to our industry leading podcast business and our digital radio

4:16

streaming service, we also have the largest social footprint of any audio service by

4:21

a factor of seven, and we operate three thousand national and local websites that

4:27

reach more than one hundred and ten million people in the United States each month,

4:30

all of which represent additional opportunities for our advertising partners to interact with our

4:35

highly engaged consumer base and provide additional revenue growth for the company. Turning now

4:41

to the multi platform group, which includes our broadcast, radio, networks and

4:45

events business. In the first quarter, revenues for four hundred and ninety three

4:48

million, down six point seven percent versus prior year and down seven point six

4:54

percent excluding the impact of political advertising. Adjusted EBIDO was seventy seven million,

5:00

down eleven point three percent versus prior year, and this represents a substantial sequential

5:04

quarterly adjusted EBIT improvement from down thirty eight percent year over year in Q four

5:10

twenty twenty three. iHeart continues to be ranked number one in radio audience in

5:15

more markets than the next two largest radio companies combined, and our events business

5:18

continues its strong momentum. For example, the iHeart Radio Music Awards generated eighty

5:24

four billion social impressions, three times more than the Super Bowl and two point

5:29

three times more than the Grammys. And we've continued to make meaningful progress in

5:32

the development of our programmatic platforms that enable the automated buying, selling, and

5:36

planning of our broadcast radio inventory, which give our broadcast radio inventory exposure to

5:43

the digital tam. Looking at the business as a whole. We had our

5:46

first quarter of year over year adjusted EBIT growth in five quarters, driven by

5:50

the substantial sequential eurover year improvement in the performance of all of our segments,

5:56

the Multi Platform Group, the Digital Audio Group, and the audiom met the

6:00

Services Group positive indicators of a recovery year. In addition to continuing to build

6:04

out our business and develop new consumer and revenue opportunities, our management team remains

6:11

focused on expense management, driving efficiencies, and structuring our business using technology including

6:15

AI for long term profitability and the maximized shareholder value. Now comments from CFO

6:23

and COO Rich Bresler, Thank you Bob. As I take you through our

6:30

results, you'll notice that, as Bob mentioned, our first quarter twenty twenty

6:33

four results were in along with our previously provided revenue and adjusted in the DA

6:38

guidance ranges. Our Q one twenty twenty four consolidated revenues with down one point

6:44

five percent year over year, In line with the guidance, we provided a

6:46

flat to down two percent. Our consolidated direct operating spences decrease point nine percent

6:53

for the quarter. This decrease was primarily driven by lower variable content costs,

6:59

lower event costs, related to the timing of the twenty twenty four iHeart Radio

7:02

Music Awards, which were on April first this year and March twenty seventh last

7:08

year, partially offset by higher third party digital costs related to the increase in

7:13

digital revenues. Our consolidate SG and A expenses decrease four point four percent for

7:17

the quarter. This decrease was driven by lower marketing expense due to the timing

7:23

of the twenty twenty four iHeart Radio Music Awards and lower variable bonus expense,

7:28

partially offset by an increase in certain costs incurred in connection with the execution of

7:32

our cost savings initiatives. We generate a first quarter gap operating loss of thirty

7:38

four point seven million, compared to a gap operating loss of forty eight point

7:43

nine million in the prior year quarter. Our first quarter adjusted i the DA

7:46

was one hundred and five million of twelve percent compared to ninety three million in

7:50

the prior year quarter and within the guidance range we provided of one hundred to

7:55

one hundred and ten million dollars. Turning out to the performance of our operating

7:59

set and as a reminder, there are slides in the earnings presentation on our

8:03

segment performances. In the first quarter, the Digital Audio Group's revenues were two

8:07

hundred and thirty nine million dollars of seven percent year of year, and they

8:13

comprised thirty percent of our first quarter consolidated revenues. The Digital Audio Groups adjusted

8:18

IDA was sixty eight million dollars of twenty five point nine percent year of year,

8:24

and our Q one margins were twenty eight point five percent, a year

8:28

of year increase of four hundred and twenty eight basis points. This was the

8:33

highest Q one IVIDA margin for the Digital Audio Group in our company's history.

8:37

Within the Digital Audio Group are our podcasting revenues, which grew eighteen percent year

8:43

of year, and our non podcasting digital revenues which grew one point two percent

8:48

year of year. The Multi Platform Group revenues were four hundred and ninety three

8:52

million dollars, down six point seven percent year of the year, or down

8:56

seven point six percent excluding the impact of political Adjusted I, the DA was

9:01

seventy seven million dollars, down eleven point three percent year over year, and

9:07

this represents a substantial sequential improvement from down thirty eight percent year of year and

9:11

QWO four twenty twenty three, the multi platform groups adjusted I the DA margins

9:18

were fifteen point six percent. Turning to the Audio and Media Services Group,

9:22

revenues were sixty nine million dollars of twelve point seven percent year of the year

9:28

and adjusted I the DA was twenty four million dollars of fifty four percent from

9:33

fifteen million dollars in the prior year. Excluding the impact of political the Audio

9:37

and Media Service Group revenues were of six point one percent. At quarter end,

9:43

we had approximately four point eighty six billion dollars of net debt outstanding,

9:46

which was the lowest net debt position in the history of our company. Our

9:52

total liquidity was seven hundred and eighty eight million dollars at quarter end, which

9:56

includes a cash balance of three hundred and sixty one million dollars. Our quarter

10:00

ending net debt to adjust it IBBITDA ratio was six point nine times, and

10:05

in twenty twenty four we expect to make progress towards our goal of a net

10:09

debt to adjust it ibbit DA ratio of approximately four times. As highlighted on

10:15

pass calls, we have no material maintenance covenants and no debt maturities until May

10:20

twenty twenty six. We continue to be opportunistic in responding to market developments and

10:26

are evaluating all opportunities surrounding our capital structure. In aggregate, we now have

10:31

repurchased five hundred and thirty four million dollars of our eight and three eight senior

10:35

unsecured notes at a meaningful discount to their par value, generating both earnings and

10:41

free cash flow accretion. This has reduced the outstanding amount of our eight and

10:45

three eighth senior unsecured notes from one point four to five billion to approximately nine

10:50

hundred and sixteen million dollars, resulting in aggregate annualized cash interest savings of approximately

10:56

forty five million dollars. In the first cour, our free cash flow is

11:01

a negative eighty one million dollars, a significant improvement from negative one hundred and

11:05

thirty three million dollars in the prior year quarter, and our Q one twenty

11:11

twenty four free cash flow excludes the positive impact of the one hundred and one

11:15

million dollars of cash proceeds from our equi state in the cell of BMI that

11:20

we received in February. As a reminder, Q one is our season low

11:24

point for free cast flow in the year, and we will generate positive free

11:28

cash flow in each of the remaining quarters in twenty twenty four. Our free

11:33

cash flow for the year will also benefit from the presidential election cycle, which

11:37

we expect to generate robust political advertising, which as reminders paid up front and

11:43

will help fuel our free cash flow generation, particularly in Q three and Q

11:48

four. Turning now to our outlook for Q two, we expect our Q

11:54

two twenty twenty four revenues to be approximately flat year of year. We are

11:58

still closed in the month of April, but expect revenues to be down zero

12:03

point four percent. Turning to the individual segments for Q two, we expect

12:07

the digital audio groups revenues to be up high single digits. We expect the

12:13

multi platform groups revenue to be down mid single digits, a sequential improvement from

12:18

Q one, and we affect the audio and Media services group revenues to be

12:22

down low single digits. We expect to generate second quarter adjusted at DA in

12:28

the range of one hundred and forty to one hundred and sixty million dollars compared

12:33

to one hundred and ninety one million dollars in the prior year quarter. For

12:37

this quarter, we will not have our usual flow through of revenue due to

12:41

the timing of the iHeartRadio Music Awards, which occurred in Q one last year

12:46

and in Q two this year. We recognize expense associated with the event,

12:50

including production and marketing course when the awards are aired on Fox and streamed on

12:56

Hulu. Turning to some of the items affecting our full year free cash flow,

13:01

we expect our cash taxes to be approximately ten percent of adjusted ibidier in

13:07

twenty twenty four. Our estimate of full year twenty twenty four capital expenditures is

13:15

expected to be approximately one hundred million dollars. Cash restructuring expenses will be approximately

13:20

sixty million this year as we continue to execute our new opportunities to optimize our

13:26

organization for efficiency and growth. As Bob mentioned, we continue to see signs

13:33

of improvement throughout our business and the broader advertising marketplace, and as we look

13:37

ahead, we expect to generate significant political revenues as a result of the presidential

13:43

election cycle, although most of the political revenue comes in the back half of

13:48

the year. As an early indicator, our full year twenty twenty four political

13:54

revenues are currently pacing approximately sixteen percent higher than the last presidential election cycle when

14:01

we generate one hundred and sixty seven million dollars of political revenue. With that

14:05

context, we expect to see a significant year of year improvement and our full

14:11

year adjusted I the DA performance on behalf of our entire management team. Bob

14:16

and I want to thank our team members who work to deliver for their communities,

14:20

our advertising partners, and for iHeart every day. Now we will turn

14:24

it over to the operator to take your questions. Thank you, thank you.

14:30

If you would like to ask a question, please press Star one on

14:33

your telephone keypad. If you have tued up and with wish to withdraw your

14:37

questions, simply press Star one again one moment please with town Square Media's first

14:45

quarter twenty twenty four earnings call ongoing, this is what happened. There are

14:50

no questions at this time. I will turn the call to the speakers for

14:54

closing remarks. Well, Bob and I in the entire management team again would

15:00

like to thank you all for taking a few minutes this morning and listen to

15:03

the iHeart story and we are available of anytime for any follow up questions.

15:09

Again, thank you all. That concludes the iHeartMedia twenty twenty four first quarter

15:16

earnings conference call. With that, we thank you for tuning into this radio

15:20

and television business report and focused podcast. It was presented by dot fm,

15:26

streaming, social podcast or broadcast. To get a dot fm domain name by

15:28

heading over to get dot fm Today. From the global headquarters of a streamline

15:33

publishing, I'm Adam R. Jacobson and book Raton in Florida. We'll see

15:37

you next time.