Welcome to the Cumulus Media Quarterly Earnings Conference Call. I’ll now turn it over to Collin Jones, Senior Vice President of Corporate Development & Strategy. Sir, you may proceed.

Thank you, operator. Welcome, everyone, to our first quarter 2020 earnings conference call. I’m joined today by our President and CEO, Mary Berner; and our CFO, Frank Lopez-Balboa. Before we start, please note that certain statements in today’s press release and discussed on this call may constitute forward-looking statements under federal securities laws. Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management’s current assessments and assumptions, and they are subject to a number of risks and uncertainties. In addition, we will also use certain non-GAAP financial measures. We believe the supplementary information is useful to investors, although it should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks as well as financial reconciliations to non-GAAP terms are in our press release and SEC filings. The press release can be found in the Investor Relations portion of our website and our Form 10-Q was also filed with the SEC shortly before this call. A recording of today’s call will be available for about a month. Details for how to access that replay can also be found on our website. With that, I’ll now turn it over to our President and CEO, Mary Berner. Mary?

Thanks, Collin, and good afternoon, everyone. At Cumulus, our de facto management mantra is to focus acutely, move decisively, and execute efficiently. More importantly, because this mindset is deeply embedded into our culture, this has been our practice to focus acutely on what matters, move decisively where it will make a difference, and execute every effort with efficiency and attentiveness to get the payoff we’re looking for. These are practices that have always served us well but that are particularly valuable during this challenging time. As such, we have taken swift and substantial actions to help us both weather the impacts of the corona crisis and emerge in a strong position as this crisis abates. Most importantly, we reduced our fixed cost by nearly $60 million through an array of actions, including reductions in executive compensation ranging from 40% to over 50%, hiring freezes, furloughs, and the elimination of our 401(k) and HSA matching programs. We enhanced our cash position by drawing down $60 million on our ABL revolver. We generated additional cash by deploying several new tactics to manage working capital, lowering our planned CapEx for the year by more than 40%, and taking advantage of the meaningful tax benefits provided by the CARES Act. We’ve also identified other ways to improve our liquidity, including further cost reduction opportunities. We lead the industry in moving to remote operations for all but the central broadcast personnel, allowing us to protect our employees while continuing to serve our advertisers and listeners, and we developed a new normal sales strategy to optimize revenue performance. It’s also important to note that the meaningful cultural, operational, and strategic shifts we made over the past few years have positioned us well to deal with and navigate through this disruption. We have a battle-tested management team who shepherded the company through its turnaround and built a track record for disciplined execution of the company’s strategies, delivering consistently strong financial performance, including revenue growth for two consecutive years, adjusted EBITDA growth for three straight years, excluding political revenue, and significant free cash flow generation. We’ve expanded our portfolio of assets from our on-air radio foundation to become an audio-first media company comprised of broadcast, digital, mobile, and voice-activated media solutions as well as integrated digital marketing services. We’ve increased the portion of our revenue mix coming from higher growth digital business lines to nearly 10% of total revenue from less than 3% just three years ago. We reduced costs through operational blocking and tackling as well as true business process reengineering, like the hubbing of our traffic function and centralization of digital operations, and we reduced debt by over $275 million and net leverage by a turn since restructuring in June of 2018 and refinanced the full balance sheet in 2019 with covenant-lite term loans and bonds and a 2026 maturity profile. Moreover, we have substantial additional liquidity sources, including our upsized $100 million ABL and a pipeline of non-core asset sales like our DC and Nashville real estate and potential monetization of our tower portfolio. So as I said, we focus acutely, we move decisively, and we execute efficiently regardless of whether the environment we are operating in is normal or not. And obviously, this coronavirus disruption is the furthest thing from normal that any of us have ever experienced. The full quarter financial results reflect that impact. Through February on a same station basis, both revenue and EBITDA grew, with revenue up low single digits and EBITDA up in the mid-teens. Political was a nice driver of those increases and we were also seeing continued profitable growth across our digital businesses. However, the heavily COVID-impacted March results erased the January and February growth, causing revenue for the full quarter to fall 11.2% year-over-year and EBITDA to decline by 28.5%. Frank will provide more detail on the quarter, but I’ll note that the cancellation of the NCAA Basketball Tournament, for which we have the exclusive national rights, produced the biggest top line impact, accounting for the majority of the quarterly revenue decline. We also experienced broad-based revenue decline from a significant wave of pandemic-driven cancellations. That said, our digital businesses grew year-over-year in both revenue and contribution to EBITDA for the quarter, including in March, which underscores the importance of having built these businesses up over the last several years. On the expense side, as I highlighted earlier, we acted expeditiously to reduce costs and with over $105 million of cash on the balance sheet at quarter end, our liquidity position is strong. While the trajectory and duration of the pandemic remain uncertain, we feel comfortable with our financial ability to weather this crisis and to take advantage of advertiser demand as it returns. As for how we see things evolving over the long term, our crystal ball is no clearer than anyone else’s. However, we do know many things will be different in the future and those changes will generate both risks and opportunities for us. As with our execution of the company’s turnaround from 2015 to 2019, we intend on being proactive in mitigating those risks and taking advantage of the opportunities, and we’ve already identified multiple projects which are in various planning stages that will allow us among other benefits to work more efficiently. While we tighten up and reduce costs in many areas, we also expect to be leaning into areas where we see opportunities. For example, we are capitalizing on the shift in streaming listening to voice-activated devices by developing a number of new voice-activated content and advertising solutions. We are also highly focused on leveraging the potential of our podcast business, which is proving to be especially resilient now, delivering substantial year-over-year revenue growth in Q1 and over 60% in March alone, and that is continuing into Q2. Also, downloads in Q1 were up over 50% year-over-year, with more than 260 million in the quarter. This is supported by our very strong news podcast portfolio which, as of the end of April, had 4 of the top 20 and 8 of the top 40 news podcasts on Apple. With regard to the second quarter specifically, our visibility is still limited and given the highly fluid environment, pacing has become a particularly unreliable predictor of where we might finish. The cancellation wave I mentioned earlier impacted our Q2 bookings meaningfully, and as a result, April was a tough month. For the full quarter, total pacing is currently down in the low 40s, but ultimately, the results for the quarter will depend heavily on how business trends play out for the rest of May and June. On listenership, as you would expect, after the first week of March, broadcast radio listenership declined as a result of significant decreases in drive time listening because of the shutdown directive. However, over the last three weeks, the variety of tracking sources report that there has been a substantial return of driving, and we see from Nielsen data a parallel steady increase in daily listenership. So before I turn the call over to Frank, I do want to say a word about our new CFO. Frank has been with the company since late March, starting just a few days after we had instituted a work from home policy across the company. Although circumstances have forced him to be a virtual CFO since he joined, that hasn’t stopped him from hitting the ground running. He was previously EVP and CFO of Univision Communications, and prior to that, spent more than 20 years as a senior investment banker at Goldman Sachs. Frank has already contributed enormously to our decision-making and financial management. And as we navigate these uncharted waters, I could not be more pleased to have him onboard. Frank, over to you.

Thank you, Mary. I’m pleased to be speaking with everyone today. These first couple of months have certainly been a whirlwind. While all of the onboarding has been virtual, I can attest to the strength of the management team and the efficacy of the Cumulus approach to challenges, both of which have helped me to get up to speed and to jump in very quickly. As you know, the company executed a significant number of M&A transactions over the last year, including in this year’s first quarter when we completed the sale of WABC-AM in New York City through Red Apple Media. So I’ll speak of the financials as Mary did on a same-station basis. In Q1, total revenue for the quarter was down $28.6 million or 11.2% from Q1 2019. As Mary noted, the quarter was on track until February, with revenue growth of 1.1% and EBITDA growth of 15.1%. Political in the quarter was a nice tailwind, a bit more than expected thanks to the heavy expense with the Bloomberg campaign. This year, we received $4.9 million, compared to $0.9 million in the quarter last year. Drilling down a bit, as Mary mentioned, more than half of the revenue decline in the quarter was attributable to the loss of the NCAA Tournament. There’s an offset to that on the expense side with the rights fees, production, and other costs. However, the loss of the tournament had a negative impact on EBITDA versus last year. We also saw a significant decline in spot business across both local and national channels while digital grew in the quarter. Moving down the P&L, expenses declined by $17.2 million or 8%, largely driven by reductions in variable costs related to the revenue declines: reduction of sports-related expenses, lower compensation costs, and lower trade expenses. Also, as mentioned on the last earnings call, there were several one-time items that created negative comparisons for the quarter of approximately $3 million. Included in that is a one-time industry-wide BMI settlement, which was a $1.8 million hit that largely relates to prior periods and the loss of certain credits that we had benefited from in the prior year. Putting revenues and expenses together, EBITDA finished down $11.3 million or 28.5% in comparison to Q1 of 2019. As Mary noted, we took swift action to mitigate the revenue declines and bolster our liquidity position. On the fixed cost side, our actions taken to date plus reduced sports fees will reduce expenses by approximately $60 million over the entire year when compared with 2019. We will also experience variable cost declines that naturally occur with declining revenue. Additionally, we’ve been laser-focused on the non-operating items that affect our free cash flow. We cut our 2020 cash tax projection of $30 million by more than 40%, or approximately $13 million, and are focusing only on items that are mission-critical. Although we are only in the second quarter, our expectation is that cash taxes this year will be minimal compared to last year’s cash taxes of $18.6 million. Additionally, the CARES Act has allowed us to file for approximately $2.5 million of refunds for amounts paid in 2019, with potentially more refunds to be received in 2021. We expect to get an approximately $8 million benefit from the ability to defer our payroll taxes in 2020. Lastly, we’re concentrating intensely on working capital management and have seen significant benefits today from those efforts. The company has made great progress with its balance sheet over the last year and a half, fully recapitalizing it with a new term loan and senior secured notes that don’t mature until 2026 and are covenant-lite. In early March, we completed a refinancing of our ABL facility and upsized it to $100 million. Given the uncertainty of the economic environment, in mid-March, we drew $60 million in the ABL facility to add liquidity to the balance sheet. Q1 finished at 4.8 times net leverage on a trailing 12-month basis. While we are focusing on ensuring we have appropriate liquidity to weather the fallout from the pandemic that’s impacting the economy, we remain very committed over the long-term to continue to reduce leverage to sustainable and more attractive levels. Given all the actions to date, we do feel comfortable with our liquidity, but we will continue to monitor economic and business conditions and evaluate ways to prudently enhance it if it makes sense to do so. To that end, I’ll remind you that as we’ve discussed on earlier calls, we have several opportunities to monetize non-core assets. In DC, our land sale closing was delayed because of the government shutdown in Montgomery County. We expect to be able to close that once the courts open back up. As mentioned on our last call, we’re also exploring strategic alternatives for our tower portfolio and have a robust marketing process already underway. We also have a potentially valuable piece of property in Nashville that we may be able to monetize once commercial real estate activities approach more typical levels. Given the state of the environment right now, we wouldn’t expect to take this to the market in the very short-term. However, we’re preparing to do so, and we will be ready to realize value from the property when the market stabilizes. Finally, we’ve been waiting for the SEC to issue a final order on our petition for declaratory ruling related to lifting the cap on foreign ownership in our stock, and that as well is delayed given the government shutdown. With that, we can now open the line for Q&A.

Your first question comes from John Janedis with Wolfe Research. Your line is now open.

Hi. Thank you, just two from me. First, of the $60 million in fixed cost savings, could you just tell us how much of that was realized in the first quarter? It sounded like there may have been some sports in there and is the cadence of the savings similar for the remaining quarters this year? And then separately, I assume the declines in network were largely driven by the NCAA Tournament but can you talk about incremental sports exposure for the next couple of quarters? Thank you.

Okay. It’s...

Yeah. I’ll turn it over to Frank to – oh, go ahead, Frank. Sorry. This is the perils of virtual earnings calls. Go ahead, Frank.

Yeah. Thank you. Sorry, Mary. Okay, so on the sports fees and the costs, most of the employment actions we took started really in the second quarter in terms of furloughs and employees. There were some costs that came out of the NCAA Tournament in the first year kind of first quarter, and so the balance of that will be spread over the balance of the year, most of it falling into the second quarter and some naturally in the third and fourth quarter.

Your next question comes from the line of Michael Kupinski with Noble Capital Markets. Your line is now open.

Thank you. I just got a couple of quick questions here. Can you talk a little bit about the current head count and where you stand now? Can you give us a sense of the employee, I guess, compensation, how that run rate might look like as we go into the third quarter? Just kind of give us a little bit more color there.

I would start by just giving you a bird’s eye view of how we approached the actions that affected employees. We did not do layoffs as it relates to COVID. We did furloughs and most employees – every single employee was affected. But most employees took three weeks within a three-month period. As you know, we have always run a very lean shop and so we felt like the first thing we should do is spread the pain over the next couple of months as we see how this unfolds. With regard to head count, we have approximately 4,500 employees.

Got you, and then in terms of...

Frank?

... I’m sorry. Go ahead, Frank.

I'm sorry. Please continue, Frank.

I don’t know if Frank or Collin wanted to add anything, yeah.

Yeah. We have about 4,500 employees, about 3,100 full-time and the rest, part-time.

Got you. And then I assume that you’ll probably bring those furloughed employees back at certain metrics that you hit in terms of revenues. Is there anything that you can talk about in terms of how those revenues come back that you’ll layer in those employees so that we kind of have a feel for how things will shake up as we kind of hopefully see a rebound in advertising?

I think I would start by saying we don’t know what the new normal will ultimately look like, but we do know that it will look different. So we are all relentlessly thinking about how to mitigate risks long-term, but as well as positioning ourselves well to take advantage of key opportunities that are going to emerge. So we don’t have, I would say, a better view on the revenue trajectory than anyone else. We look at the same data you do. The point for us is to be ready market by market, category by category, as well as by ad channel. And so that’s how we’re looking at it and all the actions and all the things we might do, could do, should do, and won’t do are uncertain. We look at this – it’s an ongoing and a very fluid situation.

Got you. And can you just give us a sense on in terms of some of your key advertisers, how things are progressing like? And obviously, you’re having conversations with them, how are they seeing things? Are you getting a sense that things are getting better, pacings are looking a little bit stronger as you head into June? Are you seeing very short lead times? I mean just kind of give us a sense on how things are at this point looking.

It really depends on the ad channel and as I said, it’s a very, very fluid market. As we said in the prepared remarks, pacing is more unreliable now than it ever was. It always was just a moment in time. I’d say in the second quarter right now, business on the books is flat. We have small ads offset by cancellations, and so we’re seeing some small improvement, modest but it’s in the right direction. Pacing in the third quarter is better at this point but again, it’s not a good indication of where we might finish because we, like everyone else, lack visibility into the shape of the recovery. I would say the one thing that we are hearing from advertisers is, and I think it bodes well for radio in general, is that those who are thinking about returning to marketing understand that it’s a different world and that consumer expectations of the companies that want their business have to acknowledge that. More specifically, there’s a lot of research out there that says that it’s not going to be enough to simply let customers know that you’re reopening, that advertisers are focused on how do they let their customers know what they’re doing to ensure their safety, and that’s a huge shift. I think radio is well-positioned because of our flexibility with regard to creative execution and the speed with which we can get spots on the air. We’re in a good position to help and support the advertising community. The other thing I would mention is that, by necessity, what we’re hearing is that advertisers are going back to basics, which is focusing on reaching as many potential customers as they can, as cheaply as they can and as effectively and efficiently as they can. Radio obviously checks all the boxes better than any other media just as frankly we did before any of us knew what coronavirus was. So when you say, are they optimistic or not? It depends. It runs the gamut.

Got you. And then one last question. Political is much stronger in the first quarter than I expected. Was that driven by Bloomberg? And then secondly, if you can just talk about whether or not you have much visibility on the political for the year at this point.

Yeah. I mean we’ve seen a lot of activity. A lot of it is placed at the last minute. We believe we’re well-positioned but I would say that with a caveat that when you’re comping against 2018, that was a banner year for us. We had $20 million in revenue. We’ve said this publicly in 2018, so that was a high mark for us. We have good overlap against the number of contested U.S. Senate races. We think that the strength of our news talk platform positions us well and of course, our reach, but I also would note as it relates to Cumulus, our pricing and inventory initiatives which we’ve talked about a lot on these calls, should allow us to manage the pricing of inventory utilization in 2020 much better than in past years. So we should be able to minimize spillage and maximize rates across the platform, and that’s going to be really important, especially in this uncertain environment. Yes, so to go first, for a full circle, Bloomberg was a very, very significant factor for us and the industry in the first quarter as well. As we said, it was – I’m not going to break it out, but the increases quarter-over-quarter were big.

Thank you. I appreciate it. Thanks for the questions.

Your next question comes from the line of Zack Silver with B. Riley FBR. Your line is now open.

Great. Thank you for taking the questions. The first for me, Mary, you mentioned in your prepared remarks a new normal sales strategy, trying to optimize revenue performance in this strange environment and was just wondering if you can expand on that. And then somewhat related, when you think about, or if you have sort of a view on markets that have been more open or have just started to reopen versus those that remain more shocked, can you talk about the ad trends within those markets? Thanks.

I would say the ad trends, we’re not actually seeing much of a difference yet in those markets that are, for example, Georgia, for example, that are ostensibly more opened. It does seem that certain local businesses who are still very much needed in the communities and may have fewer problems with social distancing may have a shallower bottom, for example, the professional services category. We saw that that was a little bit more resilient the last couple of months in the categories. But others which involve denser aggregations of people, obviously travel and entertainment, we’ve seen more pressure on them from a category standpoint. But we’re not actually. We spend a lot of time searching for definitive trends, but we haven’t seen anything that appears to be meaningful except for slightly more negative performance from our larger, denser markets. But even that isn’t really uniform at this stage, so I’d say we just don’t know. We’re not seeing patterns yet. That was one part of your question and the other was, oh, the new normal.

Yeah.

Yeah. I’d just say at a very high level, it includes a range of new training and sales support initiatives to address what I had just spoken about previously that the actual – how people go back into the market is different. We’re starting – it’s different than it was before, so we are training and supporting our sales organization to help them to help our partners. It also includes an update of our automated creative customization capability. We’ve spoken about that on prior calls called CCC, which allows us to customize each and every campaign to reflect these new rules of engagement. So many, many parts, but it’s an acknowledgement and a strategy that focuses on what is effectively a new normal both for us and for any marketer in the country.

Got it. That’s helpful and then one more if I could. Just on the tower modernization potential initiative there, does it mean you guys could get done this year or is it – I mean could there be, I guess, more long-term in nature?

I’ll let Frank or Collin take that.

Okay. So we’re early on in the process, but we do have a calendar that it could be possible to get something done this year. It just depends on how the process unfolds and if it’s attractive, we’ll pursue it aggressively.

Got it. Thanks, Frank, and welcome aboard.

Thank you.

This concludes our Q&A session. I will now turn the call back to the presenters.

Thanks, everybody. Appreciate your time, and we look forward to speaking with you again soon. Have a good day and good rest of the week. Thank you for your time.

And thank you for joining us today. This concludes today’s conference call. You may now disconnect.