Good afternoon. Thank you for attending Cumulus Media Quarterly Earnings Conference Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. Operator Instructions. I would now like to pass the conference over to our host, Collin Jones, Senior Vice President of Corporate Development and Strategy. Sir, you may proceed.

Thank you, operator. Welcome everyone to our third quarter 2021 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 this 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 and 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. Once again, this quarter's results across the board were strong and exceeded expectations. Another quarter validating the continuing success of our ongoing transformation from a one-dimensional radio company to a multidimensional audio-first media company. Q3 results also demonstrate the impact of the multiple drivers of shareholder value creation that are propelling our growth. These include anticipated additional recovery of the radio market, multiple digital growth initiatives, which now represent over 14% of revenue and have generated more than $115 million over the last 12 months, continued cost reductions, starting with the actions we've taken that will deliver more than $70 million in fixed cost savings in 2022 versus our 2019 baseline, a robust free cash flow profile and an aggressive deleveraging strategy. Since our 2018 restructuring, we've reduced net debt by more than $600 million or approximately 45% or $30 per share, which has resulted in a very strong balance sheet. And finally, significant flexibility with respect to capital allocation. All this said, we don't believe that our current stock price fully reflects these drivers or what the company is and where it's going. The new investor presentation we released last month, which you can find on our website, walks through our transition from a legacy radio model to the multidimensional, multiproduct, multichannel, on-demand audio-first media company that we're building today, a new model that significantly expands the markets in which we participate, generates new audiences and gives us the ability to drive profitable growth. At a high level, we've always created value by linking our two main constituencies, our listeners and our advertisers. This business model evolution further leverages the assets by which we create this linkage, our talent and our sales force. While we once viewed talent singularly as radio DJs, we now see them as multidimensional audio content creators whom we help expand the amount, type and distribution of audio content they generate to deepen engagement with their current listeners and to attract new ones. Through this strategy, we generate billions of monthly impressions from a wide variety of audio sources, including podcasts, streaming, live and virtual events in addition to radio, which are delivered on demand, time shifted or on fixed schedules, allowing listeners to access the content on their own terms and providing current and future advertising partners even more opportunities to access and activate customer relationships. Additionally, our more than 800-person sales force can enter the door now goes to market with this greatly expanded package of audio impressions plus a robust and complementary suite of digital marketing services that strengthen our ability to serve clients. Ultimately, this reimagination of our core assets has allowed us to expand our total addressable market beyond the $14 billion legacy radio ad market to a $30 billion and growing total addressable market comprised of radio, digital audio and digital marketing services. Within the context of this new strategic positioning, the key drivers of shareholder value mentioned are, as evidenced in Q3, already working to create value for the company and its shareholders. First, the post-pandemic rebound of traditional radio will continue to be a significant driver of our future performance. In Q3, total revenue was up 21% with broadcast revenue up 15%, representing continued sequential improvement quarter-to-quarter versus 2019. However, the pace of the recovery has been muted by the lingering pandemic effects, particularly regarding certain key advertiser categories like auto, restaurants, retail, and entertainment, which are seeing ongoing impacts from labor shortages and supply chain issues. Even recapturing a portion of the decline from pre-pandemic levels in just these ad categories represents a significant revenue opportunity for us. Additionally, certain categories like government, sports betting, professional services, general services, and financial are approaching or even exceeding 2019 levels. Sports betting, in particular, has been extremely strong, supported by the multi-platform partnership we launched with WynnBET last quarter as well as business that we're booking with many others in the space including more than eight new sports betting operators added in the last several months, and we're on track to grow this category by more than 4 times the 2020 spend. Additionally, we're optimistic about several categories that are showing particular traction recently, including recruitment, events, and pharmaceuticals. The second key driver is growth from our digital business lines, which collectively grew 67% year-over-year in Q3, each with a unique positioning that allows us to capitalize on overall digital market tailwinds. In the expanding streaming market, for instance, we take a big tent approach, meaning that we believe that listeners expect to consume content wherever and whenever they want. So we have created the most expansive streaming offering with our content available on more platforms than any of our peers, giving us the greatest opportunity, we believe, to grow our audiences and our sellable impressions. And our audiences love our content. In fact, in Q3, our average time spent listening to our streams was nearly an hour, the longest among our major peers. In the podcasting space, we have focused our efforts on developing a profitable, sustainable growth model, largely built around personality-driven content and best-in-class monetization. We represent some of the biggest names in podcasting with multiple shows once again placing in the top 10 of all podcasts in Q3. In total, our podcast platform generates more than 1 billion downloads a year, and in Q3, we moved into the top 5 in Podtrac’s podcast company ranking. Our digital marketing services business continued to gain momentum this quarter as we leveraged our relationships with small and medium businesses to deliver more value for them as a one-stop shop for their marketing solutions, resulting in revenue growth of more than 50% in Q3. Third, it is in our DNA to be relentless, yet judicious cost cutters, highly effective at pairing costs without impacting the top line. Last quarter, we increased our guidance regarding permanent fixed cost reductions for 2022 from $50 million to more than $70 million versus the 2019 baseline. And this quarter alone, we realized nearly $10 million of year-over-year fixed cost reductions. We’re not done, of course, as we continuously focus on new ways to reduce expenses to enhance margins and operating leverage. Fourth, our free cash flow profile in combination with EBITDA growth will continue to drive significant deleveraging. In Q3, EBITDA more than doubled over the prior year, and we generated $13 million in cash from operations. Looking further out on our last earnings call, we guided that we expect 2022 EBITDA to be in the range of $175 million to $200 million. And while the market climate in the short term poses more of a headwind than we were expecting when we initially issued this guidance, we still see EBITDA in that range. This outlook will further result in rapid deleveraging. If you normalize for the forgiveness of the PPP loans that we received just after the end of Q3, our net leverage ratio is already below 5x, so we are well on our way to getting below our near-term target of less than 4x. Last, but importantly, in 2022, our balance sheet and liquidity profile will provide us with flexibility in capital allocation that we’ve never had before. While we will maintain the patience and discipline that have guided us over the past few years, we now have additional flexibility for M&A if we find the right opportunity to further accelerate growth. Also, we’re working with our Board to determine our longer-term leverage targets and consideration of potential timing, amounts, and forms of capital return to shareholders. Given the magnitude of these drivers of shareholder value creation, along with our strategic repositioning, we firmly believe that our current stock price is at a highly attractive entry point for investors. Before turning to Frank, I’ll spend a minute on our short-term outlook. The Delta variant surge certainly impacted the beginning of Q4. As I said, we are still experiencing impacts from the supply and labor shortages on certain key advertising categories. That said, we expect these factors to abate at some point in 2022, so we don’t anticipate them being a significant factor in our long-term performance. However, there is definitely more of an impact in Q4 than we expected three months ago. Currently, we’re pacing up slightly versus 2020, which had a significant political component, and excluding political, we’re pacing up in the high single digits. Compared to 2019, where the political comparison is less relevant, we are pacing down in the mid-teens. We expect that our pacing will continue to improve as we go through the quarter, though not to the extent that we’ve seen in prior quarters. With that, I’ll turn it over to Frank.

Thank you, Mary. It’s good to speak with everyone again after a busy three months. The third quarter was another strong one in terms of top-line recovery. We finished the quarter better than the plus mid-teen percent pacing as indicated on our last call, with total revenue of approximately $238 million, up 21% from Q3 2020. This increase represented a continued improvement versus 2019, as we’ve executed well in the context of the recovering market. For comparison, Q1 finished down 25% versus Q1 2019, Q2 finished down 20% versus Q2 2019, and this quarter finished down approximately 15% versus Q3 2019. Digital revenue was again the bright spot, up 67% year-over-year. As with prior quarters, certain categories are approaching or exceeding 2019 levels like government, sports betting, professional services, general services, and financial, while we continue to experience pandemic-related impacts in auto and other categories suffering from supply chain disruptions and labor shortages. On the expense side, total expenses increased in the quarter by approximately $16 million year-over-year. Similar to last quarter, that increase was driven by the return of costs related to actions that we took in response to COVID-19 last year, including furloughs, salary, and benefit reductions, which were temporary, as well as a return of variable costs and higher revenue. These increases were partially offset by nearly $10 million of realized fixed cost reductions year-over-year. As Mary said, we reiterate our view that we will deliver more than $70 million of fixed cost reductions in 2022 when you compare it to the 2019 baseline. The combined revenue and expense performance resulted in EBITDA for the quarter of approximately $46 million. Now moving to cash for the quarter. Cash from operations was approximately $13 million, driven mostly by higher EBITDA, partially offset by working capital usage in higher revenue. CapEx for the quarter was $10 million, which brings us year-to-date spend of $22 million. For the full year, we’re still tracking to approximately the $30 million guidance we provided earlier in the year. On the balance sheet, we are pleased to announce that after quarter-end, we received forgiveness for the $20 million of PPP loans that we received earlier in the year. I would note that as you will see in our 10-Q, this will be treated as cancellation of debt income for book purposes, but not for federal taxes. With $153 million of cash on the balance sheet at quarter-end and pro forma for the PPP loan forgiveness, we finished the quarter with net debt of $653 million and a net leverage ratio just below 5x based on trailing 12 months EBITDA. This shows fantastic progress towards our near-term goal of reducing net leverage to below 4x. Finally, I’d like to add a little color to next year’s guidance. While we’re seeing the short-term headwinds Mary mentioned earlier, our long-term view remains intact, assuming that our expectations regarding these exogenous factors bear out. We anticipate generating EBITDA in the range of $175 million to $200 million next year on revenues in the $1 billion-plus area, and we expect to delever to less than 4x net debt to EBITDA. With that, we can open the line for questions. Moderator, we’re ready for our first question.

Operator Instructions. The first question is from the line of Michael Kupinski with NOBLE Capital Markets. You may proceed.

Thank you. Good afternoon. Just a couple of questions here. I’m just wondering if there’s a variance on how your larger markets are performing versus some of your smaller markets? And then if you could just talk a little bit about the difference between maybe local versus national or even network for that matter and if you’re seeing a variance there? And then in terms of the chip shortage in the auto category, what does auto account in terms of total revenues at this point?

Sure. Hi, Mike. Thanks for the question. So in aggregate, regarding the first question, largely small markets, in aggregate, the revenue performance between the diary, which are small markets and the PPM are large markets, is somewhat comparable, but there are different trends underneath that, which are offsetting each other. So the lagging categories that we spoke about, auto, we call them physical presence category advertisers that have lagged more in smaller markets. And there is a greater percentage of revenue in smaller markets. However, categories like sports betting have been more impactful on the positive side as listenership levels are down less in smaller markets. The larger markets are seeing a greater impact from the pandemic given more density as well as a slower listenership recovery. But in combination, we’re seeing comparable total revenue performance. Regarding your second question, yes. I think about auto; it’s not as big a category as it was when the global financial crisis hit. But in 2019, it was our fourth largest category to give you some context there.

And then on the national network versus local, I mean I’m just trying to get a sense of how much of an impact you’re seeing from either the national and the network side based on some of the issues you were talking about?

Hi, Michael, it’s Frank. I’ll take that. Well, it varies, obviously, from quarter to quarter. I will say that if you look at pacing in the fourth quarter, our national business is actually doing the best of the different channels followed by the network, and the local is lagging that’s impacted, as Mary talked about with regard to these physical presence in the auto categories. The other thing I wanted to mention is you also asked a question on autos. Another way to think about how the business is being impacted. If you look at the third quarter, if you add the auto category plus these other physical presence categories like retail, entertainment, restaurants, etc., that represented roughly 40% of third-quarter revenues at our station group net total company revenues. So that does have a significant impact on the results, but also presents a big opportunity once those categories come back.

Got you. And Mary, you mentioned that the podcasts are profitable. I was wondering if you could give us a sense of where the margins are currently in the digital segment as a whole? And what do you think are the sustainable or target margins that you might aim for over the next year or two?

Yes. I mean, one thing I would say is we've been profitable since day one on podcasting. The Podcasting segment, as we’ve said before, has margins that sit around the levels of our network margins. So in order, streaming margins are the highest and they mirror what are close to radio, our broadcast radio margins in the midrange are digital marketing services, and then mirrored by podcasting would be the broadcast network margins.

Okay. Got you. All right. And then you did mention the prospects of looking at acquisitions, possibly pursuing M&A at some point, as your leverage gets down to comfortably below 4x next year. Can you give us a sense of where you might be looking in terms of making acquisitions and maybe some parameters around your strategy there?

I would say, generally, when we consider M&A, it’s to fuel growth. And in general, it’s where we identify interesting opportunities to do so accretively. If you think broadly about the buckets, it could be to improve our current broadcast if we have a deal, a broadcast portfolio. Generally, though, they’re going to be to drive digital growth, particularly in the podcasting and digital marketing services area.

Got you. Okay, thank you. That’s all I have. Thank you.

Thanks.

Thank you, Mr. Kupinski. The next question comes from the line of Dan Day with B. Riley Securities. You may proceed.

Hi, guys. Thanks for taking my questions. Just to piggyback off the earlier question on the margins. Your guidance looking to next year seems to imply you're getting back to where you were margin-wise, high teens, 18%, 19% blended EBITDA margins. As the digital side grows and becomes a bigger part of this business, where do you think margins can shake out longer term? So I mean, is there upside into the 20s on that front? Or do you think that's probably around where you'll be in those high teens?

Hi, Dan, I'll take that. It's Frank. We're not giving longer-term guidance beyond 2022. But I will say the following. The team's focus intensely, as Mary said in her prepared remarks, is to cut costs without impacting revenues. What you've seen over the past 1.5 years and part of the operating leverage that we're getting in the company is the reduced fixed expense of $70 million going into next year versus 2019. While the digital businesses, particularly in podcasting, have a lower margin, we're going to look to push the margin as much as possible. That's driven by a focus on costs and the return of the traditional radio business. So we're pushing hard to increase the margins, and that's all I can say at this point.

Yes. No, that's great. And then just in the past, you've said that the digital revenues are split pretty evenly between the three buckets at 1/3, 1/3, 1/3. Is that still the case? Or has one of the segments maybe been growing to the point that that's no longer applicable and one is sort of taken over the others?

It's generally proportional, but I would say with the robust growth that we had in our digital marketing services business in the third quarter, those two categories will represent more than our streaming revenue. But each quarter it’s slightly different. So they're all growing rapidly. They may not be exactly 1/3, 1/3, 1/3, but we're happy with the growth in all three areas of our digital business.

Awesome. And then just one more on the network side. This sort of was a business doing over $300 million run rate revenues before COVID. Just any thoughts on what you're baking into as far as a recovery there for next year? And then how quickly you might be able to get back to that run rate? I know that advertisers tend to book a little bit more in advance in this segment versus kind of your spot revenues. So just maybe any commentary on how things are shaping up for 2022 on that front would be great?

Well, we continue to be constructive in 2022 in terms of growth from this year. You heard my comment about roughly $1 billion in revenue. At this point, we're not breaking it down between the broadcast and the network, but we continue to focus on growth in all our traditional channels.

Great. Thanks. And then last quick one, just near-term on the network, your kind of higher-profile personalities have been all fair. Just anything to think of as far as make goods for advertisers or anything as that plays out?

Yes. No, I mean, we have a lot of terrific talent, including talent with urban fan bases and whose appeal, of course, is passion and strong perspective. However, I could talk radio where we are leaders in the space. So we are used to working with our talent across platforms and in situations that you're referring to. Frank, do you want to add a little more detail?

The business and the particular talent you're talking about is a nice business and an additive business for us and very successful. But having said that, when you look at the overall scheme of the size of the company, the implications are not material. So something we'll continue to work through, but it's not going to have a meaningful impact on our results.

Great, appreciate you guys taking my questions. I’ll turn it over. Best of luck.

Thank you, Mr. Day.

There are no additional questions waiting at this time. I would like to pass the conference back over to Mary Berner for any closing remarks.

Great. Thanks, everybody. Thanks for joining us, and we look forward to speaking with you, I guess, next year. Have a great day.

That concludes the Cumulus Media Quarterly Earnings Conference Call. Thank you for your participation; you may now disconnect your lines.