Good morning, everyone. Thank you for joining today's Cumulus Media Quarterly Earnings Conference Call. My name is Jaquita, and I will be your moderator. I would now like to turn the call over to your host, Collin Jones, Senior Vice President of Corporate Development and Strategy. Collin, please proceed.

Thank you, operator. Welcome, everyone, to our first quarter 2022 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, though 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. We also posted a Q1 investor update to our website, which speaks to this quarter's highlights and accompanies the full investor presentation that we first released last year and updated earlier this year. We encourage you to download that if you haven't already. A recording of today's call will be available for about a month via a link on our website. With that, I'll now turn it over to our President and CEO, Mary Berner. Mary?

Thanks, Collin, and good morning, everyone. In the first quarter of 2022, Cumulus achieved strong results across various financial metrics, including substantial revenue growth, enhanced operating efficiency, and significant reductions in our debt levels. This performance highlights the effectiveness of our audio-first strategy, which has transformed us from a traditional radio broadcaster to a multifaceted audio media company. When we established this strategy four years ago, we focused on two key financial goals: to set Cumulus on a path of sustainable growth and to reduce our debt. We have successfully met both objectives. The company is firmly in growth mode, and our balance sheet is at its strongest in over a decade. Our outlook for the remainder of 2022 remains positive, and we are confident in our ability to maintain this trajectory while further improving our balance sheet and enhancing shareholder value. In terms of our impressive first quarter performance, revenue increased by 15% year-over-year, marking the fifth consecutive quarter of revenue growth compared to the same periods in 2019. This growth was driven by a recovery in local spot revenue, which rose by 13% year-over-year, and an 18% increase in our digital businesses. This revenue growth, combined with significant cost reductions we have implemented, led to a substantial 250% rise in our first quarter year-over-year EBITDA, increasing it to $31.2 million from $8.9 million, with an improvement in EBITDA margin of 900 basis points. By the end of 2021, we had achieved annualized fixed cost reductions exceeding $75 million compared to the 2019 baseline, translating into a $22 million reduction in expenses in the first quarter alone, which will continue to enhance our operating leverage. Our Q1 2022 EBITDA of $31.2 million indicates our positive growth trajectory, raising our trailing 12-month EBITDA to $157 million, up from $135 million in 2021 and $82 million in 2020. Given our strong results and growth momentum, we are reaffirming our annual EBITDA guidance for 2022 to be between $175 million and $200 million. Furthermore, we have made progress in reducing our net leverage, finishing Q1 with a net leverage ratio of 3.9x, down from 4.7x at the end of 2021. This reduction reflects a net debt decline of over $650 million, which is more than 50% of our debt since June 2018, marking the lowest net leverage the company has seen in over a decade and the best among our competitors. We are also on track to further reduce net leverage below our target of 3.5x by year-end. Our solid balance sheet and the forecast of healthy ongoing cash flow support our initiative to return capital to shareholders. As an initial move, we announced a $50 million share repurchase program and plan to start buybacks shortly. On our last call, we mentioned anticipating a return of capital in the second half of 2022. However, the unexpectedly strong performance in Q1 and an encouraging outlook have prompted us to accelerate this initiative. Our capital return program reflects the Board's confidence in Cumulus' long-term operational strategy, our ability to consistently generate positive cash flow, and a belief in the significant upside potential of Cumulus' stock. Importantly, even with the share repurchase plan, we still expect to remain under 3.5x net leverage by year-end, ensuring we maintain substantial liquidity and financial flexibility for future acquisitions. In conjunction with our earnings results, we have shared a letter with shareholders regarding an unsolicited, nonbinding, and highly conditional indication of interest presented to the Board. While the Board is open to various paths that enhance shareholder value, after a thorough review with our advisors, the Board has unanimously concluded that, in light of the company’s strong performance and positive outlook, this indication of interest undervalues the company and is not in the best interest of shareholders. I encourage you to read the shareholder letter for further details. Now, I'd like to provide more insight into our recent strategic progress. Alongside the recovery in spot radio, the growth of our digital businesses, which make up 14% of our total revenue, has been pivotal. Highlights this quarter include the expansion of our local podcast efforts, the addition of new national podcasts, the enhancement of our digital marketing services, and securing digital streaming rights for the NFL. Our podcasting business saw over 20% growth this quarter, achieving ten consecutive quarters of sequential growth. We continue to focus on monetizing and promoting personality-driven content across various genres. The positive start in 2022 is fueled by our existing content partners and new collaborations, including a recent partnership with the Bulwark, a notable political news network. Our local podcasting initiative has also seen impressive growth, with Q1 revenue doubling and local podcasts now on track for nearly 100 million annual downloads. Additionally, we have bolstered our local digital marketing services business, which grew by 35% in Q1, accounting for about a third of our digital revenue. To enhance our digital marketing offerings, we introduced integrated products such as listings, reputation management, website development, and SEO. The total addressable market in this space is estimated at $15 billion and is growing at 5% to 10% annually. While many small digital agencies offer paid media capabilities, few can provide a comprehensive range of marketing solutions profitably at scale, but we are succeeding in doing just that. As our sales force expands and develops digital capabilities, we've successfully broadened our customer base to include businesses operating in multiple markets. By leveraging existing local relationships, we have significantly increased the number of multi-market packages sold, which tend to generate higher revenue compared to standard local orders. In Q1, these multi-market packages were a key driver of our digital marketing services revenue growth. We've also made advancements in our streaming platform. With our recent NFL renewal, we secured digital streaming rights for the first time, allowing us to access fans who prefer listening to games via digital platforms or the NFL app, in addition to our existing 55 million broadcast listeners. This move exemplifies our audio-first strategy and our commitment to broadening our audience reach. In summary, we have established a strategy aimed at creating sustainable and profitable growth, resulting in robust cash flow and a strong balance sheet. Our ongoing performance shows that we have been successful in executing this plan, and we expect this success to persist. With our current momentum and outlook for the remainder of the year, our solid balance sheet, and new capital return program, we are well-positioned to deliver significant value to our shareholders.

Thank you, Mary. We finished the quarter with $232 million of total revenue, 15% higher from Q1 2021. Once again, digital continues its strong growth, up 18% led by digital marketing services, which grew 35% year-over-year and podcasting, which grew more than 20%. Local spot also continued its strong recovery, growing 13%. From a category standpoint, we continue to see strong growth in professional services, driven primarily by higher spend from recruiting companies. We also saw nice growth among many physical presence categories, including live entertainment, restaurants and travel as we continue to see a strong rebound driven by states relaxing COVID restrictions. Auto, which we have spoken about previously continued to be weak, down more than 25% from Q1 2021 and 50% from Q1 2019. On sports betting, as we mentioned last quarter, the WynnBET partnership ended during Q1. While we preserved the relationship through much of Q1, the unwind also resulted in a termination payment, which was recorded as other revenue. The majority of this termination payment represented, in essence, a pull forward of revenues that we otherwise would have expected from the relationship. This amount is in the mid-single-digit millions. Although the partnership concluded sooner than we expected, we continue to believe we are well-positioned to serve the sports betting category given our strength in converting radio audiences to users, particularly among country music, sports, and news talk. Moving to expenses. Total expenses in the quarter increased by approximately $8 million year-over-year, primarily driven by higher variable costs and higher revenue. The combined revenue and expense performance resulted in EBITDA for the quarter of $31.2 million, which is up approximately $22 million or 250% year-over-year. As Mary mentioned, this represented a 900-basis point improvement in EBITDA margin, reflecting our enhanced operating leverage. Turning to the second quarter. We are seeing the continued impact of supply chain shortages across sectors, particularly on auto and telecom. Offsetting this, we are benefiting from the ongoing rebound in physical presence ad categories such as entertainment and travel, as well as some political spend and continued strength in professional services. As such, total revenue in the quarter is currently pacing up in the mid-single digits versus Q2 2021. With trailing 12-month EBITDA of $157 million, we are tracking well against our EBITDA guidance for the year of $175 million to $200 million. Moving to the balance sheet and cash flow. We generated $24.3 million of cash from operations during the first quarter while paying down $12.5 million of debt. We ended the quarter with $793 million of gross debt, $181 million of cash and net debt of $612 million. With our strong cash flow generation and improvement in EBITDA, we continue to roughly deliver ending the quarter with net leverage of 3.9x, which to reiterate, is the lowest it has been in over a decade and is the best among peers. For the year, we continue to generate significant free cash flow. We expect CapEx of around $30 million for the year and cash taxes in the low double-digit millions range. As revenue grows, working capital should be a slight use of cash. Doing the math against our 2022 full year EBITDA guidance, free cash flow per share for the year will be meaningful. As Mary mentioned, given our first quarter results, free cash flow outlook, and strong balance sheet, we announced a $50 million share repurchase program, which we expect to begin this program in the very near term. And with the planned share repurchases, we expect to be below 3.5x net leverage by the end of the year with significant additional liquidity available for accretive M&A as such opportunities present themselves.

The first question comes from Michael Kupinski with NOBLE Capital Markets.

Congratulations on your quarter. I have a couple of questions about spot advertising. Despite a strong recovery and a nice bounce in Q1, it still hasn't reached the levels we saw in Q1 2020. Can you discuss whether the variance is primarily related to the auto sector, or what factors do you think account for the difference between where we are now and your expectations as we approach 2023?

It's too early for us to discuss 2023 since we need to go through the year first. You're right that spot or broadcasting revenues remain below 2019 levels. However, I am pleased to report that we have seen a significant improvement over the past five quarters. While this isn't something we're particularly proud of, our total revenues, excluding spot, are down by less than 10% compared to 2019. In terms of categories, the Auto sector is the largest contributor to revenue declines, which we mentioned earlier. Nonetheless, supply chain and labor shortages are still affecting other categories, so the decline isn't solely due to auto. Nevertheless, for the first quarter, the trends remain positive, and we will see how the rest of the year unfolds. Hopefully, we can discuss 2023 later this year.

Got you. Looking at corporate expenses, they were somewhat higher. We can discuss this more at another time, but I wanted to ask if there were any extraordinary corporate expenses in the quarter or if this is a good run rate for the year.

That's actually a good and very insightful question. One of the things that we're doing this year is we're centralizing a whole bunch of functions which previously were out in the fields, which would have been recorded in SG&A, and it's a lot of the back office, finance, and HR functions. So as a result of that project, we're actually going to be more efficient, have fewer people doing it. But from a geography perspective, those expenses, which previously were at SG&A roll into corporate now, and that's largely driven by the centralization of functions and that's really what's driving that.

And Mike, let me just add another point to what Frank said about revenue performance versus 2019. Because we've taken out such a meaningful level of cost, we can see a meaningful EBITDA recovery without getting back to 2019 levels. So I think that's an important point to make.

The next question comes from the line of Dan Day with B. Riley Securities.

It's great to see you implementing the buyback program. We've been looking forward to this, and you've managed the balance sheet very well, so congratulations. I would also like to hear your thoughts on the most effective way to return capital to shareholders over time. Specifically, how do you balance the current share repurchase program with the possibility of a dividend in the long term? It seems you have a strong free cash flow outlook for the coming years.

Thanks, Dan. As you can imagine, when we looked at return of capital with the Board late last year, during the first quarter and the second quarter, we looked at a wide range of alternatives, including dividends, sizing of the share repurchase program, etc. Where we concluded as a first step is this $50 million share repurchase program, which is a substantial amount of the market cap of the company, which we intend to retire through shares in the near term. And as I mentioned, that we'll be below our 3.5x net leverage, notwithstanding the plans, the share repurchase, which will start soon. With regard to dividends and other alternatives, we'll assess that as we get on as we work through the share repurchase program. But given where our stock price is and given the fact that we're undervalued, we think the best value for all shareholders is retiring shares at these attractive levels. And that's why we went and the Board agreed to go through this program in this way.

Yes. I would totally agree with that. Just turning to the operating results a little bit. On the digital side, one thing you guys gave the breakouts for podcast and digital marketing services. It looks like the streaming radio side, sort of the implied number there was a bit of a drag on growth. Just any commentary you can provide on advertising demand for the radio streaming side in particular, I would think that sort of a number of brands looking to get in the digital audio space, maybe that would be heating up a bit, but any commentary on that side of the digital bucket?

Sure. Just as a reminder, last year, our digital revenues grew dramatically and have been consistent through the earnings call that part of that growth in terms of reported growth was a reclassification of some digital revenues, which previously had been recorded as spot, and that has to do with the streaming. So I think part of what you're seeing is that the comparison of a big number, bigger number is tough. I would say in terms of the streaming numbers itself, I wouldn't take a lot in terms of competing demand. It just happens the quarter that it was a little bit slower than the other high-growth areas. And we were pleased with that, particularly with the digital marketing services up over 30%, podcasting over 20%. So in and of itself, yes, you look at the math, it brought down some of the growth rates. But as a part of the digital business, that's something that we're not terribly concerned about at this point.

Great. And then last one for me. Just any update you can give on finding sort of a new flagship partner for sports betting, just with the WynnBET termination in mind. Are conversations ongoing there? And I guess, is that sort of a near-term expectation or just take it as it comes?

I can handle that question. Our sports betting segment, despite the changes with WynnBET, showed growth in Q1. However, we are noticing some maturation in the industry, with smaller players exiting and larger companies shifting their focus to maintaining cash flow due to significant valuation losses. Nevertheless, we are actively engaging in multiple discussions. Our platform is well-suited for this area, and as more states legalize sports betting, our broad platform becomes increasingly attractive to advertisers at scale. So, the process is ongoing.

The next and final question comes from the line of Jim Goff.

Okay. I have a couple of questions. First, I want to follow up on Mike's discussion regarding radio revenues. There appears to be a significant difference in the growth rates between spot and network, which usually track each other closely. Can you clarify this discrepancy? Also, what kind of growth projections were you discussing last quarter in relation to this performance? In the current quarter, with the growth projections, do you anticipate a similar discrepancy emerging?

Okay. Thank you for your question, Jim. I'll start with your second question. The first quarter, when we had our call, we indicated company pacing was up in the low teens. When we had the call that also included, as I mentioned, that we had received already the WynnBET termination payments, and that would have been embedded in that number. So the way to think about the first quarter performance, we ended up, up 15% versus the low teens pacing. So that's the first quarter. So we were a couple of hundred basis points better or so. Now going to the second quarter, and in the first quarter, all the categories, all the channels were strong. Local was the strongest, followed by national then network. As we move into the second quarter, local continues to be fairly strong within our pacing numbers. We have seen some slowdown in national and network, and it's early on in the quarter. We have typically been able to exceed throughout coming out of COVID, the final quarter results versus a pacing at a time. But in this quarter, I would say that national network is slowing down a little bit. I don't know whether or not that's in response to what the Fed may do and concerns about economic weakness or a recession. But the whole area with national and network as we see in the past, it tends to be very lumpy and then to come back quickly or slow down dramatically. So that's all embedded in our pacing of mid-single digits for the quarter. And of course, we'll have more to talk about when the results come out.

Okay. A couple of other things. One, as you've discussed, coming out of COVID, I'm wondering what the audiences post-COVID look like in terms of any differences in time frames, access points, kinds of listening or other noteworthy elements.

We are still experiencing the impact of the pandemic and the fluctuations caused by COVID variants, especially in key markets that are hesitant to return to normal work routines. However, we have hope for further recovery as summer approaches and the nation transitions into what the CDC refers to as the endemic stage. We've observed positive trends with improvements in weekly cumulative pacing, particularly in smaller markets. It's important to note that radio remains a leader in ad-supported audio, comprising about 72% of both over-the-air and streaming formats. The listening patterns we observed during the pandemic, where people tuned in later, seem to have reverted to previous habits. We are seeing promising improvements and anticipate this positive trend to continue throughout the summer as the country stabilizes.

Okay, one last question. You mentioned earlier the potential for beneficial mergers and acquisitions. I'm curious about how aggressive your plans are and if you could discuss the size of the markets or any specific geographic preferences. What factors would you consider if you were to initiate an M&A program?

Thank you for the question. Regarding mergers and acquisitions, we have consistently communicated that we approach these opportunities with careful consideration to ensure they are beneficial and enhance shareholder value. Our surplus liquidity provides us with flexibility, and given our stock's current valuation, we view deploying that extra cash as a good investment. We are actively exploring opportunities in our digital sectors, particularly in digital marketing services, ensuring these additions align with our current offerings in terms of product, reach, and sales. We also occasionally examine podcasting, primarily focusing on content partnerships rather than acquiring technology. In our traditional terrestrial radio portfolio, we continuously evaluate assets to determine if they can enhance our existing clusters or if certain stations could be better managed by others, allowing us to benefit financially from divestitures. Historically, we have engaged in some asset swaps and minor acquisitions, while also dedicating considerable effort to refine our portfolio, which has led to a robust balance sheet, especially when compared to our position prior to the onset of COVID.

I will now pass the conference back over to the management team for any additional remarks.

Thanks all for listening today, and we look forward to our next call. Thank you. Have a nice day.

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