Welcome to the Cumulus Media Quarterly Earnings Conference Call. I will now turn it over to Collin Jones, Executive Vice President of Strategy and Development. Sir, you may proceed.

Thank you, operator. Welcome, everyone, to our Second 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, 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. We also posted a Q2 investor update to our website, which we encourage you to download 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 afternoon, everyone. To reiterate what we've said on prior calls, our de facto management and cultural mantra is to focus acutely, move decisively, and execute efficiently. And that mindset continues to pay off as our strong Q2 performance once again reflects our rigorous execution of our business plan, a plan we continue to strongly believe will provide significant upside for our shareholders. Elements of the plan include our multi-platform audio-first content strategy, which extends our broadcast and digital content and talent across channels to expand and diversify our audiences. Multiple digital businesses developed profitably from day one, which have bolstered and will continue to drive the company's ability to deliver sustainable top line growth. Significant and continuing reduction of fixed costs, which has meaningfully increased the company's operating leverage, profitability, and free cash flow generation, a focus on high ROI internal investments, a disciplined approach to M&A, and the generation of incremental cash through non-core asset monetization. And finally, the creation of a rock-solid balance sheet characterized by the best among peers net leverage and substantial liquidity, which together enhance the company's financial flexibility and capital allocation optionality. For those who have followed Cumulus for some time, you know that our implementation of this business plan has been both disciplined and unrelenting. As a result, we have consistently and reliably delivered strong performances quarter-after-quarter. Q2 is yet another example of that and once again underscores why we have such confidence in our plan going forward. Drilling down a bit more. With our audio-first content strategy to reach new audiences and extend our touch points with existing listeners, we have been creating both new content and extending current content franchises and personalities from broadcast to digital and vice versa. The benefits of this content strategy are demonstrated in both our broadcast listenership performance, where our audience recovery since the pandemic has outperformed our major peers, and in our digital listening growth, which we have significantly expanded the impressions we take to market. For example, most recently, we launched new mobile apps to extend our iconic sports brands KNBR in San Francisco, The Ticket in Dallas, and The Zone in Nashville with brand new user experiences and incremental content. We've seen strong engagement as a result of this strategy with average active sessions, total listening hours, and session starts all up double-digits since launch. A great example of the multi-platform audio-first strategy's payoff. Additionally, as we previously announced, for the first time ever, we have secured the digital audio streaming rights under our new NFL agreement, and we expect strong interest when the season starts from listeners who were unable to access this content through an audio stream last season. Also, the Cumulus podcast network continues to help our podcast partners and talent expand their audiences, which in turn, provides us with more impressions to sell. Notably in June, five of our podcasts were in the Top 25 of all podcasts for a number of downloads. In addition to growing podcast audiences, we were also able to deliver incremental value by extending our podcast relationships across the entire Cumulus platform as we have done with Dan Bongino and Ben Shapiro and others. So, this multi-platform content strategy increases the diversity of channels we could leverage to generate new monetizable impressions to drive revenue growth. And we saw the benefits of that strategy in our 5% year-over-year revenue increase in Q2. Most specifically, we saw continued strength in local spot, up 8% year-over-year, offset by ongoing weakness in demand from national clients, which impacted both our national spot and network lines, a challenge we noted in our last earnings call that led to overall broadcast revenue for the quarter coming in approximately flat. However, given the solid performance of our digital business and the contribution of political, we grew revenue overall in Q2. As a reminder, our participation in digital was nascent just several years ago, representing 7% of revenue in 2019. Through the execution of our strategic plan, we have now developed three strong digital businesses, which represented 16% of revenue in Q2, up from 14% in Q1. This past quarter was the seventh consecutive quarter of double-digit digital revenue growth and growth accelerated in the second quarter from the first. According to the advertiser protection's June advertising study, interest and intent to purchase podcast advertising are record highs. So, podcasting was not surprisingly our fastest-growing digital business in Q2, up 27% year-over-year. All-in, digital revenue contributed 138 million in revenue on a LTM basis, and podcast makes up approximately 40% of that with the other two businesses fairly evenly split. Our digital marketing services business, which leverages the relationships of our local sellers with tens of thousands of local and regional businesses, grew 22% in the second quarter. Driving that growth is our continuing expansion of the products we provide our clients, including in Q2, the launch of a full array of integrated presence products ranging from listings and reputation management to website development and SEO. These presence products are not only stickier, which will improve customer retention, but we also believe that there's strong interplay between presence and campaign solutions, which will significantly increase the value of the digital marketing dollars that our customers are spending with Cumulus. Our third digital business, as mentioned earlier, is streaming, which was up 12% in the quarter. Another characteristic of our performance is our ability to seed and develop these digital businesses while simultaneously reducing fixed costs on a permanent basis, enhancing profit margins and driving free cash flow. Against the 2019 baseline, our fixed costs will be more than 75 million lower in 2022, and we realized 5 million in benefits from fixed cost reductions year-over-year in Q2 alone. As importantly, these reductions have not come at the expense of revenue. So, they are truly net EBITDA benefits and net of inflationary pressures. As an example, last year, we leveraged technology and process improvements to move our business manager function from individual roles into each market to a central consolidated function across markets. Also, applying some of the lessons from COVID regarding reduced in-office operating footprints, this year we have taken on 28 facility consolidations or reductions and we are continuing to explore additional opportunities for long-term real estate savings. Now, returning to where we started, our rigorous execution of our business plan resulted in another quarter of EBITDA growth, up 23% year-over-year and margin expansion up 280 basis points. Importantly, trailing 12-month EBITDA is now 166 million, up from 157 million last quarter, 135 million in 2021, and 82 million in 2020. This improving profitability also brings year-to-date cash generation from operations to 31 million, with quarters ahead of us that traditionally generate more cash flow. In fact, we have demonstrated our ability to consistently generate positive cash from operations even in the toughest of times. For example, during the depth of the pandemic in 2020 when we generated 33 million. This has allowed us to thoughtfully invest in efforts and assets that can help maximize ROI. As I mentioned earlier, we've been able to invest in the infrastructure, systems, technology, and people on a fully organic basis to date to fuel significant growth in our digital businesses. We've implemented systems that have allowed us to consolidate functions on the broadcast side like our business manager and traffic functions. And while we're in the flow of opportunities on the M&A front, we have been judicious, with a high hit rate of success with the tuck-in transactions and swaps we've chosen to execute. Lastly, we have bolstered our cash balance over the years by aggressively monetizing non-core assets such as land and towers, and we continue to look for opportunities to generate value from remaining non-core assets. All of these aspects of our plan, the multi-platform content strategy, our digital revenue drivers, strong expense management, and cash flow generation, and high ROI investments have helped to fortify our balance sheet and put us in a position to have tremendous capital allocation optionality. In Q2, we took advantage of that to execute a 25 million Dutch tender offer, utilizing half of our 50 million share buyback authorization. Additionally, the debt market dislocation this quarter provided us with an opportunity to buy back 50 million of our bonds at a discount, bringing year-to-date debt reduction to 62 million, reducing interest expense to partly counteract the impact of rising rates. Inclusive of these actions, we yet again reduced net leverage from 3.9x last quarter to 3.8x this quarter. As we continue on our path toward our target of less than 3.5x. The challenging macro environment that we are seeing now underscores the value of the actions that we took to reduce leverage, strengthen our balance sheet, and preserve liquidity. To that point, we are experiencing a tougher market environment today than we were on our last call, and even though we were a month ago. National advertising demand remains weak. The local channels are relatively stronger, and digital is still performing nicely, given that, our Q3 total revenue pacing as we sit here today is down low single digits. Given that pace and our current visibility, we are on trend toward the low end of our previous EBITDA guidance range of 175 million to 200 million. And with that, I will now turn the call over to Frank to go through the numbers in more detail.

Thank you, Mary. We finished the quarter with 236.7 million of total revenue, higher from the previous year. As Mary mentioned, while digital revenue was the key driver behind our growth this quarter, our strength in local broadcast offset continued weakness from national advertisers. You will see that reflected in network performance, which was down 10% in the quarter. The weakness in national spot also decreased 8% year-over-year in local spot, bringing total spot performance to up 5%. Within digital, podcasting grew 27%. Digital marketing services grew 22%, and streaming grew 12%. During the quarter, we also had 3.9 million of political revenue. As a reminder, we expect to receive most of our political revenue during the second half of the year and more heavily weighted to the third quarter. From a category standpoint, we continue to see strong growth in physical presence categories such as live entertainment and travel. In addition, professional services remained a strong category during the quarter. On auto, we're still expecting the weakness in the sector as we were down 45% in the comparable period in 2019, down 5% versus 2021. In the quarter, we also began to see weakness in the financial ad category, which is a large driver of the decline in national spot. Moving to expenses. Total expenses in the quarter increased by approximately 3 million year-over-year, driven by higher variable costs and higher revenue, which more than offset fixed expense declines. The combined revenue performance resulted in EBITDA for the quarter of 45.5 million, which is up approximately 9 million or 23% year-over-year. The improvement in EBITDA was a result of both higher revenue and higher operating leverage in the business from the 75 million of fixed cost reductions we enacted versus the 2019 baseline. As Mary mentioned, 5 million of fixed costs were down approximately 25 million. Moving to the balance sheet and cash flow. We generated 6 million of cash from operations during the second quarter. Importantly, we repurchased 25 million of our shares through a Dutch auction. We also retired 15 million of face value of our senior debt at an average price of 96.8%. This will result in 1.7 million of cash interest expense savings in the first half of the year and 3.4 million on a full-year run rate basis. The debt reduction collectively from the Q1 term loan pay down and expected interest income from our cash balances is largely offsetting the impact of rising interest rates. We ended the quarter with 109 million of cash. Our liquidity, including ABL availability at the end of this quarter, was 204 million. We ended the quarter with net leverage of 3.8x, down from 3.9x at the end of the previous quarter, despite the use of 25 million of cash and stock repurchases. This is evidence of the continued strong cash generation profile of the business. As a reminder, we're on track to reduce net leverage to below 3.5x by year-end. As Mary mentioned, revenue is currently pacing down low single digits at this point. That said, we expect a robust political environment which will help offset these reductions. With trailing 12-month EBITDA of 166 million, up from 157 million last quarter, we are on trend given what we see now to the low-end of our 2022 EBITDA guidance range of 175 million to 200 million. With that, we can now open the line for questions.

Thank you. Our first question comes from Dan Day with B. Riley Securities. Your line is now open.

Yes, afternoon guys. Thanks for taking my questions. Just first one from me on the outlook, down low single digits in the third quarter. Maybe can you just drill down a little more like network was down 12% year-over-year in quarter like is that expected to kind of trend lower and then local, sort of the performance? Just maybe what you're seeing after quarter-end on national versus local, and then specifically a little more on the categories would be great?

Yeah, I can start, and then Frank, you can weigh in. You know, for Q3 and this was encompassed in the pacing, we continue to see weakness in both national and network. Again, as we said, with relative outperformance continuing in local. With local consumer unemployment, consumer demand, and employment remaining relatively strong. It's holding versus other challenges, so we are seeing the relative outperformance. In terms of categories, it's really what Frank said in the prepared remarks, the categories that are doing well so far are the physical presence categories. As Frank said, those that rely on people who are physically going somewhere. So, travel and entertainment, and we saw some nice growth. We continue to expect that. Auto, as we said, continued to be a key factor that was holding us back. And with supply chain issues persisting much longer than we anticipated. And financial, which also includes insurance companies also weakened as the quarter progressed. What's also built in is, there's obviously upside in political as well. Frank, is there anything else you'd like to add to that?

Two other comments. In the quarter, in the second quarter, we saw the decline in the network and national towards the second half of the quarter versus the first half of the quarter. Everyone's pacing is at a point in time, but we're still seeing the weakness as we're here in the first five weeks in the third quarter. And so, it remains to be seen where the network is going to be, but it is trending lower. The other thing I would add Dan is, and we talked about this in the first quarter is, we pulled forward a whole bunch of revenues this year through the settlement of the WynnBET transaction. And so, when we look at pace at the company level, it includes pacing last year that had WynnBET revenues and this year does not. So, that is also factored into our current pacing down low single digits. And lastly, I'll reiterate what Mary said, most of the political orders come in towards the end of the quarter and we'll see how that offsets the rest of the business.

Awesome. Thanks. And then like you're sitting here, you have 109 million of cash in the balance sheet, that's a lot of cash for a company of your size. Just what should we be modeling for how aggressively you might use that over the next couple of quarters? Obviously in uncertain outlook? So, maybe you want to have a little more cash sitting on the balance sheet than you otherwise would, just how are you thinking about that? And as far as the buyback, like, any thoughts on the cadence for executing on that? And then open market versus another tender offer with buyback specifically?

On the stock repurchase side, as we discussed, we utilized 25 million of the 50 million authorization that we've received from the Board. And that authorization ends next year, and so it's our expectation that we'll continue to be active in the markets throughout the period that we have the authorization to buy back stock, but we'll also be balancing what the market is and the liquidity on that. We've also been very careful stewards of cash and liquidity in the balance sheet and reducing leverage. You saw that we took advantage of that in the second quarter. We'll continue to be opportunistic users of our capital, but also want to be mindful of what the environment is in front of us. The goal here from a net leverage perspective is to continue to reduce leverage. I'm happy with the debt buybacks that we did because it's largely offsetting rise in interest rates and we'll have more to talk about at the end of the third quarter.

Great. Well, that's all I’ve got. Appreciate you guys taking my questions. I'll turn it over.

Thank you. Our next question comes from the line of Pat McCann with Noble Capital Markets. Your line is now open.

Good afternoon. I'm just going to ask a few questions on behalf of Mike Kupinski who had to drop off the call a little early today. Are there any updates on the amount of political that the company would expect for the full year?

Well, the update is that the reference point you should think about is in 2018. We generated 20 million in a non-potential election year. The markets continue to be fairly frothy. The first six months of this year have seen political revenue higher than the period for the first six months of 2018, but it's very back-end loaded. So, our expectation is it’s going to be very robust, but again, these are orders that we get last minute and are heavily skewed towards the end of the quarter and beginning of the fourth quarter. From where we see today, we would be disappointed if we had less than 2018 results, and that's all I can say on that topic.

Got you. Thank you. And then also, so obviously there's been a lot of national advertising weakness. Could you comment on, as far as local is concerned, any regional disparities in your station groups?

Well, when you think about our local businesses, most of our local business revenues are really local direct and local agency. The national component does contribute to the business, and that's less than 20% of our local business. When we look around the country in terms of our direct local business operations, they continue to be functioning quite well with low unemployment. The presence categories are up, which is a reflection of the economy. We are mindful of the potential recession that we’ve talked a lot about in press and the news, but at this point, the local business is still performing constructively, and we just have to see if that continues. But at this point, it's reflected in our pacing. So, as a reminder, our pacing down incorporates weakness in national and network strong political expectations, strong digital, and a fairly balanced local spot business.

Excellent. Thank you. That's all I've got.

Thank you. Our next question comes from the line of Jim Goss with Barrington Research. Your line is now open.

Alright, thanks. I would like to ask one about the digital marketing services business. We are familiar with a couple of other companies that have similar businesses, but I wondered if you could talk a little bit more about what you view as the growth potential there and the type of markets you tend to serve? And is it very focused or is there a broad palette of products you are trying to present to your clients?

Well, I'll take that. Thanks for the question, Jim. It's a good business for us. As you could see, we continue to build the capabilities of the marketing services business. And so, what we've generally had is advertising campaign products and those have been central to our growth over the past few years, but by adding a full suite of integrated presence products, including listings, reputation management, and website development, we believe we've expanded our total U.S. TAM to an estimated 15 billion and growing. Essentially, the way we look at it is there's lots of small digital agencies that have built paid digital media capabilities. However, there are very few companies that successfully offer SMBs, like really small businesses, a complete spectrum of digital marketing solutions. And very few that are able to do it properly at scale, but that's what we're doing. We provide advertisers with unique packages, often combining the audio and digital advertising seamlessly for improved results for our clients. So, yes, it's a huge spectrum of products.

Okay. A couple of others. Political dollars, what are you roughly expecting this year? Is there a framework that we should look for?

I'll repeat once more. The way to think about it in the way we're thinking about 2018 political revenue was 20 million and our expectation in internal models are to be at least the same as 2018. In the first half of this year on a tracking basis, we are slightly ahead compared to actual political dollars in 2018.

Okay. And maybe a last one, given that you've been sort of coming out from under some pressures with the company and trying to create the new version of it, but is there any logic to any M&A or would there not really be synergies or, you know, any sort of activity like that? Would there be any reason to look for additional properties at least until everything in the core business is running at full speed?

I'll answer that, Jim. We do look at everything across our portfolio for opportunities to be bigger, more efficient, cut costs, enhance revenues, and enhance EBITDA from a business perspective. And so, we look at that across our traditional radio platform. I will say that most of our focus has been more on the digital side versus traditional. Digital, the areas that we target mostly are in digital marketing services and podcasting as well. It's not to say there's an opportunity on our base business, legacy radio to strengthen our market position. We will take a careful approach, but we do look at all opportunities. And I would say the environment has softened for smaller tuck-in acquisitions on the radio side, but we will evaluate what's out there. Most importantly, we look at it through the lens of what is the best for the capital and for our shareholders. That’s why we're judicious stewards of our capital throughout and generally how we manage the company.

Yes, and I'd like to just reiterate what Frank is saying, is that we will be opportunistic. We're always looking and are fortunate to have the balance sheet and liquidity to do so, which I think really differentiates us.

Okay. Good point. Alright. Thank you.

Thank you. Our next question comes from the line of Avi Steiner with JPMorgan. Your line is now open.

Thanks for taking the questions. First one, which I may have missed. Just total portfolio can you break out revenue between national and local or just give us a percentage of national please?

We don't break out national in particular. In our press release, you will see that the key categories of revenue in the second quarter. Broadcast spot revenue was 175.7 million, and there are two categories within broadcast spot. There is local spot, which was 127 million, and national which was just under 49 million. Then as a separate line, we have digital. Digital was 37.8 million, and as Mary said, 16% of our revenues, and another category of 23 million that's basically non-traditional revenue like concerts, events, etcetera. So that's the breakdown, and you'll see that on Page 3 of the earnings release.

Thank you. And then I thought you mentioned in the opening remarks, now you secured digital audio streaming rights in NFL. Correct me if I misheard that, I apologize, but I think I heard it correctly. I'm just curious if you can elaborate on that at all and how to think about the impact to the company, if any, on financials?

Yes, sure. You did not miss that. Westwood One has we did extend our digital NFL deal in a multi-year agreement, and it includes for the first time the digital streaming rights. What that means is we're now able to combine broadcast impressions with the new digital impressions. And what I would say is that we're in the early days of monetizing the incremental audience opportunity, but we do have strong sponsorship interest for the upcoming season. So, it's really too early to quantify and not material to the company as a whole, but it does provide EBITDA upside to the relationship we believe with what is a very high-value premium content franchise.

Okay, terrific. And last one, kind of a bond nerd question, thank you for your time. Any covenant restrictions or anything to think about if the company wanted to buy back more bonds? And again, thank you all for the time.

Simple answer is no restrictions.

Thank you all very much. Thank you.

Thank you. There are no additional questions waiting. So, I'll pass the conference back over to Ms. Berner for additional remarks.

Thank you all for joining us today, and we look forward to our call in the next quarter. Thank you. Have a good day.

That concludes the Cumulus Media quarterly earnings conference call. Thank you for your participation. You may now disconnect your line.