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

Thank you, operator. Welcome, everyone, to our third quarter 2024 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 as discussed in our filings with the SEC. 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 via a link in the Investor portion of our website. With that, I'll now turn it over to our President and CEO, Mary Berner. Mary?

Thanks, Collin, and good morning, everyone. During the third quarter, we delivered $203.6 million in revenue and EBITDA of $24.1 million, in line with pacing commentary and analyst estimates. While we benefited from the acceleration of political spending in the quarter, as well as improving national trends, many advertisers continue to cite the overall rate environment and concerns around the upcoming presidential election as impediments to their spending. That said, we remain focused on key areas of the business that are in our control, including investing in digital growth, optimizing political spend, capitalizing on areas of improvement in national advertising, driving additional cost efficiencies, and delivering operating cash flow. Starting with our digital businesses. Digital revenue, which now accounts for 20% of our total revenue, continued to grow, increasing 8% year-over-year. Digital marketing services performed impressively, growing close to 40% year-over-year, which compares to strong growth of 24% achieved in the first half and 4% in the same quarter last year. Our DMS business is thriving, as reflected in several key performance indicators. During the quarter, customer count grew by 22%, customer retention improved by 6%, and average digital order size per customer increased by 17%. Additionally, through our focus on expanding our share of wallet with our radio-only clients, we have increased the number of legacy radio clients who now also purchase DMS from us by 32%. We fully expect this successful performance to continue, given the elements that, in combination, define our unique selling proposition and competitive positioning. First, our feet on the street sales force with direct access to over 30,000 current advertisers provides us with market insights and relationships that are difficult to replicate with an out-of-market approach. Second, we deliver fully integrated solutions, including both digital and broadcast products and services that are custom-tailored to fit our customers' needs. Third, we out-execute our competitors using our local in-market capabilities, insights, and customized solutions to generate results for our clients that outperform industry benchmarks by more than 25% across 14 key business categories. Fourth, we continue to invest in this business to accelerate growth. As we've highlighted in the past, we've been expanding our digital organization across multiple functions. We've added staff to our sales, creative, and internal agency teams, which has allowed us to increase our sales coverage, build out our product capabilities, and, in the case of our internal agency team, increase margins by up to 50% for business we are now able to fulfill in-house. Given the growing scale of our overall DMS business, we expect to take advantage of additional in-sourcing opportunities that will allow us to further improve our margins over time. We've also been investing in technology solutions to improve campaign performance, customer satisfaction, and attribution. With these investments and our unique competitive positioning, we continue to be optimistic about the prospects for our DMS business. Turning to other components of our digital revenue, streaming increased slightly during the quarter. We continue to be encouraged by our streaming performance despite the difficult comparison caused by the expiration of a fixed-rate sales contract last year. Taking back our inventory allows us to better manage and optimize the monetization of our streaming impressions. The third major channel of our digital revenue, podcasting, experienced a modest revenue decrease in the quarter, reflecting declining revenue from the Daily Wire podcast. Excluding that, revenue was up significantly in the quarter, driven by growth in existing podcasts and new podcasts that were added year-over-year. We continue to capitalize on the growing popularity of our existing stable of podcasts, particularly in the news talk category, where we've seen significant growth in several podcasts, including the Dan Bongino Show, which ranked sixth among all podcasts as ranked by Triton, and the Shawn Ryan Show, which was a top-three podcast on Spotify for all of October, at one point reaching number one. We will also benefit from recent additions to our content stable, including award-winning creator, streamer, and podcaster, Benny Johnson, whose video-first podcast has become a go-to platform for many of the next-generation news consumers. Moving to our broadcast radio business, as I said at the onset of the call, we continue to see positive indicators in our national advertising businesses, which, as a reminder, make up approximately 50% of our total broadcast revenue. Specifically, demand for live sports products has been robust, a trend benefiting our network business, which was up 5% in revenue during the quarter, thanks in part to our exclusive audio relationship with the NFL and our coverage of the summer games. We've also found success utilizing sports as a compelling reentry point for clients who have been out of network radio for a while, or to boost spending with clients who had decreased spending from prior year levels. That sports hook was a key contributor to the meaningful growth experienced by the network in the insurance, retail, and personal care products categories. National spot, which benefited from the ramp in political spend, while still negative overall, experienced performance improvement throughout the quarter with our larger markets growing year-over-year. In local spot, home products were one of our biggest areas of strength. Despite these bright spots, overall advertising sentiment remains weak. Economic and interest rate concerns continue to be reflected in lower spending in several key categories, including local, automotive, professional services, and entertainment, as well as in national job search, financial, and home improvement. Smaller local advertisers are also citing skittishness about advertising amid an intense presidential race, indicating they are holding back spending for now. Political spending was impacted by the change in the Democratic presidential candidate, which reduced spending on both sides as the transition from Biden to Harris was completed. A majority of our political revenue comes from down-ballot races, and the temporary pause in presidential advertising spending resulted in lower-than-expected political revenue in the quarter. However, political spending has significantly rebounded in the fourth quarter, with quarter-to-date political revenue booked through Wednesday amounting to approximately $9.7 million, up from $8.3 million in Q4 2022, but down from $14.3 million in Q4 2020, which benefited from two Senate races and subsequent runoffs in Georgia. Total Q4 revenue is currently pacing down slightly. Moving to expenses, we continue to be disciplined operators. We are focused on the ongoing refinement of our expense structure while maintaining flexibility to invest further in our digital growth strategy. Year-to-date, we've generated a total of $8 million in cost reductions on top of the $120 million in fixed cost reductions that we realized from 2019 through '23. These efforts reflect more efficient approaches to bringing products to market, leveraging opportunities for economies of scale, and managing and renegotiating contracts to reduce costs. For example, we've recently been able to consolidate certain products in our network business, resulting in meaningful cost savings without impacting revenue potential. In our station group, we brought some functions formerly outsourced to vendors in-house, allowing us to recapture margins that previously went to a third party. Additionally, we are aggressively pursuing AI-enabled efficiencies across all facets of the business, including programming, production, operations, marketing, sales, and administrative tasks. Among other applications, we are using AI for sales lead generation, the creation of traffic instructions for play-by-play sports, and the development of email marketing content. Like many other businesses, we believe that we are just getting started in realizing the value that AI can bring to our business. It goes without saying that given the uncertain dynamics of the advertising environment, we are determined to leave no stone unturned and will continue to be aggressive in managing expenses as we set ourselves up for next year. We are also disciplined with capital allocation. As a reminder, we have prioritized and invested in organic growth, specifically in our digital businesses, instead of pursuing non-accretive M&A. Additionally, since 2018, we have completed over $260 million in non-core asset sales and $235 million in station sales, generating $205 million in free cash flow, which we have used to reduce debt by more than 50%. Investing in our growth businesses and reducing debt remain our top capital allocation priorities. Before turning it over to Frank, I want to reemphasize the importance of the financial flexibility and runway that we created in the second quarter by extending our debt maturities to 2029, giving us time to push through the economic choppiness and realize the value we believe is inherent in the company. Cumulus has a strong set of assets, including profitable and fast-growing digital businesses, a vast national platform that can reach audiences wherever and whenever they choose to listen, extensive local sales capabilities across 80 markets with the ability to bring products through the door, and premium programming across all genres, with particularly exclusive assets in sports and the news talk space, along with an audio library filled with millions of hours of relevant, engaging, and entertaining content, and a team with a strong track record of expense management and disciplined stewardship of capital. As we continue to execute against a tight set of priorities, we see numerous paths for maximizing the value of these assets on behalf of our shareholders, courtesy of the time afforded by our recent refinancing. We have the time to explore these paths despite an economic backdrop that remains challenged for now. With that, I'll turn the call over to Frank.

Thank you, Mary. Q3 revenue was $23.6 million, down 1.8% year-over-year, consistent with the pacing guidance from our last call. While EBITDA was $24.1 million, in line with analyst estimates. Our DMS business continued to be our highest growth area, increasing approximately 40% year-over-year. Q3 DMS revenue performance represented not only an acceleration of the 24% growth delivered in Q2 but is also the largest year-over-year dollar increase that we've seen in this business, providing strong evidence that our investments in this area are paying off. Our annualized digital revenue run rate is now approximately $160 million, with DMS representing more than a third of that. In our broadcast business, telecom, insurance, and retail were our top-performing key national categories, while financial, job search, and home improvement were the weakest. In the local spot market, home products, general services, and utilities were the best-performing categories, while automotive, professional services, and entertainment were the weakest. We generated $4.4 million of political revenue in the third quarter versus $5.8 million in the same period of 2020 and $4.5 million in 2022, with the decline reflecting the change in the Democratic presidential candidate and the timing of presidential primaries. With the election less than a week away, our fourth quarter is tracking at $14.3 million in 2020 and $8.3 million in 2022. As a reminder, Q4 2020 political revenue benefited from the two Senate races and subsequent runoffs in Georgia. Total expenses in the quarter were down approximately $1 million year-over-year, reflecting additional cost reductions offset by continued investments in our digital businesses. Given the uncertain advertising environment and our desire to continue investing in our digital businesses, we remain focused on cost management. As Mary said, we've achieved $8 million in year-to-date cost reductions on top of the $120 million we've achieved from 2019 through 2023, representing approximately 20% of our total fixed cost base. Turning to the balance sheet, we ended the quarter with $52.2 million in cash, gross debt of $642.1 million, and net debt of $590 million when excluding the $31 million in principal debt reduction resulting from the exchange offer, which will be amortized over the term of the debt. Year-to-date CapEx was $15.9 million, and we expect full-year CapEx to be below the $25 million revised guidance that we provided on our last earnings call. While we did not repurchase any stock during the quarter, our capital allocation priority going forward will continue to be investment in our growth businesses and debt reduction. Turning to the fourth quarter, as Mary previously mentioned, total company revenue is currently pacing down slightly. With that, we can now open the line for questions.

Thank you. Our first question today comes from Michael Kupinski from NOBLE Capital Markets. Please go ahead, Michael. Your line is now open.

Thank you. Thanks for taking my questions. I have a couple. In terms of the marketing services, you mentioned additional services were a driving factor for a portion of the revenue growth. I was wondering if you could provide some insights regarding what those services and upsells are?

Sure. Good morning, Mike. Yes. We've always had a robust suite of campaign products since the inception of our DMS business. Additionally, we've added a full suite of integrated presence products. This includes services ranging from listings to reputation management, website development, and SEO. Now we can provide pretty much anything you'd want.

Got you. Regarding the political $9.7 million being booked, it seems a little softer than expected. I was wondering if you could share your thoughts on the political landscape and whether you think there's still some upside in that number. How do you feel you performed politically this year?

Hi, Mike. I know I've mentioned in previous calls that the last presidential election was not the best comparison for this year's presidential election. Two reasons being that the last presidential election featured a robust primary season with Steyr and Bloomberg competing for the presidential nomination. As previously discussed, the Georgia races and runoffs contributed to a significant revenue increase. We've anticipated that a $20 million number would be a better benchmark. The fourth quarter is tracking closely to our expectations. In the third quarter, we did see slightly less than expected due to the change in the Democratic presidential candidate. Overall, we expect to meet our expectations as the political ad frenzy increases, with possible individual runoffs in certain states adding toward our numbers.

Thank you for that. You mentioned that advertisers are pausing due to the elections. Typically, some advertisers may hold off in terms of the wave of political ads we see. Could you share more about whether some advertisers are not spending due to specific outcomes, and what your expectations might be post-election?

What we're hearing a lot from advertisers is that generally, they want to see how the economy settles after the election, or they feel that political ads are dominating the airwaves. They are hesitant to invest when there's what they perceive to be clutter. There's a general uncertainty that prevails right now about the election.

Got you. My final question is regarding the network business. It seems to have performed better than expected. As we head into a heavy sports season, are you still seeing those positive trends continue on the network side? You indicated that pacing is down slightly for Q4; could you elaborate on the mixture between network and local spot?

Sure, Mike. In the network business, we did benefit from airing the summer games, which was not a factor last year. Additionally, the scheduling and airing of certain NFL games provided a benefit as well. As Mary said, the interest in sports remains robust. Although I can't provide specific guidance on the network itself, we probably won’t see the same impact as in Q3 due to scheduling and the summer games. National spot business trends are decent, with local spot pacing stronger than what we observed in Q3. Overall, we expect another robust growth in digital, resulting in total pacing down slightly.

Thanks for that clarification. I appreciate it. That's all I have. Thank you.

Thank you.

Thank you. The next question comes from Patrick Sholl from Barrington. Please go ahead, Patrick. Your line is now open.

Good morning. I had a question regarding the conversations with your advertisers. I think you mentioned that interest rates are one of the headwinds on advertising spend. How much would rates have to fall to alleviate some of that uncertainty?

Hey, Pat. That's a simple question but with a complicated answer as it addresses different categories. The most obvious impact is in financial products, particularly with mortgages. Although the market expects that rates will decrease and mortgage rates have declined, there might be a lag in advertising spending due to such changes. A decrease of 25 or 50 basis points could help, but it's not the same as a fall of 100 or 150 basis points. Moreover, the inflation outlook in the economy is significantly tied to our performance. A more favorable inflation outlook closer to 2% combined with lower interest rates creates a positive environment for business and consumer sentiment. This improvement would benefit various categories, including automotive, which is one of our larger categories. Ideally, lower rates and inflation along with a growing economy would provide the best circumstances for us.

I appreciate that insight. I was also curious about the podcasting segment being down a bit. Specifically regarding Daily Wire, how much of that decline would be attributed to download rates versus advertisers' hesitance about political content amidst the current clutter of political ads?

To clarify, Daily Wire started with the Ben Shapiro Show, which we represented both on broadcast radio and podcast. Over time, Daily Wire added additional podcasters, which we represented under that umbrella. We now no longer represent some of those additional podcasters, which has led to a negative year-over-year comparison. The flagship shows have also experienced revenue pressure this year, particularly due to the change in iOS 17 late last year, among other issues. However, we continue to do very well in our non-Daily Wire podcasts. As I mentioned earlier, three of our news talk shows are consistently in the top 50 across all genres. Our expectations for future growth remain unchanged. The challenges we're experiencing are primarily incidental, and we believe our pacing in the podcasting business for Q4 is strong.

Mary, if I may add, our pacing in the podcasting business this upcoming fourth quarter is showing significant growth. We’ll provide more detailed insights during our next earnings call.

Yes.

Thank you.

Now I will hand back to Mary for closing remarks.

Thanks, everybody, for being on the call. We look forward to joining you on the next call for the next quarter. Thank you.

Thank you, everyone. This does conclude today's call. Thank you for joining. You may now disconnect your lines.