Good afternoon and welcome to the iHeartMedia Q4 2024 Earnings Call. All participants are in a listen-only mode. After the speaker's remarks, we'll have a question and answer session. To ask a question, please press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mike McGinnis, Head of Investor Relations. Please go ahead.

Good afternoon, everyone. and thank you for taking the time to join us on our fourth quarter 2024 earnings call. Joining me for today's discussion are Bob Pittman, our chairman and CEO, and Rich Bressler, our president, COO, and CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings, including our recent AK filing. Additionally, during this call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, earnings presentation, and our SEC filings, which are available in the investor relations section of our website. And now I'll turn the call over to Bob.

Thanks, Mike, and good afternoon, everyone. Before I take you through the fourth quarter financial results, I want to share two key highlights from last year. We successfully completed the comprehensive exchange transaction that we discussed on our third quarter call. This exchange accomplished three things. One, it extended the majority of our debt maturities by three years. Two, it kept our current consolidated annual cash interest expense essentially flat, and three, it provided overall debt reduction. This improved capital structure provides the company with the flexibility it needs to remain focused on creating shareholder value. And an important part of creating that value is to continue modernization of our company. In 2024, we took another significant step in that journey, flattening our organization, eliminating redundancies, and breaking down silos. It'll be easier to do business with us and easier for us to get our business done and will help to accelerate earnings growth as well. As we discussed last quarter, the actions we took over the course of 2024 will generate over $200 million of annual cost reductions. There will be some ordinary course add-backs of approximately $50 million to our expense base, which results in net savings of approximately $150 million. And with that, I'll turn to our fourth quarter financial results. In the fourth quarter, we generated adjusted EBIT of $246 million, up 18.2 percent versus prior year. Our consolidated revenues for the quarter were up 4.8 percent compared to the prior year quarter. Excluding the impact of political, our consolidated revenues were down 1.8 percent. Turning to our individual operating segments, the digital audio group generated fourth quarter revenues of $339 million, up 6.7% versus prior year, which represents approximately 30% of the company's revenue. The Digital Audio Group generated fourth quarter adjusted EBITDA of $119 million, up 2.1% versus prior year, and the Digital Audio Group's adjusted EBITDA margins were 35%. I will also note that this was the Digital Audio Group's best full-year performance its own record, generating over $1.1 billion of revenue and approximately $380 million of adjusted EBITDA. Within the digital audio group, our podcast revenues grew 5.7 percent compared to prior year, and our non-podcast digital revenues grew 7.1 percent compared to prior year. Our podcasting financial discipline continues to fuel what we believe is the most profitable podcasting business in the United States. Additionally, our podcasting EBITDA margins remain accretive to our total company EBITDA margins. And as Rich will discuss later, our podcasting revenues in Q1 are expected to grow in the high teens. In January, iHeart was once again ranked the number one podcast publisher in the U.S., according to PodTrack. And iHeart is the number one sales network in podcasting as well, with approximately three times the downloads and monthly audience of the next largest U.S. sales network, according to PodTrack, with a similar leadership position globally as well. To that end, this week, iHeart Podcast served as the official podcast partner for the 2025 Web Summit Qatar, where our marquee talent, including Malcolm Gladwell and Jay Shetty, led panel discussions. And on Monday, we announced a groundbreaking multi-year partnership with the Government Communications Office of the state of Qatar to help create a thriving podcasting industry in the Middle East and North Africa. We see this as further validation of the continued growth potential of the podcast industry and of our ability to expand our leadership position as the largest U.S. podcast publisher to the global market as well. In addition to our industry-leading podcast business, we also have the number one streaming digital radio service, which has five times the listening of our closest competitor. We have the largest social footprint of any audio service by a factor of five, and we operate 3,000 national and local websites with more than 140 million unique users in the United States each month. And in the fourth quarter, we launched the next generation of our iHeartRadio app, which combines the key features of the car radio that listeners know and love with innovative technological enhancements. We've had a strong positive response from our listeners. So if you've not done so already, I encourage everyone to check out the redesigned iHeartRadio app and see for yourselves. Turning now to the multi-platform group, which includes our broadcast radio, networks, and events businesses. In the fourth quarter, revenues were $684 million, flat versus prior year, and excluding the impact of political advertising, revenues were down 5%. The multi-platform group's adjusted EBITDA was $150 million, up 5.9% versus prior year. As we look at the multi-platform group, let me take a moment to focus on broadcast radio and tell you why we continue to believe it's a growth engine for our company, not a declining business. Broadcast radio has more listeners today than it did 20 years ago. In an environment in which broadcast and cable TV audiences have dwindled and print audiences have disappeared, broadcast radio audiences have remained strong. And our broadcast radio is the undisputed leader in monthly audience reach, even when compared to Google and Facebook. And as we look at our advertising growth opportunities for broadcast radio, the most important variable for advertising on any medium is what's happening to the audience. On that front, broadcast radio is not only healthy, but robust. Additionally, when audio is added to a social media campaign, the response rate jumps by 83%. Powerful evidence that in addition to reaching more potential consumers for advertisers, we can also meaningfully improve the response rates for their other media as well. This, combined with the ad tech innovations we're rolling out to inject our broadcast radio inventory into data-infused digital buying platforms, including programmatic, makes us more confident than ever in the growth of broadcast radio revenue. Turning to the Audio and Media Services Group, revenues were $98 million, up 44.7% year-over-year, and adjusted EBIT was $49 million, up 136% from $21 million in the prior year. Excluding the impact of political, the audio and media services group's revenues were down 1.6%. As we look to the year ahead, we remain focused on supporting our high-growth businesses like podcasting, while, as I said before, finding new ways to unlock the power and value of our broadcast radio assets, including our ongoing work to integrate our broadcast radio inventory into programmatic platforms. As evidence of our progress, I'm excited to announce that in March of this year, our broadcast radio inventory will be available via the Yahoo DSP and Google's DV360 for digital buyers to purchase alongside other programmatic assets like CTV. This is a critical early step in aligning our broadcast assets with digital buying behavior, which will allow iHeart's broadcast radio assets to participate in the growing digital and programmatic TAMs. And as we continue to innovate and grow, our operational efficiency is critical to our success and we remain relentlessly focused on cost efficiencies and on our commitment to take advantage of new and evolving technologies like programmatic and AI to deliver both short and long-term results. Before I turn it over to Rich, I'd like to take a moment to briefly mention the devastating Los Angeles wildfires. Serving our local communities is at the heart of everything we do, and I want to acknowledge the incredible work of our teams on the ground during that time of crisis. It's moments like this and the hurricane's last fall that the dramatic value of what we do becomes apparent. And now, I'll turn it over to Rich. Thank you, Bob, and good

afternoon, everyone. Our Q4 2024 consolidated revenues were up 4.8% year over year, below the guidance we provided of up high single digits, due primarily to lower political advertising revenue than we had originally expected, both before and after the election. Additionally, we saw a slowdown in non-political advertising revenue just before the presidential election, which, as we said in our Q3 call, we had hoped would be re-expressed after the election. In the end, it was not. Our consolidated direct operating expenses increased 9.9% for the quarter. This increase was primarily driven by higher variable content costs related to the increase in digital revenues, as well as cost incurred in connection with cost savings initiatives implemented in the fourth quarter. Our consolidated SG&A expenses decreased 1.7% for the quarter. The decrease was driven primarily by lower compensation expense and the timing of non-cash marketing expense due to the iHeartRadio Music Festival, partially offset by cost incurred in connection with cost savings initiatives implemented in the fourth quarter. We generated fourth quarter gap operating income of $104.5 million compared to income of $79.8 million in the prior year quarter. We generated fourth quarter adjusted EBITDA of $246 million, up 18.2% versus prior year, which was below the guidance of approximately $290 million due to the advertising impacts I just mentioned. Turning now to the performance of our operating segments, and as a reminder, there are slides in the earnings presentation on our segment performances. In the fourth quarter, the Digital Audio Group's revenues were $339 million, up 6.7% year-over-year, and in line with our guidance of up-high single digits. The Digital Audio Group's adjusted EBITDA was $119 million, up 2.1% year-over-year, and our Q4 margins were 35%. Within the digital audio group are our podcasting revenues of $140 million, which grew 6% year-over-year, and for the full year, our podcasting revenues were up 10% year-over-year. Our first quarter non-podcasting digital revenues grew 7% year-over-year to $199 million. As those of you that follow us know, our podcasting revenues typically have a higher margin than our non-podcasting digital revenues. And the flow-through we saw in Q4 reflected this revenue mix. We expect to turn our flow-through performance around in the first quarter with our podcasting revenues up in the high teens, as Bob mentioned, and to comprise the majority of our digital revenue growth, which will help us to continue our year-over-year digital audio group margin expansion. The multi-platform group's revenues were $684 million, flat compared to prior years, and below the guidance of mid-single digits. Excluding the impact of political revenues, our multi-platform group revenues were down 5%. Adjusted IBTDA was $150 million of 5.9% from $142 million in the prior year quarter. Multi-platform groups adjusted IBTDA margins were 21.9% compared to 20.7% in the prior year quarter. Turning to the Audio and Media Services Group, revenues were $98 million of 44.7% year-over-year, and adjusted EBITDA was $49 million, up 136% from $21 million in the prior year. Excluding the impact of political, the Audio and Media Services Group revenues were down 1.6%. At quarter end, we had the lowest net debt position in the history of the company, approximately $4.52 billion of net debt outstanding. Our total liquidity was $686 million at quarter end, which includes a cash balance of $260 million. Our quarter ending net debt to adjusted IBTDA ratio was 6.4 times, and we expect to end the year at approximately 5.5 times and remain on track to attain our goal of achieving 3.2 times by the end of 2028. As Bob mentioned in his remarks, we have completed the comprehensive exchange transaction with a group of debt holders representing, on an aggregate basis, approximately 92% of the company's outstanding debt. To reiterate some of the key highlights, as a result of the exchange transaction, our new notes and term loans have maturities ranging from 2029 to 2031, with reduced total debt levels, and importantly, our annual cash interest expense remains essentially flat. And notably, none of the exchange transactions had any impact on the equity capitalization of the company. This transaction strengthens the company's financial flexibility while providing iHeart with ample runway to achieve our strategic growth initiatives. In the fourth quarter, due to fees and the acceleration of certain interest payments related to the debt transaction, our free cash flow was negative $24 million. Our free cash flow would have been $111 million when adjusting for the debt transaction-related expenses. In addition to that, further impacting our fourth quarter free cash flow were costs associated with the modernization program. As a point of reference, we recorded $33.5 million of restructuring expenses in the fourth quarter, with a portion of those payments hitting Q4 and negatively impacting our Q4 free cash flow. As we look ahead to Q1 2025, although the year began with optimism, many companies are now focusing on how potential tariffs, inflation, and higher interest rates may impact their businesses, introducing an element of uncertainty. An indication of that uncertainty, as I'm sure you've seen, is the Conference Board's Measure of Consumer Confidence, which reported that February saw the largest single monthly decline in consumer confidence since August 2021. We've done our best to incorporate the impact of this uncertainty into our guidance. Our first quarter results will also be impacted by the wildfires in LA. Not only is Los Angeles our largest revenue market, but our national major account sales team is based there as well, affecting revenue beyond just LA. All of which is compounded by the fact that Q1 is always our smallest revenue quarter for the year. With that in mind, we expect to generate consolidated first quarter adjusted EBITDA in the range of $100 to $110 million compared to $105 million in the prior year quarter. We expect our consolidated Q1 2025 revenues to be down low single digits compared to the prior year. As a reflection of the optimism the year began with, and then the uncertainty that rolled in later, our January revenues were up 5.5 percent, and our February pacing is down approximately 7 percent. Turning to the individual segments for Q1, we expect the digital audio groups' revenues to be up low double digits, with podcasting revenues expected to grow in the high teens. We expect the multi-platform groups' revenues to be down mid-single digits. And we expect the audio and media services groups' revenue to be down approximately 15% due to the impact of political advertising spent in the prior year period. At this point, we remain optimistic about the year ahead, even with the uncertainty in the economy, and we want to reiterate our full year 2025 guidance. We expect our full year 2025 revenues to be approximately flat compared to 2024. We expect to generate full year adjusted EBITDA of approximately $770 million, and we expect to generate free cash flow of approximately $200 million. The following assumptions are include in our free cash flow guidance. We expect our cash taxes to be approximately 10% of our adjusted EBITDA. We expect our full-year capital expenditures to be approximately $90 million. We expect our cash restructuring expenses to be approximately $45 million. At year-end 2025, we expect our net debt to adjusted EBITDA ratio to be approximately 5.5 times, and we remain on track to achieve our goal of 3.2 times by the end of 2028. Now I will turn it over to the

operator to take your questions. Thank you. Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, press star one again. Our first question comes from Jessica Reif-Ehrlich from Bank of America.

Please go ahead. Your line is open. Thank you. I have a couple of questions if that's okay. So So first, Bob and Rich, I know you've both consistently talked about the resilience of broadcast listening. Can you talk about how you're thinking about monetizing that going forward? And maybe in that context, I know, Bob, you mentioned both programmatic and AI. How much of a needle mover will programmatic be? What does the ramp look like? And then I have a follow-up.

Look, I think the programmatic is an essential part of what we're doing. It's a growing part of the ad market. And I think you're sort of implying the answer to the question, which is how do we take this incredible amount of listening we've got, the strong relationships we've got with our consumers. And oh, by the way, when measured, broadcast radio has enormous performance in terms of performance marketers, in terms of delivering the metrics they need. So clearly the issue for us in broadcast radio is we need to make this inventory fit. the buying system you know programmatic is part of it it's also automated buying it might be actually live conversations but they can execute it through an automated platform and beginning to have it sit side by side with the other digital options our hope also as people are putting these systems together that algorithms versus human beings making decisions about allocating the dollars to different media we know there is a certainly a bias against radio is considered old media I think we've gotten tarred with a brush of you know TV or print that have really seen a substantial degradation in their audience and here we are with this incredible audience incredible performance so I think when the algorithm looks at the fact can be very beneficial to broadcast radio as well so programmatic for us we're I think making great progress on the automated platform we're making great progress on putting all of our inventory into a platform so it can be accessed from any seller anywhere anytime and can be accessed with the key data that's needed are all making progress I think this year is as we talked last year this is probably the year which we're rolling it out we're beginning to get in DSPs rolling out our platforms so we probably will learn a lot this year and I think we should begin to see some revenue this year but I think the impact probably is

built hey Justin you know the only just thing I did just quickly what Bob said is you talked about the ramp and everything but the first step before you know you kind of get to the ramp and learn is to get in the platforms and that's why Bob's point about the DB 360 and the Yahoo two very significant and platforms is significant for us.

Right. Okay. And then maybe just two more quick ones. But could you address the video podcasting opportunity? You know, Spotify has been talking about that a bit. You obviously have a really strong position in podcasting. And then just finally on the overall market outlook, I mean, obviously there's a lot of puts and takes, as you guys have outlined, but L.A. is your biggest market. Can you give us some color on what the impact was in Q4 and how it looks moving forward?

Sure. Why don't I head first to video podcasting? Look, there's a lot of talk about video podcasting. Clearly, YouTube would love everything to be video podcasting. When you look at the research, it looks like about 10% of podcast users would prefer video. Others are willing to look at video. But most people actually, the overwhelming majority, actually want it to be audio. They are using podcasting because it's a great experience for them because they don't want to use their eyes. They are cooking. They're driving. They're running. They're doing other activities where they can listen, but they can't watch. But with many of these hosts, and I know, Jessica, you listen to a lot of them, it is very conversational, very personal. It is not TV-style production. As a matter of fact, unlike TV, which is very story and production-driven, podcasting is very host-driven. And often the more just loving hands at home it sounds, it's just the easy going and casual is what people for flank radio is a lot about. I hang out with them as a publisher. We've got by far the biggest stable to play with, and there's a lot we can do there.

You know, just before Bob turns to your question on the advertising environment, just in terms of, you know, just looking at the facts. We're just coming off a year where we had double-digit revenue growth in podcasting. And, again, we're going to continue to get to a lower-bigger number, so double-digit revenue growth. And the guidance we just gave is high team growth in Q1. So, yes, you know, as Bob talked about, you know, we're monitoring, looking at consumer usage, but just look at the facts and the runway we still have with the podcasting business we have today.

And, you know, look, also, there's a big delta between video and broadcast radio in terms of CPMs. There's not a big delta between video, so we don't really get a bump up in value if you add video to it. On the L.A. front, you know, clearly L.A. is a big market force. It was disrupted by the fires. I think it's beginning to get back to normal. and not only was the market disrupted, but our direct-to-client sales, national sales, is based there, so people lost houses, went through this, traffic is getting long again, and I hate to, traffic jams are our friend. We're a company that benefits from people with longer commutes and more time in the car, and so we actually think that probably has, ironically, a beneficial effect on the company.

Yeah, and just one of those, I think you also just touched upon in terms of the overall advertising market, and we laid out the puts and takes in our opening remarks. And I think, you know, just looking at all the other companies and supported companies between yesterday and today, you know, that release, I think we're, you know, kind of all seeing the same trends out there in terms of the start of the year and the uncertainty, you know, whether it's the tariffs, we also have the consumer confidence piece come out today, you know, uncertainty in terms of inflation and interest rates. But at the same time, as we look forward, and I think it's very important, you know, we reiterated our confidence in the business for the rest of the year. You know, again, going back to a box and early about the strength of our assets, you know, the economy will sort itself out and we'll all work through this. But, you know, we continue to be optimistic as we go forward. Yeah, I think, you know, look,

what we're dealing with is, and it always happens this way, if there's change, people take a beat and there's a big change between them. And I think people are digesting, and I don't think the uncertainty is totally unexpected. Thank you.

Question comes from Patrick Scholl from Barrington Research. Please go ahead. Your line is open. Hi. I was wondering if you could

talk a little bit more about the automated buying and how much that sort of contributes to like the improving trend of the year to make up that difference in total advertising as a result

of the political comp. Yes, a really good question. I think it comes in and it comes in in pieces. It's a gradual movement. First step is have some marketplaces, audience network up, which allows us to, you know, have a pretty broad array of options for average options to that, which is, for us, the great opportunity. You know, I think that, again, I go back to probably the biggest upside we've got in terms of underappreciated asset or underutilized asset is broadcast radio inventory. I mean, it's got audience that no one else has, and it has impact for advertisers. Again, that's pretty remarkable.

And just to be fair, at one point, we're not assuming anything, to Bob's point, as we've gotten into the systems and learning, we're not assuming any significant contribution this year from that. But obviously, we're incredibly excited about the TAMs that will enable us to take advantage of.

Okay. And then on, you talked about January advertising being up, And I realize I was short-lived, but what were some of the drivers of that turnaround from kind of maybe a slower-than-expected close to the air to at least the positive start?

You know, it's interesting. We talked about, you know, that pause in advertising we saw before the election. We had thought and hoped it would be re-expressed in December. I think there's an argument that it was re-expressed in January. There was a little longer sale, I think, as reality set in. and, you know, January, February, completely gone, and other issues, keeping in mind that if there's ever a quarter in which advertisers feel confident and comfortable, it's probably all four quarters, it's pressure.

Thank you.

Last question comes from Stephen Lasik from Goldman Sachs. Please go ahead, your line is open.

Hey, guys, thanks for taking the questions, too, if I could. Maybe first on podcasting for Bob and Rich, I was wondering if you could talk a little bit more about your expected drivers of growth in the podcasting business this year, perhaps between adding new content to the platform, improving engagement, monetization, what do you see as the main drivers or the largest drivers of that expected growth in podcasting revenue? And then second, maybe just on political, I think it came in a little bit below what we had expected in the 2024 cycle. Just curious if you talk a little bit about why that might have been the case, and what do you think that means, if anything, for the next few rounds of political spending as we come up on the midterms and the next presidential cycle? Thank you.

Sure. The drivers of podcasting are all of them. I mean, we're in that fortunate phase of podcasting in which everything's growing. We're expanding the product on our platform. we're expanding the audience, we're expanding their and again look but I think in political I think the lesson here this year things want a lot of probably more data-driven than it's ever been and so when you say what's the is that we have with the poll talk about it and sort of changing the kind of and

you know we covered that but there might be some more money coming in post the election, which didn't materialize, but, you know, at the same time, while we didn't quite get to the number that we thought, if you look at the performance of MPG, you know, in Q4, we did have, you know, overall 8% EBITDA growth in Q4 on relatively flat revenue. So, it just, you know, the absolute performance was terrific. Got it. That's great. Thank you both. Well, operator, if there's no other questions, we, again, appreciate everybody taking the time to listen, to spend the time to focus on the IHART story, and, you know, the team is available, starting with Bob, myself, and Mike for any follow-ups, and thank you again.