Urban One, Inc. (UONEK) Q2 2026 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by and welcome to the Urban One 2026 second quarter earnings call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties referred to in the 10-Ks, 10-Qs, and other reports it periodically filed with the Securities and Exchange Commission, could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of August 4, 2026. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Urban One may also discuss some non-GAAP financial measures and talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www.urbanone.com. A replay of the conference call will be available from 2 o'clock p.m. Eastern Time, August 4, 2026, until 11.59 p.m. Eastern Time on Tuesday, August 11, 2026. Callers may access the replay by calling 1-800-770-2030. International callers may dial direct 1-609-800-9909. The replay access code is 3701023. Access to live audio and a replay of the conference will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or may be relied upon. I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Also joining us as usual is Jody Drew, our Chief Financial Officer at TV1, Chris Simpson, our General Counsel, and Karen Wishart, our Chief Administrative Officer. As you've seen in the press release and the results that have come out, we have seen sequential Special improvements over Q1, but still, you know, we are in a rate of decline, less decline than Q1, but, you know, however, still a tough, you know, first half of the year. We are expecting, you know, things to pick up as we go into, move into Q3, as political starts to become more and more of a factor in our numbers. Even though it's an unknown, we're hopeful because of competitive races in Ohio, Texas, Georgia, North Carolina, and Indiana. During the quarter, we have continued to reduce our leverage with market repurchases of our debt. We spent about $23.5 million purchasing our 2031 second lien notes at an average price of approximately 42 cents on the dollar. That's about a $60.2 million long-term debt reduction and an annual interest savings of $4.6 million. However, because of the first half of the year, we have decided to adjust our guidance down from 60 to the mid-50s, even though we still don't know exactly where politicals are going to come out. And also, we closed on our Dallas app. So that was August 17th. And that's off Up to a good start, and that's going to contribute significantly to the last five and a half months. There's potential upside there, but still out of an abundance of caution and trying to be more accurately elected to bring the guy down. That could change. At this point in time, we're saying mid-50s. I'm going to turn it over to Peter to go into the details of the numbers, and then we can Thanks, Alfred.

So, consolidated net revenues for three months end of June 30th, 26th was approximately $85.8 million, which was six point year over year. Net revenue for the radio broadcasting segment was $35.3 million, a decrease of 3.9% year over year. Excluding political, net revenue for radio was down 6.6% year over year. According to Miller Kaplan, our local ad sales were down 10.1%. It's the market that was down 7.8%, and our national advertising sales were down 1.5% services, which was 0.7%, primarily due to legal services. Government public category was up 14.5% as a result of political spending, and telecommunications category was up 16.9%. Net revenue for each media was $4.8 million in the same quarter. Declined at 10.6% from the prior year. It's continued to see declines in network revenue. Revenue for digital settlements down 8.4% at $9.4 million. Decrease was driven by a decrease in national direct revenue streams as a result of reductions in DEI focus spending. A lot of client spending in general due to microeconomic concerns. We recognize approximately $37.1 million of revenue from our cable television segment during the quarter, decreased to 7.4%. Cable television advertising sales were down 9.6%. We had strong competition from the NBA playoffs, and that contributed to prime delivery declines of 21% year-over-year for persons And this, along with a continued weak scatter market, led to more commercial units continuing to be allocated to direct response at lower average unit rates. Cable television affiliate revenue was down by 4.5 percent, driven by subscriber churn, as linear cable continues to decline, and that was partially offset by an increase in subscriber rates. Traditional All linear cable TV subscribers at TV1, as measured by Nielsen, finished Q2 at 27.3 million, compared to 34.3 million at the end of Q2-25. Inclusive of virtual subscribers, TV1 finished with 30.5 million Nielsen subscribers, compared to 35.4 million in the second quarter of 2025. The decline has obviously been driven by linear churn. Clio TV had 27.2 million traditional linear Nielsen subs and 31.1 million inclusive of virtual subscribers. Through the first four weeks of Q3 2026, TV1 is up by 4% in prime, persons 2554 delivering, compared to Q2 2026, And only down 3% compared to Q3 2025. Operating expenses, excluding depreciation, amortization, stock-based compensation, and impairment charges were approximately $75 million for the three months, compared to approximately $78.1 million for the comparable period in 2025. This decrease was mainly driven by sales and marketing expense decreases in the operating segments. Radio expenses were down by 1.6% or half a million dollars, driven primarily by lower revenue and lower bad debt reserves, so lower expenses. Reach operating expenses were down 17% or $1.2 million, primarily due to lower bad debt reserves. In the digital segment, we're down 8.7%, driven by a decrease in traffic acquisition costs, commissions, headcount savings, and bad debt reserves. Operating expenses in the cable television segment were up 4.1%, driven by a combination of programming expenses and accounting for new executive agreement. Paying expenses in corporate down by approximately 16.7%, driven by low professional service fees and other compensation-related costs. Consolidated adjusted EBITDA was $11.7 million, down 16%. Consolidated broadcast and digital operating income was approximately $22.2 million, a decrease of 13.7% here over the year. Interest expense in the P&R was down to approximately $2.1 million, down to $9.7 million last year. It's reflecting the debt repurchase accounting and lower effective interest rates under the troubled debt restructuring rules. We made cash interest payments of approximately $5 million during the quarter. The semiannual cash interest payment for the 2030 and 2031 notes was made on April 1st, and the next payment is due on October 1st for the full 180 days of accrued interest, which is approximately $12.1 million. During the three months ended June 30th, we repurchased approximately $23.5 million of our 2031 secondary notes at a weighted average price of 42% of par debt repurchase of the 2031 secondary notes in the second quarter reduced the outstanding long-term debt balance to $303.2 million. Year-to-date, it's a total reduction in long-term debt of $60.2 million, and an annualized interest saving of $4.6 million. Under the troubled debt restructure account, and the long-term debt on the balance sheet includes a premium, which amortizes over the remaining term, and we've separated that out in the press release, so you can see what that is. We drew an additional $10 million in the second quarter under the asset-backed facility, which resulted in total outstanding balance there of $20 million. We made a further additional draw of $7 million during the quarter, and then we just repaid this week $5 million in the third quarter. So we're at $22 million drawn there, and we have current borrowing capacity of an incremental $24.1 million. We recognize approximately $13.9 million of goodwill impairment charge and approximately $300,000 of long-lived asset impairment charges related to REACH media. We recorded depreciation and amortization expense of approximately $6.2 million, which includes $4.4 million of amortization for the radio broadcasting license and TV1 trade name. Benefit from income taxes was approximately $1.7 million. We paid cash taxes, net of refunds in the amount of approximately $500,000, and capital expenditures for the quarter were For approximately $1.7 million, net loss was approximately $7 million, or $1.58 per share, compared to a net loss of $77.9 million, or $17.41 per share for the second quarter of 2025. During the three months, we did not repurchase any shares of Class A common stock. And we repurchased 129,543 shares of Class D common stock for approximately $600,000 at an average price of $4.50. That was under the annual repurchase program for employee stock. We also executed stock best tax repurchases of 145,513 shares of Class D common stock. Which is approximately $700,000, an average price of $4.52. As of June 30th, the current contract's outstanding debt balance was approximately $323.2 million, including the ABL draw. Ending unrestricted cash was $15.4 million, resulting in net debt of approximately $307.9 million, compared to $46.2 million of LTE. As we previously announced in March, we agreed to sell WMXG and WLNK radio broadcast licenses in Charlotte, North Carolina, to unrelated third parties for approximately $0.7 million and $4.2 million, respectively. We completed both sales on June 1st, 2026, and recognized a gain of $4.7 million. In April, we entered into an agreement to acquire a service broadcasting group in Dallas, Texas, including radio stations KKDA and KRNB for $22 million. Same time, we also entered into an agreement to sell radio station KZMJ to Fusion Dallas LLC for $6 million. We completed on the sale of KZMJ on July 6th and recognized a gain of $3.2 million in the third quarter. We also completed the acquisition of Service Broadcasting Group on July 17th, 2026. With that, I'll hand back to Al.

Thank you, Peter. Operator, can you go to the lines for Q&A, please?

We will now begin the question and answer session. To ask a question, press star, then the number one on your telephone keypad. Our first question will come from the line of Ben Briggs with Stonex Financial. Please go ahead.

Good morning, guys. Thank you for taking the time to take the questions. So I've got a couple here. So, you know, a lot of puts and takes here, but obviously we've got midterms coming up. I know that you mentioned political is going to be a tailwind. Is there any way you can quantify that or even give some, I guess, relative guidance versus what it was like previously? I know that with the Dallas acquisition, there may be some changes as far as what the political demand is like.

Yeah, that's difficult. That's like, you know, we don't know yet how much money people are going to, you know, spend. I mean, that's, it's also going to depend on, you know, you know, think it's going to be. I do know that we've got radio budgeted at about 11 points, you know, and then 22, we, you know, not quite as, you know, you know, we're not, we're saying that we're not going to be quite as robust as a big choice. You kind of got two bites of the apple. You know, Georgia is expected to be competitive again, right, in the Ossoff race. It feels like it's going to be, I mean, fortunately, what we can tell, we can look at polls and see, you know, where the races are close, right? Like, you know, close in Georgia. You know, there are also the governor's race looks close there, you know, Keisha Lance bought a hosetly, you know, kind of behind the curve when fundraising, which I don't really understand. So there's all these, you know, wild cards. But anyway, let's just say it's going to be competitive. Indiana's going to be competitive. You know, suffice it to say, it feels like that there are multiple competitive races in play. And you're right, Dallas should be different for our position against the African-American audience, the democrative, and so that should bode well for us. But, you know, exactly how well for it, I can't tell you. If you can find somebody who can actually really predict what the, you know, the ad dollar market's going to be in this industry, you know, you probably could make money with them on CalShe.

I will keep that in mind.

I will keep that in mind. But those are the races that we feel will help us, right?

Yep, yep. I think you said you've got about $11.1 million budgeted for political and fiscal 2016 in radio. Will anything flow through to TV from political?

Yeah, I mean, TV usually only gets political and a presidential. Digital should see some, but TV, no. Got it.

Are you expecting much from digital?

I don't remember what the budget is. I think it's maybe a couple million bucks or something like that, or maybe a million dollars. Yeah, maybe it's a million dollars. And so, because digital can obviously be geo-targeted, right?

Yep, yep. Okay. And then kind of moving along, so I know on the last call you guys discussed some AM towers that might get sold. Is there anything to report there?

Nothing to report now. It's a process. It's ongoing, you know, right this second. And, you know, we feel good that we're going to have a positive, and we think there'll be a positive outcome this year.

Got it. Okay, thank you. And then last one for me is, so I know you moved guidance from $60 million to mid-50s. I think on the last call, there had been a discussion of about $40 million of free cash flow expectation in 2026. Is it safe to say, you know, using the mid-50s EBITDA that it would be about $35 million of free cash flow expectation now? Am I thinking about that the right way?

Yeah, there's some more puts and takes on non-cash stuff like ADU, burning through that, writing off ADU balances. It's probably lower than that now, just because of the composition of how we get into the revenue and to the EBITDA.

Okay. All right. Fair enough. Listen, I really appreciate the time. Thank you again for taking the questions, and good luck in third quarter. Thank you. Thank you.

Our next question will come from the line of Aaron Watts with Deutsche Bank. Please go ahead.

Hey, everyone. Thank you for taking my questions. I've got a couple, if I may, around the ad environment. I'll start on the radio side. I see the sequential improvement from first quarter, but I think 2Q came in a little weaker than you had guided us last quarter. I appreciate it's difficult to be around a percentage point smart in advance on radio ads, but any factors you'd call out that maybe pushed 2Q a little softer than you had originally anticipated back in May on your last call?

Yeah, I mean, I think local came in lighter than we thought, and we underperformed the market locally. Within that, obviously, there's a whole, it's not really one category. It was just across the board. And so, yeah, the patients that we gave at the last call, we did miss those a little bit, and I think almost all of that was in local.

Peter, anything you'd call out that is right now pushing national to be a bit firmer than local? Not really.

We've been underperforming the marketplace nationally, so I think we just righted that ship a little bit.

Okay. If I look ahead to your 3Q radio guide down 2.8%, does that compare to the minus 3.9 you just reported in 2Q, and does that imply some firming in the underlying core ad market, or is that purely the political lift you, Alfred, you were just kind of talking about a minute ago?

Um, look, you've got political starting to seep in there. You've got improvements in our Washington, D.C. market, you know, over what it was, you know, Atlanta is doing better than, um...

Yeah, we don't have a lot of political on the books yet. We've only got $400 million, so actually the pacing's ex-political are roughly the same.

We're struggling in Indianapolis, which has been a struggle. Houston had a great starting to do momentum because of World Cup. So many people took money and put it against that.

Now, that is helpful context. And I guess one last one for me, shifting over to the TV side, Was it many of those same factors kind of weighing on TV advertising or anything in particular to the TV side that you would call out that's pushing advertising?

TV is more of an inventory problem. More CTV impressions out there, weaker scatter market means that dollars start to default. We're going into upfront when you look at Netflix, Amazon, and then you've got a weaker scatter market. Long story short, it's putting pricing pressure on ad rates, particularly as ad rates start to default to direct response. I think those are the same kind of macro trends that folks are seeing in the linear cable business. I haven't been following everybody's numbers, you know, but, you know, when I see Warner Brothers' discovery report, et cetera, you know.

Okay. All right. Great. Thank you for the time. Appreciate the thoughts.

Our next question will come from the line of Dennis Penula with LaPan Partners. Please go ahead.

Hi. Good morning, gentlemen. Thanks for taking the questions. Most of my questions are actually already answered. I just have one last question. You guys had, what, about 14.1? This question from Mr. Thompson, $14.1 million in non-cash, goodwill, intangibles, write-downs.

Yeah.

Sound about right?

Yes. And that was all at Reach Media. That was all at Reach Media.

Just because of the way you guys word your press releases and don't actually mention or specifically talk about that, what would the bottom line have looked like without that $14.1 million non-cash write-down?

Well, look, we add it back in adjusted EBITDA because it is non-cash. So in the numbers, in the headline numbers that we look at when we talk about the $11.7 million adjusted EBITDA, it's already added back there. Obviously, on net loss and EPS and stuff, it's in there, and you would add that back. Of course.

And being a little seizure because a lot of people don't, you know, some investors probably don't get what EBITDA means. And, you know, I think if you broke it down just a little bit clearer for some of the investors, I think it would be helpful. Just my two cents, you know, again, it's only worth a penny. Being that, you know, we have this non-cash issue pretty much every quarter, and, you know, it just beats the hell and makes the, you know, the top-line number. When people look at the top-line number, they see a loss of, like, $11 million. And, you know, kind of...

Yeah, no, it does. Those impairments do swamp the numbers. I mean, hopefully we're cycling through the end of that.

You know, you guys are working so hard to get your expenses down. You guys have done a great job with, you know, interest expense, obviously. You've become much more efficient in all your operations, and you get no benefit for it because this non-cash stuff knocks the crap out of you guys all the time. Yeah.

Look, it's the way that GAP tells us we do it, and that's what we stick to. What I was saying was we're cycling through, hopefully, the end of that because we moved our radio FCC licenses to be amortized, so we made them finalized and we amortized them, and so we shouldn't see, we won't see impairments there. We've written down all of the goodwill at REACH, so there's not any more to go. So I think, I'm hopeful as we move forward, we shouldn't see nearly as many of the non-cash.

And that's actually a great positive, and I'm glad you noted that. All I'm saying is you go into great detail, you know, radio down X percent, TV down X percent. You guys go into great detail in your PR, but nowhere in there does it state that, you know, And there was a non-cash charge that, you know, made you guys lose $14 million. And that's all I'm saying is that, you know, maybe extrapolate that in your PR a little bit better.

Julie knows it.

Got it. Gentlemen, have a great day. I thank you for taking the call.

Again, for questions, press star 1. And our next question will come from the line of Adam Jacobson with RBR.com. Please go ahead.

Thank you for taking my question. I wanted to dive in a little bit more regarding the impairment charges because if you look at the overall numbers and you look at the portrait of Urban One, your net loss was basically reflective of the impairment charge lowering to $14.16 million from $130.08 million. And as the last gentleman noted, the adjusted EBITDA here is certainly very important, and you've been talking a lot about political dollars. But let's move ahead to 2027. Political is cyclical. So what are your plans in terms of the overall portrait for Urban One past political? Are you going to be focusing and doubling down on the multicultural story? Are you going to be looking at some of the non-multicultural assets and questioning, well, is there opportunity there, or is that a non-essential asset? Just wondering what the post-political portrait is for you, or is that still a little too early to ask?

I think we have shown that to our radio operation, and in particular as it relates to markets, where I've said that we believe that that does give us throws in our quiver to help drive local ad solutions. And we've seen success. I think you'll see us continue to do that. You know, managing political versus nonpolitical years is something that we do. Like, you know, we know there won't be political, you know, next year. Like, there wasn't political last year, and so we'll have an operating plan to deal with that. But, yeah, we believe that there will be further consolidation in the radio business. We don't have any plans to go outside of our urban footprint in television, you know, at this point. And we've looked at some digital businesses that would have taken, you know, that but couldn't, you know, come to terms on price. So I think the most likely place that that happens is in radio because, you know, look, you're in the business. I'm assuming the RVR is radio business report. You know that there's going to be further consolidation. There's a lot of assets for sale. And the key is to be able to acquire something, you know, that is de-levering, number one, and accretive. And you also got to be able to acquire it. It takes into account that even if you own everything, you know, there's probably still pressure on your top line in a market because there's just pressure against the medium in the advertising space, right? You know, look, that's been helpful, you know, to us. Houston, you know, our largest market, you know, now. Neither them or us were, you know, making any real money.

Thank you. I really appreciate your answer. Yeah, thank you.

This concludes the question and answer session, and I'll hand the call back over to Alfred for any closing comments.

Thank you, operator, and thank you for those folks that participated and asked questions. We do either offline if you have additional questions or next quarter, and we'll have a better handle on how the year shapes up on the next conference.

This concludes today's call. Thank you again for joining. You may now disconnect.