Ladies and gentlemen, thank you for standing by and welcome to Urban One's Year-End Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at this time. 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-K, 10-Q, and other reports, it periodically. Files 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 March 3rd, 2022. Please note that Urban One disclaims any duty to update. Any forward-looking statements made in the presentation. In this call, Urban UONE may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of the call or in the company's press release, which can be found on its website at www. urban1.com. A replay of the conference will be available from 12:00 p.m. Eastern. March 3, 2022, until 11:59 p.m. March 7th, 2022. [Operator Instructions] Access to live audio and a replay of the conference will be available on Urban One corporate website of www.urban1com. 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 maybe relied upon. I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter E. Thompson, Chief Financial Officer. Please go ahead, sir.

Thank you very much, Operator. And welcome to our fourth quarter results and year-end conference call. Also joining Peter and I are Karen Wishart, who is our Chief Administrative Officer, Jody Drewer as a Chief Financial Officer at TV One. And we have Kristopher Simpson, our General Counsel, also on the call. And as the press release states, I'm very happy with our Q4 and most of all, our full-year performance. We have guided EBITDA to be 140 to 145. That guidance was up from 135 at the beginning of last year. And we were able to exceed that and come in at 150 and some change. So very proud of team across all of our platforms. They performed exceptionally well during COVID. And as we come out of COVID, they are continuing to accelerate that performance. The demand for our platform and our audience continues to be very strong, as I've stated. I expect this demand to continue for the foreseeable future. I do believe there has been a paradigm shift at how advertisers look at minority targeted and focused audiences. Diversity and inclusion as it relates to ownership in media. The fact of the matter is it's always been a very logical business proposition that the audiences of Hispanic and African Americans are increasingly valuable as the country continues to grow in its minority presence, and now, I think more and more advertisers are really putting their investments in those areas. And so, we're very pleased that we've been a big beneficiary of that, having been in this space for over 40 years. So, Peter is going to take you through the details of the numbers in the operations is a lot for him to say a lot to unpack here. And then after that, we will go to Q&A. Peter.

Thank you, Alfred. As Alfred said, we were very pleased with our full-year 2021 numbers, and the first quarter of 2022 has started very strongly as well with advertising pace ends up across the board. First quarter core radio advertising revenue, excluding political, is pacing up low double-digits. The auto category is still trailing prior year, but services, healthcare, retail, and entertainment are all showing very healthy increases. Reach advertising revenues are also pacing up strong double-digits as are ad sales for TV One. And the Digital segment revenues are pacing up strong double-digits first quarter. So, as we move into this year, we've had a good start. There was some noise in the fourth quarter expenses, which I'll talk about in more detail later. But I think the key points are firstly, that we were missing around $13.9 million of political advertising spend in the quarter. And we made that up with some lower margin business, such as events, which obviously came with higher expenses. We also had higher sales commissions driven by increased revenues. And we had higher annual bonus and incentive plans that skewed into fourth quarter expenses. We ran almost 50% more hours of original TV program in the fourth quarter, and this led to an increased content amortization expense of TV One and our digital segment invested more in content and traffic acquisition and had higher accruals for full-year incentive-based compensation. So, the quarterly expense run rate was inflated by these various issues and isn't really fully representative of what we expect to have going forward. Consolidated adjusted EBITDA was $32.5 million for the quarter down from $41.7 million for 2020 and up from $27.5 million in 2019. Full year adjusted EBITDA was a $150.2 million compared to a $138 million in 2020 and $133.5…

Thank you. The other important topic that people want some color on is what's going on with our efforts in Richmond on the second casino referendum. Yeah. The City Council of Richmond, Virginia voted 8 to 1 to ask -- to petition the court for a second referendum to be put on the ballot for this coming November. However, that was the first step. And then there was a -- there is an effort in the General Assembly in Virginia by a state senator that represents another city, Petersburg, to actually block that referendum and move the casino license opportunity out of Richmond to Petersburg. There were two bills, one in the House, one in the Senate that would do that. The one in the House died, the one in the Senate also got killed. We've been down in Richmond following that and advocating for the opportunity for Richmond to have a second chance to vote on this. The city council also committed to offering up legislation that would reduce property taxes and specifically target casino revenues to schools and other capital projects. So, it is a different project. Even though those two bills died, there is language that's been put in the budget bill currently that would effectively block Richmond from having a second referendum this year and would not allow it to have another referendum until November of 23. And with study the viability of Petersburg as a potential location. So, we spurred this year does not look like that it will move out of Richmond. Currently this language would prohibit Richmond from having another referendum this year. But if they chose to do it in 23, there's still a lot of moving parts in the general assembly. That session goes till mid-March. There's lot of politics involved…

[Operator Instructions]. And we're going to take a question from the line of Patrick Wang with Voya Investments. Please go ahead.

Good morning. Thanks for the question. I noticed that the debt balance is down to $811,000. Does that mean that you have repurchased some of the notes in open market at this point?

No.

And also, what's the cash on hand this morning?

No. So that's just when we reported, we reported net average issuance cost so [Indiscernible]. So that's just the net number. The gross debt is $825,000 as I mentioned earlier. And I think we're in the mid-warm 30s in terms of today's cash balance. I will just pull up in a second. So yeah, no. The gross, that hasn't changed and being no purchases. And the cash balance as of this morning was about $137 million.

Okay. So, what is the timeline now -- what's going to happen next? And just kind of give us a playbook on the development of the casino project.

I think that over the next 30 days, we'll know where we sit on our chances of running a referendum in '22 versus having to run one in '23. And number of things, if it goes to '23, we got a -- there's number of other things that have to happen to secure whether it's us. Our deal with the city, doesn't go that far. So, the city's got to ultimately decide that they're okay wanting to go to '23. So those discussions are ongoing. Right now, everybody's working hard. The city and us to try to get it in '22. If where we end up is that we can't run to '23 then everybody has got to sit down and say okay, are we willing to stay committed to this project for another year-and-three-quarters. Actually, it's not a year-and-three-quarters but a year-and-a-half. And I've been in and out of Richmond pretty much every week. I was just there yesterday. So, we're working lock step with the city. They want to see this happen. Obviously, they don't want to have this opportunity move to another jurisdiction. And so, we're all working on the same page. I just say in the next 30 days, we'll know whether or not we're going to be at a run one this year. And then I think over that period, we'll probably have some clarity on whether or not the coalition all wants to hang together and pursue it in '23.

Right. So, what's the likelihood that Petersburg will get it?

I have no idea. I mean, it's not going to happen this year. But everybody wants me to handicap this. This is politics. I can't handicap. And even if I gave you a handicap, I also can't handicap the board. Right? So last go around, we had polls that said that we were -- prior to the RFP, 62% of Richmonders were in favorite gaming after the RFP process because there are a number of proposals that were proposed in middle to upper middle-class neighborhoods and people want bananas, the whole nimby thing. At the end of the RFP process, it was 47% for gaming, 45% against gaming, then after we got chosen, it was 52% to 53% for gaming. Five undecideds, and the balance against it. And then once the referendum was run, and you had a surge of conservative voters across Virginia come out, we lost 5.85 to 49.15. So, I don't want to lead anybody on that. We're working this. The political thing, the political environment right now is uncertain, but even if we get it right -- even if we get a chance to run a referendum, again, it was a 50-50 shot. So, if you own our securities or own our stock, you should really be focused on the fundamentals of the base business. Our cable networks, the return of our radio business, the digital business, which is now really starting to take flight, the value of our MGM stake, which we own. The put is at maturation. They're doing exceptionally well and think about the casino as upside, if it were to happen.

Right. Could you also talk about your strategy on radio? Before you talked about potential station swaps to get more economy scale. Is there any recent update for the plan?

Yeah. We continue to look at stuff. We're focused primarily on opportunities that allow us to get end-market scale. And we're currently analyzing a number of opportunities. We do not have a definitive agreed upon deal to do anything at this point in time. But I continue to believe that scale in the radio business makes sense. I'm of the opinion that the radio -- actually, it's not an opinion. The radio business, at least in the markets that we've operated in, have been declining over the last whatever ten years, kind of low single-digits. I think our markets, the average decline has been like minus 2%. Some markets are doing better than others. And again, I'm just looking at the market step that we're in. So, it's a slightly declining business and you can make money in it. And I'm not saying that that doesn't ultimately -- if you get further consolidation and ultimately their radio is undervalued in terms of its cost per thousand. And I do think as the industry consolidates and you've got more big players really out there harping on that and being able to deliver value for advertisers then ultimately, I think, you could get some lift in CPMs. But anyway, notwithstanding that, when you underwrite any sort of acquisition of radio, I think you need to do it from the mindset that this is going to be a business that could be declining in low single-digits. And how do you manage that? That should inform what you pay. That should inform how you're going to manage that business. And so that's what we're going through. And so, you got to look at acquisitions, I think, through those lenses -- through that lens. But I think ultimately it makes sense. I also think that it will take us out of -- not -- I'm not saying anything that we buy won't be in our format real house, but I think if we do participate in further full-scale radio consolidation, it will necessitate us going outside our traditional box of Urban radio. But that's not bad. We did that in our slop with Intercom in Charlotte, North Carolina, and that's turned out to be great for us. We now have a real cluster there that's got some scale and instead of being a market where we had $800,000 or $900,000 of EBITDA and used to just breakeven, now we have multi-millions of dollars of EBITDA, and we got a real broad offering for advertisers including Urban. I'd like to have a collection of clusters that look like that in markets. So that's where we're sitting right now.

One last question on the margins. This quarter, you have about $10 million shy of last year's EBITDA level. Is that just all because the political advertising, the lack of -- for some other one-time investment on digital side that's driving down the margins. And can we look for 2020 margin probably the higher than the first quarter because of these investments?

Yes.

Because your revenue is great.

Yeah. Revenues are great. The political obviously was high margin. That wasn't there this quarter. And if you think about the crews, for example, that was $7 million of revenue, $400,000 of profit. We were very happy with it. We wanted to run us a big scale event post pandemic and see how it went, but obviously very dilutive on margins. And then as I also mentioned, Q4 was expense heavy and is not really representative of a regular quarter. We have the TV One amortization higher. We had incentive payments that were for the full year. But we didn't know what that was going to be until fourth quarter, so they were heavy incentive payments booked into fourth quarter. So, to your point, the margins were depressed in fourth quarter unnaturally. So, we would expect to see margins generally return to historic kind of run rate.

Thank you.

[Operator Instruction] We have a question from the line of Rafe Leeman with Eaton Vance. Please go ahead.

Hi. Good morning. Thanks for taking my question. Just wondering if you could talk about your full-year guidance in EBITDA for '22, just some of the puts and takes, what could go better or worse, and with it being political, why you see it being down year-over-year?

Good question. Our digital business has exploded. I think the budget last year was $30 million give or take and we did close to 60. Like high 50s. So, this is a business that we started in 2008 and we struggled with it for a very long time. Now digital publishing is hard because it's switched from being website domain oriented, then to search oriented then to social oriented. And now, every time any one of the big platform’s changes in algorithm, it changes your audience size. Contents expensive. You got to give Google and Facebook a large part of your revenues. So, for years and years and years, this business either broke-even, lost a million dollars or made a million dollars. Prior to going into the pandemic, we started to cut a lot of expenses. We made I think $900,000 in 2019, correct me if I'm wrong, Peter. We had a low expense base. Going into the pandemic, we trended some more, although be it not as much as other places. But then you got this uplift in African American audiences, target, social equity, and demand started to really increase dramatically. And then we made $6 million, I think in 2020 in the pandemic. Going into '21, we were like okay. And by the way, traffic has been the same or declining. We didn't know where the demand was really going to go to. '21, the demand was even stronger, right? And so, we ended up making like $17 million last year. So quite frankly, the answer is, we're budgeting for digital to go down just because we don't know where that demand is going to peak. We don't know how much of it; it is a moment of time -- moment in time. I do believe that the paradigm has shifted as far as advertisers wanting to put dollars towards this audience and towards minority owned entities. But I just don't know when it levels off if it declines, etc. So, we budgeted digital down and so that's -- and yes, we do have political, and I just don't know, but quite frankly, we took digital down from $17.5 million performance to a $10 million budget, that's a big number. Ironically though, it's actually doing really well in Q1. So, there is potential upside. We're just allowing -- we're allowing for there to be some withdraw of the extraordinary demand that we've seen. So that's how we're thinking about it. And political could be off the chart as well. And I think Peter articulated that there could be upside there. You want to --

Yeah, I mean, look segment by segment, Radio properties we're anticipating higher revenues and our adjusted EBITDA year-over-year in 22 and the same to TV One. Incredible performance, great ad sales growth. We expect EBITDA growth this year. So really what Alfred is saying is when we kind of balance out all the segments, we're least certain about digital. It's a newer business. So, it's been growing like a weed. How long can we continue that? And there are more factors at play about how many impressions can we deliver? What's traffic doing and who is changing their algorithm? So, we kind of dialed that back as Alfred said, but to your point, the other segments with forecasting in that guidance [Indiscernible] to be up.

And so, look, here's the thing. You'll know what we print in Q1, right? You can track how we're doing quarter-to-quarter. So, at some point in time, people will be at a figure out how they're going to, they're going to do better than this 145 to 150. We contemplated not giving guidance at all. But people kind of like to know something. And so, we felt comfortable putting out 145 to 150. We also don't know what's going to happen in the world, right? In terms of now as they're going to be a recession. And is there going to be fallout from what's happening in Europe. But anyway, that's how we came to guidance. And I'd get one could argue that we should do better, right, than our guidance.

Maybe just to -- yeah, that's helpful. And maybe just on political to drill down a little bit. Many folks talking about mid-term election cycle versus presidential and typically that's lower, but a lot of folks are thinking it. At least certain markets could be equal or maybe even more. Where do you guys come out on that, do you think?

When -- look, we kind of look back in four-year cycles, 2020 was obviously exceptional. And if it's anything like that, then we're going to beat our number. I think when we go back and look at 2018, we did about $7.4 million net and we're thinking it'll be somewhere in that zip code, give or take a million, but it could go -- that's what we baked into our guidance on our budgets. But if it ends up being more key into 2020 then we will beat that. The previous high watermark we've had just for reference was in 2012, we did $9.1 million, so we did -- in 2020, we did about $18.9 million net and in 2012 products that we did $9.1. So, there is some bookends as to where it could go.

Okay. Great. Maybe if I could one more, you talked about some of the -- some of the one-off expenses, but I didn't necessarily hear in there I think inflation. I don't know if there's anything supply chain related, but maybe just more inflation or maybe on the wages. Anything to mention there?

Yes, we did do salary increases midway through last year from memory and that's the first time in a long time that we've done across-the-board increases. So yes, that will drive expenses up. And obviously there is inflationary pressures on various things. I think for us, we're pretty fixed cost base.

And most of our escalators in our agreements are very low-single-digits. Stuff that we've been having negotiate over time. We got away from the CPI escalator a lot of years and focused on trying to get things to be 1%, 2%. I don't know all our contracts or remember all our contracts off the top of my head but if there's a 2.5% number in one of our contracts, that's the outlier. We long ago rejected that 3%, 4%, and 5% increases were --

[Indiscernible].

Yeah. They weren't the norm because there was no inflation for a long time. And so, we spent a lot of time negotiating those down and --

Got it. Sorry. I said that my last question but you -- but I did pick one more when you mentioned in your last answer. What could happen in the world in recession, etc. Any comments on kind of how your business would be affected in a recession maybe, versus some other similar types of business. Do you guys tend to be a little more resilient?

I mean, if well, -- I mean, look, we sell advertising, right? Yes, I mean so -- yeah -- and it depends on what kind of recession. The recessions off the top of my head, that I remember like 2009, 2010, and then the pandemic sort of catastrophic economic meltdown recession, right? Not just like GDP is gone backwards by 1%. And so, we -- we're a management team that does what it takes in order to get to the other side, we had a lot of debt. I mean, I think at point in time we were close to nine times, and we've cut that ratio in half without having any sort of major issues with debt holders and things of that nature. So, I think the management team is willing and used to doing what it takes to keep the company on a good financial footing. But our mix of assets, I think protects us. Our diversification against a number of things, certainly during the pandemic, our radio business in April after the pandemic really started in full force, was down 70 plus percent. I mean, it was unbelievable. And you saw the radio companies, you saw their EBITDA get cut by more than half. And we actually ended up doing okay on the other side of that, even though we all took pain, we all took salary cuts and stuff like that, and we got through it. And a large part of that is because our cable television business flourished, and our digital business did well. We've got over $500 million - ish of revenue, $100 million of that is from subscription fees, from affiliate fees from cable television operators that aren't prone to swings in the economy, prone to churn, but not the swings in the…

Thanks for taking all my questions.

Operator, we've got time for one more.

Our next question will come from the line of Sundar Varadarajan with Lord Abbett. Please go ahead.

Hi, thanks for squeezing me in. Just wanted to kind of step back and maybe in have you discussed a little bit more about what your ultimate leverage targets are, and then put that in the context of, you mentioned, authorization to buy back stock, as well as you evaluate this referendum, what happens if in 30 days it doesn't look like it's going to happen in '22 but there's a chance that it may happen in '23. Are you still point a hold on to the cash until you figure out what happens in '23? So, if you could give us some timeline or running that would be very helpful.

Yeah. Look I have to think -- I haven't said here and thought through all of that but just off the top of my head, if it ends up being that it's going to happen in '23 and if we hold the coalition together and we're going to move forward and support it in '23, company generates a lot of cash. So, there is an opportunity for us to pay down debt, buy some stock back if we choose to, even do some opportunistic M&A and still be in a position to make the $100 million investment that we need to for the casino. So, no, we won't just hold on to the cash, right? We're paying 7 and 3/8 on our debt and we'd like to continue to increase our free cash flow generation. So -- these assets generate a lot of free cash flow, so I would feel comfortable whittling down the balance sheet because I know we'll still be in position to execute on the casino opportunity.

Got it. And then in terms of your leverage targets for the core business, where do you want to get to before you say you've done enough and move more towards equity returns?

I don't want to see a six handle on our leverage ratio again, right? And we're at 4.5 now. And if we do nothing, it's going to be below four by the end of the year. We'll probably be in the high 3s by year-end if we don't it -- if nothing happens. That's a great place to be. And so, I'm not saying that we wouldn't consider doing something that took the leverage up to five to do something in the very short-term that we thought was going to get us back down quickly, strategic. But I got to tell you where I want to be for the long term is I want to be below four, and I want to stay there. And so that's how I think about it. I don't think -- and again, we sell equity, right? So, I mean, we've done it, we will do it we'd like to do it opportunistically. I mean, we bought back probably over half the shares of this company, over a 10-year period. And we've bought them back at prices that like when nobody else -- when the world, they think the world's ending, people think the world's ending and we have a real good viewpoint on our business. And what we are actually able to do with it, we've been opportunistic, and we bought back shares at very low prices, I think during the pandemic, we bought forgotten how many shares it was, almost 4 million shares at $0.76. And so, turnaround and then selling those shares at five bucks is a great trade. But at the end of the day, I'd like to see this company go below four. And I don't ever want to see a six handle again. And I would try to avoid anything with a five handle if it wasn't just for a short period of time in order for us to work through an integration of an acquisition that eventually got us back down into the fours and on the path to go below four.

Good. Just one clarification point on that when you said strategic transaction that could get to at or close to five times on a -- for a short-term basis. Do you also -- do you include the gaming investment as part of that? Or when you say strategic, you're talking more within the quarter?

That's an extraordinarily good question and I hadn't really thought about that. I don't -- I don't want to answer that because if $100 million goes out the door and then -- look, I'm riffing here, but if $100 million goes out the door, then that's going to make our leverage ratio X. We're going to take that into account in whatever M&A opportunity that we're looking at that time. So, if we send $100 million out the door for the Richmond casino and then there's an M&A opportunity and then all of a sudden, in order for us to do that, our leverage is looking like 5.8 or 5.9 or, God forbid, 6 times, we're probably not going to do that transaction with all cash. We'll probably do it in a way that our leverage is lower. Now, by the way, if we're sending $100 million out the door to do the Richmond casino, our stock's not going to be $5. Our stock's going to be something way higher because the market has shown when they thought we were going to get it last time, that they're willing to give us some value for that ahead of it actually being open. And so, we'll have other tools at our disposal to manage our leverage. Does that make sense?

Yeah, I know that. That makes a lot of sense. Thank you for that clarification.

Okay. Operator, thank you very, very much for your help with today's call. Everybody, thank you for attending. Thank you for your support. And as I always say, Peter and I try to be exceptionally accessible offline. So, feel free to send an e-mail or blow in a call if you missed a question or think of something later that you need answered. And thank you very much and see you next quarter.

Ladies and gentlemen, that does conclude our conference for today. Thank you again for using the AT&T teleconference service. You may now disconnect. Thank you, everyone. We're sorry. Your conference is ending now, please hang up.