Hello. Thank you for standing by. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the iHeartMedia Q1 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Mike McGuinness, Head of Investor Relations. You may begin. .

Good morning, everyone, and thank you for taking the time to join us for our first 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. 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 morning, everyone. We're pleased to report that our first quarter 2024 results were in line with our previously provided adjusted EBITDA and revenue guidance ranges.

As expected, we saw February and March improved over the January pace of business, although the marketplace continues to be dynamic with a changing outlook on interest rates, inflation trends and global and domestic uncertainty, we remain confident that this is a recovery year, highlighted by the strong momentum in our podcast business and the sequential improvement of our multi-platform group's year-over-year adjusted EBITDA performance.

We also see material upside from political advertising in the back half of the year and the benefit of our ongoing focus on cost efficiencies as well. Now let me take you through some of the key financial results of the quarter.

In the first quarter, we generated adjusted EBITDA of $105 million in the middle of the guidance range we provided of $100 million to $110 million. Our consolidated revenues for the quarter were down 1.5% compared to the prior year quarter, within the guidance range of flat to down 2%.

Our Q1 free cash flow was negative $81 million, a significant improvement compared to the negative $133 million in the prior year. As a reminder, Q1 is our seasonal low point for free cash flow in the year, and we will generate positive free cash flow in each of the remaining quarters in 2024 with each quarter increasing sequentially.

We anticipate our full year free cash flow to be significantly higher than last year. Turning now to our individual operating segments. The Digital Audio Group generated first quarter revenues of $239 million, up 7% versus prior year and represented 30% of the company's total revenue.

For the quarter, the Digital Audio Group generated adjusted EBITDA of $68 million, up 26% versus prior year. The Digital Audio Group's adjusted EBITDA margins were 29%, up from 24% in Q1 2023, marking the Digital Audio Group segment's highest Q1 EBITDA margin ever. Within the Digital Audio Group, our podcast revenues grew 18% versus prior year.

Podcasting continues to be the hottest new consumer medium, and we are the leader in that medium and every key metric, audience, revenue and earnings.

Podcasting remains a strong growth engine for the company, and our financial discipline and podcasting expenses continues to pay off as our podcasting EBITDA margins remain accretive to our total company adjusted EBITDA margins. In March, iHeart was once again ranked the #1 podcast publisher in the U.S.

with more monthly downloads than the next 2 largest podcast publishers combined according to Podtrack. Our leadership position in podcasting is in part the result of the power of our broadcast radio assets.

As a reminder, we've used those assets to build not only the podcast business, but also the iHeartRadio app, which is the #1 digital radio service and our marquee live events business, which includes the recent iHeartRadio Music Awards and the iHeart Country Festival.

In addition to our industry-leading podcast business and our digital radio streaming service, which has 5x the listening of our closest competitor, we also have the largest social footprint of any audio service by a factor of 7, and we operate 3,000 national and local websites to reach more than 110 million people in the United States each month all of which represent additional opportunities for our advertising partners to interact with our highly engaged consumer base and provide additional revenue growth for the company.

Turning now to the multi-platform group, which includes our broadcast radio networks and events business. In the first quarter, revenues were $493 million, down 6.7% versus prior year and down 7.6%, excluding the impact of political advertising.

Adjusted EBITDA was $77 million, down 11.3% versus prior year, and this represents a substantial sequential quarterly adjusted EBITDA improvement from down 38% year-over-year in Q4 2023.

iHeart continues to be ranked #1 in radio audience in more markets than the next 2 largest radio companies combined, and our events business continues its strong momentum.

For example, the iHeartRadio Music Awards generated 84 billion social impressions, 3x more than the Super Bowl and 2.3x more than the Grammys, and we've continued to make meaningful progress in the development of our programmatic platforms that enable the automated buying, selling and planning of our broadcast radio inventory, which give our broadcast radio inventory exposure to the digital TAM.

Looking at the business as a whole, we had our first quarter of year-over-year adjusted EBITDA growth in 5 quarters, driven by the substantial sequential year-over-year improvement in the performance of all of our segments, the multi-platform group, the Digital Audio Group and the audio and media services group, positive indicators of a recovery year.

In addition to continuing to build out our business and develop new consumer and revenue opportunities, our management team remains focused on expense management driving efficiencies and structuring our business using technology, including AI for long-term profitability and to maximize shareholder value. And now I'll turn it over to Rich. .

Thank you, Bob. As I take you through our results, you'll notice that, as Bob mentioned, our first quarter 2024 results were in line with our previously provided revenue and adjusted EBITDA guidance ranges. Our Q1 2024 consolidated revenues were down 1.5% year-over-year, in line with the guidance we provided a flat to down 2%.

Our consolidated direct operating expenses decreased 0.9% for the quarter.

This decrease was primarily driven by lower variable content costs, lower event costs related to the timing of the 2024 iHeartRadio Music Awards, which were on April 1 this year and March 27 last year, partially offset by higher third-party digital costs related to the increase in digital revenues.

Our consolidated SG&A expenses decreased 4.4% for the quarter. This decrease was driven by lower marketing expense due to the timing of the 2024 iHeartRadio Music Awards and lower variable bonus expense, partially offset by an increase in certain costs incurred in connection with the execution of our cost savings initiatives.

We generated a first quarter GAAP operating loss of $34.7 million compared to a GAAP operating loss of $48.9 million in the prior year quarter. Our first quarter adjusted EBITDA was $105 million, up 12% compared to $93 million in the prior year quarter and within the guidance range we provided of $100 million to $110 million.

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 first quarter, the Digital Audio Group's revenues were $239 million, up 7% year-over-year, and they comprise 30% of our first quarter consolidated revenues.

The Digital Audio Group's adjusted EBITDA was $68 million, up 25.9% year-over-year and our Q1 margins were 28.5%, a year-over-year increase of 428 basis points. This was the highest Q1 EBITDA margin for the digital audio group in our company's history.

Within the Digital Audio Group, our podcasting revenues, which grew 18% year-over-year and our non-podcasting digital revenues, which grew 1.2% year-over-year. The multi-platform Group revenues were $493 million, down 6.7% year-over-year or down 7.6%, excluding the impact of political.

Adjusted EBITDA was $77 million, down 11.3% year-over-year, and this represents a substantial sequential improvement from down 38% year-over-year in Q4 2023. The multi-platform Group's adjusted EBITDA margins were 15.6%. Turning to the Audio & Media Services Group.

Revenues were $69 million, up 12.7% year-over-year and adjusted EBITDA was $24 million, up 54% from $15 million in the prior year. Excluding the impact of political, the Audio & Media Services Group revenues were up 6.1%.

At quarter end, we had approximately $4.86 billion of net debt outstanding, which was the lowest net debt position in the history of our company. Our total liquidity was $788 million at quarter end, which includes a cash balance of $361 million. Our quarter ending net debt to adjusted EBITDA ratio was 6.9x.

And in 2024, we expect to make progress towards our goal of a net debt to adjusted EBITDA ratio of approximately 4x. As highlighted on past calls, we have no material maintenance covenants and no debt maturities until May 2026.

We continue to be opportunistic in responding to market developments and are evaluating all opportunities surrounding our capital structure. In aggregate, we now have repurchased $534 million of our 838 senior unsecured notes at a meaningful discount to their par value, generating both earnings and free cash flow accretion.

This has reduced the outstanding amount of 838 senior unsecured notes from $1.45 billion to approximately $916 million, resulting in an aggregate annualized cash interest savings of approximately $45 million.

In the first quarter, our free cash flow was a negative $81 million, a significant improvement from negative $133 million in the prior year quarter. And our Q1 2024 free cash flow excludes the positive impact of the $101 million of cash proceeds from our equity stake in the sale of BMI that we received in February.

As a reminder, Q1 is our seasonal low point for free cash flow in the year, and we will generate positive free cash flow in each of the remaining quarters in 2024.

Our free cash flow for the year will also benefit from the presidential election cycle, which we expect to generate robust political advertising, which, as a reminder, is paid upfront and will help fuel our free cash flow generation, particularly in Q3 and Q4. Turning now to our outlook for Q2.

We expect our Q2 2024 revenues to be approximately flat year-over-year. We are still closing the month of April, but expect revenues to be down 0.4%. Turning to the individual segments for Q2. We expect the Digital Audio Group's revenues to be up high single digits.

We expect the multi-platform Group's revenue to be down mid-single digits, a sequential improvement from Q1, and we expect the Audio and Media Services Group revenues to be down low single digits. We expect to generate second quarter adjusted EBITDA in the range of $140 million to $160 million compared to $191 million in the prior year quarter.

For this quarter, we will not have our usual flow through of revenue due to the timing of the iHeartRadio Music Awards, which occurred in Q1 last year and in Q2 this year. We recognized expense associated with the event, including production and marketing costs when the awards are added on Fox and streamed on Hulu.

Turning to some of the items affecting our full year free cash flow. We expect our cash taxes to be approximately 10% of adjusted EBITDA in 2024. Our estimate of full year 2024 capital expenditures is expected to be approximately $100 million.

Cash restructuring expenses will be approximately $60 million this year as we continue to execute on new opportunities to optimize our organization for efficiency and growth. As Bob mentioned, we continue to see signs of improvement throughout our business and the broader advertising marketplace.

And as we look ahead, we expect to generate significant political revenues as a result of the presidential election cycle.

Although most of the political revenue comes in the back half of the year as an early indicator, our full year 2024 political revenues are currently pacing approximately 16% higher than the last presidential election cycle when we generated $167 million of political revenue.

With that context, we expect to see a significant year-over-year improvement in our full year adjusted EBITDA performance. On behalf of our entire management team, Bob and I want to thank our team members who work to deliver for their communities, our advertising partners and for iHeart every day.

Now we will turn it over to the operator to take your questions. Thank you. .

Thank you. [Operator Instructions] There are no questions at this time. I will turn the call to the speakers for closing remarks. .

Well, Bob and I and the entire management team, again, I would like to thank you all for taking a few minutes this morning to listen to the iHeart story. And we are available anytime for any follow-up questions. Again, thank you all. .

This concludes today's conference call. We thank you for joining. You may now disconnect your lines..