Ladies and gentlemen, thank you for standing by and welcome to the Urban One’s 2020 First Quarter Earnings Call. As a reminder, this conference is being recorded. We will begin this call with the following Safe Harbor statement.

During this call, Urban One will be sharing with you certain projections and other Forward-Looking Statements regarding future events or its future performance.

Urban One cautions that certain factors, including risks and uncertainties referred to in the 10-Ks, 10-Qs 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 May 28, 2020. 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 in 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.urban1.com. A replay of this conference call will be available from 12:00 p.m. Eastern Standard Time today May 28, 2020 until 11:59 p.m. May 31, 2020.

Callers may access the replay by calling 1 (866) 207-1041 or 402-970-0847 with the access code 4774576. Access to live audio and a replay of the conference call will also be available on Urban One 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..

Thank you operator and welcome to our Q1 conference call. Also joining Peter and I are the CFO of TV One, Jody Drewer; our General Counsel, Kris Simpson; and our Chief Administrative Officer, Karen Wishart. You got the press release.

I don’t think that, there is a ton of new information other than what our EBITDA ended up being in Q1, which we were happy that we were able to improve it. You know that Radio for us started off Q1 great in January and February.

And you are certainly well aware of what happened in March and we talked on the year-end conference call about the things that we have done to offset the effects of closures due to the pandemic. And all of those things are in place.

I think that we have, they say if you do something to in preparation or a fear of calamity actually go a step further and do more because you probably haven’t done enough.

And I think that, we took that approach as it related to our cost base going into Q2 and we did enough such that we felt that a under a number of stress-tested scenarios, we were going to be compliant with our debt covenants, which was paramount to us.

We want to continue down our path of de-levering and paying down debt and we think that, we are in that position, still in that position. Peter is going to talk you through the numbers. I think that Q2 is coming out where we thought it was going to be in terms of pacing kind of down high fifties.

We have not yet seen a bounce back from the planned or actually the re-openings that are in some state of progress now depending on what jurisdiction in June. We haven’t seen that effect yet. However, what I can say is that, in May and Peter would give you the exact numbers is that we added beyond money during May, a good portion of the days of May.

So, we are hopeful that we will do the same in June and now it is really about what the bounce off the bottom looks like and the recovery which none of us really grow now.

But we are prepared to whether our casino investment at MGM shutdown, so there is zero contributions from that starting in mid-March, you are starting to see casinos open up around the country.

I think Louisiana opened up and I think it was a Montana or Wyoming, one of those years South Dakota, one of those Northern Midwest states that opened up kind of first. And now they are talking about Las Vegas starting to open up in the first week of June. I do not know when Maryland is going to open up.

If I had to guess, I would say that it would probably be sometime in June and at some sort of reduced capacity. One of the things to remember is that our income off of that is gaming revenue off the top. So, when that does happen, we will see immediate contribution, we don’t have to wait for the actual EBITDA to bounce back.

But certainly the value for all businesses will be impaired for this COVID period this year. And, look, we are optimistic and hopeful that we will come out this just don’t know at what rate, but we are super focused on maintaining our liquidity, cost control, grabbing kinds of revenue shares, that we are used to even in a declining market.

And then ultimately looking for, are there any opportunities to create value or EBITDA through any sort of consolidations and things like that. I don’t think that any of that stuff is really on the table now, because people really kind of want to figure out where they are going to be at, in terms of recovery.

But I do believe that there should be some opportunity there. Certainly people are going to be worse off by the end of this year than they had planned to question is to what degree and that ultimately should create some sort of catalyst for people to want to do more into work in terms of finding extent synergies with competitors, et cetera.

We have been using exploring some options for our new cable network CLEO to see if there is a way to find some synergies with some other partners there as well. Nothing to do at this point in time, but it is kind of stuff that we are looking at.

There is a lot of conversation about, should there be more radio consolidation? The answer is, yes, there should be more radio consolidation. The entire industry is going to be levered higher than it had been in the past, after many folks come in through bankruptcies.

And so, I think people should really start to take a really harder look at which combinations yield the highest possible operational synergies. But, again, that is a conversation, I think, as people get into Q4, and see what the year-end performance and numbers are going to look like.

So with that, I will turn it over to Peter Thompson to go deeper into the numbers. Peter..

Thanks, Alfred. So net revenue was down 3.6% or the quarter ended March 31, 2020, at approximately $94.9 million. Radio segment net revenue was down 5% in the first quarter. National advertising sales were up 1.9% while local ad sales were down 5.7%.

On the same station basis, which excludes Detroit radio segment, net revenue was down 0.7% and excluding political advertising it was down 5.7%. Net revenue for Reach Media was down by 4.1% in the first quarter, and their adjusted EBITDA was up by approximately $226,000 year-over-year.

Net revenues for our digital segment decreased by 15.4% in Q1 and adjusted EBITDA for the digital segment decreased by approximately $909,000. And this was due primarily to 2019s major tent pole events, the Image Awards not recurring in 2020.

We recognized approximately $47.5 million revenue from our cable television segment during the quarter decreased 0.7%. Cable TV advertising revenue was 4.2%, driven by increased delivery, and also to CLEO TV was up approximately $100,000 year-over-year.

Cable TV affiliate revenue was down by 4.6%, with rate increases of approximately $1.3 million being offset by churn of approximately $2.6 million. Cable subscribers, as measured by Nielsen finished first quarter 2020 of $51.8 million down from $52.2 million at the end of fourth quarter 2019.

We recorded approximately $1.4 million of cost method income less administrative expenses for investment in the MGM National Harbor property for the quarter, which was down 17.2% from last year. And this decrease is a direct result of the casino closure due to COVID-19 Maryland State mandates.

Operating expenses excluding depreciation and amortization, impairments and stock based compensation decreased by $9.3 million, or 12.4% to approximately $65.6 million first quarter. Non-cash expenses were down by approximately $900,000 due to onetime adjustments and they are excluded from adjusted EBITDA. Radio operating expenses were down 4.8%.

Radio SG&A expense line was down 5.8%, primarily from lower revenue variable expenses, such as sales commissions and national rep fees, as well as nonrecurring stations events. Radio programming and technical expenses were down 3.2% mainly from the discontinuation of radio stations in the Detroit market.

Reach operating expenses were down 10.3%, programming and technical expenses were down 15.9% driven by lower talent compensation expense. Reach SG&A expenses were up 13.8% due to an increase in affiliate station compensation expense for the quarter. Corporate SG&A expenses reached down at 11.5% due to staff compensation savings.

Operating expenses in the digital segment were down 5.4% driven by support cost savings and our digital hub. Cable TV expenses were down 22% year-over-year, programming expense decreased by approximately $3 million driven by the absence of imaging wounds in the quarter and fewer premiere hours.

Operating expenses in the corporate and elimination segment were down by $1.25 million, including a favorable variance of $700,000 for non-cash adjustments for the Company’s employment agreement award liability, which is excluded from adjusted EBITDA.

Net of those adjustments corporate SG&A expenses were down approximately $600,000 driven by the reversal of accrued bonuses and non-recurring third party cyber attack remediation expenses from the first quarter of last year.

The first quarter, consolidated broadcast and digital operating income was approximately $37.6 million, up 12.8% from $33.4 million in 2019. Consolidated adjusted EBITDA was $32.3 million, an increase of 16.4% year-to-year.

Interest expense was approximately $19.1 million for the first quarter, compared to approximately $20.8 million for the same period in 2019, a decrease of 8.1%. Company made cash interest payments of approximately $13.9 million on its outstanding debt in the quarter.

The senior unsecured term loan was paid down by approximately $11.9 million during the quarter, and the Term Loan B was paid down by approximately $824,000, $27.5 million was drawn from the revolving assets backed line of credit as a preemptive measures to improve liquidity during the pandemic.

The senior term loan balance increased by picking interest of approximately $518,000. Company recorded a non-cash impairment charge of approximately $47.7 million for Radio market broadcast licenses, as well as $6 million in total goodwill assets for Atlanta and the Indianapolis markets.

These non-cash impairments resulted from changing market assumptions as a result of COVID-19. Benefit from income taxes was approximately $21.9 million in the quarter and there were no cash taxes paid during the quarter.

Net loss was approximately $23.2 million or $0.51 per share, compared to net loss of approximately $3.1 million or $0.07 per share for the first quarter of 2019. First quarter CapEx were approximately $1.4 million, compared to $707,000 last year.

During the quarter, the company executed a stock-based tax repurchase of 547,801 shares of Class D common stock in the amount of approximately $1 million. For covenant purposes, pro-forma LTM EBITDA was approximately $137.5 million. Net senior leverage was 4.6 times against the covenant test of 5.85 times.

Net debt was approximately $839.3 million, this compares to $138.1 million of LTM reported adjusted EBITDA for total net leverage ratio of 6.08 times. I’m going to go into a little bit of detail on what we are seeing in Q2 at this time from Alfred point.

So, on the same-station basis, April Radio revenues finished down approximately 58% and the second quarter overall is pacing down by around 58% as well.

In order to combat the steep and sudden revenue decline, primarily in our Radio division, Company has taken a swift actions to protect the Company and ensure a continuous liquidity and debt compliance, including drawing the $27.5 million from the asset bank line of credit aggressively cutting or delaying costs.

We have reduced second quarter expenses by almost $30 million since the beginning of March, nine million of that is a result of delaying the Tom Joyner Fantastic Voyage cruise. Another $2 million from the cancellation of radio stations events.

Eight million of those savings is employee expense reductions through a combination unfortunately of layoffs those take up about four million which are expected to be temporary in nature.

4.5 million is for reduced or delayed marketing spend, 2.5 million of savings is lower commissions and rep fees, about $1 million those Q2 savings is in TV programming content. A 1.5 million is in travel and office expenses.

And we expect to continue these cost saving measures through at least the third quarter depending on the return of normal advertising revenue. Alfred had mentioned the radio ads in May. What he was speaking to that was back in April, the cancellations on a daily basis were outweighing the amount of revenues booked in radio.

And so far since Corona Virus hit we have had roughly $14 million of cancellations across the radio provinces. But we saw in May positive ads of 15 out of 16 days where the advertising sales outweighed the cancellations. So to Alfred’s point, I think we found the flaw and we are actually managing to add advertising dollars..

Thank you, Peter. Operator, let’s open it up for questions, in hopefully this call we will actually get - have some questions and we apologize about the access code snap on the last conference call. So here goes nothing. Operator..

[Operator Instructions] We have a question from Ben Briggs (INTL FCStone). Please go ahead..

Good morning guys. Thanks for holding the call and for taking the questions. I have got a few that I want to run through here really quickly. So first of all, just kind of, I know you are probably looking out a little bit here. But just on eventually you guys are going to have to address capital structure and refi.

And assuming that the revolver that comes due in 2021. Is it going to be too much of an issue to extend out? The next one coming up is the seven and 38 notes due in 2022. I know typically, I know typically Alfred, it is been your preference to not have things become current obligations on the balance sheet.

Is it safe to guess that that is going to be your preference here as well? Or are you going to wait possibly until like mid 2021 to address those just because of all that is going on in the world right now?.

Yes.

Do you want to answer that?.

Yes. look, I think, obviously we are thinking about it. And this is a pretty big bump in the road from a timing standpoint of refinance and those out. Specifically, I don’t think the revolver/ABL is going to be an issue to renew, given that asset class and those assets significantly ahead in value in terms of the draw and capacity there.

So, I don’t think that is an issue. I think what gets to be an issue is the seven and 38s and so, by the end of the Q1 next year, it would be good to have taken care of that.

To your question, if we have to, if we get to that point, and for whatever reason, market conditions are not favorable, we could go turn with that we have had those conversations with the auditors and providing they are happy that we have a path ultimately to refi it, don’t think that that in and of itself is the issue.

Look, we are a long way out from it and to answer your question Alfred could jump in our preference is not to have that go current, but we have explored that..

Yes. Look, we spent a significant amount of time with our auditors going through our going concern this last go around. And we laid out a plan that says we are going to be in compliance, so we feel good about that. So, we were actually going to go and do a refi after our year-end print.

I mean, literally, we were weeks away from teeing up a refi when COVID happened. So we were going to go early, right. The market was favorable.

So now, my biggest issue is we are going to have this COVID hole in our earnings, and look my experience has been that markets don’t really if they can take advantage of you in a position of weakness economically, they do it right.

And so, quite frankly, and I get it, we want to give ourselves as much runway as possible to get off a refi that is reasonable right, you know what I mean. And so, if we don’t have to, we are not going to go and print a desperate refi and hang the Company with an even more owner of capital structure.

We have done, as a management team we have done everything that we said we were going to do, we have been paying down debt, even through this, we have managed our expenses, et cetera.

So the answer to your question as Peter said, I would reiterate, we prefer not to go current, but I’m more concerned about not having a qualified audit opinion and we have worked out with our auditors and we know how much runway we are going to have and that runway would push us further into 2021..

That that reasoning makes a lot of sense, yes..

So talk to your fellow investors and you are just starting to say, hey, look, that is a good management team doing what they are supposed to do. Let’s give them a COVID reprieve..

Yes, I will send you guys over a few of my reports. I hope you like what you say. Yes, of course, of course. I have got a couple more here if you guys don’t mind.

So just touching on touching on the Cable TV, so I noticed previously you provided a little bit of guidance on what the contracted affiliate rates were going to be whether increases or decreases.

Can you just refresh my memory?.

They increase every year at a mid single-digit growth..

Okay. Alright. Thank you. And that is still the case and there is - what I want to make sure is -..

That is still the case, but unfortunately, and everybody who invests in cable networks knows, that gets offset by the higher churn that kind of nobody has expected five years ago. But look, it is better than not having it and still having the churn. So, our affiliate lines stays reasonably stable, which is a good thing you know..

Yes. I know it. It is definitely a good thing.

And then what about - are there any contracts that you guys have with cable providers that are going to be coming up for renewal in the near-term?.

Our next one is Verizon that happens later this year. Yes..

Okay.

And then what about after that?.

Not until 2023, is that right, Jody?.

2021..

Well MTC, which is super small for us is 2021. But, charter doesn’t come up till 2023. And Comcast and AT&T don’t come up to 2025 and 2026..

Okay. That is very helpful. Thank you. And then next thing here is, so you had talked about the consolidation a little bit. Was that more like, hypothetically speaking you guys are always -..

Look, I mean, we are always looking for it. We try to be rational actors and we have been buyers and we have been sellers depending on what makes sense to rationalize the portfolio.

Are they enough prior to COVID, I got to tell you, investors that we talked to were more bullish on Radio as an industry than on Cable TV, right and more bullish than I have seen in a long period of time.

And quite frankly, I would argue that, investors are still kind of bullish on Radio even with the idea that a lot of the pure play radio companies are going to be levered extremely high this year with COVID, because people’s stocks have been holding up reasonably well, in fact, moving up significantly, right.

And so, but fact of the matter is once COVID happens and I’m just going by what I have seen in the analyst report, people are predicting higher levels of leverage in the Radio industry this year and next year. It just kind of makes sense that it is possible people consolidate and reduce expenses.

Now whether folks get religion on that, I mean, I don’t know, but that to me is sort of the rational outcome of the situation that we are in. But, it is typically been difficult to get Radio folks to see eye-to-eye on value. But we will see, this is a different scenario. But look, leverage goes - excuse me - the world becomes more normal again.

I think what people like about Radio is that the disruption, the digital disruption that has largely happened already, right. And so there is a level of stability. Even if you view that stability as a slow melting ice cube, at least it is a slow melting ice cube, right.

And so yes, I mean, we are open to looking at that as we always have been and we are always looking for an opportunity to deliver and increase value..

Okay. That is very helpful. And then I have got just a couple of real quick ones, I will rattle them off all at once. So first of all, can you give me a cash from ops number, I know you gave 1.4 million of CapEx.

Can you give us a cash from operations number just so we can calculate free cash flow for the quarter? And then second one is what was the total amount of cost savings, did you provided in the scripted portion? And then finally, any -..

Sorry Ben, what was the second one?.

The second one was what was the total cost savings number that you guys provided in the scripts? And then the final one was, what is if any second quarter EBITDA guidance, you can get would be awful. I know you may not like it give guidance just considering all this going on. But any guidance you could give would be helpful..

I mean, if things are moving around, we don’t want to do that. I mean I will put it this way. We are going to have ample covenant cushion. But we don’t you know - and put this way, it is not going to do anybody any good for us to give guidance. It is not going to mean anything to anybody, because it is going to be an ugly number compared to last year.

And so I think the thing that investors should know is that, we are not going to have a covenant issue in Q2. And it won’t be by a little bit..

And then the number I have mentioned was, it is just under $30 million of savings for the second quarter that we have seen since the start of March. And then we are going to put our 10-Q out, which will have the cash from operations in there. I don’t have that finalized number in front of me Ben, but we will put that out.

You will see and if you want to circle back, we are happy to talk through that..

Perfect. I appreciate that. It has been very helpful. That is it from me and good luck guys. Thank you..

Thank you.

Our next question is from [Solomon Alexander] (Ph). Please go ahead..

Good morning gentlemen. I wanted to ask, are there any other internal risk assessments have been done.

Because if COVID-19 resurges for the end of third or the beginning of fourth quarter, will we have different - will the Company function in a different manner going forward? Second part to that question, do we have any other law to London policies or things of that nature to help us in this catastrophic type of environment were in?.

Yes. We do not have any policies that - we have asked a question. Our business interruption policies don’t cover this pandemic in any significant way. Is that correct? Well, of course you are..

So there is some possibility of coverage under some state legislation, but what we are seeing most of it is going to be targeted towards smaller businesses, i.e. under 250 employees. So at this point we are acting on the assumption that won’t be covered..

Yes. So that is where a state is going to basically tell insurance companies that they got to cover these guides. .

Correct. There are actually some issues there. There are actually some constitutional issues that could be implicated. So, even if that legislation is passed, if not, there is no guarantee that would work out..

We are operating assuming that we won’t be covered, right..

Correct. Although we are tracking everything that would allow us to make a claim. We think that the losses resulting from viruses are generally excluded from policies. That may get challenged in the course. And if it does, we will at least have all of our notes ready to go..

And look, I mean, and no, we don’t really - I mean, we stress test Q4 down to some numbers, but, if you have a repeat in Q4 of what Q2 looks like, today we are not prepared for that. But I don’t think anybody is. I mean, all I do is watch the news these days and read business information and stuff and everybody is expecting some sort of bounce back.

I mean I have no idea what a repeat of what happened in April looks like right..

I mean, to your question, we are obviously able to operate remotely and have been doing so since mid-March. We are obviously operating with significantly less people. And so I guess, we proved that we can weather a minus 60 porter in radio.

And if that starts to look like it might happen again in fourth quarter, we would take whatever appropriate measures we need to take..

We have stress tested a great deal in the back half, and I don’t know what a second wave looks like, I’m not a doctor, I’m not an epidemiologist.

My sense though, is that as we get closer to a vaccine, which people are saying can be here in Q1, I would also say that governments are more as depth now at managing sort of the hospitalizations and things of that nature. So there would not be as much of a panic.

And it also would not be widespread and wholesale in every jurisdiction in America, that even if there was a second wave, it is going to look very different than what we got hit with the first time which was unexpected, and we weren’t ready for it..

Second question, last time, presidential time, we didn’t see the advertising numbers from certain candidates, probably this year, it should be a big uptick and I hope you are able to capture as much of that as possible as far as advertising dollars.

But going into it further, how can you make sure that we prevent that from ever happening again, and have a down tick in those political areas not been pass through..

Actually we have been doing - we actually punch above our weight on political. We forgot what year it was. It wasn’t last year. What year we do like $8 million? Was that -..

We did, the high was 9.1 in 2012. Then we did 7.9 in 2016..

Yes. We did $8 million in 2016..

Yes. And then in 2018, we did 7.4..

Yes. So, look, we were expecting a big political year and we were doing great. We were particularly sad to see Bloomberg give up so fast, because he was spending an awful lot of money. And, like the political game has changed this year and they have been moving primaries, delaying them.

I mean, it depends on how open the country is, and what people’s perception of Radio is. I had a conversation yesterday with a person who handles our political. And that person actually was pretty bullish on what they thought that they could do.

Not holding that person to it, but she thought that, she could get to at least 85% of what our budget number was, but you don’t know that the game has changed, right. And Radio is about people being out and about and in cars and television is about people being at home in the work-from-home environments that helps TV.

Now one of the things that is also going to happen, I suspect that, TV is going to be oversold, like it never has been before. And so, that could push money - that generally pushes money to Radio, and that could end up being very helpful.

TV does not have the same flexibility that Radio does to add units to their most of the carry networks and things of that nature. So, we are hopeful..

Thank you guys so much for all that you do..

Thank you..

And we have no other questions. You may continue..

Great. Well, thank you everyone. I’m glad we got the technology squared away this going around. We look forward to talking to you next quarter..

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect..