UONE Urban One Inc

WASHINGTON, Nov. 4, 2021 /PRNewswire/ -- Urban One, Inc. (NASDAQ: UONEK and UONE) today reported its results for the quarter ended September 30, 2021. Net revenue was approximately $111.5 million, an increase of 21.3% from the same period in 2020. Broadcast and digital operating income¹ was approximately $49.1 million, an increase of 11.2% from the same period in 2020. The Company reported operating income of approximately $34.5 million for the three months ended September 30, 2021, compared to approximately $4.0 million for the three months ended September 30, 2020. Net income was approximately $13.9 million or $0.27 per share (basic) compared to a net loss of approximately $12.8 million or $0.29 per share (basic) for the same period in 2020. Adjusted EBITDA² was approximately $42.7 million for the three months ended September 30, 2021, compared to approximately $39.6 million for the same period in 2020.

Alfred C. Liggins, III, Urban One's CEO and President stated, "We had another very strong quarter, driven by double-digit advertising revenue growth in core radio, digital and Cable TV. Our digital and national syndication businesses are benefiting from continued high demand from major advertisers for our audience on a national level, and our core radio business, excluding political, increased by approximately 35% year over year. Our diversified mix of assets has helped us rebound to Adjusted EBITDA levels that exceed those of 2019, and I now feel comfortable increasing full year guidance to in the $140 - $145 million range, up from the mid $130s. Our Richmond, Virginia, One Casino and Resort project was narrowly defeated in the city referendum on November 2^nd, which was both unexpected and disappointing given the substantial economic benefits we believe the project would have brought to the city. We are considering our next steps and will continue to pursue similar opportunities."

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements represent management's current expectations and are based upon information available to Urban One at the time of this release. These forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond Urban One's control, that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.  Important factors that could cause actual results to differ materially are described in Urban One's reports on Forms 10-K, 10-Q, 10-Q/A, 8-K and other filings with the Securities and Exchange Commission (the "SEC"). Urban One does not undertake any duty to update any forward-looking statements.

The COVID-19 pandemic could have an impact on certain of our revenue and alternative revenue sources on a going forward basis.  While parts of the country are recovering, other parts could see a resurgence of the pandemic and this could impact our results of operations, particularly in our larger markets such as Dallas, Houston and Atlanta. During the early portion of the pandemic, a number of advertisers across significant advertising categories reduced advertising spend due to the outbreak. This was particularly true within our radio segment which derives substantial revenue from local advertisers, including in areas such as Texas, Ohio and Georgia. The economies in these areas were hit particularly hard due to social distancing and other government interventions. Further, the COVID-19 outbreak caused the postponement of our 2020 Tom Joyner Foundation Fantastic Voyage cruise and impaired ticket sales of other tent pole special events, some of which we had to cancel.  A resurgence could have a similar future impact.  We do not carry business interruption insurance to compensate us for losses and such losses may continue to occur as a result of the ongoing nature of the COVID-19 pandemic. New outbreaks or surges in new cases due to variants in the markets in which we operate could have material impacts on our liquidity, operations including potential impairment of assets, and our financial results.  Likewise, our income from our investment in MGM National Harbor Casino could be negatively impacted by closures and limitations on occupancy imposed by state and local governmental authorities.

Net revenue consists of gross revenue, net of local and national agency and outside sales representative commissions. Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing.

Net revenue increased to approximately $111.5 million for the quarter ended September 30, 2021, from approximately $91.9 million for the same period in 2020. Net revenues from our radio broadcasting segment increased 21.8% compared to the same period in 2020. The increase in net revenue in our radio broadcasting segment was due primarily to mitigation of the economic impacts of the COVID-19 pandemic which began in March 2020. We experienced net revenue improvements in all of our existing radio markets, with the exception of Philadelphia and Raleigh. Net revenue excluding political, from our radio broadcasting segment increased 29.2% compared to the same period in 2020. We recognized approximately $48.8 million of revenue from our cable television segment during the three months ended September 30, 2021, compared to approximately $44.7 million for the same period in 2020 with increases in both advertising and affiliate sales. We recognized approximately $9.9 million of revenue from our Reach Media segment during the three months ended September 30, 2021, compared to approximately $7.8 million for the same period in 2020 due to increased demand. Finally, net revenues for our digital segment increased approximately $6.5 million for the three months ended September 30, 2021, compared to the same period in 2020, primarily due to an increase in direct revenues.

Operating expenses, excluding depreciation and amortization, stock-based compensation and impairment of long-lived assets, increased to approximately $74.6 million for the quarter ended September 30, 2021, up 34.1% from the approximately $55.6 million incurred for the comparable quarter in 2020. The overall operating expense increase was driven by higher programming and technical expenses, higher selling, general and administrative expenses and higher corporate selling, general and administrative expenses.

During the quarter ended September 30, 2020, we began to reinstate certain cost-cutting measures that were taken during the preliminary phases of the pandemic such as furloughs, layoffs and salary reductions. Continuing throughout 2021, as the economy began to recover, we also reversed certain other expense reduction measures including increasing travel and entertainment expenses, merit raises, marketing spend and programming/production costs, and special event costs. As a result of the continued reopening of the economy and corresponding increases in revenue, we've incurred an increase in the following expenses: approximately $4.7 million in employee compensation expenses, $2.7 million in higher program content amortization expense at our cable television segment, $1.6 million in special event costs, $2.2 million in marketing spend, $708,000 in increased travel and office expenses, $2.0 million in contract labor, talent costs and consulting fees and $2.4 million in variable expenses. Finally, the increase in corporate selling, general and administrative expenses for the three months ended September 30, 2021, compared to the same period in 2020 is primarily due to an increase in expenses related to corporate development activities in connection with potential gaming and other similar business activities. The Company has incurred approximately $2.5 million in casino chase costs for the quarter ended September 30, 2021.

Depreciation and amortization expense decreased to approximately $2.3 million for the quarter ended September 30, 2021, compared to approximately $2.5 million for the quarter ended September 30, 2020.

Interest expense decreased to approximately $15.9 million for the quarter ended September 30, 2021, compared to approximately $18.2 million for the quarter ended September 30, 2020. The Company made cash interest payments of approximately $31.6 million for the quarter ended September 30, 2021, compared to cash interest payments of approximately $9.2 million on its outstanding debt for the quarter ended September 30, 2020. As previously announced, on January 25, 2021, the Company closed on new senior secured notes (the "2028 Notes"). The proceeds from the 2028 Notes were used to prepay in full (1) the 2017 Credit Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer. 

During the three months ended September 30, 2021, we recorded a provision for income taxes of approximately $6.3 million compared to a benefit from income taxes of $136,000 for the three months ended September 30, 2020. The increase in the provision for income taxes was primarily due to the application of the estimated annual effective tax rate for the year to date and pre-tax income of approximately $20.7 million during the quarter, and state tax law changes, and provision to return adjustments. The tax provision resulted in an effective tax rate of 30.2% and 1.1% for the three months ended September 30, 2021 and 2020, respectively. The Company did not pay taxes for the quarter ended September 30, 2021 and paid $509,000 in taxes for the quarter ended September 30, 2020.

Other income, net, was approximately $2.1 million and $1.7 million for the three months ended September 30, 2021 and 2020, respectively. We recognized other income in the amount of approximately $2.1 million and $1.7 million for the three months ended September 30, 2021 and 2020, respectively, related to our MGM investment.

The increase in noncontrolling interests in income of subsidiaries was due primarily to higher net income recognized by Reach Media during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

Other pertinent financial information includes capital expenditures of approximately $1.7 million and $526,000 for the quarters ended September 30, 2021 and 2020, respectively. 

During the three months ended September 30, 2021, the Company did not repurchase any shares of Class A common stock and repurchased 6,715 shares of Class D common stock in the amount of $39,000. During the three months ended September 30, 2020, the Company did not repurchase any shares of Class A or Class D common stock.

The Company, in connection with its prior 2009 stock option and restricted stock plan and its current 2019 Equity and Performance Incentive Plan (the "2019 Plan"), is authorized to purchase shares of Class D common stock to satisfy employee tax obligations in connection with the vesting of share grants under the plan. During the three months ended September 30, 2021, the Company executed a Stock Vest Tax Repurchase of 3,285 shares of Class D Common Stock in the amount of $18,000. During the three months ended September 30, 2020, the Company executed a Stock Vest Tax Repurchase of 3,195 shares of Class D Common Stock in the amount of $6,000.

Supplemental Financial Information:
For comparative purposes, the following more detailed, unaudited statements of operations for the three and nine months ended September 30, 2021 and 2020 are included.

Urban One, Inc. will hold a conference call to discuss its results for the third fiscal quarter of 2021. The conference call is scheduled for Thursday, November 4, 2021 at 10:00 a.m. EDT. To participate on this call, U.S. callers may dial toll-free 1-877-336-4436; international callers may dial direct (+1) 234-720-6984.  The Access Code is 9827486.

A replay of the conference call will be available from 1:00 p.m. EDT November 4, 2021 until 12:00 a.m. EDT November 8, 2021. Callers may access the replay by calling 1-866-207-1041; international callers may dial direct (+1) 402-970-0847. The replay Access Code is 8168582.

Access to live audio and a replay of the conference call will also be available on Urban One's corporate website at www.urban1.com. The replay will be made available on the website for seven days after the call.

Urban One, Inc. (urban1.com), together with its subsidiaries, is the largest diversified media company that primarily targets Black Americans and urban consumers in the United States. The Company owns TV One, LLC (tvone.tv), a television network serving more than 59 million households, offering a broad range of original programming, classic series and movies designed to entertain, inform and inspire a diverse audience of adult Black viewers. As of September 30, 2021, we owned and/or operated 63 independently formatted, revenue producing broadcast stations (including 54 FM or AM stations, 7 HD stations, and the 2 low power television stations we operate) branded under the tradename "Radio One" in 13 urban markets in the United States. Through its controlling interest in Reach Media, Inc. (blackamericaweb.com), the Company also operates syndicated programming including the Rickey Smiley Morning Show, the Russ Parr Morning Show and the DL Hughley Show. In addition to its radio and television broadcast assets, Urban One owns iOne Digital (ionedigital.com), our wholly owned digital platform serving the African-American community through social content, news, information, and entertainment websites, including its Cassius, Bossip, HipHopWired and MadameNoire digital platforms and brands. We also have invested in a minority ownership interest in MGM National Harbor, a gaming resort located in Prince George's County, Maryland. Through our national multi-media operations, we provide advertisers with a unique and powerful delivery mechanism to the African-American and urban audiences.

Notes:

1              "Broadcast and digital operating income" consists of net (loss) income before depreciation and amortization, corporate selling, general and administrative expenses, stock-based compensation, income taxes, noncontrolling interest in income (loss) of subsidiaries, interest expense, impairment of long-lived assets, other (income) expense, loss (gain) on retirement of debt, gain on sale-leaseback and interest income. Broadcast and digital operating income is not a measure of financial performance under generally accepted accounting principles. Nevertheless, broadcast and digital operating income is a significant measure used by our management to evaluate the operating performance of our core operating segments because broadcast and digital operating income provides helpful information about our results of operations apart from expenses associated with our fixed assets and long-lived intangible assets, income taxes, investments, debt financings and retirements, overhead, stock-based compensation, impairment charges, and asset sales. Our measure of broadcast and digital operating income is similar to industry use of station operating income; however, it reflects our more diverse business and therefore is not completely analogous to "station operating income" or other similarly titled measures used by other companies. Broadcast and digital operating income does not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance. A reconciliation of net income (loss) to broadcast and digital operating income has been provided in this release.

2              "Adjusted EBITDA" consists of net income (loss) plus (1) depreciation, amortization, income taxes, interest expense, noncontrolling interest in (loss) income of subsidiaries, impairment of long-lived assets, stock-based compensation, (gain) loss on retirement of debt, gain on sale-leaseback, Employment Agreement and incentive plan award expenses and other compensation, contingent consideration from acquisition, casino chase costs, severance-related costs, cost investment income, less (2) other income and interest income. Net income before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as "EBITDA." Adjusted EBITDA and EBITDA are not measures of financial performance under generally accepted accounting principles. However, we believe Adjusted EBITDA is often a useful measure of a company's operating performance and is a significant measure used by our management to evaluate the operating performance of our business because Adjusted EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our acquisitions and debt financing, our taxes, impairment charges, and gain on retirements of debt. Accordingly, we believe that Adjusted EBITDA provides useful information about the operating performance of our business, apart from the expenses associated with our fixed assets and long-lived intangible assets or capital structure. EBITDA is frequently used as one of the measures for comparing businesses in the broadcasting industry, although our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including, but not limited to the fact that our definition includes the results of all four segments (radio broadcasting, Reach Media, digital and cable television). Adjusted EBITDA and EBITDA do not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as alternatives to those measurements as an indicator of our performance. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA has been provided in this release.

3              For the three months ended September 30, 2021 and 2020, Urban One had 51,190,105 and 44,175,385 shares of common stock outstanding on a weighted average basis (basic), respectively.  For the nine months ended September 30, 2021 and 2020, Urban One had 49,816,663 and 44,738,635 shares of common stock outstanding on a weighted average basis (basic), respectively. 

4              For the three months ended September 30, 2021 and 2020, Urban One had 55,080,394 and 44,175,385 shares of common stock outstanding on a weighted average basis (fully diluted for outstanding stock awards), respectively.  For the nine months ended September 30, 2021 and 2020, Urban One had 53,832,135 and 44,738,635 shares of common stock outstanding on a weighted average basis (fully diluted for outstanding stock awards), respectively. 

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SOURCE Urban One, Inc.