Spanish Broadcasting System, Inc. (SBSAA) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Spanish Broadcasting Second Quarter 2024 Conference Call. [Operator Instructions] Please note, today's event is being recorded. At this time, I'd like to turn the floor over to Brad Edwards, Investor Relations. Sir, please go ahead.

Thank you, Jamie, and good morning, everyone. Before we begin, please recognize that certain statements on this conference call are not historical fact. They may be deemed, therefore, to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements about future results expected to be obtained from the company's current strategic initiatives are forward-looking statements. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statement. Spanish Broadcasting System undertakes no obligation to publicly update or revise its forward-looking statements. Please also note that we will be discussing non-GAAP financial measures. The company believes that operating income before depreciation and amortization, loss on the disposal of assets, and other operating expenses, excluding noncash stock-based compensation or adjusted OIBDA, is useful in evaluating its performance because it reflects the measure of performance for the company's stations before considering costs and expenses related to capital structure and dispositions. This information is not intended to be considered in isolation or as a substitute for operating income, net income or loss, cash flows from operating activities or any other measure used in determining the company's operating performance or liquidity as calculated in accordance with U.S. GAAP. With that said, I will now turn the conference over to Mr. Raul Alarcon.

Good morning, ladies and gentlemen, and thank you for joining me for the SBS Second Quarter 2024 Earnings Call. I'm pleased to have this opportunity to bring you current on our progress for this year, as well as discussed with you our plans for the company as we look to its promising future service of the U.S. Hispanic market. In regards to our second quarter, our efforts to realign our organization and drive improved revenue and operating performance, gained significant traction. And yet, we are still a ways from achieving optimal efficiency across our entire operational and corporate infrastructure. That initiative can be described as a forensic analysis that continues and most probably won't be completed until late 2024 or early 2025, as I firmly believe there is significantly more operating leverage that can be run out of our current infrastructure. And I'm committed to seeing the success of our efforts at identifying and eliminating any and all redundant costs without, of course, affecting our successful operating paradigm. And our paradigm is absolutely working. Our second quarter highlights are indicative of the progress we're making in improving our overall financial results with revenue growth up 9%, a 22% increase in station operating income, a reduction in corporate expenses of 41%, and lastly, an increase in adjusted OIBDA of plus 76% for the second quarter, including our television operations as reflected in discontinued operations. These demonstrate our renewed focus of the twin goals of igniting growth while simultaneously controlling cost throughout our operational grid. Ladies and gentlemen, as I affirm to you at the beginning of this year, we will execute this Dual strategy relentlessly during 2024 and beyond, if necessary, until we arrive at our optimal operative mode at which time, we will begin a continual monitoring of our results to alert corporate as to any unacceptable variances in our monthly results. Whether it be our leading brands in station formats, our exclusive online LaMusica content or our Must Be There live events, SBS touches daily lives of millions of U.S. Hispanic consumers and that relationship -- that connection has never been stronger. As evidenced by our total first half 2024 results, where we are continuing to exhibit positive revenue growth, SOI growth of 17%, a 35% reduction in corporate expenses and an 82% increase in adjusted OIBDA, including our TV results reflected in discontinued operations. Furthermore, as regards to future revenue growth, our Orlando-Tampa Metroplex is solidly profitable and continues increasing its audience base as we prepare for the debut of our newest on-air digital brand in the third largest U.S. Hispanic market of Houston that's coming up in the following months. We have the iconic brands including the most listened and small stream station in the nation, the best-loved and most followed media personalities, the trust and confidence of our brand partners the loyalty of millions of fans and most importantly, the know-how to consistently deliver the experiences they desire. I will take a moment to reiterate that we operate in the Spanish language media sector, obviously. The same one whose buying power now stands at $3.8 trillion, that's trillion a year and whose annual GDP of $3.6 trillion ranks it as the fifth largest economy in the world, behind only the U.S., China, Japan and Germany. And talking about growth, what would you say if I told you it was growing faster than any other economy except China and India. Now that is what I call the future, ladies and gentlemen. It reminds me when i was a young man inaugurating the first Spanish language FM station in New York City in 1989, I instinctively knew the Hispanic market was going to be big. But I never imagined that it would be a global financial powerhouse, an entry within a country, if you will, capable of attracting the patronage of the most discriminating marketers and advertisers. That's SBS, ladies and gentlemen, and that's the mission we embarked upon all those years ago. So -- to recap, our commitment to our audience has no limit. Our strategic focus on strengthening and realigning our operations also has no limit. We will continue to identify and pursue operational efficiencies and drive accelerating financial results. And our focus is on building upon the foundation of the audio brand that remains firmly entrenched in the most critical DMAs in the country, growing our over-the-air digital and mobile products, expanding our live concert presentations by partnering with [indiscernible] promoters in order to reduce risk when entering new markets, fortifying the relationships with our major brand partners and customers and -- following up on ongoing strategic conversations with potential partners, so as to fast track our continued penetration into the global Spanish language entertainment ecosystem. Looking ahead, we expect to vastly improved financial and operational performance in 2024 as compared to 2023, and we will continue to execute aggressive operational disciplines, as we drive accelerated growth across our current and future business segments. And with that, I'd like to thank you again for your time this morning, ladies and gentlemen. Your continued support is greatly appreciated by all of us at SBS. I look forward to updating you on the company's progress again in the near future. Thank you.

Ladies and gentlemen, that does conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.