Spanish Broadcasting System, Inc. (SBSAA) Q2 FY2025 Earnings Call Transcript & Summary

Good day, and welcome to the Spanish Broadcasting Second Quarter 2025 Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Mike Smargiassi. Please go ahead.

Thank you, 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 statements. 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, impairment charges and other operating expenses, excluding noncash-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 substitution 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 that is calculated in accordance with U.S. GAAP. I will now turn the call over to Mr. Raul Alarcon.

Thank you, Mike. Good morning, ladies and gentlemen, and thank you for joining me for this SBS Second Quarter 2025 Earnings Call. Since our last call, we continue to progress in executing our strategic road map, including investing in our growth initiatives and driving efficiencies across our operations. During the second quarter, the advertising market across our industry continued to face challenges resulting from a number of marketplace uncertainties that have caused advertisers to pull back on their ad spends. Despite these near-term headwinds, we remain committed to implementing our plan as we cycle through this environment, and we believe the long-term benefits of our revenue enhancement and diversification efforts, combined with our commitment to reducing costs will lead to improved results for years to come. During the quarter, we further decreased operating expenses by $3 million or 10% compared to last year's comparable period. This was 20% ahead of our goal of decreasing another $2.5 million of expenses during the quarter. Moreover, for the first six months of the year, we have reduced our operating expenses by $6.1 million or 11%, representing another significant achievement. In fact, I can confidently predict a total savings of $13 million plus in 2025 versus 2024 expenses. More importantly, even as we eliminate these costs, we are delivering consistently strong audience shares across our premier station portfolio while leveraging our content across our digital multi-platform ecosystem. These efforts are supporting increasing brand visibility and engagement across multiple consumer touch points, expanding our revenue growth potential and positioning SBS as a next-generation media leader for U.S. Hispanics. Digital is and will continue to be a strategic focal point of our company's future development. Our newest station in Houston KROI-FM La Ley, continues to build on its dominant position among Hispanic listeners displacing heritage stations that have operated in the nation's fourth largest market for decades and is fully on its way to becoming the most successful start-up in the history of Spanish radio as measured by ratings and revenue. Reflecting the strength of our digital strategy and the reach of our AIRE Radio Networks, KROI's morning show with Raul Brindis is now on its way to capturing a leading position among the nation's top 18 to 49 streaming stations, joining our WSKQ flagship in New York City, the most streamed station in the nation. We are also building on the momentum of Nandy & Cristy, our new morning show on WSUN-FM in Tampa, which is delivering solid ratings growth as loyal listeners tune in to reconnect with these immensely talented hosts who during the last decade, have ranked as the #1 Hispanic radio program in the Greater Tampa Bay area. These incredibly popular shows continued gaining traction via LaMusica, our top radio streaming audio-visual entertainment app, joining all of our brands in reaching more fans on a national scale while elevating our ability to monetize our content investments. As we build and support all of the brands under the SBS umbrella, we are ensuring that fans everywhere can access our content via LaMusica regardless of where they live and work. Let me give you some Q2 highlights. LaMusica grew unique users by 18% in Q2, driven primarily by our new Houston station that itself more than doubled its digital audience in Q2 compared to Q1. Social media strategy is also attracting new users, in particular, YouTube. Views grew by 140% in Q2 compared to Q1. Once again, Houston was a major contributor to the growth, closely followed by Mega, New York, which nearly doubled its audience in Q2 compared to Q1. Our session length set a new record with a staggering 55 minute average time spent listening with KROI and WSKQ driving the averages up with loyal listeners staying online for hours at a time. This summer also saw the successful launch of LaMusica TV on Roku, the #1 TV streaming platform in the U.S. We are now streaming a 24/7 slate of digital video, radio formats and iconic on-air talent and music along with the hardest celebrity and entertainment news. We believe the growth potential of this platform is enormous, given the size and continued expansion of the Hispanic population in the U.S. and the brand connections we are building. Ultimately, LaMusica TV will also premiere SBS' live concerts, including major events such as its Calibash, MiamiBash and Mega [indiscernible] venue performances as well as its unplugged artist showcases. In summary, we are pursuing multiple growth initiatives across our audio outlets, digital streaming, network syndication and live events businesses, all supported by our consistent ability to attract and promote the best talent in the industry and drive audience engagement. SBS has evolved into a multi-platform media organization with a strong and growing roster of content and a loyal and expanding fan base. We believe our revenue expansion and diversification plan, combined with our continued emphasis on cost reduction along with an expected improvement in our nation's economy will strengthen our ability to deliver revenue growth as well as improved cash flows to the benefit of all our stakeholders. In addition, in support of our comprehensive deleveraging plan previously delineated, we have recently sold our Puerto Rico television stations and are confident that we will sell our remaining non-core assets as well as ancillary real estate in the near future. And with that, I'd like to thank all of you for joining us this morning. Your continued support is very much appreciated by all of us at SBS. For those of you that would like to contact us directly with any further questions or comments, please e-mail us at [email protected] and thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.