Urban One Inc (UONE) Reports Mixed Results for First and Second Quarters of 2023
Urban One Inc (NASDAQ:UONE) sees a 3.8% increase in net revenue for the first half of 2023 compared to the same period in 2022.
Operating income for the six months ended June 30, 2023, falls to $17.8 million from $61.8 million in the prior year.
Net income attributable to common stockholders jumps to $67.4 million, or $1.42 per share (basic), up from $32.8 million, or $0.64 per share (basic).
Adjusted EBITDA for the six-month period decreases to approximately $67.8 million from $89.5 million year-over-year.
On December 12, 2023, Urban One Inc (NASDAQ:UONE) released its 8-K filing, detailing the financial results for the first and second quarters of 2023, as well as the cumulative six-month period ending June 30, 2023. The company experienced a modest rise in net revenue, reporting approximately $239.5 million, a 3.8% increase from the same period in the previous year. However, operating income saw a significant decline, dropping to approximately $17.8 million from $61.8 million in the first half of 2022.
Despite the decrease in operating income, net income attributable to common stockholders showed a remarkable increase, doubling from $32.8 million, or $0.64 per share (basic), in the first half of 2022, to $67.4 million, or $1.42 per share (basic), in the same period of 2023. This improvement was largely due to the sale of UONE's MGM National Harbor investment, which significantly bolstered the company's cash balance. Adjusted EBITDA, however, decreased to approximately $67.8 million for the six months ended June 30, 2023, compared to approximately $89.5 million for the same period in 2022.
Financial Performance Highlights
Urban One's CEO and President, Alfred C. Liggins, III, commented on the results, stating,
this is our first earnings release since the sale of our MGM National Harbor investment for $136.8 million, and the impact can be seen in both our improved cash balance and the reduction of Adjusted EBITDA."
He also noted that core radio revenue, excluding political advertising, was up approximately 1.0%, and the acquisition of additional Indianapolis stations helped push core radio revenues up approximately 10.9%. However, margins declined slightly to 26% from 28% in the first half of 2022.
The company's cable TV division experienced ratings and delivery shortfalls in Q1 2023, leading to reduced advertising revenues. However, ratings and advertising revenues stabilized in the subsequent quarters. The return of Tom Joyner's Fantastic Voyage in Q2 contributed $1.75 million to Reach Media's revenues, but also led to an increase in SG&A expenses.
Urban One's digital revenues increased by approximately 1.8%, but margins were affected by additional traffic acquisition and content costs. Liggins expressed confidence in reaffirming the company's prior guidance of Adjusted EBITDA in the range of $125-128 million.
Income Statement and Balance Sheet Analysis
Operating expenses, excluding certain items, rose to approximately $172.8 million for the six months ended June 30, 2023, a 16.2% increase from the same period in 2022. The increase was driven by higher programming and technical expenses, selling, general and administrative expenses, and costs associated with the Fantastic Voyage cruise event. Depreciation and amortization expenses decreased slightly due to fully depreciated assets.
Impairment charges for goodwill, intangible assets, and long-lived assets were significantly higher at approximately $38.9 million, compared to $15.0 million in the prior year. Interest expense decreased due to lower debt balances, and the company gained from the sale of its MGM investment, contributing to a substantial increase in other income, net.
For the six months ended June 30, 2023, the provision for income taxes was approximately $22.0 million, reflecting an effective tax rate of 24.3%. The company also recorded discrete tax expense related to the gain on the sale of the MGM investment.
Urban One's balance sheet showed cash and cash equivalents and restricted cash of $231.2 million as of June 30, 2023, a significant increase from $71.9 million as of March 31, 2023. Total assets stood at approximately $1.28 billion, while total debt was approximately $715.2 million.
Outlook and Strategic Moves
Urban One's management remains focused on navigating the challenges presented by the softening radio advertising market and the high rates of subscriber churn in the linear television business. The company's strategic acquisitions and events like the Fantastic Voyage cruise are part of its efforts to diversify revenue streams and strengthen its financial position.
Investors and analysts interested in further details can access the full earnings report and participate in the scheduled conference call to discuss Urban One's first and second fiscal quarters of 2023 results.
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Explore the complete 8-K earnings release (here) from Urban One Inc for further details.
This article first appeared on GuruFocus.
