Cumulus Media Q1 2023 Earnings Call Transcript

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April 27, 2023

There are 8 speakers on the call.

Operator

Welcome to the Cumulus Media Quarterly Earnings Conference Call. I'll now turn it over to Collin Jones, Executive Vice President of Strategy and Development. Sir, you may proceed.

Speaker 1

Thank you, operator. Welcome everyone to our Q1 2023 earnings conference call. I'm joined today by our President and CEO, Mary Boerner and our CFO, Frank Lopez Balboa. Before we start, please note that of Investor Relations. Certain statements in today's press release and discussed on this call may constitute forward looking statements under federal securities laws.

Speaker 1

Financial results may differ materially from the results expressed or implied in forward looking statements. These statements are based on management's current assessments and assumptions, and they're subject of Investor Relations and Investors. In addition, we will also use certain non GAAP financial measures. We believe the supplementary information is useful to investors, Consumer Financial Services, although it should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks as well as financial reconciliations of Non GAAP terms are in our press release and SEC filings.

Speaker 1

The press release can be found in the Investor Relations portion of our website, of Consumer Financial Services and our Form 10 Q was also filed with the SEC shortly before this call. A recording of the call will be available for about a month via a link on our website. With that, I'll now turn it over to our President and CEO, Mary Berner. Mary?

Speaker 2

Thanks, Collin, and good morning, everyone. In the Q1, the continued weakness of the national advertising environment to which we have significant exposure drove total revenue declines as reported of 11% year over year or more comparably excluding political and WinBet, Total revenues were down 7%, a result that is consistent with the pacing we provided on our last call. Despite that challenge, We generated significant growth in our digital marketing services business, increasing revenue 23% year over year on a completely organic basis. We executed meaningful nonrevenue impacting cost reductions to further enhance our operating leverage, adding approximately $10,000,000 of additional annualized cost reductions to the approximately $90,000,000 that we've already executed since 2019. And during the quarter, we continue to enhance and benefit from our advantageous liquidity position and balance sheet, generating $16,000,000 of free cash flow, completing a highly accretive asset sale for $7,300,000 repurchasing $1,500,000 of shares and retiring $6,300,000 face value of debt at a discount.

Speaker 2

The dichotomy we talked about last quarter between a weak national advertising climate and a relatively stronger local advertising environment continues. But we expect that eventually both will revert to more normal spending patterns. Until then, as we have consistently proven, We know how to optimize results in difficult environments and emerge from them in a strong position to take advantage of recoveries and when they occur. To that point, since 2019 and through the COVID impacted years, we've taken out more fixed costs on a relative basis, Recovered more EBITDA margin, converted more EBITDA to free cash flow and reduced our net leverage more than our peers. We finished 2022 with best in class 3.7x net leverage and over $200,000,000 of liquidity, Citi, despite having been the only one to return capital to shareholders through buybacks, which is why we believe we are in the best position of Investor Relations to weather this current storm and capitalize on the eventual rebound, while maintaining our ability to opportunistically deploy capital the long term benefit of our shareholders.

Speaker 2

To understand the current market's particular impact on us, think about our company as split between businesses whose revenue generation is predominantly from national advertisers and businesses who rely on local advertisers. The national businesses primarily consisting of the Westwood One network, national spot, national podcasting and national streaming Makeup Approximately 45 Percent of Revenue. And our local businesses, primarily consisting of local stock, local digital marketing services, Local Podcasting and Local Streaming Make Up Approximately 50% of our total revenue. The weakness that is characterized in national advertising climate of the U. S.

Speaker 2

For several quarters has not abated. National advertisers continue to demonstrate significant reluctance to spend across virtually all ad categories. With that, we've been increasing somewhat since the last earnings call. Given the high margin nature of our national broadcast businesses, The associated drop in revenue has and will continue to impact EBITDA as long as the softness continues. These same national headwinds have also of Global Digital revenue growth as most of our podcasting revenue is tied to national advertisers.

Speaker 2

Looking ahead, we of course don't have a crystal ball as to when the national headwinds are going to reverse. However, what we do know is that historically, When the advertising environment does recover, national advertising has typically been the quickest to bounce back and when it does, the same operating leverage that hurts us on the downside will be a significant benefit to us on the upswing. In comparison to national businesses, our local businesses were approximately flat for the quarter, fueled by strong growth in our local digital businesses. Local spot, which makes up approximately 80% of our total spot revenue, was down about 4% in Q1. Like national, we've also seen local get a bit weaker into Q2 pacing down 7% currently.

Speaker 2

Small and midsized markets have been outperforming of continue to outperform larger markets. So our portfolio management strategy over the last 5 years, which has reduced our exposure to larger markets, has been favorable for us. Despite these mid single digit declines, we are seeing some green shoots in local demand. Encouragingly, automotive continues to rebound as we are experiencing quarter to quarter improvement in automotive as dealer inventory levels improve. To put this upswing into perspective, in 2019, Auto was about 10% of total revenue, and we lost nearly 50% of that, mostly local revenue during COVID.

Speaker 2

So even with the improvement we're already seeing and we've already seen, there remains significant upside from auto returning to more normal levels. The brightest spot and an area that we're really leaning into given its growth profile is our local digital marketing services business, SVOD, which as I mentioned, grew 23% in Q1, driven by a combination of new customer accounts and new product offerings. This business is now run rating at over $40,000,000 of revenue. And as you know, we have achieved that growth and profitable Performance from day 1 with very little upfront investment. We continue to be excited about our DMS position, So we're investing in it to accelerate its growth.

Speaker 2

Looking at the big picture, the U. S. Digital marketing services total addressable market for our target SMBs is approximately $15,000,000,000 and growing at 5% to 10% a year. While there are many small digital agencies that have built Paid Media Capabilities as well as several large providers of single point solutions. There are very few companies in the DSMS world that can successfully offer SMBs the full spectrum of digital marketing solutions to meet their needs.

Speaker 2

We focus on beating that full spectrum provider, deploying a unique go to market strategy with feet on the street selling of a suite of integrated audio Digital Marketing Solutions. We're nimble in our sales execution because we leverage our fully distributed sales force, Sales Infrastructure and notably, our ability to seamlessly add in new products and services. This is because in addition to our own in house capabilities. We utilize several white label providers to fulfill our orders, which have given us flexibility to adapt to a dynamic market And quickly and efficiently procure and deliver new digital products and services as they are created. As importantly, The double digit growth trajectory we've already ramped to supports our conviction that our go to market strategy, in particular, it's focused on feet on the street sellers, It's been a good mousetrap and an important differentiator in the market.

Speaker 2

Because we have a proven ROI from adding incremental sellers, we're Citi, armed with a growing toolkit of both digital and audio products. We're enthusiastic about the returns we can deliver from continuing to expand our sales force, Enhance Their Capabilities and Generate Efficiencies at Scale. Meanwhile, to support both these to both support these types of investments and mitigate the EBITDA pressures from national revenue declines and the inflationary environment, We continue to aggressively reduce costs. Since 2019 compared to our peers, we have achieved higher cost reduction as a a percentage of the 2019 baseline and as noted, a best among peers EBITDA margin recovery against pre pandemic levels. Year to date, we executed an additional $10,000,000 of annualized cost reductions and we will continue to make strides as the year progresses with multiple additional cost initiatives.

Speaker 2

Ultimately, all these efforts continue to support healthy free cash flow generation, Sealy in difficult economic environments such as this one. In the Q1, we bolstered our cash balance by generating $16,000,000 of free cash flow and completing $73,300,000 sale of WFAS FM, a the company's statement station, which contributed insignificant EBITDA. Given our healthy cash balance, we continued our open market the company's program in Q1, buying back an additional $1,500,000 of shares. In parallel, we were also able to complete discounted debt buybacks, retiring $6,300,000 face value of debt for $5,600,000 of cash. Since announcing this capital allocation strategy in Q2 of last year, Combined with our last excess cash flow sweep of $2,500,000 we have retired $92,800,000 of base in face value of debt and we have repurchased 2,900,000 shares, representing approximately 14% of the company's shares outstanding as of year end 2021.

Speaker 2

Before turning the call over to Frank to give you more color on the quarter and our current Q2 pacing, I'll go back to where I started. Maximizing results in challenging environments is something we do well. Over the past few years, this management team successfully executed an operational turnaround while rightsizing an inherited overextended balance sheet through a restructuring. And since the pandemic, we've driven best among peers performance with respect to cost takeouts, EBITDA margin recovery, free cash flow conversion, net leverage reduction and cash generation. This track record should give you confidence in our ability to once again Optimize and Optimize and Emmerge from this difficult advertising environment.

Speaker 2

With that, Frank, I'll turn it over to you.

Speaker 3

Thank you, Mary. Revenue in Q1 was down 11%. Excluding non recurring revenue received from the termination of our WinBet partnership last year Consumer and Political revenue was down 7%. This is consistent with the pacing commentary that we provided on our last earnings call. The continued weakness in the national advertising environment remains the main factor driving the decline in total revenue.

Speaker 3

Our businesses generating revenue from local advertisers of. In aggregate, our local businesses were approximately flat year over year. As Mirden mentioned, local spot was down approximately 4% in the quarter. From a category perspective, general services, auto and home products Corporate and Regulatory and Telecom. The weakest categories were financial, sports betting and telecom.

Speaker 3

Our local digital businesses consisting of local digital marketing services, local streaming and local podcasting were up in the mid teens. Within national advertising, we continue to see strong relative performance in live sports. As the NCAA March Madness of Consumer Electronics and Consumer Electronics. From a category perspective, we saw a decline across most major categories with financial and sports betting shown significant weakness. As Mary mentioned, we were also impacted by the continued national headwinds in the podcasting space.

Speaker 3

As a result, our digital revenue on an aggregate as reported basis was flat year over year. That said, looking ahead to the Q2, We continue to see significant weakness in the national advertising environment. Our local businesses continue to outperform national led by solid growth in local digital marketing services. On a total company basis, we are currently pacing down low double digits for the Q2. Moving to expenses.

Speaker 3

Total expenses in the quarter decreased by approximately $5,500,000 year over year driven by our cost reduction actions as well as lower variable costs and lower revenue. Year to date, we have executed an additional $10,000,000 of annualized cost reductions. In aggregate, since the beginning of 2020, We have reduced approximately 20% of our 2019 fixed cost base. As always, we will continue to be aggressive in pursuing cost reductions to mitigate the top line impacts of the current environment and make room for investments and growth. In the quarter, we generated $24,000,000 cash from operations of $16,000,000 of free cash flow and completed the highly accretive sale of WFAS FM for $7,300,000 which will have a minimus impact to EBITDA.

Speaker 3

Capital Generation supported our continued capital return and debt reduction strategy. During the quarter, we repurchased $1,500,000 of shares of of the shares of outstanding when we initiated the buyback program with $16,700,000 remaining of our Board authorized repurchase authorization. Credit Suisse. Additionally, we retired $6,300,000 faith value debt at a discount, split between $3,800,000 of our term loan of $2,500,000 of notes, bringing total debt reduction since the beginning of 2020 to approximately $309 or 30%. As Mary said, given our successful track record operating through challenging times and our strong balance sheet and liquidity position, We're confident we will optimally navigate through difficult ad environment.

Speaker 3

With that, we can now open the line for questions. Operator?

Operator

Certainly. To remove that question. Our first question comes from the line of Jim Goss with Barrington Research. Mr. Goss, you may proceed.

Speaker 4

Good morning. This is Pat on for Jim. I was just wondering within podcasting, I was wondering if you could maybe talk about like the, I guess, the environment for ad sales relationships and just the competitiveness around that of And any impact like that type of advisor might be having in terms of like the overall inventory you guys have available to sell in the market?

Speaker 2

I'll take that. Hi, Pat. Thanks for the question. I'll start with of The ad environment, as we said in the prepared remarks for podcasting, like other national challenges channels, is being affected in podcasting. Of We have a very strong position and a specific position in that we our sweet spot is Talk the Talk space.

Speaker 2

And 6 of our podcasts are in the top 30 new shows on Apple. So that does include big names like Ben Shapiro and Dan Bongito and Mike Mark with it. And so Yes, it is a competitive marketplace, but our positioning for what we bring to Content Partners is, we believe pretty unique. We are the only Podcast Partners. It does not require that a podcaster give up control of their IP.

Speaker 2

We generally put the entire platform, including the radio platform to work for our partners to help them to grow their audience. Of As the company that is that has Westwood One, which is the largest network, we put we're able to Help Podcast Partners access the largest audio network and all the avails in the advertising marketplace. So We had a strong positioning in News Talk, big bold voices, of And we're comfortable with fairly. Yes, it is competitive, but I think we've done quite well.

Speaker 4

Okay. And with regards to sort of capital allocation, just given the volatility in the ad market, do you guys sort of see More opportunities to kind of focus more on the debt reduction side or do you guys have like a longer term target and where you would want that leverage to be?

Speaker 3

I'll take that. We've been consistent in of talking about our long term net leverage target to be at 3.5% or lower. We're in an environment now that Obviously, with pressure on EBITDA, our leverage is tracking up. So on the last 12 month basis, our net leverage of I've checked up to 4.1 times in our last 12 months. As you recall, it was 145,000,000 Having said that, we've been very consistent in taking advantage of opportunities in terms of repurchasing both stock and debt given our strong liquidity positions and also given the fact that we continue to generate positive cash flow in good times and bad.

Speaker 3

Of And that's what you saw about in the Q1 that we were able to buy back stock and debt at a discount. So I can't really give you any forward guidance in terms of what we may do in the subsequent quarters. But the one thing I want to emphasize is given that we reduced our costs of so much improved our operating leverage as we have and generate free cash flow. It gives us a terrific opportunity to use that liquidity in many different ways, which includes potentially share repurchase, repurchase, Investments in the Business and Potential Acquisitions.

Speaker 4

Okay. And I think the last one I had was With regard to the sports betting category, I know it's now we had the typical comparison with the win bet relationship last year. Of I was just kind of curious in terms of if you felt that there might be, I guess, maybe more significant Regulation of that sector in the future with maybe potential concerns over, I guess, externalities of that business.

Speaker 3

I really can't comment on regulation in that space, but I will say of the patterns that we've seen that we saw last year and we see this year, and this is excluding the loss of the wind evolution, which was significant for us. Is that the pattern that we've seen in sports betting compared to when it initially became of Very active in the market is that the advertising tends to move to what states are legalizing betting for the first time. And so the pattern we're seeing in those dollars of as the sports betting company established at the print in states that have already been legal, they cut back their spending, they have their customer acquisition costs, of They have their client base, and they're spending more dollars in the newer states. And having said that, since their peer states coming online of and the pressures that they have in the underlying business as a result that results in a weaker spend of And we're seeing that both locally and in our network business.

Speaker 4

Okay. Thank you.

Operator

Thank you for your question. Our next question comes from the line of Dan Day with B. Riley Securities. Dan, your line is now open.

Speaker 3

Yes. Good morning, guys. Thanks for

Speaker 5

taking the questions. So, Mary, you mentioned in the Fair remarks, investing in digital marketing services. Just good sense for if you could quantify that at all, what specifically that investment might entail. Would it really just be like hiring more people in support of kind of selling that product? Or is there anything else CapEx wise to think about since I do that investment?

Speaker 2

Yes. Thanks, Dan. That's a great question. Yes, it's we've seen that when we put more people on the street given the training that we're able to provide them and the range of products that we go to market with that their, that the Payback is very, very quick. So we're in the process of more than doubling our direct to dealer sales organization.

Speaker 2

And we will given the growth we're seeing, as I said, it's a profitable investment from day 1. So We're just continuing to add people, given this payback. And we may wrap this up more as time goes on.

Speaker 3

And with regard to the capital investment, It requires very little to no capital investment. It's basically hiring salespeople who, as Mary said, have And that's one of the things we're doing in terms of Reducing our costs and reinvesting in these growth businesses, but it doesn't come with a big capital investment nor a tech Capital Investment, which is really important.

Speaker 5

Understood. And then on the $10,000,000 of incremental cost reductions of Can you maybe flush out where those are coming from at this point? I mean, you've been very aggressive in terms of taking costs out of the business over the last So just wondering where those opportunities are still coming from to tweak things out.

Speaker 2

Frank, you can go through the where we think, when it comes through generally. But it's things like Real Estate. We're very aggressive about our management of our real estate portfolio. Contract costs, Operational Improvements. For example, we centralized our business manager function.

Speaker 2

Of We're down into marketing spend reductions. Frank, am I forgetting something?

Speaker 3

That's right. It's very consistent on what we've done before, which is focusing on contracts, Business Process Optimization, People Efficiencies and then for your models just so you understand how that 10,000,000 That's an annual run rate. Since we're going to be implementing it now, the number we should use in the model is roughly $8,000,000 worth of cost savings of for this fiscal year, which ramps up to $10,000,000 more on an annual basis of And we'll continue to focus on additional costs in these studies.

Speaker 5

Great. Thanks. One more for me just in podcasting. So you mentioned like the exposure to national and the national side being sort of driving the softness there. Anything you're doing to increase the number of local advertisers within your podcasting segment?

Speaker 5

It seems like a big opportunity there if

Speaker 3

you could get some of these SMBs of A

Speaker 5

lot of them were AMFM advertisers over the podcasting, whether that's through like geotargeting to the national ones, whether it's podcast extensions and so local shows or whatever, just whether that's a priority or not and anything to do in there would be helpful.

Speaker 2

Yes. It's a we agree with you. About a year ago, of we focused our effort on local podcasting. And generally, it tends to be around a local show. So for example, Dallas around the ticket.

Speaker 2

We have a very, very successful local podcast called Michigan Insider, which is a sports one with all the stations there. Of And we believe there's opportunity. Many of our programmers would very much like to do podcasting. And so of We're walking before we run, but we're seeing initial success there because you're absolutely right. Listeners want to Here from our talent and it's a way also to do extend the content that they hear on air.

Speaker 2

So that is an area of focus.

Operator

CFO. Thank you for your question. Our next question comes from the line of Michael Kupinski with Noble Capital Markets. Michael, your line is now open.

Speaker 6

Thank you so much. Thanks for taking the questions. A couple of them. I know that you operate these stations very leanly, so I'm always of I was just wondering in terms of the technologies of that are out there, including AI services and so forth that may allow the company to maybe even more significantly reduce costs. Can you talk about some of the opportunities that you're looking at and what are what might be the opportunities for maybe further restructuring of the company to really significantly lower cost.

Speaker 3

Good morning, my colleague. I'll take that. We are definitely looking at AI of as a possibility to improve our business. I would say it's extremely, extremely early days of looking at that, because it has a lot of impacts in terms of when you think about our business, Our local business is strong because we have that local voice right to the local consumer. And that's something that We take advantage of with our local talent.

Speaker 3

But it's interesting since We started the cost reduction efforts because of the pandemic. I don't think we would have thought we could take out 20% of our cost base without impacting revenue. Of And we continue to look at that. A lot of the cost reductions have been at the network business, in addition to the Station Group Given the pressures in the network business. And so look, in summary, it's early days in AI.

Speaker 3

Of We're not going to say at this point, there's going to be a major restructuring of the company because AI. I think we're all learning about it and we'll see how that goes.

Speaker 6

Of And then Obviously, your balance sheet is better than most in the industry, given your large cash position and so forth. But I was wondering, Yes, I know that you sold some assets. I was wondering, are there further assets, non strategic assets that You have out there or that you're looking at potentially selling. And given that there are issues that many are facing in the industry, are there

Speaker 3

That's a good question. Early on, not say early on, up of Through COVID 202021, we did sell the bulk of our non strategic assets, including RDC Land Sale, the TowerLeaf, etcetera. We do have some non strategic assets of That we could take a look at, but they're not significant in size. The WFAS was an interesting Case study, which this is not a station that was on the market. There are buyers out there of Selective Station for their certain needs.

Speaker 3

And if others like that appear, we'll analyze it of very closely and generated a 7 minute sales sale proceeds On an asset that had virtually zero EBITDA is usually accretive and gives us a benefit to return capital to shareholders and reduce debt. Of And so I expect those will continue to happen. They're episodic. They're not planned. Of They come to us, but of course, we look at everything in the space and as those includes come in, we'll take a serious look at it.

Speaker 6

Thank you for that. And just on the digital front, can you talk a little bit about your station listening? How much of that station listening is coming from streaming? And do you feel like that streaming is likely to continue to grow, offers you more significant opportunities to monetize the of audience. Can you just kind of give us your thoughts about the shifting in terms of audience and how they're using radio?

Speaker 3

Sure. There is no question that streaming continues to be increased in terms of how our customers Experience there, they're listening. What we're generally seeing in some markets is as More clients go to the stream versus over the air, that increases our share and our listenership. We have the ability to increase pricing given our aggregate share. As a reminder, Couple of years ago, we adopted total line reporting, which shifted some of the revenues Geographically, which was recorded in spot over to digital once we had that measurement.

Speaker 3

And so Not every single station goes on total mine recording. We do that when we think there's a lift potentially. Of Again, we're following where the listeners are. And to the extent we increase our share and we've taken advantage of pricing, that's something that you'll see in It's a nice business and there's potential opportunities there. But having said all that, of When we look at our digital portfolio, we're really, really excited about the DMS space because that's really Turbocharge incremental revenues that we haven't seen in the past.

Speaker 3

I mean, the increased streaming is very nice. It's important. I think it's on the margin. Of the organic growth for the senior marketing services. And as I mentioned, it's something that's very exciting with a very Low Investment, High ROI.

Speaker 2

Yes. I just to add of Frank's remarks. The two areas of main areas of focus for digital for us are maximizing impressions of that we generate by increasing listenership from existing listeners and also extending the platforms we're able to be found on. So in 20 of 2022. We extended our tune in distribution deal and our Iheartradio distribution deals.

Speaker 2

But notably, we also added the NFL streaming rights. Of And that was and is proving to be a terrific opportunity because we have new listeners that we never really had before. And So that's one area of focus. And the second is we focus a lot on the monetization of the inventory across all the channels, local, national, network, programmatic. Of And so I think it's as Frank said, I think that the opportunity, the bigger opportunity is DMS, but Yes, this is pacing quite nicely, as you can see.

Speaker 6

Final question. Thanks for that color. Final question, on the local level, are you seeing any Regional disparities, anything in particular that might kind of indicate that maybe local is Not performing well or some issues that we might see start to see some cracks in local. Just wondering if

Speaker 3

you can just kind of of Give

Speaker 6

us some thoughts in terms of how healthy local is at this point in terms of just given the economic headwinds, it seems to be holding up very well. But of Are you seeing anything that might give us some concern?

Speaker 2

Yes. One thing I would say is that it remains a tale of 2 cities of in local versus national, but it's also a little bit small versus large. Smaller markets are outperforming larger markets, and I think that's of Given their relatively higher percentage of local revenue versus national. But on the local area, we have our portfolio skews to smaller markets. And in those markets, the stations and the of more embedded, if you will, and influential.

Speaker 2

And the programming is really needed, the live and local, in those communities. So that holds up. That is holding up better than the larger market, of Local Business and Larger Markets. We did see a slowdown from Q1 to 2nd. Again, it's a different it's a tale of 2 cities, small heart markets versus large, even on the local front too.

Speaker 3

Got you. Thank you. That's all I have.

Operator

Thank you for your question. Our final question comes from the line of Avi Steiner with JPMorgan. Avi, your line is now open.

Speaker 7

Of Thank you. Thank you for taking the questions. Just on the ad environment, which seems to be weakening in the second quarter, How much of that is being driven by maybe the regional banking crisis for lack of a better description or is there some general economic malaise or of Whatever you can point to and just on the overall pacing top line down low double digits. Is there any of onetime items in the year ago period we should be thinking about as we just kind of build out the model or that may need to adjust for that number on a comp basis. And I've got a couple more.

Speaker 7

Thank you.

Speaker 3

Okay. I'll take that. What happened with SED Not directly impacted us in terms of the flows of the business. Having said that, whenever you have weaker confidence, it makes me see how that ripples through the economy and our clients. The weakness that we're seeing in financial, particularly in the insurance category, where it's a big category for us of And those advertisers have been cutting back as they look at their underwriting losses and their need to add customers in this environment.

Speaker 3

Of And of course, with higher interest rates, a big category for us was the mortgage market. And I'm going to have to say, there's not going to be a lot of advertising for of So it's more of a continuation of the same, perhaps a little bit accelerated of in the financial space. So I wouldn't say there's anything new other than the continued uncertainty, and that's why we're seeing continued weaker national market and then our local spot business. As Mary mentioned, as I mentioned in the script, is a little bit weaker of Pacing the Q2. With regard to last year comps to last year, there were no significant one time events last year.

Speaker 3

And so I think the way to think about it is in the Q1 excluding WinBet and political, We were down 7%. Of course, we had political last year. So pacing down low double digits indicates Just that weaker and more and slightly weaker local and slightly and then weaker national. But again, it's early in the quarter,

Speaker 7

Thank you for that color and the clarification on the financial services category Two more for me. Just one free cash flow, it's pointed out as a positive. Working capital, Fairly nice source this quarter, at least the site took a peek into 10 Q. Anything one time there and just how to think about that for the rest of the year?

Speaker 3

Right. Look, our drivers on free cash flow are driven by EBITDA, Obviously, and then just our revenue, the revenue impact on working capital. In In the Q1, we generally generate a bit of cash because seasonally the Q1 is lower revenues and we have the benefit of collecting The sales in the 4th quarter and that's contributed to our working capital benefits of in the Q1, but it's mixed. The second quarter tends to be lighter on cash generation and then of The way we look at it is we try to we do manage and of look at our cash flow on a yearly basis, recognizing we have the swings. If Revenues pickup and that generates a use of working capital that will be temporary, but of With increased revenues, you add increased profitability.

Speaker 3

And if you remember, in 2020, working capital was an enormous source of liquidity of That's for the wrong reasons. We're down 25% for the full year. So we'll just have to manage that. Of We look at all expenses, we look at CapEx and operating and to that all into the mix to generate the free cash flow in the business and give us confidence of With our operating leverage, we're going to be in a position that was done in this weak environment.

Speaker 7

Great. And then just lastly on the expense line to dovetail towards the end of what you

Speaker 3

of Just to make sure

Speaker 7

I heard everything correctly, dollars 8,000,000 kind of cost saves for the balance of the year, I think is what you said on that $10,000,000 you of Assuming that's going to be pro rata cross quarter, but anything else to think about expense wise as we go through the year end? Thank you very much.

Speaker 3

You had a rise from the $8,000,000 more or less throughout the balance of the year. But let me emphasize, we're not over on that. We look at our expense base very closely, and we are in the process of identifying other opportunities We think we may be able to take advantage of, but haven't been able to nail down in such a way that we have been of and we'll give you an update in the next earnings call to the extent we can take out other costs and what the implications for the balance of the year and going into

Speaker 5

C24.

Speaker 7

Appreciate the time. Thank you all.

Operator

Thank you for your question. That concludes our Q and A session for today. I'll now turn it back over to the company for any closing remarks. Thank you.

Speaker 2

Thanks, everyone, for your time today, and we look forward to speaking to you again next quarter. Thanks.

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Earnings Conference Call
Cumulus Media Q1 2023
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