SAGA COMMUNICATIONS INC Q1 FY2025 earnings call

Potential Asset Sale

• Evaluating nonbinding letter of intent to purchase some tower sites; proceeds to be used for stock buybacks.

Board Composition

• Welcomed Mike Scafidi to the Board; Marcia Lobaito retired; continuing board refreshment.

Digital Strategy

• Blended approach (radio, search, display) as the digital strategy; digital ad revenue growing; interactive revenue up; online news initiative doubling; local direct improving; radio as the start of blended advertising.

In Q1 2025, net revenue decreased 4.3% to $24.2 million compared to $25.3 million last year. Same-station net revenue decreased 6.6% to $23.6 million. Station operating expense was $22 million, down 2.2%, with same-station operating expense at $21.3 million, down 5%. Total interactive revenue was up 14% with a 51% profit margin (excluding sales commissions). Online news initiative revenue almost doubled from $285,000 in Q1 2024 to $562,000 in Q1 2025. Digital ad revenue for 2025 YTD was $5.3 million, with 4 straight months of significant growth, and May 2025 expected to be the largest single month in digital ad revenue history.

Second Quarter Pacing

• Pacing down mid-single digits, with April down high single digits, May down low single digits, June flat. Interactive pacing up 18.4%.

Capital Expenditures

• Expected $4-4.5 million in 2025; $700,000 spent in Q1 2025.

Expenses

• Station operating expense expected flat or decreasing 1% in 2025; corporate expenses anticipated $12 million in 2025.

Tax Rate

• Expected 27%-30% with deferred tax 2%-6%.

• Threatened proxy contest led to $110,000 expense in Q1; additional legal/proxy/annual meeting expenses in Q2.
• Uncertainty around tariffs impacting advertising spend.

Q: It seems that there has been some impact on advertising spend related to the concerns around the tariffs. Are you seeing improvement in ad trends following assuaged concerns around tariffs?

A: I think there is a -- will be a ripple effect. We're going to see it on Main Street. We're going to see it in all products and services that are sold and consumed. We have not seen that as of yet. As I mentioned in the early parts of the call, Sam, one of our categories that had not been in the top three has now inched its way back in, and that's automotive, which seems to be the biggest discussion about where the tariffs are going to be coming from. And so we'll see, but there certainly will be a ripple effect in cost of goods sold.

Q: We got a few questions that came in this morning, Chris. Most of them, I think we've already addressed, but I'll just walk through it. The first one is, it seems that there has been some impact on advertising spend related to the concerns around the tariffs. Are you seeing improvement in ad trends following assuaged concerns around tariffs?

A: I think there is a -- will be a ripple effect. We're going to see it on Main Street. We're going to see it in all products and services that are sold and consumed. We have not seen that as of yet. As I mentioned in the early parts of the call, Sam, one of our categories that had not been in the top three has now inched its way back in, and that's automotive, which seems to be the biggest discussion about where the tariffs are going to be coming from. And so we'll see, but there certainly will be a ripple effect in cost of goods sold.

Q: The two questions, had to do with digital performance in the quarter and what the trends are in the second quarter and breaking down digital and legacy broadcast revenue guidance?

A: We don't break it down specifically. I do think we addressed the performance in the quarter and the trends in the second quarter. So I believe that will help with the questions.

Q: Any color on the advertising categories that are weakened from the first quarter versus the second quarter?

A: I think you addressed what had strengthened in the first quarter and where we were going. So I'm not sure that talking about the weakened categories because we are seeing some of our main categories do very well right now and showing some positive growth for the second quarter.