Good morning, everyone, and welcome to the Saga Communications Second Quarter 2024 Earnings Release and Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Chris Forgy. Sir, the floor is yours.

Thank you, Matt and thank you to everyone who’s taking time to join the Saga Q2 earnings call. We appreciate your continued interest, your questions, your support and your participation in what we believe is the best media company on the planet. It’s been an interesting week this week. Monday marked the largest single day decline in stocks in Japan since 1987. There’s been talks of a recession – the U.S. recession, they continue. Tech stocks are overpriced. There’s political uncertainty and there’s a rising risk of a wider conflict in the Middle East. The speed and depth of this recent global sell-off is compounded by both the aforementioned and thinner than usual volumes in the month of August, which traditionally is a quiet trading funds. And the Fed’s delay in lower interest rates is probably indicated and impacted the media sector more than any of the other previous countervailing forces I mentioned. Interest rates influence two of the main economic indicators in the media sector, housing starts and automotive purchases. Media tends to feel the impact of this going into and coming out of the economic downturn earlier than other businesses. In other words, we saw this coming. Excuse me. But guess what? We don’t control any of it. So we don’t spend a lot of time with it. We focus on the things we can control, which we will share with you shortly. But make no mistake, what we are experiencing is not a Wall Street thing. It’s a Main Street thing. To illustrate, the categories that experienced the largest decline in Saga during Q2 were restaurants, recruitment, automotive and grocery, consumers eating out less and business is cutting back on hiring and, in many cases, laying off employees, buying fewer cars and going to the grocery less…

Thank you, Chris. This call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties and that are described in the Risk Factors section of our most recent Form 10-K. This call will also contain a discussion of certain non-GAAP financial measures. Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data tables. For the quarter ended June 30, 2024, net revenue decreased 1.5% to $28.7 million compared to $29.2 million last year. Political did not have a major impact. As for the quarter, we had $288,000 in gross political revenue this year compared to $108,000 for the same period last year. Station operating expense increased 5.1% to $23.5 million for the 3-month period. Station operating income, a non-GAAP financial measure, for the quarter was $6.4 million and net income was $2.5 million or $0.40 per fully diluted share. Also, you should note that we recorded $1.1 million in the second quarter and other income, which was cash received for the redemption of stock that we owned in BMI when the music licensing organization was acquired. With the purchase of the 5 stations in Lafayette, Indiana on May 31, 2024, we are now back to reporting on a same-station basis. I’d be remiss if I didn’t add boiler up to my friends in Lafayette there.

Hammer down.

There we go, Chris. You’re on it. Keep in mind that same station is a minor adjustment for this quarter and year-to-date as we only owned Lafayette for 1 month during the second quarter. That said, for the second quarter this year on a same-station basis, net revenue decreased 2.4% to $28.5 million, and station operating expense increased 4% to $23.3 million. For the 6-month period ended June 30, 2024, net revenue decreased 2% to $53.4 million compared to $54.5 million last year. Gross political revenue was $598,000 for the period compared to $301,000 for the same period last year. Station operating expense increased 5.5% to $46.5 million for the 6-month period. Station operating income, a non-GAAP financial measure again, for the 6 months was $9.2 million, and net income was $900,000 or $0.15 per fully diluted share. Keep in mind that as you look at the net income for the 6-month period, that we reported a net loss of $1.6 million in the first quarter, which included a $971,000 other operating expense, which was a non-cash write-off on the sale and abandonment of non-productive broadcast assets and licenses in 2 markets. Additionally, the net income for the 6-month period reflects the $1.1 million in other income that I talked about in my second quarter performance comments just a minute ago. For the 6-month period this year on a same-station basis, net revenue decreased 2.5% to $53.1 million, and station operating expense increased 4.9% to $46.3 million. On a historical basis, pay increases and related payroll taxes amounted to an estimated $599,000 or approximately 53% of the increase in the second quarter’s station operating expense and $1 million or approximately 43% of the increase for the 6-month period. Both these periods include approximately $200,000 in severance payments for management changes…

Thank you, Sam. As I mentioned earlier, I wanted to spend some time on one of Saga’s radio and then some transformational growth strategies. As many of you have heard on previous earnings calls and perhaps more recently, have read in some of the publications like Radio Ink or Jacobs Blog, Editor and Publisher and Direct Media. Saga is moving full steam ahead with an online news and local news and community sites and 18 soon to be 19 total markets once our newest acquisition, Lafayette, Indiana, is onboarded. This product, as I have mentioned before was the brainchild of Saga’s former Clarksville, Tennessee General Manager, Katie Wheeless, who is now our Director of Innovative Online News Services. Katie will tell you the reason for the development of this original site 12-plus years ago was based on the fact that the 101st airborne out of Fort Campbell, Kentucky was being deployed to Iraq and the service men and women needed a way to stay close and connected to the local community while they were way on deployment. The solution was what came to be known as ClarksvilleNOW. No Op-Eds, no deep dive investigated reporting. We focus on practical community news, city hall, local sports teams and news from the police and fire departments. At the same time, the unfortunate decline of the newspaper industry created a void for local unbiased news source. One of Saga’s company-wide unrelenting non-negotiables is to hyper-local in the communities in which we serve. In fact, some of the members of our market leadership team have served on City Council, the local school board or even ran for Mayor of the city where the radio stations were located. I was asked recently and interviewed by Barrett Media, what is the number one thing people want from…

Thank you, Chris. And we did get a few questions that we will address now, most of which we have already talked about a little bit. The first question is, broadcasters have reported that advertising trends have deteriorated into the third quarter given the macroeconomic trends. What are you hearing from your local advertisers? Are they holding back given the economy? Do they anticipate stepping up advertising as the Fed lowers the rates? You have already talked about this a bit, but would you like to give a little more color?

Yes. Sam, thanks for the question. As I said, interest rates and inflation impact media sector greatly more so than most businesses. And as I have said earlier, it’s a Main Street thing, not a Wall Street thing. And it’s a category of business, being that $2,000 to $4,000 per month of advertisers that have said they will return. It’s just a matter of when. So, we do anticipate them coming back, but they have taken a pause in that space which is clearly a small business.

Very much so. The second question – thank you for that. The second question is, what are the struggles that you have experienced with your rollout of your digital offerings? One of the leading radio broadcasters that has effectively transitioned to digital recently expanded services to offer CRM products. Do you believe that you have runway on your current service offerings? Do you believe that you will still need to invest to offer an expanded product suite?

So, I will answer the first question first. And that is speed, speed is what we need. And so from a sales perspective, our CRM is tied tightly to our entire operation. The investments have been made in the people, the products and the processes. Now, it’s a matter of execution. And our team is getting more and more comfortable with the new processes, kind of making the processes second nature and not having to think before they act. So, they can play fast. And once they are able to play fast and make it second nature, we will be able to better serve our customers because it won’t be clunky and the like. So, being able to play fast by getting comfortable. And yes, we have significant runway ahead of us. We are – as I have said, we have had a number of transformational changes and growth taking place at Saga. And the one piece that we haven’t talked a lot about is the one that’s coming last. And there is a reason we don’t talk a lot about it because we don’t want other people to know about it. And it is the one that is – will have the largest impact and is the slowest, unfortunately.

Very good. Thank you, Chris. The last question, I will answer as I go. But the question was, can you talk about allocation of capital with the recent sell-off of the shares, do stock repurchases represent the best allocation of capital at this point? We have said continuously, our Board discusses capital allocation, share buybacks, dividends, acquisitions, etcetera, on a continuous basis. We do have a 10b5 program in place, but it’s not currently active. Over the past 12 years, we have paid out over $132 million in dividends to our shareholder as a return of capital. Additionally, over the past 20-plus years, we have repurchased approximately 2.2 million shares of stock at a purchase price of approximately $58 million. The Board will continue to evaluate capital allocations. And while buybacks have not been a part of the plans recently, they may be in the future. Okay. I think, Chris, if you have got anything to add, other than that, we can wrap it up.

No, thank you. Sam, I think you can turn it back over to Matt, and we will adjourn. Thank you all very much.

Thank you, Matt. We will let you wrap it up.

Thank you. Everyone, this concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Thank you, Matt.