It was a somewhat good fourth quarter for Salem Media Group, the owner of conservative News/Talk radio stations and Christian-themed audio and publishing assets, as total revenue surpassed analysts’ forecasts but missed Earnings Per Share forecasts.
But, what may be a bigger grey cloud for Salem is how the first quarter of 2023 is playing out.
For the first three months of 2023, the company is projecting total revenue to be between flat and a decline of 2%, compared to Q1 2022 total revenue of $62.6 million.
At the same time, Salem is projecting operating expenses before adjustments to increase between 7% and 10%. That’s compared to Recurring Operating Expenses of $55.8 million in Q1 ’22.
That somber outlook failed to immediately damper the spirits of investors, as SALM, which trades on the Nasdaq GlobalSelect exchange, was up 3% in early after-hours trading on Wednesday, to $1.42. That quickly changed by 5pm, with SALM down 4.4% as the company’s Q4 earnings call for investors and analysts began.
Still, the trio of analysts who track Salem anticipated EPS to fall between -$0.05 and $0.00. Instead, Salem saw EPS of -$0.08 as the company swung to a net loss of $2.21 million. In Q4 2021, Salem enjoyed net income of $16.84 million ($0.61 per diluted share).
What happened? Operating income shrunk to $1.63 million from $20.45 million thanks to an increase in operating expenses, which surged to $67.18 million from $48.68 million.
The higher expenses are largely due to higher broadcast operating expenses; there is also a non-cash impairment charge of $2.33 million in Q4 ’22.
Importantly, revenue slipped to $68.81 million from $69.13 million. But, this beat the $66.67 million earnings estimate the three analysts presented in their predictions.
On a same-station basis, net broadcast revenue increased to $53.28 million from $50.97 million in Q4 2022. But, Station Operating Income (SOI) declined to $10.33 million from $12.25 million. Adjusted EBITDA fell to $7.27 million from $10.84 million.
