Q3 2020 Beasley Broadcast Group Inc Earnings Call

Uh huh.

[laughter].

Good morning, and welcome to Beasley broadcast Scripps third quarter 2020 conference call.

Before proceeding I would like to emphasize that today's conference call and webcast will contain forward looking statements about our future performance and results of operations that involve risks and uncertainties described in the risk factors section.

Most recent annual report on form 10, dashed K as supplemented by our quarterly reports on form 10 dashed Q2.

Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of item Ken.

Regulations Ash S dashed Kay.

Reconciliation of these non-GAAP measures with their most directly comparable financial measures calculated and presented presented in accordance with GAAP can be found in the mornings news announcement and on the company's website.

I would also remind listeners that following its completion a replay of today's call can be accessed for five days on the Companys website, Www Dot B B G <unk> dot com.

You can also find a copy of today's press release on the investors or pressroom sections of the site.

At this time I would like to turn the conference over to your host Beasley broadcast group CEO Caroline Beasley. Please go ahead.

Thank you and good morning, everyone and thank you for joining us on election day to review our third quarter operating results. We hope if you haven't already that everyone gets out to though for me to ask our CFO is with me this morning.

Before diving into our third quarter results I wanted to acknowledge the ongoing impact of the team down like on our employees customers and the communities we serve the.

The health and safety of our employees remain our top priority and our company has implemented a variety of internal safety measures following federal state and local guy.

I will discuss in a moment, we adapted quickly to the changing environment and we are seeing promising trends in our various operation that April low we continue to closely monitor the impact of the team down there on our business and any potential clothing.

Well cases are rising we're highly focused on our back to work safely strategy, then visiting our markets to let her team know that unless they are any readthrough or have pre existing condition. Our best future will be realized if we can return to our offices and studios we believe that.

Creative collaboration takes place in our off [laughter] and that our teams can more effectively work together in person rather than through zoo and slash all while remaining say our business is created at its core and our creativity extends from our on air talent to our teams bringing innovation.

Areas, such as sales or digital we have plans in place, which happen to know what the most up to date Guy Onton mine and hope that like other businesses across the U.S., we get more people back to their normal life sooner rather than later it is through a return to our normal that we can reach.

We overcome the impact of the team down there.

We know that nothing compares to personal interaction idea sharing and the social benefit a theme Kali and customer state to state.

Or in our new normal now [laughter], while our third quarter results continue to reflect the direct impact of the pandemic on local and national advertisers, we continue to see a vast improvement and briefly [noise].

Throughout the quarter, we started each month with more dollars on the books and where we ended the previous history.

The strong recovery in our business resulted in third quarter revenue down 25% year over year, marking a significant improvement compared to second quarter. During the third quarter. We again trust monthly sequential revenue improvement with July up 8% emerging in August up 24% over July.

In September rising 22% over okay.

Visibility remains limited political revenue exceeded expectations, and we booked more than two times, our projected annual political doctor.

As a result, our recovery is on pace as evidenced by the positive after why keep a job you recorded for the quarter.

It's clear that the actions we took early on the experience of our team through previous ongoing economic challenges our balance sheet. So that the quality of our contact our strong rating personality and the role we play in communities. We serve have all contributed to our ability to rebound from.

Hello.

In addition, we continue to make progress with our digital growth initiatives with Q3 digital revenue, increasing 1.8% year over year and accounted for 10.1% of total revenue.

We also reduced our station operating expenses by approximately 16% for the quarter, including as previously disclosed continued wage cost permanent terminations furloughs and negotiated temporary and permanent discount overall the company has reduced its operating expenses throughout the year.

In my more than 32 million from our 2020 operating budget.

Finally, we amended our credit agreement to provide a bridge into revenues have normalized and we can resumed normal covenant reporting which begins in September of 21 gonna handed over to Murray now who will provide you a deeper dive into the corner.

Thank you Caroline let me talk for the right view or whatever so followed by a review of our balance sheet.

First quarter net revenue decreased 24% or 16.5 million to 49.6 million inclusive of 495000 from our 14, the alcohol and the runway we generate a female again in next political revenue and that compares.

She was 800000 in the prior year right.

Breaking down the revenue for the quarter July was down 32% year over year August was down 26% and in September we saw a 19% decrease year over year.

Station operating expenses for the quarter decreased 15.9% to 41.6 million for shopping center at July one [laughter] 2023rd quarter station operating expenses include 1.3 million of expenses related to our E sports team that.

He did not happen 2090, all south of 236000 in expenses year over year from the September 29 C.W.P.M.K. acquisition.

And 1.1 million of Afghanistan, but.

Related to our digital growth initiative, which.

Which was recorded under corporate expenses.

For 2019 that are not allocated to our station so.

So I mean, you can see in our continuing pandemic response, we have been diligently reducing our operating expenses, including corporate corporate initiative expense cuts of 23 million movie I have 2020. In addition to voluntary market custom seating in first and second quarter of close to $10 million.

Now looking at our revenue categories, My first quarter on an actual basis join me asking packets area.

Denver services remained our largest category at 27% of our revenue and we had a 21.9% year over year decrease in this category for the quarter. Our second largest category third quarter was retail which represents around 15% revenue and the retail category declines.

25.5%.

No no deepwater blocks with revenues down almost 34% on it was around 12% of the total revenue for the quarter.

This category was hardest hit in Boston, Charlotte Santana and Mustang.

Our fourth largest outdoor for the quarter was well go to call, which represented 9% so.

Water revenues and while as I said up meaningfully from last year as well. That's my guess is the last question Sanjay election cycle number five months telecom and utilities at 6.3% of total revenues and this category was down 21% and finally consumer products.

That's just pharmaceuticals food use your product from encore accounted for close to 6% of total revenue and this category declined nearly 46%.

On a same station basis consumer services decreased 23% retail declined 26% auto was down 34% consumer products declined 46%.

And your payments was down 56% [laughter] softening Super shot.

Corporate DNA samples for the quarter decreased 1.6 million compared to the same quarter prior year to 3.7 million. The decrease in corporate DNA is related to the previously discussing staff reduction initiative and reallocation from digital expenses from corporate aftermarket.

To quantify the digital investments we spent approximately lock we see now again in the third quarter and 3.5 million years today, we will companies or should be digital access to our hearts go out the balance of 2020.

Non cash stock based compensation was down 62% to 229000 in the quarter and we had an income tax benefit for the quarter of 1 million our effective tax rate for the quarter was 27% of the law and certain expenses are not deductible for tax purposes.

Reported third quarter 2020, operating income was 835000 compared to 9.4 million in the year ago score the decline in third quarter operating income primarily reflects the year over year as to why they sign up 8.6 million an increase in depreciation and.

Our first nation of 1 million, which was offset by lower corporate expenses.

Third quarter interest expense increased 138000 year over year to 4.5 million. Yeah. We did not have any scheduled debt payments on our credit facilities. During the quarter. However, we used our shops to reduce the models that by approximately 2.2 million we.

We ended the quarter with cash on hand of 16.5 million.

Our total outstanding debt at the end of third quarter was 270.75 million inclusive of 7.75, now I secured debt related to the Houston outlaw acquisition these costs.

Actually 273 million at June Thirtyth 2020.

Based on the latest amendment on our current credit agreement. We currently have five weekly reporting requirement of a minimum liquidity of 8.5 amounting.

And as of September Thirtyth 2020, we were in compliance and based on current ask anything on revenue trends expects to remain compliant until Weberstown normal color number 40 in September 2021.

Finally, the company that's a million dollars in capex for the quarter compared to 2.2 million units in the prior year quarter, and 7 million year to date compared to 6.2 million yesterday 2019. These include Dr. adelphia build out in first quarter as well as our corporate sales out and our cyber security initiative.

That's been ongoing threw off from here and with that I'll turn it back to teradyne. Okay. Thank him marine so to provide further color on third quarter revenue start revenue, including clinical decreased 28% with local down 34% and national down 11%. We also.

Can you just see our smaller markets being less impacted by coal, but and this is partly due to their focus on local direct business and then of course my worry openings in our larger markets did.

Digital has mentioned earlier was a bright spot for the quarter, increasing by 1.8% and it has increased 8.7% on a year to date basis E. Sports continues to be a growing and popular facet of our company given the sports cobot crews online play format and our offerings.

[noise] enormous appeal to the millennial and Jancee demo tour Hsas with gaming well have more to calm about E sports next quarter moving onto the fourth quarter. We ended up in the high single digits.

Well as far as October goes and despite minimal political Nov has improved as well and is pacing down in the low double digits.

Asked Kobin cases increase we remain cautiously optimistic about the remainder of fourth quarter and into 2021, so to recap our 24.9% decline in revenue is a significant improvement from the 54% decline in second quarter and coupled with the operating expense ratio.

Doctrine of close to $8 million allowed us to pass on that satellite and you put off for the quarter looking ahead to fourth quarter and into 2021. Our focus will include growing our cash flow and maintaining a strong balance sheet with.

Clarity at the current level or higher while we aren't under its leverage covenant until third quarter or 21, reducing our leverage is a priority and we are working towards returning to our free covered level. We're not leverage was in the mid four times and essentially lane better goal of four times or overlap with.

Our continued focus on the highest quality local content our station's ratings performance remains the best in the industry. In fact, according to Nielsen our Q3, P.M. ratings cluster hollek share, what's the highest of any other major broadcaster in the industry.

At the moment, we have one or more top three stations in 11 of our 13 branded market.

With the top advertising demographic a persons 25 54.

And finally, I would like to acknowledge our team members across the company for the sacrifices that they have.

Have made and everything that they are going to help us a draft and overcome the challenges of the last seven months and on behalf of all of our employees. We thank you very much for tuning mantra all.

Hi, Maria and handed over to you.

Great. Thanks, Caroline So we yeah, we always ask for questions and we'd be received a one question about our pacing and because of that we have I'll say that our current pacing as of this morning, and your language is nice to talk with you, though yeah.

Yeah I'm just so as I said earlier, we did and October up in the high single digits and Nov has improved as well and is pacing down in the low double digits.

Thank you your family all the question Okay, well. Thank you very much if you have not had any questions. Please feel free to reach out to Marie or myself and we appreciate your time this morning.

Thank you very much ladies and gentlemen. This now concludes today's conference you may disconnect your phone dimes and have a great rest of the week. Thank you.