Q4 2020 Beasley Broadcast Group Inc Earnings Call

Thank you.

Good morning, and welcome to Beasley broadcast group's fourth 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 of our most recent annual report.

On form 10-K, as supplemented by our quarterly reports on for Chuck.

Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of item 10 of regulation S. K.

A reconciliation of these non-GAAP measures with their most directly comparable financial measures calculated and presented in accordance with GAAP can be found in this morning's 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. I Dotcom you also.

Can 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 Casey and good morning, everyone. Thank you for joining us to review, our 2024th quarter and full year operating results Marie Tedesco. Our CFO is with me. This morning first let me provide a quick update on our recent capital market activity and the success.

<unk> is a first time issuer in the high yield market on February 2nd we closed on our oversubscribed 300 million bond offering which allows us to terminate I term loan b revolver in all subordinated note.

The bonds were issued at five years with a two year non call and a coupon of $8 65 per cent. In addition to on allowing beasley to repay and for all prior and that isn't that the remaining net proceeds of 25 million were added to our balance sheet and can be used for general corporate per.

We believe this transaction improves our liquidity profile and provides capital as we continue to diversify our business revenue and cash flows to a higher growth area.

With respect to Q4, it proved to be a very strong quarter as we generated more than three times the expected political revenue, which helped to offset some advertiser hesitation as well as the increased restrictions we experienced it in some of her on market beginning in mid November which was more pronounced N b.

December and we are seeing net as we go into 'twenty and 'twenty, one as well overall, we recorded approximately 10.2 million of political revenue in the fourth quarter with approximately $6 9 million in October strong political markets for us where our Charlotte Detroit.

Augusta and facile with quarterly sequential revenue growth in the third and fourth quarters. We continued to see improvement in weekly ads with monthly sequential revenue increases in October and November when excluding political December revenues were down slightly due to one less Patriots game and.

Just mentioned tightening on restrictions in several of our markets. Despite the pandemic and related restrictions, we generated year over year revenue increases in six of our markets, which resulted in overall for Q revenues down five per site, which is a substantial improvement when comparing to second and third quarters.

During the quarter, we continued to make meaningful progress with our digital growth initiatives as Q for digital revenues rose seven 6% year over year and accounted for $10 six per cent of total fourth quarter revenue.

And that's up from nine 2% and for Q 19. The trend was also evident in the 'twenty 'twenty four year results as digital revenues represented 10, 6% as total revenue compared to seven 6% in all of 19 as noted earlier diversifying our revenue and cash flow.

As a strategic priority and we believe our 'twenty 'twenty results demonstrate the complementary nature of our radio business with our Detroit and esports operations are.

Our fourth quarter performance also highlights the significant operating benefits from the actions. We took in 2020 to address the pandemic, including reducing station operating expenses and negotiating discounts with our partners, reflecting these efforts and initiatives fourth quarter expenses decreased $14.

Four per cent year over year, which resulted in fourth quarter Soi, increasing 28, 8% to $20 1 million for high end of the range. We provided in our January 14th Q4 per year now and that compares with $15 6 million in last year's Q4. In addition force.

S O Y less corporate expenses increased by approximately $62 four per cent to $16 5 million compared to $10 1 million in for Q 19, and again. This was at the high end and our January 14th queue for pre announcements.

As we reflect on 2020 I couldn't be prouder of the resiliency and determination shown by our corporate station digital and esports team members. During what was a very challenging year for all of us from both a personal and professional standpoint, we successfully endured unprecedented.

Changes to our business created and implemented enhanced safety protocols and continue to execute on our long term strategy by reevaluating and re imagining our operations and content offering while accelerating our digital transformation. So now I'm going to hand, it over to Marie.

To give you a deeper dive into the quarter.

Thanks Carolina I will start with our revenue on the fourth quarter results, followed by a review of our balance sheet.

Fourth quarter net revenue decreased just 5% or $3 6 million to $68 5 million, which includes 732000 from our esports team the outlaws and the renegade.

We generated $10 2 million net political revenue compared to 500000 in the prior year.

Breaking down for the quarter October increased 9.11st on year over year with approximately $6 nine long enough to let it call November was down 8.2 firsthand and in December we saw a 15.9% decrease year over year, primarily due to one less day drifting play.

It's a 2019 as well as tightened restrictions in some of our markets due to COVID-19 search and second wave and some of that's market.

Despite the headwinds we grew revenue revenue year over year at our Atlanta, Augusta, Detroit, Fayetteville, Tampa, and well my son clusters.

Full year revenue decreased 21.21st on or $55 for ammonia to $206 1 million inclusive of approximately 15 points to a million of political ad revenue.

Station operating expenses for the quarter decreased $8 1 million or 14 point for her son to $48 3 million for shopping in fourth quarter 'twenty 'twenty S. L. I F. 'twenty 'twenty, one and now again, our significant quarterly expense production Easter day rest for solve for box.

Response to the pandemic, including company initiated expense cost and saving in excess of 32 million against our 2020 operating budgets and in excess of 23 million against our station operating expenses in 2019, excluding esports.

Full year expenses decreased $9 four per cent or $18 nine on yeah.

Two $182 2 million, including esports with and so on for the full year decreasing 64 per cent to approximately 24 million.

Now looking at our revenue categories for fourth quarter consumer services, including service oriented businesses remained our largest revenue category at 20 515 percentage of our total revenue and we have a 513% year over year revenue decrease in this category for.

For the quarter and that compares to this category being down almost 22 for sand in the previous quarter, our second largest category in fourth quarter, what political revenue, which were for standard around 15 from one off fourth quarter total revenue.

Retail came in the third spot on in Roper stand at around 13, and a half first half of our revenue in this category declined 24%.

Although our fourth largest category saw revenue was down close to 31 first asking year over year, but showed a modest increase from the previous quarter auto was around nine on a half percentage of our total revenue for the quarter.

This category worked hard on his passing Boston, New Jersey, and Las Vegas, I think markets and there are some of the larger COVID-19 driven restrictions during the period.

Our fifth largest category was entertainment, which represented $8 four per cent of fourth quarter revenue.

Consumer products, such as Pharmaceuticals, food beauty products in August for accounted for five and a half percentage of total revenue in this category declined nearly 38%.

Telecom and utility was four nine for signs of total revenue and this category went downtown for a shot.

On a full year basis consumer services decreased $15 six first on retail declined 31.6 per son, although was down $36 five per cent consumer products declined 44 on a half firsthand entertainment was down 47, 21 per cent and telecom slipped out.

On the 20 per cent.

Corporate G&A expenses for the quarter decreased almost 49 per cent or by 1.8 million coffee. After the same quarter a year ago, two or 3.7 million the year over year decrease in corporate G&A is related to the previously discussed expense reduction initiative and allocation of certain.

They should all expenses from core for us to our market.

Full year corporate G&A decreased $5 6 million to $15 6 million.

Noncash stock based compensation decreased 85 per cent to 56000 in the quarter and decreased 65 per cent or one point for ammonia to 751000 for the full year we.

We had on income tax expense for the quarter on a 4.3 million and net income tax benefit for the full year of $5 2 million, our effective tax rate for the quarter was approximately 28 for sun and with what happens on tax liability for 'twenty 'twenty one.

Fourth quarter 2020, operating income was $19 6 million and reflecting the year over year increase in Soi, we significantly exceeded prior year operating income of $11 2 million, which in the prior year included 17.1, and they'll get a gain on disposition and authorities.

$10 7 million noncash impairment loss.

In addition in the current quarter, we close on this day all of a piece of land in Charlotte North Carolina with net cash proceeds are for Wednesday familiar on December 31st that was partially offset by a $2 2 million noncash impairment charge for the divested assets.

Full year operating income declined from $38 1 million in 2019 to allow for a four point that email me on a day restaurant selection of the loss of revenue during the pandemic, particularly in the first half of 'twenty 'twenty, partially offset by reduced operating expenses and lower corporate expenses.

Total fourth quarter interest expense increased by 175000 year over year, two for 3 million and for the full year 2020 interest expense increased approximately 1.1 on yet due to increased borrowing costs.

We did not have any scheduled from long desk payments during the quarter. However, we reduced the marvelous not by 2.25 million at the end of December.

Fourth quarter 2020 free cash flow was $16 8 million compared to $20 7 million on into 2019 fourth quarter, which include that from 1.8 million net proceeds from disposition.

Fourth quarter 'twenty 'twenty also reflects lower capital spending the aforementioned expense reductions and then net proceeds from the land sale.

We ended the quarter with cash on hand of 28 million.

Our total outstanding debt as of December 31st 2020 was $268 5 million inclusive of $10 5 million net unsecured debt.

Pro forma for the completion of the 300 million bond offering completed in first quarter average.

If it had occurred by December 31st, including the repayment of all prior existing indebtedness on total outstanding debt was 300 million.

And finally, the company spent 481000 in the current quarter on Capex compared to two for 1 million, Inc. Fourth quarter of 2019, and $7 5 million for the full year of 2020 compared to 9 million and the phone you're off 2019 and with that I'll turn it back.

Carolina. Thank you Murray to provide further color on fourth quarter revenue spot revenue, including political was down just two 6% with national increasing 45 per cent and that does include $10 2 million of net political revenue and local was down 20 points.

6% well October political had a significant impact on the quarter. It is important to mention that excluding political we still saw a sequential increase in both October over September and November over October digital revenue continues to grow in the digital expansion is a priority at the digital star.

Sales team is laser focused on driving net new digital revenue and targeting to sell of non radio products to non radio advertisers.

E sports continues to be a growing and popular facet of our company given the sports Covid crews online play format and it's increasingly massive appeal to younger consumers are E sports offerings have enormous appeal to the Gen Y and Gen Z demos, who makes up the majority of the gamers and with respect to our property.

The I'll ask ranked as the weeks for the most popular team in terms of fan viewership and social media followers and merchandise out and we look forward to building on our first year successes and leveraging our learnings going forward now moving on to 'twenty 'twenty. One first quarter is currently pacing down about 18 per.

That and breaking that down January was down 21.5 per cent with fab in March pacing down approximately 16, and 15% respectively. We do expect fab in March pacing to improve as we get further into them on and the quarters. As this has been a consistent trend over the past several months.

And as a reminder, last year's first quarter had a strong start with both Jan and fab up 7% over 19 and that was followed by Mark just decline due to COVID-19.

So to recap fourth quarter or five per cent decline in revenue is a significant improvement from the 54 per cent decline in second quarter and 25 per cent decline in third quarter. The revenue improvement combined with the operating expense reduction of $8 1 million allowed us to post positive S N Y and positive EBITDA.

For the quarter and a special note our S O I S O wide last corporate expense and EBITDA were all greater in fourth quarter of 2020 compared to the same quarter in 2019.

Looking ahead, the first quarter and into 'twenty 'twenty. One our focus will include growing our free cash flow and maintaining a strong balance sheet with liquidity at the current level or higher and while we no longer will be under a leverage covenant, reducing our net leverage continues to be a priority and we're working towards return.

To our pre COVID-19 level of med for time.

With our continued emphasis on the highest quality local content our ratings performance remains the best in the industry. In fact, according to Nielsen Beasley for Q4 P. P. M ratings cluster bulwark share was once again the highest on any other major broadcast or in the industry during the fall 'twenty right.

Eating period, we had one or more top three stations in 10 of our 13 markets.

Weighted market with the top advertising demographic of adults 25, 54, and finally, our total on air audience are Kim has been consistently growing since the pandemic began and now we're at more than 90 per cent of where our audience was prior to Covid and we do expect it to continue.

To see growth in our key in going forward as our markets open up so before going into Q&A I'd like to acknowledge our team members across the company for everything they've done and are doing to help us quickly address and overcome the challenges of last year and any has that we have seen thus far for 'twenty two.

One so thank you very much and I'm going to turn it over to Marie.

Thank you Caroline and we have received just a couple of questions with the first one asking to discuss a leg up on and MTR business and when and when will we see a return to those.

Right, So where I'm excited about the potential opportunity of live events and NTR. Returning this business to actually accounted for more than five per cent of our revenue pre COVID-19. However, we do expect this revenue to come back hopefully by the end of this year and going.

[noise] into 'twenty 'twenty, two as the states start opening up and we're able to host events right.

Great. Thank you and we were also asked to dive into esports on metal and review any growth opportunities in this sector right. So given where we are today we have.

Have great assets across our esports space. These are complementary E sports assets and they are somewhat COVID-19 proof as we saw last year.

We do believe that this space combined with our traditional assets on learning actually allowed us to make lemonade out of lemons last year, and we look forward to applying some of these same principles in 'twenty 'twenty, one, but that being said I do want to focus on digital today, because that is our focus.

In 2021, we are looking to attract non radio clients to generate added revenue and as we said in the past our internal target is to have 20 per cent of our revenue coming from digital.

And potentially a larger number longer term so with that thank you great. That's that's great. Thank you and and that's from Western stack. We have from this morning, alright, well. Thank you very much for your time today and should you have any questions. Please feel free to reach out to Marie or myself.

Hope you have a great day.

Yeah.

Ladies and gentlemen, this concludes today's call. Thank you for your participation and you may now disconnect your phone lines.

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