Q2 2021 Beasley Broadcast Group Inc Earnings Call
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Good morning, and welcome to the Beasley broadcast group's second quarter 2021 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 and the.
Risk factors section of our most recent annual report on form 10-K, and supplemented by our quarterly reports on form 10-Q. 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 measure.
<unk> with their most directly comparable financial measures calculated and presented in accordance with GAAP can be found and this morning's news announcement.
And on the company's website.
I would also like to remind listeners that following its completion a replay of today's call can be accessed for 5 days on the Companys website, Www Dot B B G I 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 Katie and good morning. Thank you all for joining US to review our 2021 second quarter operating results married to that though our CFO is with me this morning.
Before starting and let me just say that we continue to more on the passing of my day.
And our founder and Chairman George can you play he passed away on June <unk>.
Moving on when he founded the company 15 years ago with a single station and North Carolina to 1 of the 5 largest radio group in the country per day with vision and continues uninterrupted and we further our transition from a multimedia platform company. This year represents our 16th anniversary and we all wish that.
And he said B with us to celebrate this major milestone and then.
Moving on to our results I'm pleased to report that the second quarter again revenue, increasing both quarter over quarter and year over year, our AD trend rebound and is being driven by healthy consumer spending and cash.
Soft demand vaccination and the initial return on commuting and customers again, visiting local and national retail shop and of course dining out however, with that being said, we continue to monitor the delta there and yet as this could impact some of our progress and.
Second quarter revenue rose from $96, 1 per cent year over year with over the air and local spot, increasing 116% and national spot increase and 121 per se.
Our overall increase was widespread across all of our markets with healthy double digit increases and Boston, Detroit, Philadelphia, and Wilmington, compare and where we are it's a day to a year ago. We've learned a lot and we are emerging a stronger more efficient media company and a better position across every facet.
And of our business and.
Moving and audio and dessert, all our balance sheet and overall capital structure.
On a 60 year history, we have focused on localism and highly weighted contract that graphic day and connect with our users naphtha result, we maintained significant local reach with and our markets and local revenue remains the cornerstone of our revenue, notably our continued emphasis on strong local call.
Non cat drove best in industry ratings performance, where our station clusters, and the second quarter and our accumulative 1 air audience share has grown consistently we continue to serve our listeners and customers with Thailand weighted programming and market, leading content and with the progress. We've all made against the pandemic B <unk>.
And tend to reopen our debt and third quarter. However, this may change given the delta area.
Second quarter event, and NTR revenue were minimal, but with M. P. R and no debt push into third quarter, we'll get from revenue upside in third and fourth quarter again, assuming no further negative impact on the delta there yet.
And I'm looking at our digital revenue and our Daddy upward curve of recent quarter. Our digital revenue grew 96% year over year and accounted for $13.4 per cent of total second quarter revenue and 12, 8% year today and this compares with digital revenue accounting for 76 per cent of 10.
It'll 19 second quarter revenue and 6.9% year to day and the comparable 2019 period revenue and cash flow diversification and will remain a strategic priority and we're making meaningful progress on all of these front and.
As discussed and disclosed before with the continuous growth and focus of this revenue channel and it eclipse and 10% of total revenue. We're now reporting digital on a segment basis.
Second quarter operating expense reflects several permanent reductions implemented in 2020 as well as the increased cost of sales expenses related to our higher local and national spot advertising and the period Q2 operating expenses also include a free investment and research and marketing, India investments and digital with Iraq are inter.
Digital advertising agency debt is a significant driver of our digital revenue.
Given these factors our 2021 second quarter Soi with $11.1 million and we generated positive free cash flow of just over $1 million.
Now while the last 16 months presented unprecedented challenges for Agri businesses I'm extremely proud of the way our team rose to the occasion and worked tirelessly to enable beasley to generate positive earnings.
And I lied and free cash flow and the second quarter, our strategic priorities remain focused on delivering exceptional content and services to our listeners advertisers and online users and esports fans, while diversifying our revenue growing our cash flow and maintaining a solid and flexible balance sheet and were made.
And consistent progress on all fronts.
In addition to our revenue diversification and expense reduction initiatives. We also remain committed to capital structure improvement that can support our future growth and enhance our financial flexibility earlier. This year, we completed a $300 million offering of $8.65 per cent senior secured notes due in 2020.6.
The net proceeds of the offering were used to repay and full existing indebtedness with the remaining proceeds added to our balance sheet for general corporate purposes, and as a result, and with our positive second quarter free cash flow, we ended the quarter with over $57 million of cash on hand on our balance sheet.
And our competency experience and our team and competitive positions and our market combined with the steps, we've taken to reduce cost and improve operating efficiency position us well for near and long term success, particularly as economic trends continue to improve and our market.
Looking ahead, we expect continued growth and recovery that's Luckily as agile continues to build and that's return and we also expect continued growth from our initial digital initiatives and expecting a definite and that's built out to drive further revenue increases.
Overall, our third quarter is now taking a 30% with July up 40% and August and September are pacing up 29, and 23% respectively.
Now let me also touch on sports betting revenue as this has become a very viable category and was our second largest category and second quarter or second quarter of sports betting revenue increased 340% year over year and represented 5% of our total revenue. This was driven by our film.
Adelphia, Detroit, and New Jersey market clusters, Massachusetts, and Florida or in the process of Goodbye from sports betting, which is passed we will have a positive impact on our revenue given the sports Providence, Providence and targeted demographics, we have and those market.
So now I'm and I turn over the call and marine and she's going to give you a deeper dive and 2 are resolved.
Thank you Caroline and let me begin with a financial review of the quarter, followed by a balance sheet update.
Second quarter, and net revenue increased $96, 1 per se or $29.2 million to $59.6 million inclusive of a 376000 and from our esports operations.
Core AD trends were solid as we generated 85000 net political revenue during the second quarter compared to 270000 and the prior year.
Breaking down the quarter audio revenues increased $24.2 them out and get digital revenue increased $3.8 million and did it all up refreshed and that 13, 4% of total revenue.
Looking closer at the quarter April station revenues were up 128% or $8.2 million compared to prior year may wish to ask 117% or $9, 1 zone, yet and you and what that $65.8 per cent for 12 and now they are year over year.
Station operating expenses for the quarter increased $7.1 million or 17, 2% to 48, and a half an hour ago for shopping and second quarter extra alive, and 11 points, 1 and again compared to a loss of 11 and area and.
On a year ago period.
Our second quarter, Soi and marks over 100% quarterly sequential increase from first quarter 2020, 1 when we had and $5.2 million and X or y.
Quarterly expenses inclusive and exclusive of our 2020 Prime ethics fast reduction increased by 7 points..1 on here primarily from increased cost per sale related to the $29.2 million and increasing revenue the investments and our digital agency and reinvestment and.
The market in terms of research and marketing, we also re instituted wage levels to a pre pandemic level. After the cuts we made last year.
Moving to our revenue categories, we saw on toward improvement across the board consumer services remained our largest revenue category at 30.5% of our total revenue and consumer services increased 80% range compared to second quarter 2020.
Our second largest category retail represented around $14.8 per cent of total revenue and was up from 98% year over year.
Entertainment was our third largest revenue category, representing 11, 8% of total revenue base.
These categories saw a year on year increase of 286% on.
Although our fourth largest category saw revenues up 135 per cent year over year and auto was 9.5% of total revenue for the quarter.
And many pardon me on which closed in second quarter of 2020.
And the category showed huge year over year increases in all on market, especially Boston and Philadelphia, while the auto industry continued having new car inventory challenges. The second quarter increase in spend was primarily driven by increased used car sales and service and most of it.
On tier 2 and tier 3.
We expect here for the rebound and their advertising spend by fourth quarter. After the industry supply chain challenges ease and the auto chip to come from more readily available on.
Our fifth largest category and what's consumer products, which represented 7.6% of second quarter revenue was.
Consumer products interest pharmaceutical food and auto parts and this category increased 143% cash.
And then Tom and utility with 5.5% of total revenues and this category increased 80%.
1 source for competitive and market data that we and try and are we rely up on its Miller Kaplan and.
And just ballpark 15 markets, representing about 91 per cent of second quarter revenues reported to Miller, Kaplan and including our top 5 markets.
On a combined basis Beasley and market clusters drove a revenue increase of 109, 2% for the quarter and suddenly outperforming on market, which rose 85, 9%.
We are taking a larger share of revenue and our markets and that is very evident when looking at local and spa and our clusters outperformed their markets by 'twenty 2.3 per cent.
We also continue to see the markets revenue increased on a combined basis and national switched on and N E. R. I.
I believe this is a metric that carries a value when we live and on local and digital performance inside our market. After that is our main focus and where we see growth opportunities.
Corporate G&A expenses, excluding stock based compensation for the quarter increased 2.6 per se or 93000 compared to the same quarter a year ago to 3.7 million and also down from $3.9 million in first quarter.
Year over year increase and corporate DNA reflects the 2020 expense wage reduction initiative, which was reinstated and the first quarter on 'twenty 'twenty 1.
Noncash stock based compensation increased 102% to 402000 and in the quarter. We had no income tax expense for the quarter and our effective tax rate for the quarter was 27 per cent.
Second quarter 2021 operating income increased $23.4 million to $5.8 million compared to a negative $17.6 million and the year ago quarter current operating income interest and that $1.5 million and insurance benefit.
Total second quarter interest expense increased 3 emails and year over year to $6.9 million, reflecting the recent capital structure changes, we don't have any scheduled non payments and our first semiannual interest payments of $12.9 million was made earlier this week.
Second quarter, 'twenty, and 'twenty, 1 and free cash flow improved meaningfully from second quarter, 2020 to a positive 1 million compared to a negative 24 million and the 2020 second quarter. This turnaround is significant and reflects our advertisers research and as well as hard work.
Murphy's sleeping and we are pleased that debt with second quarter, representing the first full quarter and our newly restructured debt. We are again reporting positive free cash flow.
And that's what reminder, we completed the previously announced 300 million bond offering and first quarter, which were issued at 5 years with a non call 2 at a coupon of 8625 and the process and allowed the company to eliminate all other bank and subordinated debt with excess net proceeds added to our balance sheet.
Moving on to our liquidity, we ended the quarter with $57.1 million cash on hand on.
Our total outstanding debt as of June 30, 'twenty, 'twenty, 1 with 310 million, including 10 million and P. P. P M zone, which is eligible for forgiveness.
Quarter, we spent $1.5 million and capital expenses compared to 2.5 and help me asking and second quarter, 2020 and year to date 'twenty 'twenty..1 we spent $2.6 million versus <unk> 6 million for the same period in 2020 and with that I will turn it back to Caroline.
Thank you Murray as I noted earlier, our stations continued to gain share and audience and our largest market driven by the highest quality and multiplatform and local content and b industry. This is a clear and competitive differentiator and 1 which we will continue to leverage to drive asphalt and the spring ratings.
Periodically our largest P M market by 87 per cent share increase year over year, and a 4 per cent increase quarter to quarter with the top advertising and demographic of adults 25.54.
It's the largest share of Beasley has ever had and our ppm markets and impressively we have the number 1 station and all of our 3 largest markets of Boston, Detroit, and Philadelphia, as Commerce, and consumer activities and our markets continue to strengthen our total on air organic has been consist.
Simply growing and is now more than 91% of where our audience while its prior to Covid and addition to our growing on air audience and share our digital content strategy continues to show great success, our digital impressions grew by over 29% and a second quarter year over year and 13 person.
And that quarter to quarter, the biggest quarter ever for digital impressions for our company now let me give you a quick update on our interest and our off platform. We presently ranked number 3 and the WAF on 5 and the world and that's out of 'twenty team and we completed our first of all I think that since Covid in July.
And more and to expand our esports audience scale and appeal, we are expanding into the rocket League.
We selected this game because it has younger hill is a non tutor P. G friendly gang and will allow us to compete and a game that can be played on virtually every day by delivering a more mainstream easy to understand the game so to conclude it and celebrate our 16th anniversary. This year, our founding values have never been more.
Important evercore, we are a local multimedia platform company that produces unique local content, our brands connect our audience and to their favorite artist sports teams and their local community and as much as the world has changed in the past year. So much of what makes us exceptional since George founded the business and 19 and 61.
Has remained true our commitment to local and our culture of innovation entrepreneurship and leaseback.
Overall I'm so proud of our hard working teams and that's reflected in the improvement we saw this quarter not only on the revenue line, but across all strategic priority diversify or no revenue, creating and expanding our great content and delivering positive free cash flow I. Thank you for your time today and marine and I think we do.
Have a few questions, we do and we have a handful of questions. The first 1 is and how it is third quarter pacing compared to 2019.
Third fourth quarter.
Quarter pacing for 2019.
We are looking at that being about 5% compared to 2019 at this point.
In terms of 'twenty second quarter pacing from 2019, we're looking at that ended down about 10% and that was driven by thought down about 16% offset by increases and dessert all of about 67 per cent and N. T. R. <unk> of course was down and.
Second quarter now for us to be down 5% compared to 2019 and third quarter. We are assuming into euro will come back and piece of debt will come back. So that's a big if.
Out there at this point.
And the next question and is asking for and updates on our PPP loan forgiveness, and so I can share with you that our non forgiveness application was filed and hop on the weeks ago and this is a somewhat longer process and we will be providing an uptake and all of the PPP forgiveness application.
On our next earnings call.
And the next question is if we can provide some color on the contribution of that yes. So in 2019 that accounted for about 5% of our total revenue and that was a little over $12 million, So and second quarter as I, just mentioned and we literally have a you know almost.
And that revenue and.
And and second quarter of 19 debt accounted for 2 per cent of total or $2 million.
The third quarter of 19 event revenue accounted for almost $3 million and and fourth quarter and accounted for almost $4 million. So attending this revenue was able to come back and we can see that gap being and reduce between 2019 and 2021 and and also on.
Helping us is the growth and digital revenue.
Great. Next question is argue continue on to see a shift enlist enlist and nurse to digital.
Do you know at this point, we are actually seeing a shift back to over the air as I mentioned and my comments earlier today.
When you have 91% of our over the air audience back when you compare just because it's less name that being said you know we.
And our listeners are with 1 of our users and our own ecosystem, so whether they're listening digitally or over the air and that is fine with us and also and we'd like to attract and his listeners and by doing that and with that and mine. We are and can be found on multiple channel.
In addition to our owned and operated additional channel with our App and also our site. We're also on Odyssey and you were on iron ore and tune in and of course, and we can be found side Alexa.
Great. Thank you next.
Next question, please describe and nature of the 2020 and cost reductions and how much of these cost reductions will be permanent.
So I won't take that on an annual basis, the original 2020 cost cuts were done in 2 steps they totaled 23, and nelligan and on top of back on them.
We also had cost savings from the market and the first 4 months of 2020 of an additional 8 million. So our total cost and savings came to 31 million in 2020, approximately 6 million or 19 per spans all jealous Cup more permanent.
And the last question, we have Caroline and you said when do you anticipate a rebound to a pre COVID-19 revenue level, yeah, assuming that NTR event and are coming back.
We do anticipate that.
Revenue will.
Come back to pre Covid levels near term, but realistically it could be 2022 and.
And and once we start seeing revenue come back to B levels, and we see normalized operations and our operating income b compared with pre Covid and we would like to take on work a dividend at that point and that being said, we will also keep it working.
On the leverage and it Leverages the point, where we feel comfortable with and we'll take a look at the parent.
Thank you.
And that's all the questions we have.
Thank you all very much for your time and as always please feel free to call and Marie or myself.
Have a great day.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
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