Q3 2021 Beasley Broadcast Group Inc Earnings Call
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David.
Yes, ma'am good morning, and welcome to Beasley broadcast group's third 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 in the risk for.
Actors section of our most recent annual report on Form 10-K as 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 measures with their most directly comparable financial measures calculated and presented in accordance with GAAP can be found on this morning's news announcement and on the company's website I.
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 U.
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.
<unk> broadcast group CEO Caroline Beasley. Please go ahead.
Thank you David and good morning, everybody. Thank you for joining us to review our third quarter results Marie Tedesco, Our CFO is with me this morning.
Pleased to report strong third quarter results, where we again generated revenue increases quarter over quarter and year every year, we delivered overall third quarter revenue growth of 26, 7% with over the air local spot revenue, increasing 31% and national spot revenue, increasing 23% while the delta.
And in some markets next quarter, we continue to see an overall rebound from the pandemic, including improvement in core radio advertising as well as from our digital platform looking at digital revenue in our steady upward trend of recent quarters. This revenue stream grew 67% year over year and accounted.
Or 13, 2% of total third quarter revenue and 12, 9% on a year to date basis.
Here's with digital revenue accounting for 10% of 2020.
6% of 2019 third quarter revenue, it's important to note that ex political total third quarter revenue would have grown 34%.
We drove total revenue increases across all but one of our market with Detroit, Las Vegas, and Wilmington, delivering year over year increase it about 40%.
Anymore, when comparing third quarter 2021, with third quarter 2019, our total revenue declined approximately four 8%. So we're closing that gap even further as we go through the year I think you know we returned back to the office every year we.
We've seen the benefits of that especially when looking at our performance compared with the local market.
With respect to our markets and emerging AD categories, we have bought that they stress, but let me touch quickly on sports betting revenue stream path and continues to grow into a very meaningful category was our second largest category in Q3 growing 228% year over year.
And it represented $4 3 million or seven 2% of our total revenue for the quarter. This growth was driven by our Philadelphia, Detroit, and New Jersey market clusters, notably, Massachusetts, and Florida or in the process of legalized sports betting, which impact will have a positive impact on our.
Revenues next year.
Our monthly revenue in the third quarter reflect increased consumer spending and demand as customers are visiting in local and national retailers and dining out more July revenue was 39% year over year, while August and September increased 29, and 16%, respectively, Our third quarter operating.
Expense reflect permanent cost reductions implemented in 2020 offset by the increased cost of sales related to the significantly higher level of local and national spot advertising in the period, which accounted for about two thirds of the quarterly expense increase.
Q3 operating expenses also include our reinvestment and event marketing and to continue investment in our internal digital agency that is a significant driver of our digital revenue.
Given these factors our third quarter Soi with $11 7 million and we generated positive free cash flow of just over $1 7 million with our third quarter free cash flow, we ended the quarter with over $48 million on our balance sheet overall.
Overall, our fourth quarter is now pacing up 2% with October down 12, and this is solely due to the comp last year, which included $7 6 million of net political advertising and November and December are pacing up 16, and 13% respectively, excluding political our pacings would be.
Up 25, 5% and we are currently pacing, one 8% down when compared with fourth quarter of 19. So we are further closing the gap with 19, and we hope that we'll be at even or even better than 19 by the end of the quarter. So now I'm going to turn it over to Marie.
And he's going to give you a further update on third quarter. Thanks.
Thanks, Caroline and after that I will begin with a review of the financial results followed by a balance sheet update.
Third quarter net revenue increased 26, 7% or $13 3 million.
$62 9 million, which includes approximately 500000 from our esports operation core AD trends were solid as we generated 225000 in net political revenue during the quarter compared to 3 million net political in the prior year third quarter breaking.
Down the quarterly revenue also increased 28, 6% or 12 million and EBITDA rose, 67% or three planning area with digital now representing 13, 2% of total revenue.
Nothing close or at the quarter July station revenues was up 39% or $5 2 million compared to prior year August was up 29% from $4 8 million in September was up 16% or $3 2 million year over year as Karen I know that's excluding political.
Our third quarter revenue growth was 34%.
Station operating expenses for the quarter increased $9 6 million or 23, 1% to $51 2 million, resulting in third quarter 2021, Soi of $11 7 million, a 45% increase compared to $8 1 million in the year ago period, our third.
Quarter expense increase of $9 6 million is inclusive of the higher AD revenue related cost of sales, which inclusive of our digital direct agency represents approximately $6 3 million increase or 66%.
Other factors are the institution of the 'twenty 'twenty wages to pre pandemic levels, including bringing back certain furloughed employees, which combined represents around $1 5 million and we increased our concert and marketing expenses year over year by approximately $1 5 million.
Yes.
Moving to our revenue category, we saw a quite improvement across the board.
Tim or service that remained our largest revenue category at 28, 2% of our total revenue and consumer services increased 36% compared to third quarter of 2020.
Entertainment jumped one number two category.
In part due to the growing sports betting revenue and represented 15, 8% plus total revenue.
On behalf of womens category increased 139% year over year, our third project third quarter category retail represented 14, 8% of total revenue and was up 20% year over year.
Auto our fourth largest category saw revenues flat and represented eight 8% of total revenue for the quarter, notably despite continued labor and supply chain issues, which held back spending the audit categories showed year over year increases in most of our market.
We slashed declines in Boston and Philadelphia, We expect auto still continued to strengthen towards the end of the year and still have significant growth in 2022.
And of course, they come more accountable and automakers again from a new model and compete aggressively for electric car sale.
Our fifth largest category, what's consumer products, which represented seven 1% of the quarter's revenues and this category increased 63% Telecom and utilities was five 2% of total revenue and increased 7% with fan basket or anything of that we are also.
Seeing a significant revenue increases at our station in Boston, and Philadelphia, where sports station WPZ and W. P. E N had a combined revenue increase of 37% year over year.
Overall Forex represented approximately 18% of our total revenue for the quarter.
Looking at our market performance. According to Miller Kaplan seven of our 15 markets representing about 83% of our third quarter revenue reports to Miller Kaplan inclusion have top five market on a combined basis Beasley market clusters.
Clusters drove a revenue increase of 26, 9% for the quarter significantly outperforming the market, which rose 25%, we're taking a larger share of revenue in that market and that is very evident when looking at local spa at our cluster increased $30.
6% compare compared to the combined market, which increased $22 five first that our outperformance was broad based as we exceeded the market revenue increased on a combined basis in local total spot DHL network and MTR revenue.
Corporate G&A expenses, excluding stock based compensation for the quarter increased 7% or by 216000 compared to the same quarter a year ago to $7 million.
Here on your increase in corporate G&A, primarily reflects the reinstatement of the 2020 expense wage reductions.
Noncash stock based compensation increased 10% to 251000 in the quarter and we had no income tax expense for the quarter. Our third quarter 2021, operating income increased $4 1 million to $4 9 million compared to 835000 in the year.
The quarter the increase in operating income eight organic and reflects the increase in soi for the quarter.
Total third quarter interest expense increased $2 5 million year over year to 7 million, reflecting our recent capital structure changes, we don't have any scheduled loan payments and our second semiannual interest payment is scheduled for February one 2022.
Third quarter 2021, free cash flow improved meaningfully to a positive $1 7 million compared with a negative 533000 in the 2023rd quarter. They continued to turnaround is significant and again reflects a growing revenue share strong market position.
And the hard work of the baseball team.
Our total debt at the end of third quarter remains that's 800 million with an additional 10 million in an outstanding T E C zone, which is eligible for forgiveness.
Moving on to our liquidity, we ended the quarter with $48 1 million cash on hand.
Our capex spend for the quarter was $1 2 million compared to 1 million in the 2023rd quarter and $3 7 million year to date 2021, compared to 7 million year to date in the 2020 year and with that I'll turn it back to Caroline. Thank you Murray so our priority.
And strategic focus is creating top quality, one ear and digital content and growing our audience, which in turn drive revenue graph and the summer Nielsen audio rating period, our largest P. P. M market saw a 4% share increase year over year with the top advertising demographic of adults 25 54.
Sure we continue to maintain dominant positions in our largest markets of Boston, Detroit and Philadelphia with the number one station in all three metros plus according to Nielsen, we had the highest average P. P. M cluster share of any major radio broadcaster with adults 25, 54 enough that I am extremely proud of.
As it is a direct outcome of our culture and focus on providing consumers with the best audio Entertainment news and information and it's representative of the phenomenal team we have in place now moving to our digital platform. The investments we've made on our content side are clearly value, creating and resulted in <unk>.
Q3, being a record high quarter for impressions on our website platform up 13% year over year with well over 53 million impressions for the quarter. Additionally, our streaming audience was up 17% year over year moving onto Esport, Let me provide a quick update on the Houston alcohols as we just.
Wrapped up the number four and the final here playing Overwatch one season five is expected to start sometime in April or May of 2022 coordinated with Activision Blizzard released Overwatch two and this is the long awaited revamped game that is expected to take the video gaming industry by storm work.
Actively finding players for next season, and we're planning to roster of mixed lineup of eastern and Western player and as a follow up from the last call on rocket League and after summer wide search to find and find our first expansion team we'd launch team accelerate into the lease on October the eight for the kick off of there.
Inaugural season, this team required a far smaller investment than the outwork and it's already profitable as our learning from our esports operations plus already existing infrastructure has made us more efficient leading to a faster path to profitability and as a reminder, the rocket game has younger hill is a non shoot.
Or P. G friendly game and this will allow us to compete in a game that can be played on virtually every device.
We expect to finish 2021 strong and looking into 2022, our main goals remain the same grow and diversify our revenue create great and compelling content and quite a RFP free cash flow and deleverage and return capital to shareholders in the form of dividend as we celebrate our 16th anniversary.
This year, our fandom values have never been more important at our core we're a local media company that produces compelling content and in certain cases like.
My state and local content.
Multiple platforms and said before closing there are a couple more points that I'd like to touch on one being the nationwide labor shortages that many of US are confronting these labor shortages are resulting in higher wages. It could have an impact on expenses going forward. However on a positive note we've not been effect.
With my cost increases from our vendors today, and we don't see any supply chain issues, preventing us from continuing to produce engaging content some of our.
Advertisers are experiencing some.
Our supply chain issues and have decreased our delay their AD spend until next year, so more to come on that.
Finally, I can't say enough about how proud I am of our hard working teams as our markets have opened we're returning to a new normal that again include the that that makes seem extremely proud of the way our corporate and station level leaders digital and esports team members have worked tirelessly to enable beasley to generate positive S. M y.
And free cash flow growth in the third quarter of 2021, so with that I. Thank you for listening this morning, we.
We did not have any questions that were submitted that we did not cover in our script, but if anything comes up please feel free to reach out to either Marie or myself and we'll be happy to answer those questions. Thank you very much.
This concludes today's call. Thank you for your participation you may now disconnect.
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