Q1 2022 Beasley Broadcast Group Inc Earnings Call
Please standby were about to begin.
Good morning, and welcome to the Beasley broadcast group first quarter 2022 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.
Also 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 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.
Conciliation 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 like to remind listeners that following its completion a replay of today's call can be accessed for five days on the company's website Www <unk> com.
You can also find a copy of today's press release on the investors or pressroom section of the site.
At this time I'd like to turn the conference over to your host Beasley broadcast group's CEO Caroline Beasley. Please go ahead ma'am.
Thank you Cody and good morning, everyone. Thank you for joining us to review our 2020 key first quarter operating results Marie Tedesco. Our CFO is with me this morning and throughout this year, our first quarter 2022 results with you as our digital growth initiatives strong cracker and share in broadcast.
Market resulted in revenue Soi EBITDA growth on a year over year basis. Overall Q1 was another strong quarter for us with total revenue growth of 15, 6% outpacing the 13% revenue guidance, we provided on our last earnings call.
New business initiative sports betting and a $2 million year over year increase in digital revenue were the primary drivers to the strong quarter. These results are beginning to reflect the power of our platform and diversification effort and are truly a testament to the hard working team we have asthma.
As mentioned 2022 first quarter revenue Rose 15, 6% over Q1, 'twenty one over the ear in local spot revenue increased 26%, while national spot revenue declined 12, 1% our gains were again broad based with the 11 to 14.
Markets delivering year over year revenue increases, including double digit growth in Boston, Detroit, New Jersey, Philadelphia, Tampa and Wilmington.
Looking closer at the quarter January was up 17% February up 8% in March rose almost 13% year over year, we have now almost fully regained business at the levels achieved in Q1 19 in Q1 'twenty when comparing our revenue performance to Q1 19.
Our revenue was down $2 million or three 4%, which is the difference is primarily from the event and MTR revenue that have not fully recovered to pre pandemic levels.
We are exceeding our goals of growing our total audience and that is coming from the accelerated growth on our digital platform, where we have doubled and tripled our increases in unique visitors and unique page views. Since 2019. These page. These are directly related to our large increase in impressions, which in turn is.
Driving the increase in digital revenue, making content creation on the digital side a priority that is.
This initiative resulted in continued digital growth, where Q1 digital revenues rose, 26% year over year and represented 14% or $7 8 million of total first quarter revenue and that's up from 12% in the comparable year ago quarter, especially when comparing Q1 'twenty to digital.
With Q1 19, our digital revenue has more than doubled from $3 4 million or 6% of total revenues.
We continue moving closer to our near term goal with digital representing 20% of total revenue and we are laser focused on increasing our digital cash flow with a goal to achieve margins comparable to our over the air business and as an aside we do expect our digital agency to contribute to positive soi.
In third quarter.
Touching on sports betting, we recorded $3 6 million of revenue or six 5% of total revenue in this category during the quarter on par with first quarter of 2021, but slightly down from fourth quarter sports betting revenue was again, driven by our Detroit, Philadelphia, and New Jersey clusters and massive.
Houston Sports betting legislation was recently approved by the Senate with some restrictions compared to the health of the previously approved version moving us closer to another meaningful source of new revenue. Once these differences are resolved.
First quarter Soi increased 645000, or 15, 6% year over year as we were able to leverage the revenue growth in the quarter first quarter, our operating expenses increased 16% year over year with higher cost itself directly related to the revenue increase and we also absorbed in.
And related increases in wages and reinvestment and station marketing, we are hyper focused on reducing our leverage and we weren't able to take advantage of our bonds trading below par and repurchased 5 million at a discounted rate of approximately 4%. This was completed in the first week of April and as a permanent reduction.
<unk> of our debt, which will reduce cash interest expense and has had a positive benefit on our free cash flow I'm now going to turn it over to Mark <unk>, who will provide you more details into the quarter.
Thanks, Caroline and good morning, everyone. Let me start with a review of the first quarter results followed by a review of our balance sheet.
First quarter net revenue increased 15, 6% or $7 5 million to $55 7 million, which includes 550000 Komatsu esports teams the outlaws and accelerated we grew revenue year over year at all but three of our markets, including Atlanta.
Boston, Charlotte Detroit, Fort Myers, Las Vegas, New Jersey, Philadelphia, Tampa, and Wilmington, and for comparison, we generated approximately 50000 net political revenue in first quarter 'twenty two compared to 265000 last year first quarter digital.
Revenue for the quarter grew 26 first after $7 8 million and now represents 14% of total revenue.
We are focused on continuous to grow this revenue stream and diversifying our revenue sources.
Operating expenses for the quarter increased $6 9 million or 16% to $49 8 million, resulting in first quarter 2022 soi of $5 9 million an increase year over year of approximately 600000, breaking down the increase in operating expenses.
The main drivers were.
Cost of sales directly related to the revenue increase of 2 million flat inflation related wage increases and increased talent.
That's right fees due to increase of games played investments in innovation marketing and a bad debt variance of approximately 1 million stemming from a prior year credits taken.
Reflected in the variance above its approximately $2 5 million, which is directly related to the build out of our digital agency and the driver of the success and ongoing growth of our digital revenue.
Now looking at our revenue categories for first quarter consumer services remained our largest revenue category at 30% of our total revenue and we drove a 15% year over year revenue increase in this category for the quarter. Our second largest category was entertainment, which flips boss would be.
Retail entertainment grew 48% year over year and accounted for 16% of total revenues. This jump was partly driven by sports betting, which added $3 6 million more revenue in first quarter 'twenty to.
Retail number equity represents around 15% of first quarter total revenues and retail increased 16% year over year.
Auto our fourth largest category saw revenues down one 2% year over year and the cat is already accounted for 10% of total revenue, we saw double digit increases in auto and our Detroit and New Jersey clusters, and the year over year decline in this category was less than 65.
Towson.
We believe this revenue category and show improvement by the latter part of the year provided the supply chain issues have normalized.
Going into the fifth boss is financial services up $22, six firsthand and representing 6% of total revenues.
Telecom rounds out our top six categories and was up 30%.
Looking now at our first quarter market performance. According to Miller Kaplan of our seven clusters that report to Miller Kaplan, Boston, Detroit and Panther outperformed their market on a combined basis basically market clusters increased 13, 9% for the quarter compared to our combined.
Markets up 15, 3%.
Our clusters exceeded their markets on a combined basis in local digital NTR and of course, we'll continue to stay hyper focused on local revenue and growing this with new business initiatives and growing our digital share while we expect national demand will continue to slowly decrease.
National revenue in first quarter records that represented less than 16% of our total revenue.
Corporate G&A expenses for the quarter increased eight 4% or by 328000 compared to the same quarter a year ago to $4 2 million the year over year increase in corporate G&A is related to increased wages insurance expense and CME, partially offset by a reduction.
On stock based compensation.
And stock based comp and stock based compensation decreased 300200, 49000 in the quarter and we had an income tax benefit of the quarter of $5 8 million.
First quarter of 2022 operating income declined 200000 to a negative $2 7 million.
Compared to a negative $2 5 million in the year ago quarter, largely due to an impairment charge of $1 9 million related to the sale of our Boca Raton a M station.
First quarter interest expense increased $1 1 million year over year to $6 8 million and represents a full quarter of increased borrowing costs compared to a partial period in first quarter 'twenty. One we did not have any scheduled debt payments during the quarter, leaving us with a total debt of $300 million. However.
As Caroline noted, we repurchased 5 million of our bonds death between April 1st and they felt that at an average discount of around 4%. Additionally, we made an interest payment of approximately $12 9 million on February one.
First quarter 2022 free cash flow was a negative $6 million compared with a negative $4 2 million in the 2021 first quarter, which due to seasonality is typically a negative free cash flow quarter for us.
We ended the quarter with cash on hand of $50 7 million, our substantial cash balance is allowing us the financial flexibility to reduce debt just as we did earlier in the second quarter and or pursue a potential acquisition or investment within the digital space should an opportunity arise.
Could accelerates our digital growth I'll provide significant synergies and free cash flow.
Our capital expenditures for the quarter were $1 4 million compared to the prior year of $1 million and with that I'll turn it back to Caroline.
Murray overall Beasley radio stations continue to gain share and audience driven by the highest quality multi platform local content in the industry and to win in the winter Nielsen audio ppm ratings period, our overall share increased by 3% year over year in the top and most valuable advertising demographic.
Of adults 25 54, according to Nielsen, we have the highest average cluster share and the largest year over year share growth when compared to all the other major radio broadcasters in P. P. M. Our digital content strategy continues to show great fix out in Q1 impressions grew over 88% year.
Over year, and 36% quarter to quarter. This was once again the biggest quarter ever for digital impressions at Beazley as we continue to monetize our digital content.
In addition to audience performance, we always put a high priority on serving the community and this is evident by our Philadelphia Classic Rock station Wmgk just been awarded the prestigious Christopher Award for Outstanding Community Service.
Moving onto esports, we remained very focused on expanding our viewership fan base and revenue stream. So Overwatch League season number kicked off on May six this was a big deal with the Houston Outlaws husband, the first live and in person events since pre Covid that featured the outlaws playing against the Dallas fuel.
And where we won all three matches. This was the first time that band saw two Overwatch League teams play the beta released version of the New game Overwatch two the match was broadcast live on Youtube. In addition to in person tickets being sold.
Looking ahead to second quarter and into the back half of 2022, our focus remains on driving further revenue diversification and audience expansion, improving our margins, maintaining a strong and flexible balance sheet, reducing leverage and growing free cash flow, excluding any recession impact.
We expect progress on each of these fronts as we continue to close the gap toward our pre COVID-19 revenue and soi levels and grow from there as of today, our second quarter revenue is pacing up about 7% and breaking that down April was up 7% with may and June pacing up.
10% and 5% respectively.
In terms of local and national local is currently pacing up in second quarter, 17%, while national is pacing down 23%.
We are proud of the strong results, we are delivering even in the face of headwinds, including the war in Ukraine unprecedented inflation labor challenges interest rate increases and the continued recovery from the pandemic. It's too early from an economic perspective to see what impact high interest rates and inflation they have the end.
The past broadcasting groups had operated well in a high interest rate environment.
Lastly, I'm absolutely thrilled to share with you two announcements number one former U S. Senator and former CEO of Eni Gordon Smith has agreed to be included as a nominee for our board of directors to be voted on by the end of this month and then number two Tina early was promoted from VP of sales where she oversaw.
Radio revenue to Chief revenue officer, overseeing all revenue for the company said before going to Q&A I'd like to acknowledge our team members across the company for everything they've done and are doing to help us in the past the challenges presented by the pandemic and now even more economic heck.
So with that Murray I'm going to.
Turn it over I know that we do have a few questions to address today.
That's correct Carolina, we have a few questions that was not covered in our prepared remarks and at first a request to touch on our revenue categories for second quarter, and I will take that so as of today, our top five categories. It looks like the consumer services is up 8% retail is.
That 28% entertainment is up 23%.
Finance is up 28% and auto is down as of today, 6% or approximately 300000. So as you can see auto is still somewhat weak still suffering from the supply chain issues and we hope to see an improvement in that revenue category by the end of the year.
Yeah.
The next question is what are you contemplating on the M&A front Caroline.
What we have been saying over the last several quarters. As we were we are hyper focused on digital and we're looking at various digital assets.
Would complement what we are currently doing pocketing either on content or on our digital agency business.
In acquisitions that would be accretive to the company.
In addition, I think many of you may have read that we did sell off one of our smaller radio properties, which was an am station located in <unk> and we did that because it just wasn't a strategic to our company.
Longer.
Thank you and all of the questions were covered in our prepaid.
I have prepared earnings remarks, okay, well with that I. Thank you very much for listening today and should you have any further.
Further questions. Please feel.
Feel free to reach out to either Marie or myself. Thank you and hope you all have a great week.
Thank you that does conclude today's conference. We thank you all for your participation and you may now disconnect.
Okay.
Sure.