Q2 2022 Beasley Broadcast Group Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Beasley broadcast group's second 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 and results of operations.
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 a reconciliation of these.
These non-GAAP measures.
With their most direct comparable financial measures calculated 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 to the following its completion a replay of today's call can be accessed for five days on the Companys web site 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 very much and good morning, everyone. Thank you for joining us to review our second quarter result, Marie Tedesco. Our CFO is with me. This morning, I am pleased to report that our growth momentum continued through second quarter net revenue increased eight 8% year over year exceeding the guidance we.
When we reported Q1 of a projected 7% increase in revenue on a pro forma basis that excludes our divested back overtime station, which closed on April one our revenues grew nine 2% for the.
Second quarter digital revenue grew 34, 3%, while audio revenue increased four 3% year over year similar to previous quarters, New business initiative sport that sports betting political.
Slide seven and year over year increase in digital revenue were the primary driver to our call.
Our new business performance was robust this quarter as we recorded an.
8 million in revenue.
60% from Q1 and up 16% from second quarter of 'twenty, one given the declining economic backdrop, we remain watchful of every market every expert in all of our content creation and initiatives as we move into the back half of the year.
Now breaking down second quarter as I mentioned before new increased eight 8%.
Point 2 million over the air local revenue increased 10, 5% or by $3 5 million, while national declined 21% or by three 3 million. This is what the trends of the past several quarters, where declines in Nash offset by increased.
Paul also given the growth that we have had in digital now.
<unk> now accounts for a larger share of revenue than national and we expect this gap to increase going forward net of political our overall gains were again faced with 11 of our 13 markets delivering year over year revenue increase now.
Now looking closer at the quarter April was up seven 4% may was up 11.
11, 1% and then Jim Rose, 5% year over year as we started to see the economy slowly.
Finally are in close range, the second COVID-19 revenue levels with the current quarter being less than 500000 of second COVID-19 on a pro forma basis.
We continue to exceed our internal goals of growing our total audience and reflecting our strategy of talent created content, we generated a 24%.
Our increase in unique visitors, which directly converts to impression. In addition on June 23rd we completed a small acquisition of a <unk>.
White label Digital agency that will accelerate our digital revenue growth and provide meaningful synergies within our digital platform overall, our digital revenues accounted for 16, 5% of our total Q2 revenue that's up from 14% in the prior quarter and 13.
4% in the year ago comparable.
Our goal remains for digital revenues to account for 20% of total revenue by the end of 2022 now touching on sports betting we recorded $3 1 million in revenue or 5% of total revenue in this category during the quarter. This was driven by Detroit, Philly and New Jersey.
And I do have breaking news and that is sports betting legislation relation was tentatively approved in their hours of this morning in Massachusetts, that's moving closer to generating additional revenue in this category from our Boston cluster.
First quarter Soi increased slightly compared to last year to $11 2 million.
<unk> expenses increased 10, 6% year over year or $5 1 million with increased cost of sales directly related to revenue also we saw increased costs associated with MTR revenue, we had reinvestment in station marketing and noncash expense related to the new boss.
The studio.
Which we will be moving in within the next month or so.
Of note digital Soi grew by $1 5 million.
Second quarter 'twenty, one margins now at 14% and when comparing second quarter to the first quarter 'twenty two digital Soi increased $2 1 million negative 593000. This further highlights the progress we are making with our digital business.
<unk> Q1 was supposed to take advantage of our bonds trading below par and we repurchased an additional $2 million at 75% of par and that settled in third quarter I'm going to hand, it over to Murray now and she's going to give you a deep dive into the quarter Murray, Thanks, Caroline and good morning, everyone I will.
I'll start with.
Our revenue of the second quarter results and follow up with it.
Our balance.
Second quarter net revenue increased eight 8% or $5 2 million to $64 8 million, which included 673000 from our two esports teams the outlaws.
We grew revenue a year in 11 of our markets include our Boston, Charlotte, Detroit, New Jersey, Philadelphia, and Tampa clusters and for a comparison, we generated approximately 600000 in net political revenue in <unk>.
Order compared to 85000 last year and we are are higher.
Than initially expected, including more sand on pack related campaign.
Digital revenue for the quarter, 34% to $10 7 million and now represents 65% of total revenue.
Also up 14% from the previous quarter as we continue to manage our digital net okay.
To grow our digital margin from 14, 4% this quarter two our margins closer to pre pandemic over the air margin.
Largely largely reflecting the revenue growth station operating expenses for the quarter increased $5, one or 10, 6% to six.
6 million starting in quarter Soi of $11 2 million a year over year.
Approximately 100000.
Breaking down the <unk>.
Operator next.
The main drivers of the increased cost of sales of approximately $1 $5 million year over year, including third party hard cost related to the revenue increase also concert events expenses of $1 6 million installation related wage increases investments in station marketing.
And the bad debt variance of approximately 1 million stemming from the prior year.
Reflected in these variance that was approximately $2 five which is directly related to the investments in our digital age.
Which has been the driver of the success ongoing growth of our digital revenue.
Now looking at our revenue categories for second quarter consumers remained our largest revenue category at 35% of our total revenue and we drove a seven 4% year over year revenue increase in this category for the quarter, our second largest casual retail switching placed with that.
Entertainment and retail 28, 5% year over year and accounted for $17 seven of total revenue.
Double digit growth in all but two markets.
Entertainments move down a notch to third spa and represented about 2% of second quarter total revenues and entertainment.
The 27% year over year. This increase was partially driven by sports betting, which added $3 1 million or 100000 more in the quarter year over year.
Auto our fourth largest category saw revenues down five 8% year over year and the category accounted for 83% of total revenue we saw double digit increases in auto Detroit, and New Jersey clusters, and low single digit increase in Fayetteville.
Year over year.
This.
It was less than 320.
So Lee this revenue category can show improvement by the latter part of the year provided the supply chain issues have normalized.
Consumer services, I'm, sorry, a consumer product it's down.
20% and 55, 6% of total revenue and financial services.
Scott and rose, 17%, representing five 3% of revenue.
Moving to the second quarter market performance. According to Miller Kaplan of our seven clusters that report to Miller Kaplan.
Boston, Detroit and outperformed the market on a combined basis. These lay market clusters increased eight.
Eight 3% for the quarter.
Compared to our combined margin.
10%.
However, while the national buckets decreased and now represents less than 15%. We grew our written local revenue was 12, 3%.
Two our combined markets up seven points.
Our clusters outperformed their markets in local revenue in all but one of our market with Boston, Charlotte, Detroit, Fayetteville, Philadelphia and Panther.
Their market our clusters also exceeded the market on a combined basis in digital and MTR.
<unk> uses a hyper focus on digital revenue and growing the digital revenue grew 51, 8% year over year compared to the combined markets up 38, 6% with the ongoing success of our new business initiatives and the growth of our digital businesses.
We expect this to.
The continued national revenues declined.
Corporate G&A expenses for the quarter increased 15, 4%.
610000, compared to the quarter, a year ago to $4 6 million the year over year increase in corporate G&A is related to increased wages noncash stock based compensation corporate unemployment insurance expense and G&A expenses.
Stock based compensation decreased 25000 to around 380000 in the quarter and we had income tax expense for the quarter of $3 6 million offsetting previous quarter tax benefit of $5 8 million, resulting in a year to date tax benefit of $2 6 million.
<unk> second quarter.
Net income declined $10 2 million to a negative one.
<unk> 5 million compared to $5 8 million in the year ago quarter solely due to an impairment.
$8 6 million related to the increase in interest rate and a $1 5 million of insurance proceeds received in the prior year quarter.
Total second quarter interest expense decreased 42000 year over year to $6 8 million related to our previous 5 million repurchase of our bonds completed early April .
Have any scheduled debt payments during the quarter, leaving us with debt of 290, <unk> again as Greg previously mentioned, we repaid.
An additional $2 million of ARPA, which settled on July 1st or.
Our second annual interest payments of approximately 12 6 million is going to be made this morning.
Yes.
This quarter with on hand of $45 9 million net of cash used in the bonds.
Our strong cash.
It allows us the continued flexibility to reduce debt and or.
Pursue additional acquisitions or investments in the digital space.
Right that could further accelerate our growth.
<unk> and provide significant synergies and free cash flow our capital expenditures for the quarter were $5 1 million, mostly related to a reload.
Buildup of our Boston Studios in Austin.
We have received $2 6 million and a build out allowance from the landlord, which nets, our second quarter capex cash spend to $2 5 million.
The prior year of $1 5 million and with that I'll turn it back to Caroline Okay. Thank you Murray Beasley brands continue to grow.
Driven by the highest quality multi platform content and the industry in the second quarter pension before our digital owned and operated audience grew 24% compared to second quarter of 'twenty, one with unique users now at $23 million, but even more important this is.
Banded audience spent more time and consume content on our digital platforms, which are higher sellable digital impression our O&M impressions were up over 95% from $2 21 to Q2 'twenty two and we are in the very early innings of capitalizing on our ability.
To leverage growing impression and we're laser focused on this aspect of our business.
To the incredible growth on the digital platforms, our radio stations continue to maintain dominant positions in Nielsen ratings from.
We currently have the highest cluster share when comparing every other major broadcaster in ppm. In fact, we have the number one station in most of our largest markets.
<unk>.
Detroit and Charlotte.
Adults 25, 54 during the spring ratings period.
Moving onto esports, the Overwatch season is well underway and we're presently ranked sixth in the world we are expanding our overall.
With the introduction of an academy team and that's in partnership with the University of St. Thomas in Houston, and we will have more to report on this in the <unk> now looking ahead to third quarter in the back half of 'twenty two as we stay focused on driving further revenue diversification and growing our audience, especially on the digital part.
Form with our new strategic initiatives, we have to slow down in July and August related to installation labor shortages interest rate increases and the continuing chip in auto inventory issues and just an overall slowdown in the economy third quarter revenue as of today is flat to prior year and.
Breaking that down July was down 4% August is now pacing down 2% and September is pacing up 8% breaking that down further national is pacing down 16% and local is pacing up 2%.
We are mindful of our expenses and we initiated cost reductions in second quarter through the end of the year and so lastly, before going to Q&A I'd like to once again acknowledge our team members across the company for everything they have done and are doing to help us move pass these economic challenges and.
Also we think very much for.
Being on the call today and should you have any further questions. After we address the questions. You sent then please feel free to write to US summary, I'm going to hand that over to you at this point. Thanks Caroline itself. There's a couple of questions. In addition to our App to our prepared script that wasn't covered.
The first question was to please provide us on the small acquisition office Digital agency, if we could touch both on the price and the revenue impact of such yes. So we paid $2 million for the agency and the incremental revenue on a pro forma basis for the full year.
It should be about $4 million.
As mentioned in the script, we are seeing synergies as a result, this acquisition and we're expecting them to be probably between 115 million in synergies.
Thank you and the second question is can you break down the increase in operating expenses and how much is related to digital as well as the agency build outs. So in addition to what reviewed in our script digital expenses for the cool.
Total was approximately $9 2 million or 17% of total expenses, our digital agency accounted for approximately two and a half a million of that and also of course, some additional color on our total third party expenses for the quarter was $5 7 million.
Yes.
And that concludes our question.
Alright again, thank you so much for attending the call today and should you have any follow up questions. Please feel free to reach out alright have a good week.
Ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.
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