Beasley Broadcast Group Inc. Q1 2023 Earnings Call

Good morning, and welcome to Beasley broadcast group's first quarter 2023 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 report.

Warts on Form 10-Q.

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

A reconciliation of these non-GAAP measures with their most direct comparable financial measures calculated and presented in accordance with GAAP can be found in this morning's news announcement 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 G I dotcom.

You can also find a copy of today's press release on the investors or pressroom section of the site.

At this time I would like to turn the conference over to your host Beasley broadcast group's CEO Caroline Beasley. Please go ahead.

Thank you Chuck and good morning.

Good morning, everyone and thank you for joining us to review our 2023 first quarter operating results now Richard <unk>. Our CFO is with me this morning and ask for our earnings release, we just touched on the earnings presentation on our website and we hope that you will find it helpful I'm thrilled to.

Share our first quarter results, which again highlights the significant success and growth we are achieving based on our strategy to leverage our local talent to delta growing digital platform in Q1, we generated strong year over year results across the board driven by growth from our digital initiatives.

New business initiatives increased network revenue and revenue growth in the sports betting category, our strong first quarter revenue performance drove solid as well and EBITDA growth on a year over year basis.

Total revenue grew three 7% outpacing the guidance, we provided on our last earnings call with over the air local spot revenue, increasing 4% network.

69% of which five strategically plan to offset the decline in political political from 2022 and digital was up almost 27% as expected national spot revenue remained challenged and declined 15%.

Overall audio revenue increased slightly.

New initiatives brought $5 7 million to the quarter, that's up 14% year over year and sport, adding added $4 3 million year over year. Our overall gains were broad based with eight of 14 markets delivering year over year revenue increase it including a 16% year over year.

Growth in Boston, driven by sports betting as noted on previous.

Called sports betting connect and Massachusetts on January 31st in Q1 saw the benefit of the Super Bowl and March Madness.

Well positioned in the Boston market with five of them, including 98, 5% and four top home to the New England Patriots, Boston Bruins and Boston Celtics.

Now moving on to the ongoing success of our digital transformation Q1 digital revenue grew 26, 7% year over year and represented 17, 3% of total revenue that's up from 14, 1% in the year ago first quarter, our digital initiatives continue to drive great.

And we are well on our way to achieving our goal of additional accounting for 20% to 30% of total revenue digital growth in Q1 as in the past recent quarters was driven by our content creation initiative and web services rollout as well as from our Mirth acquisition.

<unk> of the White label agency guaranteed desert, all with our consistent digital revenue growth, we continue to make headway in increasing our margins with the goal of digital margins ultimately matching or exceeding our traditional over the air margins now breaking down the quarter trend.

January was flat everywhere. It was up 4% and March was up nine 5% year over year now marched yet include the Tampa show this year and last year. It was included in April .

Importantly, with Q1 saw a growth we have retained business at levels achieved in Q1 19. These great results are directly related to our efforts to diversify our revenue streams as well as a reflection of our brands strong local presence and the results are truly a testament to the hard working team we have now touching on sport.

Setting, we recorded $4 3 million of revenue or seven 4% of total revenue in this category, that's 553000 or 20% from the prior year sports betting revenue was driven by our Boston cluster with $2 2 million Detroit is fully recorded sports betting revenue combined.

At $2 1 million for the quarter now that slightly lower year over year as was expected and the established sports betting market.

First quarter operating expenses increased one 7% year over year, including new expenses from the acquisition of our digital agency and caused the cells directly related to revenue increase.

Which more than offset a reduction in expenses stemming from the head count reductions and other 2022 expense cuts.

First quarter, FY, <unk> increased $1 2 million or 21% year over year to $7 1 million as we were able to leverage the year over year revenue growth in the quarter same station revenue increased two 6% same station expenses were down 6% and same station Soi.

<unk> increased 28, 4%.

With our strong results and positive outlook, we remain hyper focused on reducing our leverage by organically growing EBITDA. We're all actively monitoring market conditions to determine when we should take advantage of our bonds trading below par and with that I'm going to turn it over to Marie and she's going to give you more details.

On the quarter.

Thanks, Caroline and good morning, everyone. I will review first quarter results, followed by an update of our balance sheet.

First quarter net revenue increased three 7% or $2 1 million to $57 8 million, which includes 385000 from our east 14, we grew revenue and year over year in eight markets and most notably in Boston, where revenues increased $2 1 million.

Year over year did.

Digital revenue for the quarter grew double digits to $10 million and now represents 17, 3% of total revenues as we continue to grow this revenue stream and diversify our revenue sources.

Station operating expenses for the quarter increased 823000, or one 7% to $50 7 million for shopping in first quarter 2023, Soi on $7 1 million, an increase year over year of approximately $1 2 million or up 21%.

Breaking down the increase in operating expenses. The main drivers were the addition of guaranteed debt at all our White label agency, which added new expenses of $1 3 million plus cost of sales directly related to the revenue increase and a year over year variance from a bad debt credit suggests.

And then that occurred in first quarter of 2022.

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 3% year over year revenue increase in this category during the quarter, our second largest category, what's entertainment, which grew 8.3.

Percent year over year and accounted for 16% of total revenues.

This jump was partly driven by sports betting with $4 3 million for the quarter retail number equity represents around 15% of our first quarter total revenue and retail increased eight 8% year over year.

Auto our fourth largest category saw revenues up one 7% year over year and the category accounted for nine 6% of total revenue we saw increases in auto and half of our markets, including Boston. We believe this revenue category will continue to improve.

We move throughout the year in fifth spot with telecom up 13%, representing five 2% of total revenues and financial services rounded out our top six categories and was down 5%.

Corporate G&A expenses for the quarter increased five 9% or about 250000 compared to the same quarter a year ago to $4 5 million a year over year increase in corporate G&A is related to increased cyber security expenses and some corporate digital expenses noncash.

Cash stock based compensation decreased 53000 to 174000 for the quarter and we had an income tax benefit for the quarter up $2 2 million.

First quarter 2023, operating income increased $3 1 million to a positive 413000 compared to a negative $2 7 million in the year ago quarter, largely due to the increase in EBITDA as well as the $1 9 million impairment charge in the prior year.

Water.

Total first quarter interest expense decreased 255000 year over year to $6 6 million and our outstanding debt at the end of first quarter was 290 million. Additionally, we made an interest payment of approximately $12 5 million on February one.

EBITDA for our first quarter 2023 was up 59, 5% or 986000 from the previous year quarter to $2 6 million.

LTM adjusted net leverage including add back such as certain taxes noncash compensation losses from our digital agency build out pro forma of our 2022 agency acquisition and 2022 risks decreased to $6 7667 times.

I'm happy to point out that while we ended fourth quarter 2022 with cash on hand of $39 5 million and with an interest payment made in February of $12 5 million. We still ended first quarter with $35 9 million of cash on hand.

As we are generating cash from operation and continuing to build up our cash our cash same as our operations are seasonal with first quarter always slow now we expect second quarter third quarter fourth quarter and the full year of 2023 to provide positive free cash.

Cash flow, our current cash balance will allow us the flexibility flexibility to reduce our debt and therefore also reduce our leverage which we are hyper focused on.

Capital expenditures for the quarter were $1 2 million, which was mostly related to upgrades and replacement of transmitters that compares to the first quarter of 2022 Capex spend of $1 4 million, we expect our capex spend to normalize in 2023 at around four to five.

And with that I'll turn it back to Caroline. Thanks, Murray again, I'm very pleased with our first quarter performance reflects our continued growth and the positive diversification afforded by our digital business our content strategy put in place mid 'twenty two.

Helped to drive a 27% growth in our digital revenue for the quarter. So we're very excited about this opportunity as we continue through 'twenty three.

I believe these leading multiplatform local content strategy continues to drive tremendous audience growth and in the first quarter, our owned and operated audience reach grew 21% compared to the same period in 'twenty two a radio brands continue to hold dominant positions in Nielsen, where our market share grew.

<unk> and both are large markets and the mid sized diary markets, but the key demographic of adults 25, 54, our ppm market share grew by 4% year over year and our diary market share is up by 11% overall, our average share growth grew by 6% year.

Over year, however, like other recent quarters the large the largest audience growth was seen on our digital assets with unique huge increasing 59% from Q1 'twenty to Q1 'twenty three this audience growth led to a 93% increase.

Sellable digital impressions year over year, and digital now accounts for 45%.

<unk> total monthly audience.

And we expect this trend to continue now looking into the second quarter and into the back half of 'twenty three.

<unk> remains on driving revenue diversification and audience expansion, improving margins, maintaining a strong and flexible balance sheet, reducing net leverage and growing free cash flow. We're.

We're measuring the impact of a potential recession, and we're taking steps toward that as of today. Our second quarter revenue is pacing slightly down and breaking that down April is down 3% with may down 2% in June is up 2%. However, this is inclusive of that.

Oh in April up 22 that was held in March of this year, which I had mentioned earlier when we were talking about March pacings, and then also to Walt Splash withheld may 22, and we're not doing that this year. So if you adjust for each of these during the quarter we would be.

Flat to slightly up in terms of pacing for second quarter.

We are all hopeful that our agencies will continue to improve moving further into the quarter as we saw a slowdown in the latter half of second quarter of 'twenty two.

So we're proud of the strong results we have delivered over the last several quarters, even to get headwinds, including inflation Labor chart challenges interest rate increases and a potential recession and as the season company operating for more than 60 years, we have a great understanding of the local markets we serve.

And the digital transformation within our company proves that our teams are ready for the challenges and the future. So on behalf for our corporate and station personnel. We thank you for listening to our call today and Marine we did have a few questions that were submitted.

And to those already that's about right.

So the first question that was not addressed in our prepared remarks could you breakdown things aside revenue source.

So we.

For first quarter for second quarter second quarter is trending just like first quarter. So local is pacing up slightly national is pacing down double digits and then digital is pacing up.

And what was adjusted EBITDA in first quarter 'twenty, two first quarter 'twenty, three and LTM. So I'll take that our adjusted EBITDA in first quarter of 2022 was for Maryann and in first quarter of 2023. Adjusted EBITDA was also a format that our latest 12 months adjusted EBITDA at <unk>.

And our first quarter 2023 was $38 1 million again. This includes certain add backs as described earlier in our prepared remarks.

The next question is what are you seeing with respect to digital impression pricing trends.

So digital CPM.

Our seasonal just like our other business that we see so there's typically a drop off in Q1, but we are seeing that come back in Q2.

Also our digital impressions are more crowded today, especially programmatic because of supply and demand.

We have integrated our <unk> impressions in our proposal builder and so that makes it easier to sell to.

Two our direct market and when we do that then we're able to achieve higher CPM to.

To the tune of five to six times more which has been our official business part of the whole content strategy. We were able to include more impressions more page views, so where we're gonna be seeing the benefit of that.

Great.

Would you consider selling non core assets, yes, we are considering selling noncore assets.

And then the last question could you review that 10 million cost savings initiative and how much hit 2022, and our all cash costs done. So first of all all cash costs for these cost savings were realized in fourth quarter 2022 half of the savings or $5 million.

Let's head count reduction, which we will see the benefit in the first three quarters of 2023 a portion.

These savings will be offset by increased cost of sales and that's from increased revenue as well as the newly added expenses from our agency acquisition, which we closed on at the end of second quarter of 2022, and Karen and that concludes our submitted question alright, well. Thank you very much for attending.

And we look forward to speaking with you next quarter. If you have any other questions feel free to reach out to Marie or myself. Thank you. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

Yeah.