Q1 2024 Beasley Broadcast Group Inc Earnings Call

Unknown Executive: Good morning, and welcome to Beasley Broadcast Group's first quarter 2024 earnings 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 reports on Form 10-Q. Today's webcast will also include a discussion of certain non-GAAP financial measures within the meaning of Item 10, of Item 10 on Regulation SK, and a reconciliation of these non-GAAP measures with their most directly comparable financial measures.

Good morning, and welcome to Beasley broadcast group's first quarter 2024 earnings 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 rich.

Unknown Executive: Calculations and presentation in accordance with GAP 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.bbgi.com. You can also find a copy of today's press release in the investors or press room 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.

Unknown Executive: Six and uncertainties described in the risk factors section of our most recent annual report on Form 10-K.

Unknown Executive: Ah supplemented by our quarterly reports on Form 10-Q.

Unknown Executive: Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of item 10.

Unknown Executive: Item 10 on regulation S K.

A reconciliation of these non-GAAP measures with their most directly comparable financial measures.

Unknown Executive: How can they are 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 Companys website, Www Dot B B G I.

Unknown Executive: Dot com.

Unknown Executive: You can also find a copy of today's press release on the investors or pressroom sections of the site.

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

Barbara Caroline Beasley: Thank you, Melissa. And good morning, everyone.

Barbara Caroline Beasley: Thank you Melissa and good morning, everyone and thank you for joining us to review our first quarter result, Marie Tedesco. Our CFO is with me. This morning, Industrywide Azoff that led to a first quarter revenue decrease of five 9%, which is slightly below the pacing we previewed at the time Q4.

Barbara Caroline Beasley: Thank you for joining us to review our first quarter results. Marie Tedesco, our CFO, is with me this morning. Industry-wide ad softness led to a first-quarter revenue decrease of 5.9%, which is slightly below the pacings we previewed at the time Q4 was reported. Perhaps more importantly, on a same-station basis, meaning excluding revenue from WJBR, the outlaws in the March 23 home show in the year-ago period, first-quarter revenue declined 3.1% or $1.7 million.

Barbara Caroline Beasley: Report it perhaps more importantly on a same station basis, meaning excluding revenue from W. J P. R. The outlaws in the March 'twenty three home show in the year ago period first quarter revenue declined three 1% or 1.7 million during the quarter, we generated 548000 up.

Barbara Caroline Beasley: During the quarter, we generated $548,000 of net political revenue, and that compares to $19,000 in Q1-23. This exceeds our first quarter budget for political, and we continue to look forward to robust 24 political spend, as several of our markets are located in swing states.

Barbara Caroline Beasley: Net political revenue and that compares to 19000 in Q1 'twenty three this exceeds our first quarter budget for political and we continue to look forward to robust 24 political spend at several of our markets are located in swing states.

Barbara Caroline Beasley: Operating expenses declined 2.8% or 1.4 million, reflecting the divestiture of WJBR and our eSports team. Same station expenses declined $23,000, which includes a headcount reduction from last year, offset by increased third-party digital COGS related to the increase in digital PPP revenue. As a result, our first quarter adjusted EBITDA was $731,000 compared to $2.6 million last year. Breaking down our first quarter revenue performance, over-the-air local spot was down 12.8% or $4.4 million, and same station local was down 12% or $4.1 million.

Barbara Caroline Beasley: Operating expenses declined two 8% or $1 4 million, reflecting the divestiture of W. J D. R and R. E Sports team same station expenses declined 23000, which includes the head count reduction from last year offset by increased third party digital com.

Barbara Caroline Beasley: Related to the increase in digital T. P P revenue.

Barbara Caroline Beasley: As a result, our first quarter adjusted EBITDA was 731000 compared to $2 6 million last year, breaking down our first quarter revenue performance over the air local spot was down 12, 8% or $4 4 million and same station local was down 12% or $4 1 million.

Barbara Caroline Beasley: This was driven by a decline in agency business as local direct was flat. We remain highly focused on developing new local direct business, and our efforts paid off as our new business increased 53% or $2.9 million to $8.4 million for the first quarter. Local direct accounts for 57% of our total local business as we continue to shift from agency to direct.

Barbara Caroline Beasley: This was driven by a decline in agency business F. Waffles, Iraq was flat we remain highly focused on developing new local direct business and our efforts paid off as our new business increased 53% or $2 9 million to $8 4 million for the first quarter buckle with Iraq.

Barbara Caroline Beasley: Counts for 57% of our total local business as we continue to shift from agency to direct.

Marie Tedesco: Now showing signs of stabilizing, during the quarter, national increased by 100,000 or 1.1% year over year, and it declined just 4.9% excluding political. Our digital bills continue as we delivered year over year 20% digital revenue growth in the quarter, and this is on the same station basis. Digital revenue accounted for 20.1% of first quarter total revenue, again outbilling national revenue, which was at 12.7% of total. And this is ex-political, as we've been successful in offsetting the national declines with growing digital revenue.

Barbara Caroline Beasley: Now showing signs of stabilizing during the quarter national increased 100000, or one 1% year over year and it declined just 4.9% excluding political our digital bills continues as we delivered year over year or 20% digital revenue growth in the quarter.

Marie Tedesco: And this is on a same station basis digital revenue accounted for 21% of first quarter total revenue again, our billing national revenue, which was at 12, 7% of total and this is ex political as we've been successful in offsetting the nationals declines with growing dessert.

Marie Tedesco: All revenue, we expect digital to account for between 20 and 25% of total revenue in 2024, driven by our content creation and the continued success and growth of digital services.

Marie Tedesco: We expect digital to account for between 20 and 25% of total revenue in 2024, driven by our content creation and the continued success and growth of digital services. Now quickly touching on the sports betting category, we recorded $4.9 million in Q1, marking a 17% year-over-year increase, with sports betting revenue now accounting for 9% of total revenue in the quarter. And this was driven by both our Boston and our Charlotte clusters, following the recent approval of sports betting in North Carolina. So now I'm going to turn it over to Marie, and she's going to give you a deeper dive into the quarter. Thanks, Marie. Thanks, Caroline, and good morning, everyone.

Marie Tedesco: Now quickly touching on the sports betting category, we recorded $4 9 million in Q1, marking a 17% year over year increase with sports betting revenue now accounting for 9% of total revenue in the quarter and this was driven by both our Boston and our Charlotte Club.

Marie Tedesco: After following the recent approval of sports betting in North Carolina, So now I'm going to turn it over to Marie and she's going to provide you a deeper dive into the quarter Murray.

Marie Tedesco: Thanks, Caroline and good morning, everyone as Caroline mentioned first quarter net revenue decreased five 9% or $3 4 million to $54 4 million.

Marie Tedesco: As Caroline mentioned, first quarter net revenue decreased 5.9%, or $3.4 million, to $54.4 million. However, Augusta, Charlotte, Fayetteville, and our in-house agency, DigitalDirect, recorded positive revenue growth year-over-year. The main driver of the revenue decline was related to the divested Wilmington station, one less Tampa home show in the quarter, and the decline in local agencies' box business, which was somewhat offset by continued growth in digital revenue, up 10% year-over-year and 20% on the same station basis. Looking closer at the quarter, January increased 1.7%, February declined 2.1%, and March dropped 9.5%.

Marie Tedesco: Gosh that Charlotte Fayetteville, and our in House Agency digital direct recorded positive revenue growth year over year. The main driver of the revenue decline was related to the divested walnut sensation, one less Tampa home show in the quarter and the decline in local agencies box business, which.

Marie Tedesco: Somewhat offset by continued growth in digital revenue up 10% year over year and 20% on a same station basis.

Marie Tedesco: Looking closer at the quarter generate increased one 7% February declined two 1% in March dropped nine 5%. However on a same station basis, excluding the divested Wilmington station esports and the non restaurant of them are Tom Shaw January was up 3.4.

Marie Tedesco: However, on a same-station basis, excluding the divested Wilmington Station, Eastport, and the non-return of the March home show, January was up 3.4%, February down 0.4%, and March declined 6.1% year-over-year, and same-station revenue for the quarter declined 3.1%. Operating expenses for the quarter decreased 2.8% year-over-year, or by $1.4 million, and SOIs declined $2 million to $5.1 million compared to first quarter 2023, primarily due to the divested Wilmington Station and E-Sports team.

Marie Tedesco: For Sun February down, 0.4% and March declined six 1% year over year.

Marie Tedesco: And same station revenue for the quarter declined to eight 1%.

Marie Tedesco: Operating expenses for the quarter decreased two 8% year over year or by $1 4 million and Soi declined 2 million to $5 1 million compared to first quarter 2023, primarily due to the device divested when it makes sense Asia and E sports team same station.

Marie Tedesco: Same station expenses dropped $23,000, driven by our previous 2023 headcount reduction and overall expense management, which was somewhat offset by increased cost of sales from third-party expenses related to the shift in digital revenue. Same station SOI declined $1.7 million for the quarter to $5.4 million.

Marie Tedesco: Sensus has dropped 23000, driven by a previous Twenty-twenty head count reduction and overall expense management, which was somewhat offset by increased cost of sales from third party expenses related to the shift in digital revenue.

Marie Tedesco: Same station Soi declined $1 7 million for the quarter to $5 4 million.

Marie Tedesco: Now looking at our revenue categories for the quarter, consumer services remained our largest revenue category at 31.9% of total revenue with an increase of 5.3% year-over-year, including increased spend on legal and home improvement. Our second largest category was entertainment, which was up 1.8% in the quarter, accounting for 17% of total revenue. The largest entertainment spend increase came from Charlotte, where we are benefiting from a surge of sports betting ad revenue. We also had increases year-over-year in Boston, Detroit, Tampa, Fort Myers, Fayetteville, and Augusta.

Marie Tedesco: Now looking at our revenue categories for the quarter consumer services remained our largest revenue category at the 31, 9% of total revenue with an increase of five 3% year over year, including increased spend in legal and home improvement our second largest category was to entertain.

Marie Tedesco: <unk>, which was up one 8% in the quarter accounting for 17% of total revenue the largest entertainment spend increase came from Charlotte, where we are benefiting from a surge of sports betting AD revenue. We also had increases year over year in Boston, Detroit, Tampa Fort Myers Fayetteville.

Marie Tedesco: We continue to see declines in the Philadelphia market due to some sports betting dollars moving to new markets such as Charlotte. Retail landed in third place, representing 14.3% of the quarter, falling 8.4% year over year, mostly from Tampa and Detroit. The audit category saw revenues down 10.6% or $560,000 year-over-year, and the category accounted for 8.8% of our total first quarter revenue.

Marie Tedesco: And Augusta, we continued to see declines in the Philadelphia market due to some sports betting dollars move into new markets such as Charlotte.

Marie Tedesco: Retail ended in first place representing 14, 3% of the quarter falling eight 4% year over year, mostly from Tampa and Detroit.

Marie Tedesco: The auto category saw revenues down 10, 6% or 560000 year over year and the category accounted for eight 8% of our total first quarter revenue. However, three of our markets exceeded prior year and revenue growth, including Tampa, Charlotte and Las Vegas.

Marie Tedesco: However, three of our markets exceeded the prior year in revenue growth, including Tampa, Charlotte, and Las Vegas. And on a positive note, we grew our share of auto dollars in Philadelphia, Charlotte, Detroit, and Las Vegas as market spend decreased year over year. Consumer products came in fifth place at 6% of total first quarter revenue, up 20.7%, and telecom landed in sixth place with 4.2% of total revenue. Corporate G&A expenses for the quarter decreased 1.7% or $75,000 compared to the same quarter a year ago to $4.4 million.

Marie Tedesco: And on a positive note we grew our share of auto dollars in Philadelphia, Charlotte, Detroit, and Las Vegas, as the market's been decreased year over year.

Marie Tedesco: Consumer products came in fifth place at 6% of total first quarter revenue up 27% and telecom landed in sixth place with four 2% of total revenue.

Marie Tedesco: Corporate G&A expenses for the quarter decreased one, 7% or 75000 compared to the same quarter a year ago to $4 4 million the year over year decrease in corporate G&A is mostly related to a reduction in wages and legal fees.

Marie Tedesco: The year-over-year decrease in corporate G&A is mostly related to a reduction in wages and legal fees. Non-cash, stock-based compensation increased $21,000 to $131,000 in the quarter, and we paid $84,000 in income taxes for the quarter. First quarter 2024 operating income decreased 1.4 million to a negative 1.1 million compared to 413,000 in the year ago quarter, reflecting the year over year decline in revenue. Interest expense in the first quarter decreased $1 million year over year to $5.6 million, reflecting debt reduction throughout 2023.

Marie Tedesco: Noncash stock based compensation increased 21000 to 131000 in the quarter and we paid 84000 in income taxes for the quarter first quarter 2024, operating income decreased $1 4 million to a negative $1 1 million compared to 413000.

Marie Tedesco: In the year ago quarter, reflecting the year over year decline in revenue.

Marie Tedesco: Interest expense in first quarter decreased $1 million year over year to $5 6 million, reflecting debt reduction throughout 2023, we ended the quarter with a total debt of $267 million and we made our semiannual interest payment on February one 2024.

Barbara Caroline Beasley: We ended the quarter with a total debt of $267 million, and we made our semi-annual interest payment on February 1, 2024. Adjusted EBITDA for Q4 was $731,000 compared to the prior year adjusted EBITDA of $2.6 million. I will note that the cyclical pattern shows Q1 consistently being the lowest in profitability throughout the year. We ended the quarter with cash on hand of $27.8 million, up from $26.7 million at year-end 2023. Our capital expenses for the quarter were $948,000 compared to the prior year's first quarter of $1.2 million. And looking into 2024, we expect our annual capex spend in the range of $4 to $5 million. And with that, I will turn it back to Caroline.

Barbara Caroline Beasley: Adjusted EBITDA for the fourth quarter was 731000 compared to prior year adjusted EBITDA of $2 6 million I will note that the cyclical pattern shelf first quarter consistently being the lowest in profitability throughout the year.

Caroline: We ended the quarter with cash on hand of $27 8 million up from $26 7 million at year end 2023, our capital expenses for the quarter were 948000 compared to prior year first quarter of $1 2 million and looking into 2024, we expect our annual.

Barbara Caroline Beasley: Capex spend in the range of $4 million to $5 million and with that I will turn it back to Caroline. Thank you Murray digital revenue growth has been a significant surplus for Beasley a variety of factors will continue to contribute to this growth, including number one the expansion of our digital sales force.

Barbara Caroline Beasley: Thank you, Marie. Digital revenue growth has been a significant focus for Beasley. A variety of factors will continue to contribute to this growth, including, number one, the expansion of our digital sales force; and, number two, the successful implementation of digital marketing strategies that continue to leverage our strong local relationships and offer a breadth of omni-channel solutions to advertisers. And finally, number three, impressive CPM growth, particularly after transitioning a higher percentage of sales to private marketplaces.

Barbara Caroline Beasley: Number two the successful implementation of digital marketing strategies that continue to leverage our strong local relationships and offer a breadth of omnichannel solutions to advertisers and finally number three impressive CPM growth, particularly after transitioning a higher percentage of cells to private marketplace.

Barbara Caroline Beasley: <unk>.

Barbara Caroline Beasley: We can see that Beasley's multi-platform local content strategy has been yielding dominant share results, with strong digital impressions and top-rated clusters in the majority of our market. The local audience appeal of our over-the-air talent and strong brand recognition have been pivotal, with a growing following on platforms like Instagram, Twitter, and TikTok. Across all of our brands, we have combined social media audiences of about 7 million.

Barbara Caroline Beasley: We can see that Beasley multi platform local content strategy has been yielding dominant share results with strong Detroit impressions and top rated clusters in the majority of our markets.

Barbara Caroline Beasley: The local audience appeal of our over the air talent and strong brand recognition have been pivotal with their growing following on platforms like Instagram Twitter and Tic toc across all of our brands brands. We have combined social media audience is up about $7 million and despite a year over year digital.

Barbara Caroline Beasley: And despite a year-over-year digital audience decrease, as we mentioned in last quarter's call, there is an expectation for normalization in the second half of the year, as we adapt to the Google algorithm changes and some of our newer initiatives bear fruit. We're particularly excited about an initiative to redesign all of our websites, which will enhance user experience and increase site traffic. Part of the redesign, the transition to a new back-end platform will allow for SEO and security upgrades, contributing to further traffic growth.

Barbara Caroline Beasley: All audience decrease as we mentioned in last quarter's call. There is an expectation for normalization in the second half of the year as we adapt to the Google algorithm changes and some of our newer initiatives bear fruit, we're particularly excited about initiatives to redesign all of our web site, which will enhance user experience.

Barbara Caroline Beasley: Increased site traffic part of the redesign the transition to a new back end platform will allow for a C O and security upgrades contributing to further traffic growth.

Barbara Caroline Beasley: Now caring for our local communities is at the heart of who we are, and we'd like to take this opportunity to underscore our continued commitment to our community. This past April, our Southwest Florida cluster joined forces with Children's Miracle Network to host the first Cares for Kids Radiothon, in which we raised over $50,000 for Golisano Children's Hospital.

Barbara Caroline Beasley: Now caring for our local communities is at the heart of who we are and we'd like to take the opportunity to underscore our continued commitment to our communities. This past April our southwest, Florida cluster joined forces with children's Miracle network to host the first cares for kids Radiothon in which we raised over.

Barbara Caroline Beasley: We're a $50000 for golf on a children's hospital.

Barbara Caroline Beasley: Now looking at second quarter revenue as of today, we are pacing down in the low single digits, with April ending up in May and June pacing down. We remain mindful of the current economic environment, and based on that, we've kicked off process and technology-based initiatives designed to streamline our business operations, resulting in the recent elimination of approximately $6.8 million in expenses through the end of this year, including a 7% reduction in the workforce.

Barbara Caroline Beasley: Now looking at second quarter revenue as of today, we are pacing down in the low single digits with April ending up in May and June pacing down we remain mindful of the current economic environment and based on such we've kicked off process and technology based initiatives designed to streamline.

Barbara Caroline Beasley: Our business operations, resulting in the recent elimination of approximately $6 8 million in expenses through the end of this year, including a 7% reduction in workforce. This strategic realignment will enable us to improve our operating efficiency, while also reducing our leverage as we continue to best serve.

Barbara Caroline Beasley: This strategic realignment will enable us to improve our operating efficiency while also reducing our leverage as we continue to best serve the needs of our valued audiences, advertisers, and shareholders. Beyond next quarter, we expect the asset sales we made in late 23 will impact our year-over-year comps through the third quarter. However, we remain optimistic about our growth prospects in 24, given our anticipated strong political spend in the back half of the year and expectations for continued growth in digital. We're also seeing some positive signs that the national advertising market is beginning to stabilize.

Barbara Caroline Beasley: The needs of our valued audiences advertisers and shareholders.

Barbara Caroline Beasley: Beyond next quarter, we expect the asset sales we made in late 'twenty three to impact our year over year comps for the third quarter. However, we remain optimistic about our growth prospects in 'twenty four given our anticipated strong political spend in the back half of the year and expectations for continued growth in digital.

Barbara Caroline Beasley: We're also seeing some positive signs that the national advertising market is beginning to stabilize but we remain mindful of the current economic environment and are taking actions to further reduce our cost structure.

Barbara Caroline Beasley: But we remain mindful of the current economic environment and are taking actions to further reduce our cost structure. Finally, we received $6 million for our BMI shares in the first quarter, and we intend to use this cash to reduce debt in line with our continuing effort to right-size our capital structure, reduce leverage, and bring more dollars to the free cash flow line. So in closing, I'd like to thank our team members across the company for everything that they've done and are doing to focus forward. And I thank you all for attending today. And Marie, I think we have a few questions.

Barbara Caroline Beasley: Finally, we received 6 million for our BMI shares in the first quarter and we intend to use this cash to reduce debt in line with our continue continuing effort to rightsize, our capital structure reduce leverage and bring more dollars to the free cash flow line.

Barbara Caroline Beasley: So in closing I'd like to thank our team members across the company for everything that they've done and they are doing to focus forward and I. Thank you all for attending today and Maria I think we have a few questions.

Marie Tedesco: Thank you. And yes, we received a few questions that were not particularly addressed in our pre-prepared remarks. And here comes the first one.

Marie Tedesco: Thanks, Caroline Yes, we've received a few questions that were not particularly addressing our prepaid remarks and here comes the first one could you give an update on the bond maturity in February of 2026.

Marie Tedesco: Could you give an update on bond maturity in February of 2020? Yeah, so what I can say is that we are highly focused on addressing the maturity of our bonds. And our goal is to have this resolved as soon as possible, as this is a top priority for the company. The next question is, is there anything left of eSports at this point? So do we no longer have any teams in eSports at this point?

Marie Tedesco: Yeah. So what I can say is that we are highly focused on addressing the maturity of our bonds and our goal is to have this resolved as soon as possible. As this is a top priority for the company.

Marie Tedesco: The next question is that is there anything left of esports at this point. So we no longer have any teams and esport at that point.

Marie Tedesco: Great. And the last question, how much of the $6.8 million has been implemented, and when should we see it flow through? So out of the $6.8 million, $3.8 million is related to the headcount reduction that we just completed, including wages and benefits, and these have been implemented. The remainder is related to reductions in cost of goods sold, research and marketing, and other operating expenses. But keep in mind that the $6.8 million relates to the current month through the end of the year, and this will be higher on an annual basis, and that's all the questions. All right, great. Well, thank you again for attending today's call, and feel free, as always, to reach out to Marie or myself with any follow-up questions.

Marie Tedesco: Great and the last question how much of the $6 8 million have been implemented and when should we see these flow through so so out of the $6 8 million $3 8 million is related to the head count reduction that we just completed at including wages and benefits and these have been implemented.

Marie Tedesco: The remainder is related to a reduction in cost of goods sold research and marketing and other operating expenses, but keep in mind that the $6 8 million relates to the current month through the end of the year and this will be higher on an annual basis.

Marie Tedesco: And that's all the questions alright, great well. Thank you again for attending today's call and feel free as always to reach out to Marie or myself with any follow up questions.

Marie Tedesco: Yeah.

Unknown Executive: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Marie Tedesco: Yeah.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.