Q4 2024 Beasley Broadcast Group Inc Earnings Call
Good morning and welcome to Beasley Broadcast Group 4th quarter in full year 2024 earnings call.
Before proceeding, I would like to emphasize that today's conference and webcasts will be contained 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 10K.
Today's webcast will also contain on the discussion of certain non-gas financial measures within the meaning of item 10 of regulation SK.
A Reconceal version of these non-GAAP measures with their most directly comparable financial measures calculated and presented in accordance with CAP can be found in this morning's news announcement and on the company's website.
Our successful execution of strategic capital structure initiatives, including our exchange a new notes issuance has significantly improved our leverage profile extended maturities and reduce financial risk positioning beasley to generate stronger free cash flow go.
Ballpark.
For the fourth quarter total net revenue was $67 3 million or two 3% increase compared with Q4 of 2023 $8 3 million in political helped to offset weakness in national and local AD spend we exceeded our full year expectations for political.
Delivering $12 1 million for the year, driven primarily by by strong federal election spending in key battleground states.
Same station revenue for the quarter grew 4.4%.
Digital remains a critical growth engine accounting for 17.1% of total revenue in Q4, while this represents a slight decline from 19, 4% in Q3, it's important to note that total digital revenue increased sequentially from Q3 to Q4 the percentage decline.
This is primarily due to the surge in political during the quarter, which impacted overall revenue mix for the full year digital revenue as a percentage of total revenue reached 19, 4% up from 18, 4% in the prior year reinforcing our continued momentum in scaling.
Our digital offerings.
On the National side ex political revenue declined four 9% in Q4, a meaningful improvement from the 16% decline in Q3.
National represented 12, 4% of total revenue for the quarter down slightly from 12, 7% in Q3.
Looking ahead, we expect national to face additional pressure, particularly in sectors like auto and consumer goods were proposed tariffs could lead to constrained consumer demand and more cautious advertising budgets.
We are maintaining a disciplined approach to execution, ensuring we maximize opportunities as market conditions evolve.
Local over the air revenue declined five 7% in Q4 reflect a broader market trends, while local to Iraq revenue contracted by 5%. This was partially due to the strength of our political advertising performance, which led to inventory constraints across several of our key markets limiting avail.
Ability for local advertisers as a result, local direct represented 54% of our total local business in Q4, that's down from 57% in Q3, we're actively pursuing strategies to strengthen direct relationships and deliver more customized high.
<unk> solutions, New business development was a headwind in Q4 with revenue from this category declining 12, 8% year over year.
Reflecting cyclical shifts in AD spend however, we see opportunities they had five leveraging data driven audience insights expanding ourselves outreach and enhancing our audience engagement. We are confident in our ability to rebuild momentum in this area as advertisers seek greater.
Her schedule and their marketing spend we remain well positioned to offer solutions that drive measurable ROI, even in a more cost conscious environment in summary, while the advertising landscape remains highly fluid we are executing with discipline and focus while we anticipate continued near term.
Sure well you were Nathan committed to navigating these changes proactively and ensuring we are well positioned for long term growth with that I'll turn it over to Loren for a deeper dive into our financial performance.
Loren: Thanks, Caroline and good morning, everyone.
Loren: As Caroline mentioned fourth quarter total net revenue was $67 3 million.
Loren: While the divestiture of the voluntary station the elimination of the outlaws and guarantee digital and a decline in national and local spot revenue created headwinds. These are more than offset by strong political revenue.
Loren: For the full year 2024, total net revenue was $240 million each.
Loren: To your 0.8% decline compared to full year 2023.
Loren: On a same station basis revenue for the full year was up 0.2%.
Loren: As we break down revenue by category.
Loren: Consumer services remained our largest segment accounting for 24, 5% of total revenue.
Loren: Despite broader category softness Tampa Detroit stood out as bright spot generating a combined zero point.
Loren: 8 million incremental revenue.
Loren: Retail accounted for 13, 8% of total revenue while entertainment represented 15, 3%.
Loren: Sports betting revenue for Q4 came in at $4 $1 million, representing a $1 1 million decrease year over year.
Loren: This decline reflects an industry wide shift away from aggressive customer acquisition strategies towards a more sustainable focus on customer retention and profitability.
Loren: Operators are increasingly leveraging algorithms to identify and retain a high value players, while minimizing exposure to high frequency winters.
Loren: While this shift has resulted in short term softness in sports betting related AD spend we anticipate this trend to normalize over the coming year as the industry Recalibrates isn't getting strategies.
Loren: Meanwhile.
Loren: The auto sector remained relatively flat, but continue to take more share while I think 9% of total revenue in Q4.
Loren: A bright spot for the quarter in the auto category with our important segment, which grew an impressive 115% year over year.
Loren: However, the motive industry is facing increasing uncertainty as manufacturers and dealers prepare for the financial impact of proposed tariffs.
Loren: You can anticipate a tariffs could drive up consumer vehicle prices.
Loren: Anywhere from 2000 to 12000 per unit with vehicles under 30000 expected to be the most impacted.
Loren: As pricing pressure intensifies automakers and dealers are reevaluating their marketing strategies, we are already seeing signs of advertiser pullback in the auto sector as industry players proactively adjust their budgets in response to these anticipated changes.
Loren: While the long term effects remain to be seen we are closely monitoring monitoring the situation and working alongside our automotive partners to provide strategic advertising solutions that align with their evolving needs.
Loren: Okay.
Loren: Throughout 2024, we made significant progress in streamlining operations and optimizing our cost structure setting the stage for improved profitability.
Loren: These efforts have enhanced our operating leverage, allowing us to navigate a dynamic economic environment, while maintaining our commitment to high quality service and content.
Loren: Building on this momentum.
We drove additional efficiencies in Q4 station operating income or Soi came in at $14 1 million up.
Loren: Four and a half a million year over year, a 46% increase.
Loren: Excluding nonrecurring severance costs of 816000.
Loren: So I would have been $14 9 million for the quarter.
Loren: For the full year 2024.
Loren: <unk> totaled 38, and a half million roughly in line with fiscal year 2023, despite the impact of significant severance expenses incurred in 2024.
Loren: Part of our broader cost realignment efforts.
Loren: Adjusting for severance expenses in both years Soi performance in fiscal year, 2024 would have been $40 8 million compared with $39 5 million in fiscal year 2023.
Loren: These results underscore our focus on long term profit expansion, ensuring we remain well positioned for sustainable growth in 2025 and beyond.
Loren: Turning to corporate expenses.
Loren: Expenses for the fourth quarter totaled $4.7 million.
Loren: This include zero $27 million in nonrecurring severance joining bonus and systems implementation costs as we continued to realign our workforce and invest in technology to drive productivity.
Loren: Excluding these nonrecurring costs corporate G&A was 4 million, reflecting a reduction in corporate expenses year over year.
Loren: These reductions are part of a broader effort to streamline overhead while optimizing operations across the business.
Loren: Operating income for the quarter came in at $7 6 million holding steady year over year. Despite the absence of a one time $6 million gain in Q4 of 2023 from the extinguishment of franchise fees related to the sale of the outlaws.
Loren: This underscores the strength of our core operations and disciplined financial execution.
Loren: For the full year operating income totaled $13 1 million versus a loss of $82 million in 2023.
Loren: Interest expense for the quarter was $3 5 million or a reduction of $3 4 million year over year as we continued to benefit from lower outstanding debt. Following the proactive deleveraging actions, we took in 2023 and 2024.
Loren: We ended the fourth quarter with total principal outstanding on our notes of 220 million down significantly from the 267 million at the end of 2023.
Loren: This ongoing debt reduction underscored our commitment to strengthening the balance sheet and enhancing long term financial flexibility.
Loren: EBITDA as defined by our indenture for the fourth quarter, including adjustments for severance.
Loren: Noncash stock based compensation property and franchise taxes and other add back those detailed in our indenture totaled $12 5 million.
Loren: With full year lender EBITDA at $32 2 million.
Loren: This represents a doubling of our Q4 lender EBITDA.
Loren: 35% improvement versus prior year for full year 2024.
Loren: Driven by the successful execution execution of our comprehensive cost reduction initiatives, which helped to mitigate revenue pressures.
Loren: Okay.
Loren: Capital expenditures for the quarter totaled 387000, bringing year to date capex to $3 million, which is consistent with our efforts to prioritize essential investments, while maintaining disciplined capital allocation.
Loren: Cash on hand at the end of Q4 was $13 8 million a decline compared to $27 8 million at the end of Q3, largely due to debt repayments and fees associated with the debt restructuring.
Loren: Together these actions position Africa's leaner cost base, ensuring our ability to invest in areas that drive long term revenue growth, while also enhancing our ability to generate free cash flow and reduce leverage over time.
Loren: As we move into 2025, we remain laser focused on strengthening our financial position. Despite the evolving macroeconomic landscape, we are executing with discipline and our strategic initiatives continue to position us for long term success.
Caroline: I'll turn it back over to Caroline.
Caroline: Thank you Lauren digital remains a key pillar of our growth strategy and we've taken decisive steps to adapt to the evolving economic landscape, while optimizing this part of our business last August we welcomed Dave Schneider as our head of digital content marketing and since then we've made targeted.
Caroline: Had structural changes to enhance the agility and profitability in our digital operations.
Caroline: Include realigning, our digital team refining bonus structures for talent and programming teams and Reorienting, our sales team to focus on both total and Oh, no digital revenue goals date shifts position us to drive a more aggressive revenue mix in favor of higher margin digital offered off.
Caroline: <unk>, ensuring we are better insulated from near term macroeconomic pressures in prime for long term sustainable growth.
Caroline: Q4 digital revenue was slightly down year over year. This was primarily due to the wind down of guaranteed digital as we continue to refine our portfolio and focus on higher margin opportunities were actively mitigating economic headwinds through strategic realignment efforts that or ties.
Caroline: Efficiency customer acquisition, and the monetization of high margin digital products.
Caroline: Digital remains at the core of our long term growth strategy and we continue to see strong momentum in this space in 2025, we expect digital to drive roughly half of all new business fueled by the continued expansion of our offerings, including streaming audio newsletters and the rollout.
Caroline: Of new premium products as advertisers can continue to navigate in economic detox period, and take a more measured approach to spending our focus on deepening direct to consumer engagement leveraging data driven marketing solutions.
And enhancing inbound lead generation ensures we remain a strategic partner delivering measurable value for our clients as part of this strategy, we anticipate new revenue streams from our redesigned station and deeply digital websites, which will play a crucial role in our broader digital expansion.
Caroline: We expect our redesigned to be completed in Q2. These platforms are being optimized to enhance user experience increased engagement and provide more premium inventory for advertisers, we're positioning beasley to capture a greater share of digital AD dollars, while providing advertisers with more <unk>.
Caroline: <unk> data driven solutions Beasley stations continue to deliver strong ratings performance with our stations ranking number one and number two and half of our markets a testament to the strength of our local brands and to work. Our programming teams are doing to consistently engage and grow our audiences. Additionally.
Caroline: Alison has recently announced a significant change to its ppm methodology early results. So beazley stations benefiting from the change and we expect to continue to benefit from that throughout the year.
Caroline: We remain hyper focused on driving operational excellence, ensuring every part of our business is positioned for agility and growth in 2024, we took bold actions to streamline our organization and modernize our processes, creating a leaner faster and more collaborative structure that.
Caroline: <unk> for us to move with speed and a rapidly evolving media landscape. Looking ahead to Q1 of 2025 same station revenue is pacing down roughly 10% with a significant step down starting with February performance driving.
Caroline: Driving negative overall pacing for the quarter advertisers remain cautious amid ongoing economic uncertainty leading to more measured spending patterns, while near term headwinds persist. We are focused on driving digital growth strengthening advertiser relationships and executing our revenue diverse.
Caroline: Vacation strategy to position us for long term success. Despite short term volatility we're confident that the strategic foundation, we built rooted in technology and operational rigor will allow us to outperform the marketplace capture greater value for our advertisers.
Caroline: And deliver long term growth for our shareholders.
Caroline: Look forward to sharing our progress with you as we execute against our vision in 2025.
Caroline: With that let's move on to the questions that were submitted.
Caroline: Great.
Caroline: So the first question that was submitted.
Caroline: Political themes, particularly strong for Q4, where there are certain markets that lead.
Caroline: Yes, there were we.
Caroline: We saw significant political dollars in Charlotte, Philadelphia and Detroit.
Caroline: We also saw meaningful dollars from Las Vegas.
Speaker Change: Okay. Next question are you seeing any resumption in national advertising in Philadelphia and Boston.
Speaker Change: So NASA on Boston is pacing down but national in Philadelphia is pacing up. So these two markets combined we are seeing pacing up however, overall net national pacing is down roughly about 10% and this is primarily.
Speaker Change: Driven by sports betting pullback in Charlotte.
Speaker Change: Great how much of the $20 million of cost savings hit the 'twenty 'twenty four numbers.
Speaker Change: I'll jump in on that one.
Speaker Change: As you can see from the fourth quarter.
Improvements in EBITDA per indenture.
Speaker Change: Prior to our pro forma cost savings.
Speaker Change: Already reflect annualized cost savings in excess of $20 million.
Speaker Change: So as you know we did start making cuts in may of last year through the end of the year.
Speaker Change: So we definitely expect to see the full benefit of these cost savings in 2025 Megs, but in addition to that we made further reductions in Q4 in excess of 3 million.
Rick: Rick of which only have 7 million would have hit in Q4, So you've got an extra call. It $2 5 million plus annualized savings that you didn't see in the quarter.
Speaker Change: Yeah.
Speaker Change: Alright, moving on to the next question could you comment on the potential for regulatory changes would you hope it would you be open to station swaps or selling stations to reduce debt.
Speaker Change: So all of the regulatory environment seems right for de Reg for both radio and TV.
Speaker Change: And of course, we are very supportive and hopeful that this will.
Speaker Change: Occur sooner versus later.
Speaker Change: As far as being open to swaps or selling stations, we're always open.
Speaker Change: First what's ourselves if the deal is right for the company.
Speaker Change: Great well those are all the questions that we have been for everyone.
Speaker Change: Alright. Thank you. This concludes our call and as always feel free to reach out to Lauren or myself with any additional questions.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen that concludes your conference call. We thank you for participating in a such a please disconnect your lines.
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