Q1 2025 Beasley Broadcast Group Inc Earnings Call
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Speaker Change: Good morning, and welcome to Beasley broadcast group first quarter 'twenty 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.
Speaker Change: 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 on Form 10-Q.
Speaker Change: Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of item 10 of regulation S. K.
Speaker Change: A reconciliation of these non-GAAP measures with their most directly comparable financial measure calculated.
Speaker Change: In accordance with GAAP can be found in this morning's news announcement and on the company's website.
Speaker Change: I would also remind listeners that following its completion a week.
Beasley ball: For today's call can be accessed for five days on the company's website www dot speed D. G. I Dot Com you can also find a copy of today's press release on the investors what pressroom section of the site at this time I would like to turn the conference over to your host Beasley ball.
Speaker Change: Casper CEO Caroline Beasley. Please go ahead.
Caroline Beasley: Thank you Ilana and good morning, everyone. We appreciate you joining us to review our first quarter results. Following a transformative 2024, we entered this year with a clear set of priorities number one accelerate digital growth number to improve revenue quality.
Caroline Beasley: He and number three execute with discipline in Q4, we remain focused on those priorities scaling high margin digital products deepening our advertiser relationships and continuing to invest in areas that drive long term value.
Caroline Beasley: In Q1 total net revenue was $48 9 million, while total operating expenses were $45 2 million, while topline softness was felt industry wide our ability to preserve EBITDA profitability through efficient cost management high like Steve.
Caroline Beasley: <unk> improved much weakness and the ongoing impact of our margin focused operating strategy.
Caroline Beasley: We were especially encouraged by the progress in our digital segment digital revenue accounted for 22% and total revenue and digital segment operating income grew meaningfully from 100000 in Q1 24 to $1 9 million in Q1 25.
Caroline Beasley: This performance highlights the impact of our digital product margin optimization.
Caroline Beasley: Optimization and the growing demand for digital first solutions.
Caroline Beasley: We believe this momentum validate validates our long term strategy and positions us to drive further gains in market share operating efficiency and margin expansion across the digital portfolio at the same time, we took proactive steps to manage through broader economic headwind.
Caroline Beasley: We continued executing our cost reduction plan.
Caroline Beasley: Realigning resources across the company and improving internal workflows to maximize efficiency and support growth in high return categories, including sports, which is a high return category that has developed to be core to our broader strategy, we see meaningful opportunity.
Caroline Beasley: Trinity to grow this vertical both own air and digitally we currently maintain flagship relationships with five major professional teams in Boston and Philadelphia. In addition to your relationships with several major universities across the nation.
Caroline Beasley: In April we expanded its footprint with a landmark multiyear partnership in Detroit through a new flagship agreement with University of Michigan Athletics, and Lear fields, Michigan Sports properties. Starting this fall will bring Michigan football men's basketball and men's hockey.
Caroline Beasley: To the FM dial on 94, seven WCS Act with select women's basketball games airing on 1051. The bounce. This partnership is more than just game coverage. It includes weekly coaches shows player interviews and digital exclusives fully.
Caroline Beasley: To date across our own air online in one site platforms. It represents the next chapter in our Omnichannel sports strategy, bringing advertisers and fans into a seven day a week engagement model.
Caroline Beasley: As we continue investing in high impact content proprietary digital products and platform spanning opportunities like sports, we remain equally committed to disciplined execution and long term financial performance with that I'll turn it over to Loren for a closer look at our first quarter.
Caroline Beasley: Results.
Loren: Thanks, Caroline and good morning, everyone.
Loren: As mentioned total net revenue for the first quarter was $48 9 million down 10, 1% on an as reported basis, but down eight 5% on a same station basis.
Loren: As a reminder, we report our pacing data on a same station basis.
Loren: With that in mind.
Loren: Modestly exceeded the trend of a 10% year over year decline, we reported in our Q4 earnings call, reflecting early progress in stabilizing revenue trends amid continued market volatility.
Loren: As we received a number of investor questions. Following our Q4 earnings release on our same station performance. We've added those reconciling T Rex.
Loren: Conciliation tables back to our release and we'll continue to provide details of reported versus same station performance.
Loren: Okay.
Loren: The first quarter reflected the ongoing challenges of a cautious advertising environment.
Loren: With softness across most major categories.
Loren: Overall demand remained under pressure and year over year declines were consistent with broader industry trends.
Loren: With that context, I'll walk through performance by category, beginning with consumer services.
Loren: Yeah.
Loren: Consumer services remained our largest revenue category in Q1 accounting for 30% of total revenue.
Loren: While dollar from the category declined 15% year over year, there were bright spots within consumer services, including legal and HVAC in particular.
Loren: Legal has continued to build momentum growing nearly 5% year over year.
Loren: A key driver of this success has been the expanded deployment of Q visual billboards and sponsorship.
Loren: Which deliver synchronized in car messaging during the on air commercials.
Loren: When an advertiser spot aired a matching visual appears on the cars dashboard.
Loren: As a full visual AD on HD radio or the dynamic text messaging on standard radio displays.
Loren: Real time AD synchronization dramatically enhances brand visibility and drive deeper audience engagement.
Law firms in particular have been highly responsive to this format recognizing the power of having their brand front and center at precisely the moment of message delivery.
Loren: As a result, Q has helped us secure incremental spend from existing accounts, while accelerating new business wins.
Loren: Reinforcing legal is one of our most stable and scalable verticals.
Loren: We also saw meaningful growth in HV AC growing 12% year over year.
Loren: Our focus on targeted outreach and digital integration resulted in several new advertiser wins.
Loren: This category is becoming an increasingly dependable contributor and we believe we have additional upside as we expand our footprint and refine campaign offerings through the remainder of the year.
Loren: Shifting to automotive overall category revenue declined slightly in Q1 with domestic softness outweighing strikes and foreign auto.
Loren: Okay.
Loren: Foreign auto was up seven 5% for the quarter down from the plus 15% year over year growth. We saw in Q4, primarily due to advertiser caution tied to potential tariffs on imported vehicles.
Loren: This uncertainty emerged late in the quarter and weighed on both campaign planning and co op spending.
Loren: Domestic auto declined 5%. Despite early strength in January placements as broader market concerns and shifting inventory dynamics impacted budgets across several key accounts.
Loren: While the category was down overall, we did see bright spots in markets like Boston and Tampa.
Loren: We're team secured tier two program commitment and develop new local partnerships.
Loren: That said given the macro environment in auto sector volatility. We expect these headwinds to continue into Q2, particularly on the national side.
Loren: Altogether National revenue, excluding political declined 12, 7% driven.
Driven in part by a broad pullback across all verticals.
Loren: As well as continued softness in categories, such as home improvement and health care.
Loren: These results reflected heightened macroeconomic caution and ongoing pressure across agency channel.
Loren: Local agency revenue declined 19, 9% year over year with all markets experiencing some level of contraction.
Loren: That said several of our markets limited local agency losses to the single digits underscoring the strength of local relationships and effective sales execution.
Loren: In contrast, local direct revenue increased by <unk>, 3% year over year, and now represents 55% of our total local business.
Loren: Testament to the resilience of our direct Advertiser base and the continued performance of our in market sales teams.
Loren: Okay.
Loren: This year over year growth, even in a challenging economic environment reflects the enduring value of our local sales strategy and the strength of our client relationships.
Loren: As with others in our industry. The majority of our overall revenue decline was concentrated in agency driven business.
Loren: Amplified by broader macroeconomic headwinds.
Loren: Looking ahead, we are taking deliberate steps to deepen collaboration with a local agency partners.
Loren: On streamlining the buying process and offering multi platform solutions that align with our clients' evolving needs.
Loren: Okay.
Loren: New business declined 19, 5% in the quarter largely due to agency churn and tough comparisons to Q1 2024, which included several one time high value campaigns in health care and sports betting, but now fall into a recurring base.
Loren: Despite this we saw positive year over year, new business comps in some of our largest markets, including Boston, Tampa, Charlotte and Philadelphia.
Loren: Amid macroeconomic challenges, we remain focused on value creation with our sales team focused on building sustainable advertiser relationships and strengthening conversion across priority verticals.
Loren: Now turning to expenses.
Loren: Total operating expenses for the quarter were $45 2 million down nearly $4 million or eight 1% compared to the prior year.
Loren: On a same station basis operating expenses were down $2 6 million or five 4% compared to the prior year.
Loren: Audio operating expenses declined five 3% or 5% on a same station basis, while digital operating expenses saw an 18.2% reduction.
Loren: Or six 8% reduction on a same station basis due to the divestiture of guaranteed digital and the outlaws.
Loren: As a result station operating income for the quarter was $3 7 million.
Loren: Compared to $5 1 million in Q1 2024.
Loren: On an adjusted basis, excluding nonrecurring and severance expenses and stock based compensation adjusted Soi was $4.6 million.
Loren: The decline in Soi reflects the impact of lower revenues, the outpaced outpaced our cost reductions.
Loren: <unk> strong underlying expense discipline.
Loren: Corporate G&A expenses decreased eight 8% or 388000 compared to the same quarter, a year ago to $4 million.
Loren: Excluding nonrecurring severance costs and stock based compensation.
Loren: Adjusted corporate G&A expenses declined approximately 20% or 575000 to $3 4 million.
Loren: These results reflect our broader commitment to financial rigor and a sustained focus on aligning aligning our expense base with current revenue trends.
Loren: Okay.
Loren: Operating income for the first quarter of 2025 was a loss of $2 million compared to a loss of $1 1 million in the prior year period.
Loren: The reported decline was primarily the result of a $5 5 million year over year reduction in net revenue, which outpaced the $4 $6 million decrease in total operating expenses corporate expenses and depreciation and amortization.
Loren: However, when excluding one time charges, including severance.
Loren: One time costs related to our financial systems implementation and go live and expenses associated with our debt transaction. Our adjusted operating loss was zero point $6 million.
Loren: On this basis underlying operating performance improved by approximately 500000 compared to the same period last year.
Loren: This improvement underscores the continued impact of our cost containment efforts and highlights the operational progress we've made despite a softer revenue environment.
Loren: Interest.
Loren: <unk> declined $2 2 million year over year from $5 6 million to $3 4 million, reflecting the benefit of that reduction activities in Q4 2024.
We ended Q1 2025 with total principal outstanding of $220 million.
Loren: Adjusted EBITDA for the first quarter of 2025 was $1 1 million up 28% from <unk> 9 million in the prior year period, despite a challenging revenue environment.
Loren: This performance reflects the benefits of our strategic cost initiatives and disciplined operational execution adjusted.
Loren: Adjusted EBITDA includes <unk> 1 million in noncash noncash stock based compensation for.
Loren: 495000 in nonrecurring advisory expenses associated with our financial system go lives and the debt transaction.
Loren: 890000 in one time severance expenses.
Loren: Excluding noncash trade adjustment property and franchise taxes, and pro forma cost savings totaling <unk> 5 million altogether EBITDA as defined by our indenture was even stronger at $1 7 million.
Loren: Following our Q4 earnings call, we had a number of conversations with our lenders and we have refocused our earnings release around adjusted EBITDA because that continues to be the metric. They are most interested in.
Loren: While revenue declined by $5 $5 million year over year due to broader market softness we believe our improved profitability profile positions us to capitalize on future top line recovery.
Loren: Our proactive cost discipline combined with investments in core growth areas provides a strong foundation for margin expansion and sustainable long term value creation.
Loren: Okay.
Loren: We ended the quarter with $12 2 million in cash on hand down from $13 8 million at the end of fiscal year 2024.
Loren: Capital expenditures were 800000 in the quarter.
Loren: Compared to 900000 in the prior year.
Caroline Beasley: And with that let me turn it back to Caroline.
Caroline Beasley: Thank you Lauren before I turn to our ratings performance and updated outlook I want to spend a few minutes on one of the most exciting and fast moving areas of our business. Our digital segment. This is not just a growth vertical for us. It's a key part of how we are future proof.
Caroline Beasley: Beasley and creating durable value across platforms audiences and advertisers our progress in Q1 continues to validate that strategy demonstrating that our digital transformation is gaining traction accelerating margin expansion and positioning the beasley.
Caroline Beasley: And the business for scalable sustainable growth Q1, 'twenty five marked a continuation of the trajectory total digital revenue grew six 4% year over year on a same station basis and our same station digital segment operating income increased by $1 3 million.
Caroline Beasley: Compared to the prior period on a same station basis digital segment operating margin expanded significantly from six 1% to 17, 8%, reflecting strong operating leverage and disciplined execution. This exceptional margin.
Caroline Beasley: Improvement underscores the scalability of our digital platform and affirms the effectiveness of our strategic investments in content technology and audience development is a clear demonstration of how our digital business is not only growing but maturing into a <unk>.
Caroline Beasley: High margin value accretive engine within our portfolio.
Caroline Beasley: We've been intentional in driving more predictable and sustainable digital outcomes in Q1, we launched a focused effort to optimize our product portfolio and back in infrastructure. These initiatives include enhancements to our owned and operated platforms expanded.
Caroline Beasley: Newsletter and content distribution capabilities and continued investment in advertising technology, particularly around campaign automation and monetization. We're also advancing our audio and video offerings to create more integrated cross platform experiences not at the same time.
Caroline Beasley: We're aligning ourselves organization to focus on higher margin proprietary inventory and simplifying the buy side experience taken together. These efforts are enabling us to deliver greater value per listener improve yield and build a more scalable diversified digital.
Caroline Beasley: Business.
Caroline Beasley: As a result revenue from our digital owned and operated inventory grew by $1 million year over year, while cpm's on our streaming platform increased by 13%.
Caroline Beasley: These gains paired with stronger cross platform engagement and improving digital margins underscore the progress, we're making in unlocking greater value per listener and building a more scalable diversified digital business.
Caroline Beasley: At the heart of our digital growth is a strong and differentiated foundation.
Caroline Beasley: One that's difficult to replicate we combined the region credibility, our beloved local brands with national scale execution across platforms and channels in short our foundation is not just about content it's about connection.
Caroline Beasley: We're combining editorial integrity distribution breadth and monetization depth to create a digital business that is growing durable and highly aligned with where media consumption is headed.
Caroline Beasley: One of the clearest expressions of this strategy and one of the most exciting areas of transformation is our streaming products.
Caroline Beasley: This year in digital we are focused on product optimization across our entire digital portfolio and we began that process with streaming we've consolidated our offerings into a single unified streaming solution audio plus.
Caroline Beasley: This product's simplifies our go to market strategy and significantly enhances performance for both listeners and advertisers.
Caroline Beasley: Lastly sales teams, we're pitching both owned and operated and third party platforms, but limited inventory on our side often lead clients to choose third party platforms.
Caroline Beasley: Now with backend optimization efforts completed in late Q1, we increased streaming inventory availability by nearly three times, making audio plus a far more scalable and competitive product all targeting is now prioritized through our <unk> channels.
Caroline Beasley: And audience targeting waterfall intelligently from our direct inventory to programmatic and only then to third party when needed.
Caroline Beasley: And this is just the beginning display is the next product, we'll optimize followed by video and pre roll as we continue transforming our digital product portfolio for growth and efficiency as advertisers continue to shift more dollars into digital we're capturing.
Caroline Beasley: A growing share thanks to high quality brand safe environments, and a scalable data driven approach to audio monetization or.
Caroline Beasley: Our digital transformation is a long term engine for value creation, and we're just getting started with audio plus end market more products queued for optimization and a robust pipeline of innovation, we're confident in our ability to continue unlocking sustainable growth and margin expansion.
Caroline Beasley: And across digital.
Caroline Beasley: With that let's shift back to our ratings performance, where we will continue to see strength in key markets and day parts. I'll then walk through our updated guidance for Q2 Beasley brands continued to maintain their premium status in the radio industry by dominating in Nielsen ratings and growing.
Caroline Beasley: Audience six of our radio stations are currently number one in their market among the key adults 25, 54 demo and our overall audio June is up five 6% in our ppm markets, we saw a 20% quarter to quarter increase in Nielsen and a 10% ish.
Caroline Beasley: Increase year over year.
Caroline Beasley: The large largest ratings gain gains came from Charlotte, which was up 33% as was Detroit also up 33% and then Philadelphia up 24% with our increased focus on engaging with audiences on digital platforms. We're happy to report there.
Caroline Beasley: Our social media audience has grown by over 20% year over year.
Caroline Beasley: In addition to the landmark partnership with the University of Michigan highlighted earlier, we've launched several high impact initiatives in the first quarter that we expect will contribute to future growth in Las Vegas, We debuted maxima, a new bilingual music format. Okay.
Caroline Beasley: S assay design.
Caroline Beasley: Designed to better serve the regions rapidly expanding Hispanic population.
We also partnered with PRN and NASCAR.
Caroline Beasley: Con call Paddy to launch a nationally syndicated radio show, which is now airing on more than 180 stations across the country.
Caroline Beasley: Each of these initiatives will drive incremental revenue and deepen advertiser engagement in the second half of 'twenty five and beyond.
Speaker Change: As always serving our community is a core value at Beazley media group and many of our stations hosted and sponsored events to help people in need.
Speaker Change: These events not only unite the community with a common goal, but also strengthens our brands and create a more personal connection with listeners.
Speaker Change: <unk> is widely known for our work in the community and is being recognized by the <unk>.
Speaker Change: With the prestigious 2025.
Speaker Change: Service to America Award in June of this year.
Speaker Change: Now looking ahead to Q2 in the remainder of the year, we're maintaining a disciplined and focused approach to performance management across the organization.
Speaker Change: Revenue is currently pacing down 10% in Q2, primarily driven by continued macroeconomic pressure in select categories. However, we've moved swiftly to offset these headwinds headwinds through a combination of targeted expense reductions and strategic.
Speaker Change: Product realignment.
Speaker Change: These actions are already helping to protect margin performance, we remain committed to thoughtful cost management, while continuing to fund the initiatives, particularly in digital content and technology that we believe will drive long term shareholder value as we move through the year will stay.
Speaker Change: We're focused on execution delivering for our clients growing our audience optimizing our digital portfolio and continuing to unlock operating leverage across the business I.
Speaker Change: Thank you for your continued support and we'll now address questions that were submitted to US. This morning Alona. We have several questions submitted ahead of today's call.
Speaker Change: Could you. Please provide an update on the current status of the cost savings initiatives, specifically, how much of the projected savings have been realized to date and what additional impact is expected to be reflected in the 2025 financials.
Speaker Change: Alright.
Speaker Change: Thanks for the question.
Speaker Change: At this point, we should see the full amount of the cost reductions that we implemented in 2024 in Q1.
Speaker Change: And I think to reiterate what I said in the prepared remarks, we continue to be laser focused on aligning our expense base with current revenue trends.
Speaker Change: And our Q1 results are evidence of this.
Speaker Change: In addition, we made $1 $3 million in incremental cuts in Q1 of which roughly let's say 200000 showed up in the numbers. So.
Speaker Change: So we will see the balance of that impact in Q2.
Speaker Change: But we continue to evaluate our cost structure relative to our revenue performance and have made additional cuts are quarter to date.
Speaker Change: Yes.
Speaker Change: Thank you all right now for the second question is national feeling stronger or weaker in 2024, I see that national was 14% of revenue in Q1, how much with national down year over year, how international performing in Philadelphia and Boston.
Speaker Change: Yeah.
Speaker Change: As we addressed previously in the call National is weaker this year than in 2024, but.
Speaker Change: But as we look at the market, specifically Boston was down consistent with the overall declines in the segment and is pacing in line with this trend this quarter.
Speaker Change: On the bright side, Philly and New Jersey.
Speaker Change: Sure.
Speaker Change: Up double digits year over year in Q1, so that was a real bright spot in these markets continue to pace positively in Q2.
Speaker Change: Now for the last question has there been any increase in M&A discussions given potential regulatory loosening do you see an opportunity for swaps.
Speaker Change: So I'll take that yes, I will say that earlier in the year there were discussions multiple discussions.
Speaker Change: However, given the uncertainty in the economy today due to tariffs it seems that some of these discussions have softened.
Speaker Change: However, I will also say that we are always open to evaluating swaps.
Speaker Change: If they are beneficial to the company.
Speaker Change: Thank you Carolyn. This concludes today's earnings conference call. A replay of this call will be available on the company's Investor Relations website. If you have any further questions. Please contact investor relations at <unk>.
Speaker Change: Our at <unk> Dot Com. We appreciate your continued interest in Beasley broadcast group and we thank you for joining us have a great day.
Speaker Change: Thank you Sir.
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