Conference Call and
WebcastToday, May 2, 2017 at
10:00 a.m. ET719/325-4767, conference ID
6898633 or www.bbgi.com
Beasley Broadcast Group, Inc. (Nasdaq:BBGI) (“Beasley” or the
“Company”), a large- and mid-size market radio broadcaster, today
announced operating results for the three month period ended March
31, 2017.
On November 1, 2016, Beasley acquired 18 radio
stations (net of divestitures) (“the Greater Media
stations”). The actual results presented herein reflect the
Company’s legacy Beasley Broadcast Group broadcasting and digital
operations and the results from the acquired Greater Media
stations. On January 6, 2017 we completed the sale of WFNZ-AM
and three Greater Media stations in Charlotte, and as a result the
first quarter does not reflect any contribution from these
stations. The 2017 and 2016 first quarter and pro-forma results
presented herein reflect the Company’s legacy Beasley Broadcast
Group broadcasting and digital operations and the results from the
Greater Media stations, excluding the aforementioned Charlotte
stations, as if the transaction had been completed on January 1,
2016.
|
Summary of First Quarter Results
(actual) |
|
|
In millions, except per share data |
Three Months EndedMarch
31, |
|
2017 |
2016 |
Net revenue |
$ |
53.7 |
$ |
27.5 |
Station operating income (SOI - non-GAAP) |
|
9.8 |
|
7.5 |
Operating income |
|
11.5 |
|
4.1 |
Net income |
|
7.5 |
|
1.8 |
Net income per diluted share |
$ |
0.27 |
$ |
0.08 |
|
|
|
|
|
The $26.3 million, or 95.7%, year-over-year
increase in net revenue during the three months ended March 31,
2017, reflects the operation of stations in Boston, Philadelphia,
Detroit and New Jersey acquired from Greater Media, partially
offset by the impact of the comparison with political revenue in
the year ago quarter.
Station Operating Income (SOI, a non-GAAP
financial measure), rose 31.1% year-over-year in the first quarter
of 2017. The increase in SOI reflects the operations of the Greater
Media stations and comparable quarterly net revenues at Beasley’s
existing stations versus the 2016 period, which does not include
the Greater Media stations.
Operating income of $11.5 million in the first
quarter of 2017, an increase of approximately $7.4 million over the
comparable 2016 period, is primarily attributable to the increase
in station operating income and an additional $7.5 million gain on
the acquisition of the Greater Media stations due to an increase in
the Company’s stock price which increased the fair value of certain
preliminary purchase price accounting items. The Company also
incurred an additional $0.5 million of pre-tax merger expenses in
the first quarter, while first quarter interest expense increased
approximately $3.8 million related to the financing of the Greater
Media acquisition. As a result of these factors, net income
per diluted share increased to $0.27 per diluted share in the three
months ended March 31, 2017 compared to $0.08 per diluted share in
the three months ended March 31, 2016.
Net income for the 2017 first quarter of $7.5
million compared to net income of $1.8 million a year ago, with the
increase primarily attributable to the gain on acquisition and
other contributions to operating income described above. The
purchase price allocation which resulted in the $7.5 million gain
on merger recorded in the first quarter of 2017 is preliminary and
the figure is expected to be finalized the second or third quarter
of 2017.
Please refer to the “Calculation of SOI” and
“Reconciliation of SOI to Net Income” tables at the end of this
announcement for a discussion regarding SOI calculations.
Commenting on the financial results, Caroline
Beasley, Chief Executive Officer, said, “Our first quarter revenue,
SOI and net income growth reflect the contributions from the
Greater Media stations, partially offset by the absence of
political revenue and softer national revenue trends. On a
reported basis, the 95.7% increase in consolidated first quarter
net revenue drove SOI growth of 31.1%. Pro forma revenue was
down 5.7%, or $3.3 million, of which approximately $1.0 million was
attributable to the lack of political revenue, with the remainder
attributable to transitional matters related to the Greater Media
stations as well as lower national revenues. This was partially
offset by a 5.7% reduction in pro-forma first quarter operating
expenses.
“In the first quarter, we continued to execute
on our integration strategy focused on strong local programming to
support our goals of ratings and market leadership at the newly
acquired stations, while implementing our operating disciplines and
SOI margin expansion. Reflecting the early success of our
cost-reduction initiatives on a stand-alone basis, operating
expenses for the Greater Media stations decreased by 9.0%,
resulting in a 42.4% year-over-year increase in first quarter SOI.
We believe we remain on track to complete the integration and
realize the significant financial and operating synergies expected
from this transaction within 12 to 18 months from the acquisition
date.
“On a stand-alone basis, Beasley legacy station
revenue declined by $2.0 million, with approximately 35% of the
decline related to the absence of political revenue and the
remainder partially attributable to the reformatting of a station
in Tampa-St. Petersburg market. The Greater Media properties had a
first quarter revenue decline of approximately 4.0% on a
stand-alone basis, which was attributable to the political spending
levels, as well as certain specific integration-related issues
particularly in Philadelphia and declines in national revenues.
“With the financing of the Greater Media
acquisition, our total outstanding debt as of March 31, 2017, was
approximately $240 million, compared to $268 million at December
31, 2016. We made voluntary debt repayments of $4.0 million
in the first quarter and applied all of the $24.0 million in net
proceeds from our Charlotte cluster divestiture toward debt
reduction. In February, we entered into an agreement to
divest our Greenville-New Bern-Jacksonville cluster for $11
million. That divestiture is expected to close shortly, and we
intend to further reduce debt and leverage with the majority of the
net proceeds from that transaction.
“Throughout 2017, we will continue our strategic
priorities of realizing the synergy targets and integration goals
for the newly acquired stations, reducing debt and leverage,
improving top and bottom-line performance, returning capital to
shareholders through our quarterly cash dividend program, and
further diversifying our revenue streams. As the number one reach
medium with 93% of the U.S. population tuning in weekly, we remain
highly confident in the radio industry. We look forward to
realizing the strategic benefits of the Greater Media transaction
in 2017 and remain confident that our ongoing initiatives to drive
sales, productivity and efficiency across our platform, combined
with prudent management of our capital structure, is a proven
formula for sustained long term financial growth and the creation
of shareholder value.”
Conference Call and Webcast
Information
The Company will host a conference call and
webcast today, May 2, 2017, at 10:00 a.m. ET to discuss its
financial results and operations. To access the conference
call, interested parties may dial 719/325-4767, conference ID
6898633 (domestic and international callers). Participants
can also listen to a live webcast of the call at the Company’s
website at www.bbgi.com. Please allow 15 minutes to register and
download and install any necessary software. Following its
completion, a replay of the webcast can be accessed for five days
on the Company’s website, www.bbgi.com.
Questions from analysts, institutional investors
and debt holders may be e-mailed to ir@bbgi.com at any time up
until 9:00 a.m. ET on Tuesday, May 2, 2017. Management will
answer as many questions as possible during the conference call and
webcast (provided the questions are not addressed in their prepared
remarks).
About Beasley Broadcast
GroupCelebrating its 56th anniversary this year, Beasley
Broadcast Group, Inc., (www.bbgi.com) was founded in 1961 by George
G. Beasley who remains the Company’s Chairman of the Board.
Pro forma for the completion of announced divestitures, Beasley
Broadcast Group owns and operates 63 stations (45 FM and 18 AM) in
15 large- and mid-size markets in the United States. Approximately
18.0 million consumers listen to Beasley radio stations weekly
over-the-air, online and on smartphones and tablets and millions
regularly engage with the Company’s brands and personalities
through digital platforms such as Facebook, Twitter, text, apps and
email. For more information, please visit www.bbgi.com.
DefinitionsStation Operating
Income (SOI) consists of net revenue less station operating
expenses. We define station operating expenses as cost of
services and selling, general and administrative expenses.
SOI is a measure widely used in the radio
broadcast industry. The Company recognizes that because SOI
is not calculated in accordance with GAAP, it is not necessarily
comparable to similarly titled measures employed by other
companies. However, management believes that SOI provides
meaningful information to investors because it is an important
measure of how effectively we operate our business (i.e., operate
radio stations) and assists investors in comparing our operating
performance with that of other radio companies.
Note Regarding Forward-Looking
StatementsStatements in this release that are
“forward-looking statements” are based upon current expectations
and assumptions, and involve certain risks and uncertainties within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Words or expressions such as “believe,” “plan,”
“intends,” “expects,” “expected,” “anticipates” or variations of
such words and similar expressions are intended to identify such
forward-looking statements. Key risks are described in our
reports filed with the SEC including in our annual report on Form
10-K and quarterly reports on Form 10-Q. Readers should note
that forward-looking statements are subject to change and to
inherent risks and uncertainties and may be impacted by several
factors, including:
- external economic forces that could have a material adverse
impact on the our advertising revenues and results of
operations;
- the ability of our radio stations to compete effectively in
their respective markets for advertising revenues;
- the ability to successfully combine our business with Greater
Media’s business and the potential for unexpected delays, costs, or
liabilities relating to the integration of Greater Media;
- the incurrence of significant Merger-related fees and
costs;
- the risk that the Merger may prevent us from acting on future
opportunities to enhance stockholder value;
- our ability to respond to changes in technology, standards and
services that affect the radio industry;
- audience acceptance of our content, particularly our radio
programs;
- our substantial debt levels and the potential effect of
restrictive debt covenants on our operational flexibility and
ability to pay dividends;
- our dependence on federally issued licenses subject to
extensive federal regulation;
- the risk that our FCC broadcasting licenses and/or goodwill,
including those assets recorded due to the Merger, could become
impaired;
- the failure or destruction of the internet, satellite systems
and transmitter facilities that we depend upon to distribute its
programming;
- disruptions or security breaches of our information technology
infrastructure;
- actions by the FCC or new legislation affecting the radio
industry;
- the loss of key personnel;
- the fact that we are controlled by the Beasley family, which
creates difficulties for any attempt to gain control of us;
- the effect of future sales of Class A common stock by the
Beasley family or the former stockholders of Greater Media;
and
- other economic, business, competitive, and regulatory factors
affecting our businesses.
Our actual performance and results could differ
materially because of these factors and other factors discussed in
the “Management’s Discussion and Analysis of Results of Operations
and Financial Condition” in our SEC filings, including but not
limited to our annual reports on Form 10-K or quarterly reports on
Form 10-Q, copies of which can be obtained from the SEC,
www.sec.gov, or our website, www.bbgi.com. All information in
this release is as of May 2, 2017, and we undertake no obligation
to update the information contained herein to actual results or
changes to our expectations.
|
BEASLEY BROADCAST GROUP,
INC.Consolidated Statements of Operations (Unaudited) |
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
|
2016 |
|
Net revenue |
|
$ |
53,740,551 |
|
|
$ |
27,454,947 |
|
Operating
expenses: |
|
|
|
|
Station
operating expenses (including stock-based compensation and
excluding depreciation and amortization shown separately below)
(1) |
|
|
43,949,594 |
|
|
|
19,986,291 |
|
Corporate
general and administrative expenses (including stock-based
compensation) (2) |
|
|
3,230,097 |
|
|
|
2,500,957 |
|
Merger
expenses |
|
|
450,833 |
|
|
|
- |
|
Other
operating expenses |
|
|
328,247 |
|
|
|
- |
|
Depreciation and amortization |
|
|
1,502,837 |
|
|
|
839,406 |
|
Loss on
disposition |
|
|
269,456 |
|
|
|
- |
|
Gain on
merger |
|
|
(7,533,292 |
) |
|
|
- |
|
Total
operating expenses |
|
|
42,197,772 |
|
|
|
23,326,654 |
|
Operating income |
|
|
11,542,779 |
|
|
|
4,128,293 |
|
Non-operating income
(expense): |
|
|
|
|
Interest
expense |
|
|
(4,827,339 |
) |
|
|
(988,524 |
) |
Other income (expense), net |
|
|
356,198 |
|
|
|
(39,641 |
) |
Income before income taxes |
|
|
7,071,638 |
|
|
|
3,100,128 |
|
Income tax expense
(benefit) |
|
|
(414,858 |
) |
|
|
1,279,375 |
|
Net income |
|
$ |
7,486,496 |
|
|
$ |
1,820,753 |
|
|
|
|
|
|
Basic and diluted net
income per share |
|
$ |
0.27 |
|
|
$ |
0.08 |
|
Basic common shares
outstanding |
|
|
27,663,114 |
|
|
|
22,983,471 |
|
Diluted common shares
outstanding |
|
|
27,766,662 |
|
|
|
23,020,926 |
|
(1) |
Includes
stock-based compensation of $79,047 and $36,412 for the three
months ended March 31, 2017 and 2016, respectively. |
(2) |
Includes
stock-based compensation of $118,692 and $198,894 for the three
months ended March 31, 2017 and 2016, respectively. |
|
Selected Balance Sheet Data -
Unaudited(in thousands) |
|
|
|
March 31,2017 |
|
December 31,2016 |
Cash and cash
equivalents |
|
$ |
18,871 |
|
$ |
20,325 |
Working capital |
|
|
57,822 |
|
|
69,472 |
Total assets |
|
|
638,161 |
|
|
661,670 |
Long term debt, net of
current portion and unamortized debt issuance costs |
|
|
226,848 |
|
|
247,692 |
Stockholders’
equity |
|
$ |
208,420 |
|
$ |
202,492 |
|
Selected Statement of Cash Flows Data –
Unaudited |
|
|
|
Three Months EndedMarch 31, |
|
|
|
2017 |
|
|
|
2016 |
|
Net cash provided by
operating activities |
|
$ |
6,146,698 |
|
|
$ |
6,087,590 |
|
Net cash provided by
(used in) investing activities |
|
|
22,150,413 |
|
|
|
(656,073 |
) |
Net cash used in
financing activities |
|
|
(29,751,806 |
) |
|
|
(4,193,105 |
) |
Net increase (decrease)
in cash and cash equivalents |
|
$ |
(1,454,695 |
) |
|
$ |
1,238,412 |
|
|
Calculation of SOI –
Unaudited |
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
|
2016 |
|
Net revenue |
|
$ |
53,740,551 |
|
|
$ |
27,454,947 |
|
Station operating
expenses |
|
|
(43,949,594 |
) |
|
|
(19,986,291 |
) |
SOI |
|
$ |
9,790,957 |
|
|
$ |
7,468,656 |
|
|
Reconciliation of Net Income
to SOI - Unaudited |
|
|
|
Three Months EndedMarch
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
Net income |
|
$ |
7,486,496 |
|
|
$ |
1,820,753 |
|
Corporate general and
administrative expenses |
|
|
3,230,097 |
|
|
|
2,500,957 |
|
Merger expenses |
|
|
450,833 |
|
|
|
- |
|
Other operating
expenses |
|
|
328,247 |
|
|
|
- |
|
Depreciation and
amortization |
|
|
1,502,837 |
|
|
|
839,406 |
|
Loss on
disposition |
|
|
269,456 |
|
|
|
- |
|
Gain on merger |
|
|
(7,533,292 |
) |
|
|
- |
|
Interest expense |
|
|
4,827,339 |
|
|
|
988,524 |
|
Other income (expense),
net |
|
|
(356,198 |
) |
|
|
39,641 |
|
Income tax expense
(benefit) |
|
|
(414,858 |
) |
|
|
1,279,375 |
|
SOI |
|
$ |
9,790,957 |
|
|
$ |
7,468,656 |
|
|
BEASLEY BROADCAST GROUP,
INC.Supplemental Pro-Forma* Data (Unaudited) |
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
|
2016 |
|
Reported net
revenue |
|
$ |
53,740,551 |
|
|
$ |
27,454,947 |
|
Acquired
stations |
|
|
- |
|
|
|
30,207,597 |
|
Sold
stations |
|
|
(19,747 |
) |
|
|
(691,219 |
) |
Pro-forma net
revenue |
|
$ |
53,720,804 |
|
|
$ |
56,971,325 |
|
|
|
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
|
2016 |
|
Reported station
operating expenses |
|
$ |
43,949,594 |
|
|
$ |
19,986,291 |
|
Acquired
stations |
|
|
- |
|
|
|
27,289,117 |
|
Sold
stations |
|
|
(50,931 |
) |
|
|
(738,037 |
) |
Pro-forma station
operating expenses |
|
$ |
43,898,663 |
|
|
$ |
46,537,371 |
|
|
|
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
2016 |
Pro-forma net
revenue |
|
$ |
53,720,804 |
|
$ |
56,971,325 |
Pro-forma
station operating expenses |
|
|
43,898,663 |
|
|
46,537,371 |
Pro-forma SOI |
|
$ |
9,822,141 |
|
$ |
10,433,954 |
* |
The 2017 and 2016 first
quarter pro-forma results presented herein reflect the Company’s
legacy Beasley Broadcast Group broadcasting and digital operations
and the results from the Greater Media stations, excluding the
divested Greater Media Charlotte stations, as if the transaction
had been completed January 1, 2016. |
|
Reconciliation of Net Income to Pro-Forma
SOI |
|
|
|
Three Months EndedMarch
31, |
|
|
|
2017 |
|
|
|
2016 |
|
Net income |
|
$ |
7,486,496 |
|
|
$ |
1,820,753 |
|
Pro-forma net revenue
adjustment |
|
|
(19,747 |
) |
|
|
29,516,378 |
|
Pro-forma station
operating expenses adjustment |
|
|
50,931 |
|
|
|
(26,551,080 |
) |
Corporate general and
administrative expenses |
|
|
3,230,097 |
|
|
|
2,500,957 |
|
Merger expenses |
|
|
450,833 |
|
|
|
- |
|
Other operating
expenses |
|
|
328,247 |
|
|
|
- |
|
Depreciation and
amortization |
|
|
1,502,837 |
|
|
|
839,406 |
|
Loss on
disposition |
|
|
269,456 |
|
|
|
- |
|
Gain on merger |
|
|
(7,533,292 |
) |
|
|
- |
|
Interest expense |
|
|
4,827,339 |
|
|
|
988,524 |
|
Other income (expense),
net |
|
|
(356,198 |
) |
|
|
39,641 |
|
Income tax expense
(benefit) |
|
|
(414,858 |
) |
|
|
1,279,375 |
|
Pro-forma
SOI |
|
$ |
9,822,141 |
|
|
$ |
10,433,954 |
|
CONTACT:
B. Caroline Beasley
Chief Executive Officer
Beasley Broadcast Group, Inc.
239/263-5000 or ir@bbgi.com
Joseph Jaffoni, Jennifer Neuman
JCIR
212/835-8500 or bbgi@jcir.com
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