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 and six-month
periods ended June 30, 2019.
The results presented herein reflect actual results including
the operations of WXTU-FM in the three and six months ended June
30, 2019.
Summary of Second Quarter
Results
In millions, except per share data |
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net revenue |
$ |
65.7 |
$ |
61.6 |
$ |
123.3 |
$ |
116.8 |
Operating income1 |
|
10.7 |
|
10.7 |
|
17.5 |
|
11.1 |
Net income1 |
|
4.3 |
|
4.9 |
|
5.6 |
|
1.8 |
Net income per diluted share1 |
$ |
0.15 |
$ |
0.18 |
$ |
0.20 |
$ |
0.06 |
Station operating income (SOI - non-GAAP) |
|
17.9 |
|
16.7 |
|
28.1 |
|
26.3 |
1 Operating income, net income and net
income per diluted share were impacted by a $4.4 million charge due
to the change in fair value of contingent consideration in the six
months ended June 30, 2018 and a $3.5 million gain on dispositions
in the six months ended June 30, 2019.
The $4.0 million, or 6.5%, year-over-year
increase in net revenue during the three months ended June 30,
2019, reflects increased revenue in the Company’s Philadelphia
market cluster, primarily due to the September 2018 acquisition of
WXTU-FM, and increased revenue in the Company’s Boston market
cluster. Net revenue for the three months ended June 30, 2019 was
comparable to net revenue for the same period in 2018 at the
Company’s other market clusters.
Beasley reported operating income of $10.7
million in the second quarter of 2019. Second quarter 2019 interest
expense increased by approximately $0.7 million to $4.5 million
reflecting additional borrowings related to the WXTU-FM acquisition
and a higher overall cost of borrowings. As a result of these
factors, Beasley reported net income of $4.3 million or $0.15 per
diluted share in the three months ended June 30, 2019, compared to
net income of $4.9 million or $0.18 per diluted share in the three
months ended June 30, 2018.
Station Operating Income (SOI, a non-GAAP
financial measure) rose $1.2 million or 7.5% year-over-year in the
second quarter of 2019 to $17.9 million. The year-over-year
increase reflects the net revenue growth during the period which
more than offset a 6.2% year-over-year rise in station operating
expenses related to the Company’s expanded platform.
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, “The strategic and
financial benefits of our initiatives to further expand and
diversify Beasley’s broadcast and digital platform are evident in
our second quarter financial results and further highlights the
progress we are making to reinforce and grow Beasley’s leadership
position across all audio platforms in our markets. Record second
quarter net revenue of $65.7 million was driven by the strength of
our station clusters in three of our top five largest revenue
markets as well as contributions from recent acquisitions and more
than offset approximately $1.0 million in combined political and
United States Traffic Network (USTN) revenue recorded in the
comparable 2018 period, which was non-recurring in 2019. Reflecting
the strong operating leverage in Beasley’s business model, second
quarter revenue growth of 6.5% drove a 7.5% year-over-year increase
in SOI and overall margin improvement.
“Beasley’s reported second quarter free cash
flow declined to $5.5 million from $8.4 million in the comparable
2018 period due to higher capital expenses related to the ongoing
build-out of our Philadelphia studios and increases in taxes,
corporate overhead and interest expense offsetting the $1.2 million
increase in SOI. Importantly, year-to-date operating results and
third quarter trends continue to pace consistently with our
internal forecasts.
“During the second quarter, we continued to make
significant progress toward transforming Beasley into a fully
diversified, local multi-media company through select investments
in our existing platform and opportunistic accretive transactions.
In June, we entered into a definitive agreement to acquire WDMK-FM
and three translators used to broadcast WDMK’s HD2 signal in
Detroit, Michigan from Urban One for $13.5 million. This
transaction is expected to be immediately accretive to Beasley’s
free cash flow, excluding one-time transaction costs. The
acquisition of WDMK-FM and the WDMK-HD2 translators represent a
strategically and financially compelling growth opportunity for our
shareholders and further enhances our revenue and competitive
position in Detroit with a strong cluster of four FM stations in
the country’s thirteenth largest market.
“We also continued to advance our initiatives
focused on leveraging our premium local programming and brands,
while aggressively rolling out our digital offerings and
distribution capabilities to create new value for listeners and
advertisers. In the second quarter, the early success of our
digital sales, digital content development and podcasting
strategies resulted in digital revenue growth and higher levels of
audience engagement.
“In addition to our growth and diversification
initiatives, we remain committed to enhancing shareholder value
through capital returns and leverage reduction. In the second
quarter, we used cash from operations to pay our twenty-third
consecutive quarterly cash dividend and made voluntary debt
repayments of $4.0 million, with total outstanding debt of $245.5
million as of June 30, 2019.
“Looking ahead to the second half of 2019, we
remain committed to our strategic priorities of improving top- and
bottom-line performance, reducing debt and leverage, and returning
capital to shareholders through our quarterly cash dividend. With
enhanced opportunities to monetize our strong core programming and
local brands, we remain confident in the radio industry and in
Beasley’s growth prospects going forward. We look forward to
realizing the strategic benefits of the WDMK-FM and WDMK-HD2
translators transaction later this year and continue to believe
that our ongoing initiatives to diversify and drive revenue,
productivity and efficiency across our platform, combined with
prudent management of our capital structure, are proven initiatives
for sustained long-term financial growth and enhanced shareholder
value.”
Conference Call and Webcast
InformationThe Company will host a conference
call and webcast today, August 5, 2019, at 10:00 a.m. ET to discuss
its financial results and operations. To access the
conference call, interested parties may dial 334/777-6978,
conference ID 7350889 (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 Monday, August 5, 2019. 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 58th 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.
Beasley Broadcast Group owns and operates 64 stations (46 FM and 18
AM) in 15 large- and mid-size markets in the United States.
Approximately 19 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.
Free Cash Flow (FCF) consists of SOI less
station stock-based compensation expense, corporate general and
administrative expenses, interest expense, current income tax
expense and capital expenditures plus amortization of debt issuance
costs and interest income.
SOI and FCF are measures widely used in the
radio broadcast industry. The Company recognizes that because
SOI and FCF are not calculated in accordance with GAAP, they are
not necessarily comparable to similarly titled measures employed by
other companies. However, management believes that SOI and
FCF provide meaningful information to investors because they are
important measures of how effectively we operate our business
(i.e., operate radio stations) and assist 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 “Looking ahead,” “look
forward,” “intends,” “believe,” “hope,” “plan,” “expects,”
“expected,” “anticipates” or variations of such words and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, such as
statements about expected income; shareholder value; revenues; and
growth. 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 our advertising revenues and
results of operations;
- the ability of our radio stations
to compete effectively in their respective markets for advertising
revenues;
- our ability to develop compelling
and differentiated digital content, products and services;
- audience acceptance of our content,
particularly our radio programs;
- our ability to respond to changes
in technology, standards and services that affect the radio
industry;
- our dependence on federally issued
licenses subject to extensive federal regulation;
- actions by the FCC or new
legislation affecting the radio industry;
- our dependence on selected market
clusters of radio stations for a material portion of our net
revenue;
- credit risk on our accounts
receivable;
- the risk that our FCC broadcasting
licenses and/or goodwill could become impaired;
- our substantial debt levels and the
potential effect of restrictive debt covenants on our operational
flexibility and ability to pay dividends;
- the failure or destruction of the
internet, satellite systems and transmitter facilities that we
depend upon to distribute our programming;
- disruptions or security breaches of
our information technology infrastructure;
- 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;
- our ability to integrate acquired
businesses and achieve fully the strategic and financial objectives
related thereto and their impact on our financial condition and
results of operations; and
- other economic, business,
competitive, and regulatory factors affecting our business,
including those set forth in our filings with the SEC.
Our actual performance and results could differ
materially because of these factors and other factors discussed 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 August
5, 2019, and we undertake no obligation to update the information
contained herein to actual results or changes to our
expectations.
-tables follow-
BEASLEY BROADCAST GROUP,
INC.Consolidated Statements of Operations (Unaudited)
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net revenue |
$ |
65,658,748 |
|
|
$ |
61,625,296 |
|
|
$ |
123,346,302 |
|
|
$ |
116,778,923 |
|
Operating expenses: |
|
|
|
|
|
|
|
Station operating expenses (including stock- based
compensation and excluding depreciation and amortization
shown separately below) |
|
47,759,693 |
|
|
|
44,967,293 |
|
|
|
95,210,875 |
|
|
|
90,480,140 |
|
Corporate general and administrative expenses (including
stock-based compensation) |
|
5,423,561 |
|
|
|
4,440,299 |
|
|
|
10,385,975 |
|
|
|
7,722,772 |
|
Transaction expenses |
|
55,163 |
|
|
|
- |
|
|
|
296,511 |
|
|
|
- |
|
Depreciation and amortization |
|
1,742,687 |
|
|
|
1,562,052 |
|
|
|
3,511,474 |
|
|
|
3,108,786 |
|
Change in fair value of contingent consideration |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,415,925 |
|
Gain on dispositions |
|
- |
|
|
|
- |
|
|
|
(3,545,755 |
) |
|
|
- |
|
Total operating expenses |
|
54,981,104 |
|
|
|
50,969,644 |
|
|
|
105,859,080 |
|
|
|
105,727,623 |
|
Operating income |
|
10,677,644 |
|
|
|
10,655,652 |
|
|
|
17,487,222 |
|
|
|
11,051,300 |
|
Non-operating income
(expense): |
|
|
|
|
|
|
|
Interest expense |
|
(4,547,036 |
) |
|
|
(3,805,575 |
) |
|
|
(9,137,921 |
) |
|
|
(7,430,815 |
) |
Other income (expense), net |
|
38,193 |
|
|
|
27,311 |
|
|
|
(194,390 |
) |
|
|
476,212 |
|
Income before income taxes |
|
6,168,801 |
|
|
|
6,877,388 |
|
|
|
8,154,911 |
|
|
|
4,096,697 |
|
Income tax expense |
|
1,899,800 |
|
|
|
1,958,776 |
|
|
|
2,532,647 |
|
|
|
2,339,277 |
|
Net income |
$ |
4,269,001 |
|
|
$ |
4,918,612 |
|
|
$ |
5,622,264 |
|
|
$ |
1,757,420 |
|
|
|
|
|
|
|
|
|
Basic net income per share |
$ |
0.15 |
|
|
$ |
0.18 |
|
|
$ |
0.20 |
|
|
$ |
0.06 |
|
Diluted net income per share |
$ |
0.15 |
|
|
$ |
0.18 |
|
|
$ |
0.20 |
|
|
$ |
0.06 |
|
Basic common shares
outstanding |
|
27,776,682 |
|
|
|
27,344,752 |
|
|
|
27,668,814 |
|
|
|
27,530,043 |
|
Diluted common shares
outstanding |
|
27,838,939 |
|
|
|
27,523,310 |
|
|
|
27,740,491 |
|
|
|
27,710,563 |
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data -
Unaudited(in thousands)
|
June 30,2019 |
|
December 31,2018 |
Cash and cash equivalents |
$ |
12,272 |
|
$ |
13,434 |
Working capital |
|
33,110 |
|
|
42,086 |
Total assets |
|
723,896 |
|
|
681,085 |
Long term debt, net of
unamortized debt issuance costs |
|
237,244 |
|
|
242,777 |
Stockholders’ equity |
$ |
279,217 |
|
$ |
275,034 |
|
|
|
|
|
|
Selected Statement of Cash Flows Data –
Unaudited
|
Six Months EndedJune 30, |
|
|
2019 |
|
|
|
2018 |
|
Net cash provided by operating activities |
$ |
11,533,939 |
|
|
$ |
10,982,567 |
|
Net cash used in investing activities |
|
(3,369,405 |
) |
|
|
(2,329,499 |
) |
Net cash used in financing activities |
|
(9,325,978 |
) |
|
|
(7,753,709 |
) |
Net increase (decrease) in cash and cash equivalents |
$ |
(1,161,444 |
) |
|
$ |
899,359 |
|
|
|
|
|
|
|
|
|
Calculation of SOI –
Unaudited
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net revenue |
$ |
65,658,748 |
|
|
$ |
61,625,296 |
|
|
$ |
123,346,302 |
|
|
$ |
116,778,923 |
|
Station operating expenses |
|
(47,759,693 |
) |
|
|
(44,967,293 |
) |
|
|
(95,210,875 |
) |
|
|
(90,480,140 |
) |
SOI |
$ |
17,899,055 |
|
|
$ |
16,658,003 |
|
|
$ |
28,135,427 |
|
|
$ |
26,298,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income
to SOI – Unaudited
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net income |
$ |
4,269,001 |
|
|
$ |
4,918,612 |
|
|
$ |
5,622,264 |
|
|
$ |
1,757,420 |
|
Corporate general and
administrative expenses |
|
5,423,561 |
|
|
|
4,440,299 |
|
|
|
10,385,975 |
|
|
|
7,722,772 |
|
Transaction expenses |
|
55,163 |
|
|
|
- |
|
|
|
296,511 |
|
|
|
- |
|
Depreciation and
amortization |
|
1,742,687 |
|
|
|
1,562,052 |
|
|
|
3,511,474 |
|
|
|
3,108,786 |
|
Change in fair value of
contingent consideration |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,415,925 |
|
Gain on dispositions |
|
- |
|
|
|
- |
|
|
|
(3,545,755 |
) |
|
|
- |
|
Interest expense |
|
4,547,036 |
|
|
|
3,805,575 |
|
|
|
9,137,921 |
|
|
|
7,430,815 |
|
Other income (expense), net |
|
(38,193 |
) |
|
|
(27,311 |
) |
|
|
194,390 |
|
|
|
(476,212 |
) |
Income tax expense |
|
1,899,800 |
|
|
|
1,958,776 |
|
|
|
2,532,647 |
|
|
|
2,339,277 |
|
SOI |
$ |
17,899,055 |
|
|
$ |
16,658,003 |
|
|
$ |
28,135,427 |
|
|
$ |
26,298,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Revenue to
FCF – Unaudited
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net revenue |
$ |
65,658,748 |
|
|
$ |
61,625,296 |
|
|
$ |
123,346,302 |
|
|
$ |
116,778,923 |
|
Station operating
expenses |
|
(47,759,693 |
) |
|
|
(44,967,293 |
) |
|
|
(95,210,875 |
) |
|
|
(90,480,140 |
) |
Station stock-based
compensation expense |
|
85,002 |
|
|
|
221,046 |
|
|
|
208,149 |
|
|
|
373,464 |
|
Corporate general and
administrative expenses |
|
(4,960,947 |
) |
|
|
(3,957,941 |
) |
|
|
(9,461,934 |
) |
|
|
(6,775,060 |
) |
Interest expense |
|
(4,547,036 |
) |
|
|
(3,805,575 |
) |
|
|
(9,137,921 |
) |
|
|
(7,430,815 |
) |
Amortization of debt issuance
costs |
|
483,983 |
|
|
|
470,376 |
|
|
|
967,966 |
|
|
|
940,752 |
|
Interest income |
|
32,289 |
|
|
|
31,721 |
|
|
|
74,180 |
|
|
|
63,204 |
|
Current income tax
expense |
|
(1,326,448 |
) |
|
|
(309,984 |
) |
|
|
(1,493,124 |
) |
|
|
(315,281 |
) |
Capital expenditures |
|
(2,153,273 |
) |
|
|
(953,503 |
) |
|
|
(3,994,405 |
) |
|
|
(2,126,999 |
) |
FCF |
$ |
5,512,625 |
|
|
$ |
8,354,143 |
|
|
$ |
5,298,338 |
|
|
$ |
11,028,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:B. Caroline
Beasley
Chief Executive
Officer
Beasley Broadcast Group, Inc.239/263-5000 or ir@bbgi.com
Joseph Jaffoni, Jennifer NeumanJCIR212/835-8500 or
bbgi@jcir.com
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