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 nine-month
periods ended September 30, 2019.
The results presented herein reflect actual results including
the operations of WXTU-FM in the three- and nine-month periods
ended September 30, 2019 and the operations of WDMK-FM for the
month of September 2019.
|
Summary of Third Quarter Results |
In millions, except per share data |
Three Months EndedSeptember
30, |
Nine Months EndedSeptember
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net revenue |
$ |
66.1 |
$ |
65.1 |
$ |
189.5 |
$ |
181.9 |
Operating income 1 |
|
9.4 |
|
9.3 |
|
26.9 |
|
20.4 |
Net income 1 |
|
3.0 |
|
2.6 |
|
8.7 |
|
4.4 |
Net income per diluted share 1 |
$ |
0.11 |
$ |
0.10 |
$ |
0.31 |
$ |
0.16 |
Station operating income (SOI - non-GAAP) |
|
16.7 |
|
14.8 |
|
44.8 |
|
41.1 |
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 nine
months ended September 30, 2018 and a $3.5 million gain on
dispositions in the nine months ended September 30, 2019.
The $1.0 million, or 1.5%, year-over-year
increase in net revenue during the three months ended September 30,
2019, reflects increased revenue in the Company’s Philadelphia,
Detroit, Boston, Charlotte, Fayetteville, and Wilmington market
clusters. Net revenue for the three months ended September 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 $9.4
million in the third quarter of 2019 compared to operating income
of $9.3 million in the third quarter of 2018 as higher net revenue
and lower station operating expenses in the 2019 period more than
offset a rise in corporate general and administrative expenses and
depreciation and amortization expenses during the period. Third
quarter 2019 interest expense increased by approximately $0.3
million to $4.4 million reflecting additional borrowings related to
recent acquisitions. Beasley reported net income of $3.0
million, or $0.11 per diluted share in the three months ended
September 30, 2019, compared to net income of $2.6 million or $0.10
per diluted share in the three months ended September 30, 2018. The
increase was primarily due to expenses related to a securities
offering in 2018.
Station Operating Income (SOI, a non-GAAP
financial measure) increased 12.7% year-over-year in the third
quarter of 2019. The year-over-year increase is primarily
attributable to higher revenue in the 2019 third quarter and lower
station operating expenses related to $1.7 million of non-recurring
bad debt expense that was recorded in the comparable 2018 period,
partially offset by higher expenses at recently acquired
stations.
Please refer to the “Calculation of SOI” and
“Reconciliation of Net Income to SOI” tables at the end of this
announcement for a discussion regarding SOI calculations.
Commenting on the financial results, Caroline
Beasley, Chief Executive Officer, said, “Throughout the third
quarter, we continued to advance our revenue diversification
initiatives and actively manage our local radio broadcasting and
digital platforms, while implementing our operating disciplines at
recently acquired stations to drive SOI growth and margin
expansion. Record third quarter net revenue of $66.1 million was
driven by the strength of our station clusters in four of our top
five largest revenue markets, as well as contributions from recent
acquisitions and more than offset the approximate $0.9 million of
combined political, spectrum and United States Traffic Network
traffic revenue recorded in the 2018 third quarter, which did not
recur in the 2019 third quarter. Reflecting the strong operating
leverage in Beasley’s business model and the non-recurrence of the
bad debt charge recorded in last year’s third quarter our 1.5%
revenue growth drove a 12.7% year-over-year increase in SOI and
overall margin improvement.
“We remain focused on strong local programming
to support our goals of ratings and market leadership across all of
our audio platforms, while making strategic investments to expand
our digital capabilities to better serve our listeners and
advertisers. On August 31, we completed the accretive and
deleveraging acquisition of WDMK-FM, which is complementary to our
three existing radio stations and digital operations in Detroit and
moves us closer to our goal of achieving 30% revenue share in the
market. The integration is proceeding according to plan, and we
look forward to realizing the benefits of the transaction as we
move into 2020. The success we are achieving through our
disciplined approach to acquisitions is further reflected by the
24% year-over-year increase in pro-forma third quarter revenues at
WXTU-FM, which returned to our Philadelphia cluster just one year
ago. Overall, we are extremely pleased with the value we are
extracting from recent transactions, which have enhanced our
revenue share and competitive position in several key markets.
“Third quarter results also began to reflect
financial contributions related to our new and expanding digital
development and diversification initiatives. Beasley generated a
year-over-year increase in digital revenue of approximately 37%,
with digital now accounting for 7.4% of total revenue, compared to
5.4% of total revenue in the prior year period. Going forward, we
remain committed to increasing digital share of total revenue as we
continue to aggressively roll out our digital transformation
strategy across the organization. Our strategies are targeted
at expanding our production of quality content, growing audiences
and strengthening our digital sales support teams to deliver
custom, multi-platform turnkey marketing solutions to advertisers
and brands.
“In addition to our growth and diversification
initiatives, we remain committed to enhancing shareholder value
through capital returns and leverage reduction. In the third
quarter, we used cash from operations to pay our twenty-fourth
consecutive quarterly cash dividend and made voluntary debt
repayments of $2.5 million, with total outstanding long-term debt
of $253 million as of September 30, 2019.
“Looking ahead, Beasley has built a solid
foundation to continue pursuing a range of near- and long-term
growth opportunities that create new value for our listeners,
advertisers, online users, eSports fans and shareholders. Beasley’s
ongoing initiatives to drive sales, productivity, diversification
and efficiency across our platform, combined with prudent
management of our capital structure, is a proven formula for
sustained long term financial growth and enhanced returns for our
shareholders.”
Conference Call and Webcast
InformationThe Company will host a conference
call and webcast today, November 7, 2019, at 10:00 a.m. ET to
discuss its financial results and operations. To access the
conference call, interested parties may dial 334/323-0522,
conference ID 2175708 (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 Thursday, November 7, 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 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
November 7, 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 ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net revenue |
$ |
66,114,701 |
|
|
$ |
65,147,080 |
|
|
$ |
189,461,003 |
|
|
$ |
181,926,003 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Station operating expenses
(including stock-based compensation and excluding depreciation and
amortization shown separately below) |
|
49,443,632 |
|
|
|
50,351,099 |
|
|
|
144,654,507 |
|
|
|
140,831,239 |
|
Corporate general and
administrative expenses (including stock-based compensation) |
|
5,326,660 |
|
|
|
3,665,865 |
|
|
|
15,712,635 |
|
|
|
11,388,637 |
|
Transaction expenses |
|
65,423 |
|
|
|
110,901 |
|
|
|
361,935 |
|
|
|
110,901 |
|
Depreciation and
amortization |
|
1,867,234 |
|
|
|
1,693,073 |
|
|
|
5,378,708 |
|
|
|
4,801,859 |
|
Change in fair value of
contingent consideration |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,415,925 |
|
Gain on dispositions |
|
- |
|
|
|
- |
|
|
|
(3,545,755 |
) |
|
|
- |
|
Total operating expenses |
|
56,702,949 |
|
|
|
55,820,938 |
|
|
|
162,562,030 |
|
|
|
161,548,561 |
|
Operating income |
|
9,411,752 |
|
|
|
9,326,142 |
|
|
|
26,898,973 |
|
|
|
20,377,442 |
|
Non-operating income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(4,406,162 |
) |
|
|
(4,073,658 |
) |
|
|
(13,544,083 |
) |
|
|
(11,504,473 |
) |
Loss on modification of long-term debt |
|
- |
|
|
|
(281,021 |
) |
|
|
- |
|
|
|
(281,021 |
) |
Other income (expense), net |
|
(86,333 |
) |
|
|
(761,275 |
) |
|
|
(280,722 |
) |
|
|
(285,063 |
) |
Income before income taxes |
|
4,919,257 |
|
|
|
4,210,188 |
|
|
|
13,074,168 |
|
|
|
8,306,885 |
|
Income tax expense |
|
1,733,980 |
|
|
|
1,578,412 |
|
|
|
4,266,627 |
|
|
|
3,917,689 |
|
Income before equity in earnings of unconsolidated affiliates |
|
3,185,277 |
|
|
|
2,631,776 |
|
|
|
8,807,541 |
|
|
|
4,389,196 |
|
Equity in earnings of
unconsolidated affiliates |
|
(141,378 |
) |
|
|
- |
|
|
|
(141,378 |
) |
|
|
- |
|
Net income |
$ |
3,043,899 |
|
|
$ |
2,631,776 |
|
|
$ |
8,666,163 |
|
|
$ |
4,389,196 |
|
|
|
|
|
|
|
|
|
Basic net income per
share |
$ |
0.11 |
|
|
$ |
0.10 |
|
|
$ |
0.31 |
|
|
$ |
0.16 |
|
Diluted net income per
share |
$ |
0.11 |
|
|
$ |
0.10 |
|
|
$ |
0.31 |
|
|
$ |
0.15 |
|
Basic common shares
outstanding |
|
27,781,412 |
|
|
|
27,351,587 |
|
|
|
27,706,759 |
|
|
|
27,469,904 |
|
Diluted common shares
outstanding |
|
27,882,474 |
|
|
|
27,500,840 |
|
|
|
27,828,316 |
|
|
|
27,664,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data -
Unaudited(in thousands)
|
September 30, |
|
December 31, |
|
|
2019 |
|
|
2018 |
Cash and cash equivalents |
$ |
11,899 |
|
$ |
13,434 |
Working capital |
|
27,628 |
|
|
42,086 |
Total assets |
|
739,883 |
|
|
681,085 |
Long term debt, net of current
portion and unamortized debt issuance costs |
|
245,228 |
|
|
242,777 |
Stockholders’ equity |
$ |
281,469 |
|
$ |
275,034 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Statement of Cash Flows Data –
Unaudited
|
Nine Months EndedSeptember
30, |
|
|
2019 |
|
|
|
2018 |
|
Net cash provided by operating
activities |
$ |
23,313,498 |
|
|
$ |
15,833,485 |
|
Net cash used in investing
activities |
|
(21,611,242 |
) |
|
|
(43,069,058 |
) |
Net cash provided by (used in)
financing activities |
|
(3,237,333 |
) |
|
|
23,292,684 |
|
Net decrease in cash and cash
equivalents |
$ |
(1,535,077 |
) |
|
$ |
(3,942,889 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of SOI –
Unaudited
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net revenue |
|
$ |
66,114,701 |
|
|
$ |
65,147,080 |
|
|
$ |
189,461,003 |
|
|
$ |
181,926,003 |
|
Station operating
expenses |
|
|
(49,443,632 |
) |
|
|
(50,351,099 |
) |
|
|
(144,654,507 |
) |
|
|
(140,831,239 |
) |
SOI |
|
$ |
16,671,069 |
|
|
$ |
14,795,981 |
|
|
$ |
44,806,496 |
|
|
$ |
41,094,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income
to SOI - Unaudited
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
|
2018 |
Net income |
$ |
3,043,899 |
|
$ |
2,631,776 |
|
$ |
8,666,163 |
|
|
$ |
4,389,196 |
Corporate general and
administrative expenses |
|
5,326,660 |
|
|
3,665,865 |
|
|
15,712,635 |
|
|
|
11,388,637 |
Transaction expenses |
|
65,423 |
|
|
110,901 |
|
|
361,935 |
|
|
|
110,901 |
Depreciation and
amortization |
|
1,867,234 |
|
|
1,693,073 |
|
|
5,378,708 |
|
|
|
4,801,859 |
Change in fair value of
contingent consideration |
|
- |
|
|
- |
|
|
- |
|
|
|
4,415,925 |
Gain on dispositions |
|
- |
|
|
- |
|
|
(3,545,755 |
) |
|
|
- |
Interest expense |
|
4,406,162 |
|
|
4,073,658 |
|
|
13,544,083 |
|
|
|
11,504,473 |
Loss on modification of
long-term debt |
|
- |
|
|
281,021 |
|
|
- |
|
|
|
281,021 |
Other income (expense),
net |
|
86,333 |
|
|
761,275 |
|
|
280,722 |
|
|
|
285,063 |
Income tax expense |
|
1,733,980 |
|
|
1,578,412 |
|
|
4,266,627 |
|
|
|
3,917,689 |
Equity in earnings of
unconsolidated affiliates |
|
141,378 |
|
|
- |
|
|
141,378 |
|
|
|
- |
SOI |
$ |
16,671,069 |
|
$ |
14,795,981 |
|
$ |
44,806,496 |
|
|
$ |
41,094,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Revenue
to Free Cash Flow - Unaudited
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net revenue |
|
$ |
66,114,701 |
|
|
$ |
65,147,080 |
|
|
$ |
189,461,003 |
|
|
$ |
181,926,003 |
|
Station operating
expenses |
|
|
(49,443,632 |
) |
|
|
(50,351,099 |
) |
|
|
(144,654,507 |
) |
|
|
(140,831,239 |
) |
Station stock-based
compensation expense |
|
|
138,704 |
|
|
|
156,338 |
|
|
|
346,853 |
|
|
|
529,802 |
|
Corporate general and
administrative expenses |
|
|
(4,862,856 |
) |
|
|
(3,364,749 |
) |
|
|
(14,324,790 |
) |
|
|
(10,139,809 |
) |
Interest expense |
|
|
(4,406,162 |
) |
|
|
(4,073,658 |
) |
|
|
(13,544,083 |
) |
|
|
(11,504,473 |
) |
Amortization of debt issuance
costs |
|
|
483,983 |
|
|
|
474,797 |
|
|
|
1,451,949 |
|
|
|
1,415,549 |
|
Interest income |
|
|
19,517 |
|
|
|
38,947 |
|
|
|
93,697 |
|
|
|
102,151 |
|
Current income tax
expense |
|
|
(1,179,217 |
) |
|
|
(862,008 |
) |
|
|
(2,672,341 |
) |
|
|
(1,177,289 |
) |
Capital expenditures |
|
|
(2,231,838 |
) |
|
|
(1,219,559 |
) |
|
|
(6,901,243 |
) |
|
|
(3,346,558 |
) |
FCF |
|
$ |
4,633,200 |
|
|
$ |
5,946,089 |
|
|
$ |
9,256,538 |
|
|
$ |
16,974,137 |
|
CONTACT: |
|
|
B. Caroline Beasley |
|
Joseph Jaffoni, Jennifer
Neuman |
Chief Executive
Officer |
|
JCIR |
Beasley Broadcast Group,
Inc. |
|
212/835-8500 or
bbgi@jcir.com |
239/263-5000 or
ir@bbgi.com |
|
|
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