Conference Call and
WebcastToday, November 2, 2018 at
11:00 a.m. ET323/794-2094, conference ID 1713516
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 and nine-month
periods ended September 30, 2018.
As previously reported, on May 1, 2017, the
Company completed the sale of six stations in Greenville-New
Bern-Jacksonville, and on December 19, 2017, Beasley completed an
asset exchange transaction whereby the Company exchanged its Boston
adult contemporary station WMJX-FM and $12.0 million for Boston’s
sports station WBZ-FM. On September 27, 2018, Beasley completed the
acquisition of WXTU-FM in Philadelphia from Entercom Communications
Corp. for $38.0 million. Prior to the acquisition closing, on July
23, 2018, the Company began operating WXTU-FM under a local
marketing agreement (“LMA”). During the term of the LMA, the
Company included net revenues and station operating expenses,
including the associated LMA fee from operating WXTU-FM, in its
consolidated financial statements.
The results presented herein reflect the
operations and results from WBZ-FM in the three and nine months
ended September 30, 2018 and WMJX-FM in the three and nine months
ended September 30, 2017. The results also reflect approximately
two months of contribution from WXTU-FM in the three and nine
months ended September 30, 2018 and four months of contribution
from the Greenville-New Bern-Jacksonville stations in the
nine-month period ended September 30, 2017.
Summary of Third Quarter
Results
In millions, except per share data |
Three Months EndedSeptember
30, |
Nine Months EndedSeptember
30, |
|
2018 |
2017 |
2018 |
2017 |
Net revenue |
$65.1 |
$58.9 |
$181.9 |
$173.7 |
Station operating income (SOI - non-GAAP) 1 |
14.8 |
16.4 |
41.1 |
42.3 |
Operating income 2 |
9.3 |
13.2 |
20.4 |
37.6 |
Net income 2 |
2.6 |
6.1 |
4.4 |
17.5 |
Net income per diluted share 2 |
$0.10 |
$0.22 |
$0.16 |
$0.63 |
1 Station operating income for the three
months ended September 30, 2018 was impacted by an additional $1.7
million in bad debt expense due to financial issues at United
States Traffic Network (“USTN”).2 Operating income, net
income and net income per diluted share in the three months ended
September 30, 2018 were impacted by the $1.7 million USTN bad debt
expense. In addition, the 2018 third quarter net income and net
income per diluted share were impacted by a loss of $0.3 million
due to a modification of long-term debt and $0.8 million of
professional expenses incurred in connection with the shelf
offering completed during the period.
The $6.2 million, or 10.6%, year-over-year
increase in net revenue during the three months ended September 30,
2018, reflects the inclusion WBZ-FM Boston and a partial quarter
contribution from WXTU-FM Philadelphia, partially offset by the
disposition of WMJX-FM Boston. Net revenue in the 2018 third
quarter increased year-over-year in the Company’s Tampa,
Philadelphia, Fort Myers, Las Vegas, Augusta, Boca Raton and Boston
clusters compared to the same period of 2017.
Station Operating Income (SOI, a non-GAAP
financial measure) declined 9.9% year-over-year in the third
quarter of 2018. The year-over-year decrease is primarily
attributable to $1.7 million of additional bad debt expense due to
financial issues at USTN and higher station operating expenses
related to the operations of WBZ-FM Boston, WXTU-FM Philadelphia
and our Tampa-Saint Petersburg market cluster. Station operating
expenses for the three months ended September 30, 2018 were
comparable to station operating expenses for the same period in
2017 at our remaining market clusters.
Beasley reported operating income of $9.3
million in the third quarter of 2018 compared to operating income
of $13.2 million in the third quarter of 2017. The year-over-year
decrease in operating income reflects the aforementioned $1.7
million USTN bad debt expense and a $2.5 million benefit realized
in the 2017 third quarter related to the change in the fair value
of contingent consideration in connection with the acquisition of
Greater Media and related sale of Greater Media’s tower assets.
The decline in 2018 third quarter net income
reflects the lower operating income during the period, a $0.3
million loss due to the modification of long-term debt and $0.8
million of professional expenses incurred in connection with the
shelf offering completed during the period, partially offset by a
$0.6 million year-over-year reduction in interest expense and a
$0.9 million year-over-year decline in income taxes. As a result,
net income for the 2018 third quarter was $2.6 million, or $0.10
per diluted share.
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, “In the third quarter, we
continued to execute on our integration strategy focused on premium
local programming to support our goals of ratings and market
leadership at acquired stations, while remaining opportunistic in
further building our scale and revenue diversification to drive
growth and SOI margin expansion.
“Third quarter net revenue rose 10.6% in 2018
compared to the prior year period, primarily reflecting the
strengthening over the last year of our Boston and Philadelphia
clusters, as well as the overall revenue outperformance of our
leading station clusters in their respective markets. The
year-over-year top line growth was partially offset by increased
station operating expenses largely attributable to Beasley’s
expanded scale and $1.7 million in additional bad debt expense
related to USTN. Although 2018 third quarter SOI declined 9.9%
year-over-year, it would have increased slightly compared to the
third quarter of last year, without the one-time bad debt
charge.
“Beasley’s strong operating cash flows allowed
us to continue making strategic investments in our broadcast and
technology platforms. During the third quarter, we completed the
strategically complementary and accretive acquisition of WXTU-FM in
Philadelphia. In addition to being one of the best and most
listened-to country music stations in America, WXTU-FM further
enhances our revenue and competitive position by creating a full
cluster of five FM and two AM stations in a key, top-ten market. We
also completed two smaller acquisitions including a Tampa-based
event company and a nationally syndicated Esports podcast in
separate transactions that were funded with cash on hand. All three
transactions are consistent with Beasley’s disciplined approach to
growing our platform by identifying and completing transactions
where we can drive valuable synergies, leverage content and enhance
SOI margins, all with a limited impact to our leverage.
“During the third quarter, we successfully
released phase two of our mobile apps and our data attribution
initiative, “Beasley Analytics,” was rolled out in all our
markets. Both of these initiatives reflect our commitment to
deliver great content to our listeners anywhere, any time, on any
device, while further demonstrating to advertisers the incredible
value of radio advertising. We believe the attribution data derived
from Beasley Analytics will emerge as a game changer in our core
business given its unrivalled confirmation of how radio provides a
significant lift to advertisers’ websites.
“With our disciplined approach to leverage
reduction and balance sheet management, Beasley remains committed
to enhancing shareholder value through capital returns, capital
structure improvements and leverage reductions. During the third
quarter, we paid our twentieth consecutive quarterly cash dividend.
In addition, interest expense decreased $0.6 million
year-over-year, reflecting last year’s refinancing of our senior
debt, which reduced our interest rate by 200 basis points.
“Looking ahead, with a strong balance sheet, we
believe Beasley has a solid foundation to continue pursuing a range
of near- and long-term growth opportunities that create new value
for our listeners, advertisers and shareholders. Our platform,
market position, ratings and content are strong, and we are seeing
a continuation of the third quarter’s positive revenue trend in the
fourth quarter to date. As the number one reach medium, we remain
confident in the radio industry’s future and believe that Beasley’s
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 enhanced returns for our shareholders.”
Conference Call and Webcast
Information
The Company will host a conference call and
webcast today, November 2, 2018, at 11:00 a.m. ET to discuss its
financial results and operations. To access the conference
call, interested parties may dial 323/794-2094, conference ID
1713516 (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 10:00 a.m. ET on Friday, November 2, 2018. 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 57th 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 20.0 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 “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 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
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;
- 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 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 November 2, 2018, 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 EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net revenue |
$ |
65,147,080 |
|
|
$ |
58,902,050 |
|
|
$ |
181,926,003 |
|
|
$ |
173,656,015 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Station
operating expenses (including stock-based compensation
and excluding depreciation and amortization
shown separately below) |
|
50,351,099 |
|
|
|
42,481,721 |
|
|
|
140,831,239 |
|
|
|
131,344,313 |
|
Corporate
general and administrative expenses (including
stock-based compensation) |
|
3,665,865 |
|
|
|
4,026,521 |
|
|
|
11,388,637 |
|
|
|
11,745,100 |
|
Transaction expenses |
|
110,901 |
|
|
|
- |
|
|
|
110,901 |
|
|
|
746,070 |
|
Other
operating expenses |
|
- |
|
|
|
290,581 |
|
|
|
- |
|
|
|
871,743 |
|
Depreciation and amortization |
|
1,693,073 |
|
|
|
1,453,167 |
|
|
|
4,801,859 |
|
|
|
4,575,646 |
|
Change in
fair value of contingent consideration |
|
- |
|
|
|
(2,524,195 |
) |
|
|
4,415,925 |
|
|
|
(7,666,145 |
) |
Gain on
dispositions, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,707,993 |
) |
Termination of postretirement benefit plan |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,812,448 |
) |
Total operating expenses |
|
55,820,938 |
|
|
|
45,727,795 |
|
|
|
161,548,561 |
|
|
|
136,096,286 |
|
Operating income |
|
9,326,142 |
|
|
|
13,174,255 |
|
|
|
20,377,442 |
|
|
|
37,559,729 |
|
Non-operating income
(expense): |
|
|
|
|
|
|
|
Interest
expense |
|
(4,073,658 |
) |
|
|
(4,717,530 |
) |
|
|
(11,504,473 |
) |
|
|
(14,296,913 |
) |
Loss on
modification of long-term debt |
|
(281,021 |
) |
|
|
- |
|
|
|
(281,021 |
) |
|
|
- |
|
Other
income (expense), net |
|
(761,275 |
) |
|
|
46,219 |
|
|
|
(285,063 |
) |
|
|
441,936 |
|
Income before income taxes |
|
4,210,188 |
|
|
|
8,502,944 |
|
|
|
8,306,885 |
|
|
|
23,704,752 |
|
Income tax expense |
|
1,578,412 |
|
|
|
2,432,740 |
|
|
|
3,917,689 |
|
|
|
6,242,531 |
|
Net income |
$ |
2,631,776 |
|
|
$ |
6,070,204 |
|
|
$ |
4,389,196 |
|
|
$ |
17,462,221 |
|
|
|
|
|
|
|
|
|
Basic and diluted net
income per share |
$ |
0.10 |
|
|
$ |
0.22 |
|
|
$ |
0.16 |
|
|
$ |
0.63 |
|
Basic common shares
outstanding |
|
27,351,587 |
|
|
|
27,705,736 |
|
|
|
27,469,904 |
|
|
|
27,690,199 |
|
Diluted common shares
outstanding |
|
27,500,840 |
|
|
|
27,907,570 |
|
|
|
27,664,999 |
|
|
|
27,886,984 |
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data -
Unaudited(in thousands)
|
September
30,2018 |
|
December 31,2017 |
Cash and cash
equivalents |
$ |
9,980 |
|
$ |
13,922 |
Working capital |
|
37,447 |
|
|
55,700 |
Total assets |
|
681,774 |
|
|
654,719 |
Long term debt, net of
current portion and unamortized debt issuance costs |
|
243,809 |
|
|
212,466 |
Stockholders’
equity |
$ |
273,930 |
|
$ |
286,166 |
Selected Statement of Cash Flows Data –
Unaudited
|
Nine Months EndedSeptember
30, |
|
|
2018 |
|
|
|
2017 |
|
Net cash provided by
operating activities |
$ |
15,833,485 |
|
|
$ |
17,754,746 |
|
Net cash provided by
(used in) investing activities |
|
(43,069,058 |
) |
|
|
30,778,431 |
|
Net cash provided by
(used in) financing activities |
|
23,292,684 |
|
|
|
(53,403,678 |
) |
Net decrease in cash
and cash equivalents |
$ |
(3,942,889 |
) |
|
$ |
(4,870,501 |
) |
Calculation of SOI –
Unaudited
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net revenue |
$ |
65,147,080 |
|
|
$ |
58,902,050 |
|
|
$ |
181,926,003 |
|
|
$ |
173,656,015 |
|
Station operating
expenses |
|
(50,351,099 |
) |
|
|
(42,481,721 |
) |
|
|
(140,831,239 |
) |
|
|
(131,344,313 |
) |
SOI |
$ |
14,795,981 |
|
|
$ |
16,420,329 |
|
|
$ |
41,094,764 |
|
|
$ |
42,311,702 |
|
Reconciliation of Net Income
to SOI - Unaudited
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
Net income |
$ |
2,631,776 |
|
$ |
6,070,204 |
|
|
$ |
4,389,196 |
|
$ |
17,462,221 |
|
Corporate general and
administrative expenses |
|
3,665,865 |
|
|
4,026,521 |
|
|
|
11,388,637 |
|
|
11,745,100 |
|
Transaction
expenses |
|
110,901 |
|
|
- |
|
|
|
110,901 |
|
|
746,070 |
|
Other operating
expenses |
|
- |
|
|
290,581 |
|
|
|
- |
|
|
871,743 |
|
Depreciation and
amortization |
|
1,693,073 |
|
|
1,453,167 |
|
|
|
4,801,859 |
|
|
4,575,646 |
|
Change in fair value of
contingent consideration |
|
- |
|
|
(2,524,195 |
) |
|
|
4,415,925 |
|
|
(7,666,145 |
) |
Gain on dispositions,
net |
|
- |
|
|
- |
|
|
|
- |
|
|
(3,707,993 |
) |
Termination of
postretirement benefits plan |
|
- |
|
|
- |
|
|
|
- |
|
|
(1,812,448 |
) |
Interest expense |
|
4,073,658 |
|
|
4,717,530 |
|
|
|
11,504,473 |
|
|
14,296,913 |
|
Loss on modification of
long-term debt |
|
281,021 |
|
|
- |
|
|
|
281,021 |
|
|
- |
|
Other income (expense),
net |
|
761,275 |
|
|
(46,219 |
) |
|
|
285,063 |
|
|
(441,936 |
) |
Income tax expense |
|
1,578,412 |
|
|
2,432,740 |
|
|
|
3,917,689 |
|
|
6,242,531 |
|
SOI |
$ |
14,795,981 |
|
$ |
16,420,329 |
|
|
$ |
41,094,764 |
|
$ |
42,311,702 |
|
CONTACT:B. Caroline Beasley
Joseph Jaffoni, Jennifer NeumanChief Executive
Officer
JCIRBeasley Broadcast Group,
Inc.
212/835-8500 or bbgi@jcir.com239/263-5000 or ir@bbgi.com
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