Beasley Broadcast Group, Inc.

Good morning and welcome to Beasley Broadcast Group's third quarter 2020 conference 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 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 reports on Form 10-Q. Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of Item 10 of Regulations S-K. A reconciliation of these non-GAAP measures with their most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the morning's news announcement and on the company's website. I would also remind listeners that following its completion, a replay of today's call can be accessed for five days on the company's website, www.bbgi.com. You can also find a copy of today's press release on the investors or press room sections of the site. At this time, I would like to turn the conference over to your host, Beasley Broadcast Group CEO, Caroline Beasley. Please go ahead.

Thank you, and good morning, everyone, and thank you for joining us on Election Day to review our third quarter operating results. We hope, if you haven't already, that everyone gets out to vote. Marie Tedesco, our CFO, is with me this morning. So before diving into our third quarter results, I wanted to acknowledge the ongoing impact of the pandemic on our employees, customers, and the communities we serve. The health and safety of our employees remain our top priority, and our company has implemented a variety of internal safety measures following federal, state, and local guidelines. As we'll discuss in a moment, we adapted quickly to the changing environment and we are seeing promising trends in our various operations since the April lows. We continue to closely monitor the impact of the pandemic on our business and any potential closings. While cases are rising, we're highly focused on our back to work safely strategy. I've been visiting our markets to let our team know that unless they are in a risk group or have pre-existing conditions, Our best future will be realized if we can return to our offices and studios. We believe that creative collaboration takes place in our offices and that our teams can more effectively work together in person rather than through Zoom and Slack, all while remaining safe. Our business is creative at its core, and our creativity extends from our own air talent to our teams bringing innovation to areas such as sales or digital. We have plans in place which have been developed with the most up-to-date guidelines in mind and hope that, like other businesses across the U.S., we get more people back to their normal life sooner rather than later. It is through a return to our new normal that we can really overcome the impact of the pandemic. And we know that nothing compares to personal interaction, idea sharing, and the social benefits of seeing colleagues and customers face-to-face or in our new normal, mask-to-mask. While our third quarter results continue to reflect the direct impact of the pandemic on local and national advertisers, we continue to see a vast improvement in weekly ads. And throughout the quarter, we started each month with more dollars on the books than where we ended the previous month. The strong recovery in our business resulted in third quarter revenue down 25% year-over-year, marking a significant improvement compared to second quarter. During the third quarter, we again addressed monthly sequential revenue improvement, with July up 8% over June, August up 24% over July, and September rising 22% over August. So visibility remains limited, political revenue exceeded expectations, and we booked more than two times our projected annual political budget. As a result, our recovery is on pace as evidenced by the positive SOI and EBITDA we recorded for the quarter. It's clear that the actions we took early on, the experience of our team through previous unseen economic challenges, our balance sheet focus, the quality of our content, Our strong ratings, personalities, and the role we play in communities we serve have all contributed to our ability to rebound from April low. In addition, we continue to make progress with our digital growth initiatives with Q3 digital revenue increasing 1.8% year-over-year and accounting for 10.1% of total revenue. We also reduced our station operating expenses by approximately 16% per the quarter, including as previously disclosed continued wage cuts, permanent terminations, furloughs, and negotiated temporary and permanent discounts. Overall, the company has reduced its operating expenses through year-end by more than $32 million from our 2020 operating budget. Finally, we amended our credit agreement to provide a bridge until revenues have normalized and we can resume normal covenant reporting which begins in September of 21. I'm going to hand it over to Marie now who will provide you a deeper dive into the quarter.

Thank you, Caroline. Let me start with a review of third quarter results followed by an overview of our balance sheet. Third quarter net revenue decreased 24.9% or $16.5 million to $49.6 million Inclusive of $495,000 from our esports teams, the Outlaws and the Renegades. We generated $3 million in net political revenue and that compares to $300,000 in the prior year. Breaking down the revenue for the quarter, July was down 32% year-over-year, August was down 26% and in September we saw a 19% decrease year-over-year. Station operating expenses for the quarter decreased 15.9% to $41.6 million, resulting in third quarter SOI of $8.1 million. The 2020 third quarter station operating expenses include $1.3 million of expenses related to our e-sports teams that we did not have in 2019. Also, a $236,000 in expenses year-over-year from the September 2019 WPMK Acquisition, and $1.1 million of added expenses related to our Digital Growth Initiative, which was recorded under corporate expenses during third quarter 2019, but are now allocated to our station. So as you can see in our continued pandemic response, we have been diligently reducing our operating expenses, including corporate initiative expense cuts of $23 million through the end of 2020, in addition to voluntary market cuts and savings in first and second quarter of close to $10 million. Now, looking at our revenue categories for third quarter on an actual basis during this impacted period, consumer services remained our largest revenue category at 27% of our revenue, and we had a 21.9% year-over-year decrease in this category for the quarter. Our second largest category in third quarter was retail, which represents around 16% of our revenue, and the retail category declined 25.5%. Auto moved into our third spot with revenues down almost 34%. Auto was around 12% of total revenue for the quarter. This category was hardest hit in Boston, Charlotte, Seattle, and Las Vegas. Our fourth largest category for the quarter was political, which represented 9% of third quarter revenues and was, as I said, up meaningfully from last year, as well as when compared to the last presidential election cycle. Number five was telecom and utilities, at 6.3% of total revenues, and this category was down 21%. And finally, consumer products, such as pharmaceuticals, food, beauty products, and auto parts, accounted for close to 6% of total revenues, and this category declined nearly 46%. On a same-station basis, consumer services decreased 23%, retail declined 26%, auto was down 34%, consumer products declined 46%, entertainment was down 56%, and telecom was down 22%. Corporate DNA expenses for the quarter decreased $1.6 million, and David Snyder. We will continue to shift these digital expenses to our markets throughout the balance of 2020. Non-cash stock-based compensation was down 62% to $229,000 in the quarter, and we had an income tax benefit for the quarter of $1 million. Our effective tax rate for the quarter was 27% of the loss, as certain expenses are not deductible for tax purposes. Reported third quarter 2020 operating income was $835,000 compared to $9.4 million in the year-ago quarter. The decline in third quarter operating income primarily reflects the year-over-year SOI decline of $8.6 million and an increase in depreciation and amortization of $1 million, which was offset by lower corporate expenses. Total third quarter interest expense increased $138,000 year-over-year to $4.5 million. We did not have any scheduled debt payments on our credit facilities during the quarter. However, we used our stock to reduce the Immortals debt by approximately $2.2 million. We ended the quarter with cash on hand of $15.5 million. Our total outstanding debt at the end of third quarter was $270.75 million. Inclusive of $7.75 million of unsecured debt related to the Houston outlaw acquisition. This compares to $273 million at June 30th, 2020. Based on the latest amendment of our current credit agreement, we currently have biweekly reporting requirements of a minimum liquidity of $8.5 million. And as of September 30th, 2020, we were in compliance. And based on current ad pacing and revenue trends, expect to remain in compliance until we resume normal covenant reporting in September 2021. Finally, the company spent $1 million in capex for the quarter compared to $2.2 million in the prior year quarter and $7 million year-to-date compared to $6.2 million year-to-date 2019. This includes our Philadelphia build-up in first quarter, as well as our corporate build-up and our cybersecurity initiative that's been ongoing throughout the year. And with that, I'll turn it back to Caroline.