Beasley Broadcast Group, Inc.

Good morning and welcome to Beasley Broadcast Group's second quarter 2024 earnings 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 factor 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 Regulation 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 this morning's news announcement and on the company's website. I would also like to remind listeners that following its completion, a replay of today's call can be accessed for five days on the company's website at 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.

Good morning, everyone, and thank you for joining us to review our second quarter results. Marie Tedesco, our CFO, was with me this morning. So consistent with the pacings we provided at the time we reported Q1, And reflecting continued softness across every client businesses, our second quarter same station revenue was down just 2%. Adjusting for the WJBR divestiture and the outlaws. And on an actual basis, total revenue was down 4.8%. Now reflecting our continued focus on leveraging and monetizing our local content and reach, second quarter same station digital revenue grew by an impressive 10.2%. Our revenue mix shift toward digital continues with it now accounting for 21.5% of second quarter total revenue. And that's up from 19.4% in second quarter 23 and up from 16.5% in second quarter 22. For the full year of 2024, we expect digital to account for between 20 and 25% of our total revenue. and this is driven by our content creation capability and the continued success and growth of our digital service offerings. As such, we intend to continue to expand our digital sales force to leverage our strong local brands, content, and relationships by offering a broad range of advertising solutions to clients. Another bright spot for the quarter was political, as during Q2, we generated $586,000 in net political revenue, And this includes both traditional and digital, exceeding our second quarter political revenue budget by 72%. This compares to $228,000 in political revenue in second quarter of 2020. So we're off to a strong start with political, and we expect a robust second half of 2024, as several of our markets are well positioned in swing states. Now, national showed signs of stabilizing in Q2 with same station national up 7.3% and up 3.5% ex-political. And on an actual basis, national increased 6.4% year-over-year for the quarter and 2.6% ex-political. In total, national now accounts for 14.4% of our total revenue, and this is ex-political. Now breaking down our second quarter revenue performance even further, over the year local spot was down 10.9% or 4.1 million. And same station local was down 10% or 3.7 million. This was driven by a 3% decline in local agency business and a 4.9% decline in local direct. Local direct currently accounts for 57.3% of our total local business as we continue to shift from agency to direct. I think the declines that we've seen in local business further supports the softness on Main Street that many of us and our peers have discussed for the last quarter. Our operating expenses in the quarter declined 3.9% or 2 million, and this includes an added 1.3 million in severance costs. Excluding the severance costs, expenses were down 3.3 million. and SOI would have increased by $250,000 to $12.4 million. And on a same-station basis, X, WJBR, eSports, and the one-time severance costs operating expenses were down $1.3 million, which resulted in a $60,000 increase in same-station SOI to $12.6 million. And to highlight, our adjusted EBITDA increased 11.4% to $8.8 million in the second quarter. Now I'm going to turn it over to Marie, and she's going to give you further detail in second quarter.

Thanks, Caroline, and good morning, everyone. As Caroline mentioned, second quarter total net revenue was $60.4 million, and six of our markets, including Augusta, Charlotte, Fayetteville, Fort Myers, New Jersey, and Tampa, exceeded prior year second quarter revenues, as did our in-house agency, Digital Direct. The main drivers of the overall revenue decline was related to the divested Wilmington Station, the elimination of the outlaws, and the decline in local stock business, which was somewhat offset by continued growth in digital and political revenue. Looking closer at the quarter, on the same station basis, excluding the divested Wilmington Station and Eastport, April was up 2.3%, May declined 5.2%, and June dropped 2.7% year-over-year, resulting in a 2% same-station revenue decline for the quarter. Operating expenses for the quarter decreased 3.9% year-over-year, or $2 million, and SOI declined $1 million year-over-year to $11.1 million. The expense decline was primarily due to the divestiture of our Wilmington station and the elimination of our E4 team, along with a May 2024 headcount reduction somewhat offset by a 1.3 million non-recurring severance costs. Excluding the one-time severance costs, SOI increased 2% or $250,000 for the quarter. Same-station expenses dropped by $28,000, driven by the headcount reduction, offset by increased third-party costs and severance expenses. Consequently, same-station SOI declined $1.2 million for the quarter to $11.3 million, and excluding the one-time severance costs, same-station SOI increased $60,000 for the quarter. Now looking at our revenue categories for the quarter, consumer services remained our largest revenue category at 31.1% of total revenue with a decline of 1% year-over-year. Retail ended in second place, representing 16.2% in the quarter, falling 5.4% year over year, mostly from Detroit and New Jersey. Entertainment, number three, was up 4.5% in the quarter, accounting for 15.1% of total revenue. The largest entertainment increase came from Boston and Charlotte, related to increased sports betting revenue partially offset by a decline in sports betting revenue from Philadelphia. In the sports betting category, we recorded $3.1 million in the quarter, and that accounted for 5.6% of total revenue. The audit category was down 18.5% year-over-year and represented 7.6% of our total second quarter revenue. This drop was primarily due to a decline in domestic auto spend, which accounted for 60% of the drop. Consumer products came in fifth place at 6% of total revenue for the quarter, up 19.8%. Corporate G&A expenses decreased 11.9%, or 525,000, compared to the same quarter a year ago, to 3.9 million. And year-to-date corporate expenses declined 6.8% or 600,000. The second quarter year-over-year decrease in corporate G&A is mostly related to a reduction in corporate compensation and an allocation of digital expenses to our market. Non-cash stock-based compensation increased 80,000 to 262,000 in the quarter and increased 59,000 to 415,000 year-to-date. and we paid $117,000 in income taxes year-to-date for 2024. Second quarter, 2024 operating income increased 219%, or $9.9 million, from a negative $4.5 million to a positive $5.4 million. And operating income for the six months increased $8.4 million from a negative $4.1 million to a positive $4.3 million. Both prior year second quarter and prior year six months included an impairment loss of 10 million. Interest expense decreased 632,000 year-over-year to 6.1 million and decreased 1.6 million year-to-date compared to the same period a year ago, reflecting our debt reductions throughout 2023. We ended the quarter with total debt of $267 million, down from our original $300 million debt at the beginning of 2021, and we made our latest semi-annual interest payments on August 1st, 2024. Adjusted EBITDA, meaning adding back one-time severance expense of $1.3 million and non-cash stock-based compensation of $262,000, was $8.8 million for the quarter and $9.6 million year-to-date. We ended the quarter with cash on hand of $33.3 million, and that's up from $27.8 million at the end of first quarter 2024. Our capital expense for the quarter was $1 million compared to prior year second quarter of $847,000. Year-to-date CapEx spend remains the same in both years at $2 million. Looking at the full year, 2024, we expect our annual CapEx spend in the range of $4 to $5 million. And with that, I'll turn it back to Caroline.