Beasley Broadcast Group, Inc.

Good morning and welcome to Beasley Broadcast Group's second quarter 2025 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 factors section of our most recent annual report on Form 10-K, as supplemented by our quarterly report on Form 10-Q. Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meeting 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 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.

Thank you and good morning, everyone. We appreciate you joining us to review our second quarter results. Q2 was a challenging but important quarter for Beasley. yielding mixed results. On a positive note, I am pleased to announce that we signed this week an agreement to sell WBCN AM, WJPT FM, and WWCN FM in Fort Myers to a third party for $9 million. In addition, we entered into a purchase agreement to sell WRXK FM and WXKB FM in Fort Myers to a separate third party for $9 million. As a result of the sales, which are subject to FCC approval, the company will no longer have operations in the Fort Myers Naples market. In June, we announced the sale of WPBB FM in Tampa, Florida for 8 million. So to summarize, we will be selling these assets for a combined 26 million in gross proceeds. As stated in previous quarters, we remain open to additional opportunities where the strategic rationale is compelling and the financial impact supports our broader objectives. While our digital business continues to gain meaningful traction with strong revenue growth and expanding margins, our core audio segment significantly underperformed, contributing to a larger than expected revenue shortfall. These results highlight both the progress we're making in reshaping the business and the urgency of the transformation still underway. We're operating with our eyes wide open. This quarter underscores the importance of accelerating our progress on the priorities we laid out earlier this year. Number one, advancing our digital roadmap. Number two, reducing structural costs. And then number three, taking tangible steps to improve our capital position. It also reinforced the need to drive accountability across our Salesforce. In Q2, digital revenue grew by 1.3% or 8.1% on the same station basis and accounted for 25% of our total revenue. This is an important milestone and one that we've been working towards deliberately. But this growth isn't just about top line. It's about quality of earnings and operating leverage. our digital business continues to scale profitably with our digital segment operating margin improving 900 basis points quarter over quarter from 17.8% to 26.8%. This margin expansion is the result of targeted product development, disciplined sales alignment, and increasingly efficient infrastructure. Two key strategic drivers are fueling this margin improvement. First, we saw a meaningful shift in our digital inventory mix from 49% O and O in Q1 to 55% in Q2. This increases profit margin and gives us far greater control over the end-to-end monetization cycle. Then number two, we continue to deliver on programmatic growth driven by enhancements to our backend tech stack that improves inventory access, targeting precision, and campaign optimization. We further refined our ad delivery infrastructure to maximize impressions across content channels and implemented ongoing improvements to our programmatic waterfall, enabling more efficient yield management and higher CPM realization across key demand sources. These improvements are compounding. We're not just driving higher margin revenue. We're building a scalable, data-driven digital platform with durable earnings power. Our teams across engineering, product, and content have executed with focus, and the impact is visible in both our financial results and client feedback. At the same time, we recognize the challenges facing our broader revenue performance. While digital continues to scale, overall net revenue was down 11% on a same-station basis, a performance we take full ownership of. This is not simply a macroeconomic issue. It reflects a deeper challenge in sales execution. For too long, our business has been overly dependent on agency-driven revenue at both the national and local levels. In 2025, both channels have experienced significant and sustained pullbacks. The impact has been especially pronounced with our largest brand, which has historically attracted a greater share of agency spend. Our sales organization has not yet fully evolved to offset these losses through direct, digitally-led selling, an area where we are now making deliberate changes. We recognize this reality, and we're not approaching that with short-term solutions. The pivot away from legacy selling models and toward a digitally native, local-first approach is a foundational shift, and one that will take time to fully implement and scale. Our focus is on building a high-performing team that can lead with data, convert traditional agency clients into digital first buyers, and unlock the long-tail S&B market through scalable, repeatable processes. To support this pivot, we are training AEs to lead with full funnel marketing strategies, bundling own-air endorsements with trackable digital solutions. Our ability to offer integrated radio and digital campaigns has already demonstrated measurable success, as these campaigns have shown 30% plus higher purchase intent versus radio or digital alone. This is a long-term investment in capability, not a quick fix. We don't expect the full impact to materialize next quarter, but we are executing against it with urgency, clarity, and conviction. The sales team we're building reflects where Beasley is headed, platform-driven, insight-led, and positioned for growth across O&O and programmatic inventory. On the expense side, we continue to manage with discipline. In the first half of the year, we implemented approximately $10 million in annualized expense reduction, bringing the total to roughly $30 million over the past 12 months. These actions span every part of the company. At the corporate level, we streamline G&A expenses, optimize vendor contracts, and restructured support functions. At the market level, we've realigned resources to focus on high-performing stations and product categories while eliminating redundancies. And in digital, we've retooled infrastructure to improve automation, reduce overhead, and shift investment toward growth products. Our aim is not just to cut costs. It's to rebalance the organization for long-term sustainability and value creation. With that, I'll turn it over to Lauren to walk through the financial results in more detail, including agency trends and expense reductions. Lauren?

Thanks, Caroline, and good morning, everyone. Let me begin by directly addressing the primary driver of our second quarter performance, continued weakness in our agency business. Macroeconomic volatility was not the defining challenge this quarter. It was the continued structural decline across national and local agency channels. These channels, which historically represented a sizable portion of our overall business, have proven increasingly fragile in the current traditional media environment. In Q2, agency-related revenue declines were deep and widespread. National agency revenue was down 12.1% year over year, reflecting ongoing budget compression, delayed decision making, and reduced upfront commitments from larger advertisers. Local agency performance deteriorated even further, down 24.7% year over year, with most of our market seeing high double-digit decline. This is not just cyclical, it is structural. Agency business models are evolving, and with that, the mechanics of media buying are shifting Increasingly, agencies are incorporating large language models and AI-driven recommendation engines into their planning workflows. These systems prioritize media channels based on digital attribution data, real-time performance metrics, and optimization algorithms, areas where traditional audio often lacks direct parity. As a result, radio is being systematically deprioritized in media mixes, not necessarily due to performance but because it is underrepresented in the digital data sets and signals that power these tools. This trend has accelerated the shift away from legacy audio buys and has further widened the gap between traditional planning cycles and where advertising dollars are flowing. Without deliberate human override or advocacy, traditional formats like radio are often omitted altogether. While this presents a near-term headwind, it also reinforces the urgency behind our digital transformation and the importance of positioning our owned and operated assets, targeting capabilities, and measurement tools to compete in a technology-first buying environment. The impact on our total revenue was material. While we continued to see growth in digital and stability in local direct, these gains were not sufficient to fully offset the contraction in agency. As a result, as Caroline previously mentioned, total net revenue for the quarter declined by 11.1% year-over-year on a same-station basis. That said, the data also reinforces where our strengths lie. Local direct revenue was up 1.7% year-over-year and now represents the majority of our local sales mix. Digital growth continues to accelerate at 8.1% year-over-year on a same-station basis, and 22.5% quarter over quarter, as Caroline mentioned earlier, with strong contributions from owned and operated channels and programmatic monetization. This further validates the strategic pivot we are making to reorient the business around scalable, higher margin revenue streams. We are acting with urgency to address the core issues. As Caroline mentioned, we've begun a broad transformation of our sales organization. starting with recruiting and process realignment. While that transition will take time, we are confident it is the right path forward, and early signs of traction in digital and direct reinforce that confidence. Turning to expenses, our cost discipline remains a defining strength. Q2 total operating expenses were down 4.6 million, or 9.3% year over year. driven by the impact of previously announced restructuring actions and incremental cost containment across corporate, market, and digital operations. These cost actions were not reactive, they were strategic. They allowed us to preserve margin amid revenue compression while continuing to reinvest in our highest conviction growth priorities. Station operating income for the quarter was 8.2 million, reflecting an SOI margin of 15.6%. Adjusted for stock-based compensation and non-recurring severance expenses, our SOI would have been $8.4 million, reflecting a margin of 15.8%. Corporate expenses for the quarter totaled $3.8 million, a 2.8% year-over-year decline. It is worth noting that our Q2 2024 results included a one-time $225,000 vendor credit that partially offset expenses in that period. Excluding that credit, the year over year improvement in corporate spend reflects continued discipline in managing overhead, optimizing vendor relationships, and streamlining centralized functions to support a meaner, more efficient operating structure. Adjusted EBITDA was $4.7 million after adding back $226,000 in severance and stock-based compensation. We continue to manage margin and liquidity tightly, and we believe the work done over the last year has created a more resilient operating base. From a liquidity standpoint, we ended Q2 with $13.7 million in cash on hand and continue to manage capital expenditures, which were $600,000 in the second quarter. In summary, while top line performance remains under pressure due to continued agency softness, our strategic direction is clear. We're simplifying the business, reallocating resources towards digital and direct, and executing with discipline across both operations and the balance sheet. With that, I'll turn it back to Caroline.