Good morning, and welcome to Beasley Broadcast Group Third 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 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 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 remind listeners that following its completion, a replay of today's call can be accessed for 5 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, Ryan, and good morning, everyone, and thank you for joining us to review our third quarter results. Before we dive into the third quarter and other recent developments, I want to thank Marie Tedesco, who retired last week from Beasley after 33 years, including serving as our CFO for the last 7 years.

On behalf of the Board and the entire Beasley team, we wish her the very best in the next phase of her journey. . I'm pleased to announce that Lauren Burrows Coleman, our newly appointed CFO, is on the call with me this morning. Lauren joined us from Waver where she served as Global Head of Strategic Corporate and Commercial Finance.

Leading the team of 50 across financial planning and analysis, commercial finance, capital markets, corporate development and global tax options. We're delighted to have her on the team, and she has hit the ground running.

The last few months have been both active and productive for Beasley as we've reached an inflection point with respect to successfully addressing several of the strategic priorities that we've discussed on recent calls related to debt reduction, maturities and our NASDAQ listing.

To start, subsequent to the quarter end, we successfully completed our exchange offer, new notes offering and tender offer, resulting in an immediate debt reduction of $47 million, in a meaningful extension of our maturities to August of 2028.

This transaction was supported by 98.4% of the company's existing 8.625% senior secured note due in 2026, reflecting our noteholders confidence in the future of our business.

As we've noticed previously, improving our capital structure is a strategic priority for the business and this transaction squarely addresses our goals and create value for all of our stakeholders. Also in September, the company effected a reverse split of our Class A and Class B common stock at a ratio of 1 for 20.

This enables us to maintain our NASDAQ listing while making BBGI shares more investable for certain institutions. Now diving into Q3.

Same-station revenue was up 0.5%, adjusting for WJBR divestiture, closure of the Outlaws and Guarantee Digital Total net revenue comping with WJBR, the Outlaws and Guarantee Digital from last year declined 3.2%, representing a quarterly sequential improvement from Q2.

In the 9 months ended September 30, 2024, revenue was down 1.6% on a same-station basis and total net revenue was down 4.6%.

Given the well-documented challenges of the ad environment and economy at large, we believe the positive third quarter same-station results reflect the strength of our local content and franchises in the ongoing success of our digital revenue diversification and also our focus on developing local direct business.

During the quarter, we generated $2.7 million in net political across both traditional and digital, bringing year-to-date net political revenue to $3.7 million. That's up 23% relative to $3 million in the same period in 2020.

On the day of the general election, we are pleased with the net political revenue we generated, exceeding our budget for the year, and of course, there will be another significant level of political to report in Q4 as we booked $8.2 million to date in Q4 and $12 million on a year-to-date basis.

Following a strong second quarter, third quarter digital segment revenue grew 1.1%, but this reflects some of the disruption we experienced as we closed our white-label agency Guarantee Digital effective July 15. However, on a same station basis, digital grew 11.7% for the quarter and 13.6% on a year-to-date basis.

Nevertheless, our revenue mix shift toward digital continues with digital revenue accounting for 19.4% of Q3 total revenue. That's up from 18.6% of total revenue in Q3 '23 and 16% in Q3 '22. For the 9 months ended September 30, digital accounted for 20.4% of total revenue. National saw the benefit of political in Q3 with same-station national up 10.7%.

Overall, national remains constrained across our industry and other ad reliant businesses. And in Q3, it was down 16% ex political, including results from divestitures and discontinued ops, national increased $1.2 million or 11.2% year-over-year for the quarter and dropped 15.3% ex political.

In total, national accounted for 12.7% of total revenue, and this is ex political compared to 14.8% in Q2 '24 and 14.6% in Q3 '23. Now breaking down our Q3 revenue performance further. Same-station over-the-air local was down 8.9% or $3 million and declined 9.9% or $3.4 million overall. This was driven by a 6.9% decline in local agency business.

That was partially offset by a 2.7% increase in local direct. Total direct sales currently account for about 57% of our total local business as we continue to shift from agency to direct sales. Given the margin and cash flow upside, we remain highly focused on developing our new local direct business.

In our Q3 '24 new business increased 1.9% year-over-year, and on a same-station basis, it grew 4.2%. And on a year-to-date basis, it increased 18.8% year-over-year and 21.2% on a same-station basis. Now this reinforces our focus towards business that we have more control over, and that is local direct and digital.

So with that, I'm going to hand it over to Lauren, and she's going to give you a deeper dive into Q3..

Thanks, Caroline, and good morning, everyone. I'm excited to be here because as Caroline noted, Beasley has some fantastic franchises in local markets with great teams. Further, the business is making demonstrable progress on several key strategic priorities and has set a foundation for growth and the creation of shareholder value.

As Caroline mentioned, third quarter total net revenue was $58.2 million. The divestiture of the Wilmington station and elimination of the Outlaws and Guarantee Digital plus the decline of local spot was partially offset by political revenue and continued growth in digital.

On a same-station basis, excluding the divested Wilmington Station Guarantee Digital and esports July was up 2.5%, August declined 0.8% and September dropped 0.2% year-over-year, resulting in a 0.5% same-station revenue increase for the quarter. In Q3, we drove further efficiency in our operations.

For the quarter, our operating expenses declined 0.3% or $171,000, inclusive of $747,000 in severance costs and station operating income, or SOI, declined $1.8 million year-over-year to $8.2 million. Excluding nonrecurring severance costs, expenses were down $639,000 and SOI would have decreased by $1.3 million to $9 million year-over-year.

On a same-station basis, excluding WJBR, Guarantee Digital, esports and onetime severance costs, operating expenses increased by $1.8 million. which resulted in a $1.5 million reduction in same-station SOI to $9.8 million. Again, that number is also excluding onetime severance costs.

In addition to the $0.8 million in severance expenses, this quarter was also impacted by $1 million in incremental expenses from a combination of noncash trade expense, bad debt and the timing of the home show this year versus last year. Digging into our revenue categories for the quarter.

Consumer services remained our largest revenue category at 28.6% of total revenue with a 1% year-over-year decline. Tampa and Detroit were bright spots, delivering the combined $0.8 million in incremental revenue in the consumer services category.

Retail and entertainment tied for second place each representing 15.6% in the quarter as retail fell 5.2% year-over-year and entertainment rose 1.2% year-over-year. Declines in the retail category were primarily driven by national accounts, responding to the challenging economic environment, partially offset by strength in local retail.

In entertainment, Charlotte delivered a year-over-year gain of $726,000, more than offsetting declines in other markets. In the sports betting category, which benefited Charlotte as North Carolina went live with sports betting, early in 2024, we recorded $3.4 million in the quarter, and that accounted for 5.8% of total revenue in the quarter.

Reflecting the continued challenges in domestic auto as profits have been squeezed by rising inventory levels and high interest rates, the auto category was down 11% year-over-year. and represented 7.9% of our total Q3 revenue.

Consumer products came in fifth place at 5.4% of total revenue for the quarter, up an impressive 18% year-over-year, driven by Boston and Philadelphia with strong results in Charlotte and Augusta as well. Turning to expenses. Corporate G&A expenses decreased 4.4% or $197,000 compared to the same quarter a year ago to $4.3 million.

Excluding nonrecurring severance costs, corporate G&A expenses increased 5 -- I'm sorry, decreased 15.5% or $696,000 to $3.8 million. The Q3 decrease in corporate G&A is mostly related to a reduction in corporate compensation and an allocation of digital expenses to our markets.

Noncash stock-based compensation increased $180,000 to $358,000 in the quarter and increased $240,000 to $773,000 year-to-date.

Third quarter 2024 operating income increased 101.4% year-over-year or $86.7 million from a negative $85.5 million to a positive $1.2 million, and operating income for the 9 months ending September 30 increased $95.1 million from a negative $89.6 million to a positive $5.5 million.

The prior year Q3 and prior year 9 months results included an impairment loss of $89 million and $99 million, respectively, compared to $922,000 in the current year quarter and current year-to-date.

Interest expense decreased $353,000 year-over-year to $6.1 million and decreased $2 million year-to-date compared to the same period a year ago, reflecting the benefit of debt reductions throughout 2023. We ended the third quarter with total debt of $267 million, down from the original $300 million of debt issued at the beginning of 2021.

And as Caroline noted at the start of the call, we completed our exchange, new notes and tender offer on October 8, 2024, and pro forma for the transaction, our quarter end debt was $220 million.

Adjusted EBITDA with the add-back of onetime severance expense of $1.2 million and noncash stock-based compensation of $358,000 was $5.6 million for the quarter and $15.2 million year-to-date, down 6.9% or $414,000 for the quarter, and 9.2% or $1.5 million year-to-date.

We had additional nonrecurring expenses of $760,000 this quarter, from the shutdown of Guarantee Digital and Outlaws and the LMA of WBOS. When adjusting for these further onetime items, adjusted EBITDA grew by $344,000 year-over-year, more than offsetting the $1.9 million reduction in revenue.

We ended the quarter with cash on hand of $27.8 million, down from $33.3 million at the end of Q2 2024. Our capital expenses for the quarter were $642,000 compared to the prior year Q3 of $847,000. CapEx spend was $2.6 million compared to the prior year of $3.1 million.

And looking at the full year of 2024, we continue to expect our annual CapEx spend in the range of $4 million to $5 million. And with that, let me turn it back to Caroline..

Thank you, Lauren. So digital revenue growth remains a strategic priority for us, and Q3 represented a further optimization of our strategy. As noted on our Q2 call, we closed our white-label agency Guarantee Digital effective July 15, and in doing so, we eliminated a large portion of the operating expenses.

So for the third quarter, our Digital segment reported SOI of $871,000. In August, we hired Dave Snyder as our Head of Digital Content Marketing. He's responsible for overseeing digital marketing and building revenue opportunities on behalf of the company.

And Dave short time with the company, he successfully rolled out content-rich newsletters, website, go-to-market O&O sales strategy and affiliate marketing products. He's also been integral in leading our development team to optimize all of our digital offerings.

We've mentioned a few times on the call, the strength of our local franchises in Beasley remains the Nilson Ratings powerhouse in most of the markets we operate. In our markets such as Boston, Charlotte, Vegas, Tampa and Philly, we sustained our dominant ratings positions in the key adult 25-54 demographic.

Since the last earnings release, the spring rating period was released for our medium-sized market, where we saw growth of 3% from the previous rating period. [indiscernible] saw the most share growth increasing 25% and 19%, respectively.

As more of our audience continues to migrate to our digital platform, same-station streaming audience grew 2% from the same period in 2023. Now during the final days of Q3, Hurricane Halen impacted several of our markets, especially Augusta, Fort Myers and Tampa.

During the storm, our station served as a lifeline to concern local residents, looking for information and guidance. Our programming team provided amazing live waterwall coverage and listener engagement before and after the storm, and our technical team worked day and night to keep us on the air.

In the days following the storm, our stations were leading the recovery efforts by hosting supply drive, producing benefit concerts and providing ongoing Red Cross support on all stations. And then just a few days later, we did it all over again when Hurricane Milton made landfall just south of Tampa.

These are the moments when radio is needed the most and the Beasley team served their communities in the best possible way. Now moving on to fourth quarter 2024 revenue pacing on a same-station basis as of today. They're up in the mid-single digits with October up 24% and November pacing down mid-single digits and December pacing down roughly 10%.

As we look at the pacing through November and December, we are hearing from our advertisers that they are hesitant to book prior to the election results. We continue to execute on our strategic plan to drive improved profitability and free cash flow, and in parallel, improve our capital structure.

Our recent exchange, new notes and tender offer represented a material improvement in our capital structure. And in addition, since July, we've continued to evaluate our operations, and we executed expense reductions, which are projected to amount to in excess of $5 million on an annualized basis.

These reductions have been achieved through a voluntary early retirement, strategic headcount reductions and the implementation of new systems streamlining G&A. In aggregate, these actions have reduced our full-time employee count from the start of the year by 15% through September 30.

Now this is in addition to the nearly $15 million previously disclosed in the financial settlement for our exchange, new notes and tender offer. As such, we are looking at total annualized savings of approximately $20 million.

So with the meaningful improvement in our operational efficiency and capital structure and a strong political season behind us, we're focused on growing and nurturing our traditional business and expanding our digital revenues.

So in closing, I'd like to thank our team members across the company for everything they've done and are doing to execute on our strategic plan. So with that, Lauren, I know that we have a few questions that were sent in. So yes, we will take them..

So the first question we received that wasn't covered in our prepared remarks was, are you seeing any resumption in national advertising in Philadelphia and Boston?.

So I would answer that as not yet. As we indicated, our advertisers are hesitant to book anything until after the election. And that is primarily because of the shortage of inventory. We are hopeful that what the election is over today and maybe once the noise has passed, then the advertisers will be coming back..

Next question is post the exchange, how do you think about liquidity and the potential for more bond buybacks. So I'll take this one. First and foremost, we are focused on maintaining a minimum cash position as a business. But of course, anything above that, we will absolutely seek opportunities to opportunistically buy back bonds.

So moving on to the next question.

When do you foresee year-over-year comps going positive again?.

Right. So in the third quarter on a same-station basis, our revenue was up 0.5%. And as we indicated earlier, fourth quarter is pacing up in the mid-single digits. So we do expect revenue to be up in fourth quarter as well..

That's great. So those were all the incremental questions we had beyond what we already addressed in the prepared remarks. Okay. Thank you, Lauren, and thank you, everyone, for listening in today. And should you have any follow-up questions, please feel free to contact Lauren or myself. Thank you..

Thank you. The conference of Beasley Broadcast Group has now concluded. Thank you for your participation. You may now disconnect your lines..