Good morning and welcome to Beasley Broadcast Group's Second Quarter 2017 Conference Call. Today's conference is being recorded.

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 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'd 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'd like to turn the conference over to your host, Beasley Broadcast Group's Chief Executive Officer, Caroline Beasley. Please go ahead..

Thank you Abern, and good morning everyone. Thank you for joining us to review our second quarter operating results. Marie Tedesco our CFO is with me this morning.

Now let me quickly review the comps representing today, our second quarter reflects the November 1, 2016 closing of the Greater Media transaction and the divestiture of the four Charlotte stations in January of this year.

Q2 reported numbers also include one month of operations of our Coastal Carolina cluster which we've sold on May 1 of 2017 and it is included under continuing ops, but excluded in our pro forma numbers. Reflecting these transactions at the end of the second quarter Beasley owned and operated 63 stations in 15 markets.

That before diving into the details let me say, that I'm pleased to report that we had solid second quarter SOI growth on a pro forma basis, which resulted in over 20% year-over-year increase in pro forma SOI margins.

Overall pro forma revenue decline partially due to the lack of political and a decrease from national, but this was more than offset by operating efficiencies resulting in a 17.5% increase and second quarter SOI.

In addition, we've reduced debt by $15 million during the quarter and we've reduced debt by $43 million year-to-date and a total of $45.3 million since the closing of the Greater Media transaction.

So we achieved solid SOI growth, the second quarter remained a transitional period as we move forward with our integration of the Greater Media stations, we continue to see improvement in these markets and remain confident that the integration will be completed within the targeted 12 to 18 months after closing.

As reported on our first quarter call in May, we expected second quarter revenue to be down mid-single digits and while second quarter revenues dipped slightly on our pro forma basis, I'm happy to report that several of our clusters reported year-over-year revenue increases.

On an actual basis the 119.7% increase in second quarter revenue reflects the addition of a Greater Media stations and the divestiture of the stations that I mentioned earlier. Pro forma as if we owned all the stations as of April 1, 2016 revenue was down 3.3% or $2 million of which about $400,000 of that came from political.

During the quarter the Philly cluster revenue declined again on our pro forma basis as we continue to address and overcome some of the sales issues, which weighed on this cluster post closing and that resulted in second quarter revenue down 7.6% compared to the first quarter decline of 13% that we are seeing some progress in the Philly cluster.

Our Tampa cluster also recovered somewhat in Q2 with revenue down 3% compared to a decline of 18% in Q1. On an actual basis the 119.7% increase in consolidated net revenue drove a 100% increase in second quarter SOI.

We also recorded a decrease against the Greater Media estimated gain of about $2.4 million due to fluctuations of the stock price related to an ongoing working capital adjustment, and we recorded a gain from the sale of the Coastal Carolina cluster of approximately $4 million.

In addition, we've recorded a gain due to the termination of a certain Greater Media medical and life insurance benefit. And then finally we incurred $1 million onetime severance charge related to terminations within the Greater Media market. And this onetime $1 million severance charge is included in our station operating expenses.

So with that I'm going to turn it over to Marie to dive into the details a little more..

Thanks Caroline.

I'm going to start with a review of the second quarter operating results and then we'll talk about some balance sheet items, reflecting the addition of the Greater Media station after on net revenue increased $33.2 million or 119.7% to $61 million and station operating expenses for the quarter increased to 127.6% or $25.2 million resulting in a 100% increase in station operating income to $16.1 million.

The rise in operating expenses is a direct result of the addition of the Greater Media station and includes approximately $1 million of the onetime severance expense from termination in some other Greater Media markets. On the pro forma basis our second quarter revenue decreased approximately 3.3% or $2 million.

Pro forma operating expenses were down approximately 9.1% or $4.4 million. Excluding the onetime severance our expenses would have been down 11%. Pro forma SOI is up 17.5% or $2.4 million year-over-year reflecting the slightly lower revenue offset by the reduced expenses from the ongoing realization of synergies.

Reflecting the operating synergies Q2 pro forma SOI margins reached 26.6% up from 21.9% in the year ago period. Looking at Beasley legacy, our plasters in Fayetteville, Wilmington, Fort Myers, and Las Vegas experienced revenue increases compared to Q2 2016, while Tampa, St. Petersburg and Augusta reported low single digit revenue declines.

Overall the Beasley legacy stations saw flat revenue and when combined with a 2% reduction in operating expenses resulted in an SOI increase of 3.6%. On a consolidated basis second quarter 2017 SOI margins were 26.4% compared to 29% in the year ago period. Our goals and expectations is to build SOI margins back into the low to mid 30% range.

In the Greater Media markets, revenue declined approximately 5.2%, which was in part related to a lack of national revenue including non-recurring political revenue. We saw revenue declines in Boston, New Jersey and Philadelphia whereas Detroit again generated double digit revenue increases.

The revenue declines were more than offset by the company's expense reduction and efficiency initiatives and the Greater Media markets operating expenses decreased 12.5%. This equated to SOI increasing and impressive 35% on a pro forma basis, which we believe begins to highlight the value this transaction is creating for Beasley.

According to Miller Kaplan, our combined clusters declined 1.6% compared with the overall market which increased 0.6%. This was mainly attributable to under performance in national revenue where our clusters on a combined basis were down 8.8% compared with the combined markets being down 5.4%.

The national under performance was particularly noticeable in Philadelphia, Tampa and Charlotte, now conversely we outperformed our markets in terms of revenue growth in both Fort Myers and Detroit with Detroit generating revenue increases as of 20% compared to the Detroit market, which was up 4%.

Corporate G&A expenses rose 65.7% or by $1.5 million during the quarter to $3.8 million primarily due to an increase in corporate staff and new employment agreements including some retroactive compensation. Stock based compensation increased $0.6 million for the quarter to $0.7 million.

Our effective income tax rate after the Greenville-New BernJacksonville divestiture gains, the gain on the termination of the post retirement plan and the change in the fair value of the working capital adjustment was approximately 25.1% for the six months ended June 30, and we've paid $1.7 million in taxes for the first six months of this year.

Total second quarter interest expense increased approximately $3.9 million year-over-year to $4.8 million reflecting the year-over-year increase in borrowings related to the Greater Media transaction as well as an increase in borrowing costs.

With the financing of the Greater Media acquisition, our total outstanding debt as of June 30, 2017 was $225 million this compares to $240 million as of March 31, 2017. We made voluntary repayments against our debt in second quarter of $4 million.

We also applied 100% of the Greenville-New BernJacksonville divestiture proceeds to debt repayment, this resulting in a total of $15 million debt reduction during the quarter. Our LTM consolidated operating cash flow as defined in the credit agreement was $52.6 million resulting in a leverage ratio of 4.28 times as of June 30.

This compares to 4.28 times of March 31. Our credit agreement allows the company to receive the benefit of up to $20 million of our total cash on hand in calculating net leverage and reflecting our balance sheet cash, net leverage as of June 30, 2017 was 3.96 times with a maximum leverage covenant of 6.25 times.

We ended second quarter 2017 with cash on hand of $17 million and the company spend $600,000 in CapEx in the second quarter 2017 compared to $713,000 in the prior year second quarter. Total CapEx spend for year-to-date was $1.6 million compared to $1.4 million year-to-date 2016. With that I'll turn it back to Caroline..

So thank you Marie. After completing our second full quarter with the addition of the Greater Media markets, we are beginning to see the benefits this transaction brings to our company in terms of scale and opportunity. For example on July 24 our WRIF Detroit Morning Show, Dave & Chuck the Freak can now be heard on our Boston station WBOS.

This is our first foray into syndication and I look forward to updating you on the progress we're making. We've recognized that there is upside to the overall revenue performance and we are actively developing new revenue initiatives.

We're focused on the remaining two quarters this year, but we're also looking ahead to opportunities in 2018 as we near the completion of the Greater Media integration. And looking into 3Q, we continue to see some headwinds on the national front and we're currently facing flat on a pro forma basis for the company.

Our focus will continue to be on protecting and growing our brands, and we will continue to invest in them as needed whether that be and research or marketing.

Throughout 2017 and looking into 2018 we will continue our strategic priorities of achieving our exceeding the synergy targets and integration goals for the newly acquired stations reducing debt by average in our cost of capital and returning value to our shareholders through our quarterly cash dividend and further diversifying our revenue streams.

In closing, we are excited about the future of radio and our company, we're becoming more and more agnostic to the content delivery platform with the emphasis on delivering entertaining content, which is a core focus of our company while incorporating our Beasley best philosophy and all that we do.

So on behalf of our dedicated employee thank you very much for participating today. We did receive a few questions I'm going to hand it over to Marie to review those..

Thanks Caroline. The first question that we received was if we could touch a little bit about the estimate of the total amount of cost synergies? And so I'm happy to report that we expect our total synergies in 2017 to be approximately $10.8 million. Year-to-date as of June 30, we have had the benefit of approximately $5.9 million in synergies so far.

Another question was to touch on the categories and geographic strengths and weaknesses.

As far as our revenue categories in second quarter we were down in our top five categories looking ahead at third quarter, we are pacing up in our top two categories, which are consumer services and retail we are seeing some downward pacing in the next three categories, which are our adult, entertainment and consumer product.

And do you want to talk about geographic trends?.

Where you had mentioned in your comment, so just in terms of geography, geographic strengths we saw growth in Fayetteville, Fort Myers, Las Vegas and Detroit, great for second quarter..

Thank you.

And the final question is how much opportunity might there be as other groups divest properties to meet financial obligations?.

So at this point that speculative at this nature, but we always will look at opportunities as they become available to see if it makes financial sense for our company, I mean we've been very vocal about returning value to our shareholders whether that be through dividends or finding other ways to grow our company..

Great, thank you. And that concludes the questions we have received..

So thank you again for participating on the call today. And should you have any questions please feel free to call Marie or myself. Thank you..

And this does conclude today's presentation. Thank you for your participation. You may disconnect..