Good morning and welcome to Beasley Broadcast Group's Second Quarter 2018 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 and 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 on 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's CEO, Caroline Beasley. Please go ahead..

Thank you. Good morning, everyone, and thank you for joining us to review our second quarter results and other recent initiatives to both expand our platform and drive free cash flow.

This was another solid quarter for our company as we continue to make significant progress executing against our strategic plan to leverage our increased scale, which contributed to revenue growth, EBITDA growth, and margin improvement.

Marie Tedesco, our CFO is on the call with me today and she's going to give you more details on the Q2 financial results. As a reminder, our results include the benefit for the full quarter from the December 19th 2017 Boston station asset swap and also reflect the divestiture of the Coastal Carolina cluster that closed May 2nd or May 3rd, 2017.

As we previously reviewed, our reported results are actual results as we believe investors are most interested in our ability to grow free cash flow per share over the long-term.

The second quarter results and more recent development demonstrate that we are making progress against all of our strategic priorities, namely driving revenue, SOI and free cash flow growth in our existing operations, completing and integrating accretive transactions that strengthen our position and revenue share in our market, reducing debt while maintaining a watchful eye on our leverage ratios as we expand our scale and reach.

Returning capital to shareholders in the form of quarterly dividend payments and acting on opportunities to enhance the liquidity of our shares to make them attractive to a broader base of investors. So starting with our second quarter results, we saw an overall improvement in revenue as we generated a 1% increase year-over-year.

This is primarily a result of the Boston station swap which was partially offset by last May's divestiture of the Coastal Carolina cluster.

During the quarter, we outperformed local revenue on a combined basis in our markets and we've recently begun to see improvements in National, our flattish station expenses and the operating leverage related to the top line growth resulted in a 3.5% increase in second quarter SOI and 6.6% year-over-year increase in operating income when excluding nonrecurring items.

With these results, we grew SOI margins 64 basis points year-over-year to little over 27% and we see further upside on this front as we achieve more benefits from the recent Boston and Philly transactions.

Overall, our Q2 results again demonstrate the operating leverage in our model, the value of our cost management disciplines and strategies as well as efficiencies we are realizing related to our expanded scale.

As we continue to make progress with realizing the full value of the stations acquired in late '16 and '17, the build out of our digital platform has also progressed nicely. And I'm happy to report that we will be releasing Phase II of our mobile apps this quarter.

In addition, we recently partnered with Analytic Al, which provides us with attribution data, we are in the process of rolling this out to all our markets as we continue to work hard to demonstrate to our advertisers the accountability, effectiveness and strong value of radio.

This is very exciting news for radio and can put us on par with digital offerings in terms of proving to our advertisers that radio works. Moving on, I'm thrilled to review our recent news regarding our planned acquisition of XTU, Philadelphia's country Heritage station for the purchase price of $38 million.

This acquisition underscores Beasley's focus on premium local programming and is complementary to the company's six other stations and digital operations in the market.

Importantly, the transaction will be immediately accreted to the company upon closing with the latest trailing 12-month revenue and pro forma SOI and this does include synergies of $9.4 million and $9.5 million respectively. We expect that free cash flow per share accretion from this transaction to amount to slightly more than 10%.

We began operating XTU under an LMA agreement on July 23rd and we expect to receive FCC approval sometime in the late third quarter or early fourth quarter.

To better understand the strength of our Philly cluster among the seven Beasley stations in the market, three are ranked among the top five rated stations in the market and this is persons 25-54 in the latest monthly ratings. MMR, first. MDK, second, and XTU is tied for number five.

And we also bring advertisers that attract a sports fan demographic at The Fanatic, which broadcast the 76ers and Flyers games.

Now finally, before turning the call over to Marie for a review of the financials, I want to ensure that everyone is clear about the details of the recent share sale by certain members of the Bordes Family, who owned Greater Media for the 60 years prior to our acquisition of the company in '16.

On July 24, we announced those shareholders sold approximately 3.1 million Beasley shares at a price to the public of $7.50 per share, well below the closing price on the Friday prior to our announcement of the planned offering; neither the company, nor any Beasley insiders including Peter Bordes, Jr.

who is on our board sold any shares in the offering. The shares sold represent a majority of the approximately 4.1 million shares received by the Bordes Family.

While we are not happy with the share price action related to the sale, we expect to see an increase in the trading liquidity of our publicly traded shares, which we expect will be a positive for long-term investors in our company.

And we look forward to being on the road and at conferences talking to investors and analysts about the company's growth and value creation plans. Again, let me be clear, nothing has changed in our strategic objective for the company. So with that I'm going to turn it over to Marie..

Thanks, Caroline. Let's start with a review of the second quarter operating results after which I will review several items from our balance sheet.

Second quarter net revenue increased 1% or $0.6 million to $61.6 million as we saw increases in net revenue on a year-over-year basis in our Wilmington, Philadelphia, Augusta, Boca Raton and Boston clusters.

Station operating expenses for the quarter remained essentially flat at $45 million or plus 0.1% giving us a 3.5% increase in station operating income to $16.7 million compared to $16.1 million in the year ago period.

Again, the net revenue on SOI for the year ago period includes the Coastal Carolina cluster, which we sold and WMJX FM in Boston, which was swapped for WBZ FM, which is included in the current period.

The small increase in station operating expenses reflects the Boston asset swap, which has a sports format typically carries higher expenses, which was almost fully offset by a reduction in general expenses across our other markets.

On a category basis, consumer services remained our largest revenue category in 2Q 2018 and we generated a mid to high single-digit year-over-year increase in this category during the quarter. Consumer services include advertisers such as medical, dental, construction, insurance, real estate, among others.

Our second largest category was Retail, which was down low to mid single-digits while Auto, our third largest revenue category was up in the low single-digit range marking a rebound from a low to mid single-digit decline in the first quarter.

Corporate G&A expenses increased 200,000 during the quarter to $4 million, primarily reflecting our expanded scale and investment in our digital division, which includes an increase in corporate staff.

In addition, non-cash stock-based compensation decreased 237,000 for the quarter to 482,000 and we paid approximately 230,000 in cash taxes for the quarter. Reported operating income was $10.7 million in the second quarter of 2018 compared to $12.8 million in the second quarter of 2017.

The year-over-year decrease slowly reflects the non-recurring items that benefited last year second quarter including again a $4 million of the Greenville-New Bern-Jacksonville divestiture and a $1.8 million gains related to the termination of certain Greater Media medical and life insurance benefit.

These gains were partially offset by a $2.4 million change in the fair value of contingent consideration and a $0.5 million in transaction related expense. Excluding these non-recurring transaction related gains and expenses from the 2017 second quarter results.

Beasley's second quarter operating income increased 6.6% year-over-year, reflecting our expense management discipline and our ability to extract valuable operating efficiencies across our platform.

Total second quarter interest expense decreased approximately $0.9 million year-over-year to $3.8 million reflecting our debt repayments and the November 2017 refinancing of our senior debt which reduced our interest rate by approximately 200 basis points. We ended the quarter with cash on hand of $14.8 million.

Our total outstanding debt as of June 30, 2018 was $220 million compared to $222 million at March 31, 2018. Our LTM consolidated operating cash flow as defined in the credit agreement was $49.1 million, resulting in a leverage ratio of 4.48 times as of June 30, 2018 compared to 4.45 times as of March 30, 2018.

Our credit agreement allows the company to receive the benefits of up to $20 million of our total cash on hand in calculating net leverage, reflecting our balance sheet cash, net leverage at June 30, 2018 was 4.18 times compared to a maximum leverage covenant of 6.0 times and that compares with 4.18 times on the same basis at March 31, 2018.

The company spends $954,000 million in CapEx in the current quarter compared to $601,000 million in the prior year quarter. And year-to-date, the company has spend $2.1 million in CapEx which compares to $1.6 million year-to-date 2017.

For the June 2018 quarter, our free cash flow rose 12.9% to $8.4 million compared to $7.4 million in the year ago period. On a LTM basis, free cash flow increased 7.6% to $24.8 million reflecting our focus on growing free cash flow from strategic transaction, expense management and the benefit from our 2017 interest rate reduction.

We will continue to allocate our free cash flow to pay down debt, return value to our shareholders through quarterly cash dividend and to reinvest in our stations when and where needed for research promotion, sales and other initiatives that strengthen our position in our broadcast. With that, I will turn it back to Caroline..

Thanks, Marie. So with one month and the quarter complete actual Q3 revenue is chasing up in the mid single-digit and we are seeing political in certain markets. Now this does include a positive impact of XTU given the fact that we are aiming that vision and the BD swap.

As demonstrated with our acquisition of XTU, we will continue to grow our company and build out our platform in a strategic manner as we identify creative acquisitions and investments with our disciplined acquisition track record and our strong balance sheet; we plan to take advantage of potential transactions that could further strengthen our platform.

We are managing our capital structure and leverage and we continue to return capital to shareholders as we just paid our 19 consecutive quarterly cash dividend. So to close, radio continues to be the number reach medium in U.S. and we are very excited about its future.

We had massive reach multiple distribution platform, great content, a local commitment and connection and the ability to show how effective radio is to renew attribution technology. So with that, I thank you for listening today. We do have a few questions that Marie is going to read you..

Thanks, Caroline. Our first question is about the growth of political revenue in our third quarter and fourth quarter. Now we have already booked approximately 500,000 of political revenue year-to-date, and currently we have more political dollars on the book for August as of today August 3, than we ended up with in July.

We are located in several politically attractive markets and we are optimistic that our expectations, or that we will receive somewhere in the neighborhood of $2.5 million in total political revenue.

Our next question is how much digital revenue did we have in second quarter of '18 and the first-half of 2018, and have we seen an increase year-over-year? Caroline, will you take that?.

Sure. So I think what we have seen is about 6.5% of our revenue was generated in second quarter. And this represents about a 19% quarter-over-quarter increase and digital. That's about $4 million in revenue for us. And I think to -- and clearly this is not anywhere near our long-term digital goals.

But to put that in perspective, we are now TLRing [ph] most of our PPM stations. So they have lost streaming revenue. And so that has been taken out of the digital lines that show a 19% quarter-over-quarter increase and generate $4 million in digital, which is an all-time high for our company.

I think it speaks to the fact that we are very focused on growing our digital dollar..

Great. Next question is if we could talk about our early experience with the attribution product Analytic Al, and describe our expectations.

Caroline?.

Yes. So we are seeing great results from Analytic Al. We are seeing that radio does work and we are very excited to be able to show our advertisers that. It also shows us which created this working bed. But Analytic Al and these other attribution products that out there, they are helping radio potentially go out and generate new business.

But in addition to that what's helping us to renew our spend from existing client and in some cases increase spend from existing clients..

Great.

And the final question is if we have seen any new revenue related to casino advertising or sports betting?.

Yes, in New Jersey which -- this is now lost I believe..

Yes..

We are seeing revenue from sports betting there we are also receiving inquiries in Philadelphia because of the close proximity between New Jersey and Philly, and we expect that this will just do nothing, but bode well for Boston, Philly, and New Jersey..

Thank you..

So with that, thank you for participating on the call today, and please feel free to call Marie or myself with any questions..

That does conclude today's conference. We thank you for your participation..