Good morning and welcome to Beasley Broadcast Group's Third 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 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 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, Ann and good morning, everyone, thank you for joining us to review our 2018 third quarter results. As we previously announced, during the quarter we began to operate XTU under an LMA and then we subsequently closed on the acquisition on September 27.

After nearly four year hiatus, we are thrilled to welcome XTU back into the Beasley family, and our Philadelphia staff is excited as well as they are working actively to integrate this Heritage Country Station into their cluster, thus strengthening our already strong position and revenue share in the Philadelphia market.

Reflecting our recent strategic initiative in the Q3 outperformance of our revenue in our markets, we grew third quarter revenue by 10.6%. Now let me do a quick rundown of the quarter highlights after which Marie will provide more detail on the quarter.

As a reminder, reported results represent actual results and reflect the operations and results from [indiscernible] Boston which is the market leading sports stations in the three and nine months ended September '18, and the divested WMJX FM in Boston in the three and nine months ended September '17.

The results also reflect approximately two months of contributions from XTU in the three and nine months ended September '18 and four months of contributions from Coastal Carolina in the nine months ended September '17.

So starting with our third quarter results; as I said, we outperformed total revenue on a combined basis when combined with our market, and we benefited from our new stations in Boston and Philly, as well as year-over-year net revenue increases in five of our clusters.

Station operating expenses rose during the quarter as a direct result of the XTU acquisition, the operations at Beasley [ph] and a charge of approximately $1.7 million due to the financial issues at USTN. The USTN charge resulted in a 9.8% decline and reported SOI.

However, SOI rose just under 1% on a quarter-over-quarter basis when excluding this charge. So let me quickly review the strategic and financial rationale for the XTU transaction.

We purchased Philadelphia's leading country heritage station for $38 million of which $35 million was financed through additional borrowings from the company's credit facility, with the remaining $3 million coming from cash-on-hand. The transaction was based on a multiple of 7.6x estimated 2018 adjusted SOI inclusive of synergy.

The acquisition enhances our revenue and competitive position in the Philly market as I asked another great format, and a strong female listener demographic to our cluster.

The transaction was immediately accretive to the company with September 30 latest trailing 12-month revenue and pro forma SOI including synergies of $9.2 million and $4.9 million respectively. Notably, the addition of XTU increases our market revenue share to almost 30% which is our minimum goal in every market that we're in.

In addition to the XTU acquisition, during Q3 we have hired an event company in Tampa, Florida, which generates approximately $600,000 of SOI annually. This is an immediately accretive acquisition that was funded with cash from operations.

The acquisition is strategic and that it allows us to use our brands and marketing abilities to further grow this already successful event company. Also late in third quarter we acquired Checkpoint Media, the only nationally syndicated Esport Show which reaches over one million weekly listeners.

In addition to their own air weekly two hour show, the host creates two weekly podcast. The shows are also delivered on the Checkpoint twitch [ph] channel.

This acquisition was small and was also funded with cash-on-hand, it's a great vehicle for us to reach a coveted demo and future generations of listeners as we continue to focus on new and innovative ways to add more unique content.

In that regard, we've been working quickly to leverage and expand the reach of this and demand content and more fully monetize it.

Over the last five weeks we launched Checkpoint Daily, a daily Monday through Friday show, four additional specialty shows around Esports, gaming and pop culture; and three new podcasts featuring the Checkpoint personalities dialing in to topics of interest to take their target them [ph] such as comics, pop culture and wrestling.

For our recent station, event and Esports content acquisitions demonstrate our strategies to continue to grow Beasley Media and built out our platform in a diversified strategic manner as we continue to identify accretive acquisitions and long-term investments.

We plan to further leverage our disciplined acquisition track record and strong balance sheet to take advantage of other potential transactions that can further expand, diversify and strengthen our company's ecosystem.

Now moving on, I'm happy to report that we've successfully released Phase 2 of our mobile app this quarter and our data attribution initiative has now been rolled out to all our markets.

Both of these initiatives reflect our commitment to deliver great content to our listeners anywhere, anytime on any device while further demonstrating to advertisers the incredibly value of Radio. As such we see them contributing to our future operating results.

We believe the attribution data drive from Beasley Analytics will emerge as a game changer in our core business given it's unrivaled confirmation of how Radio provides a significant list to advertisers website.

We continue to invest in both people and products in our digital division and we expect this revenue stream to realize significant growth in the coming years. And with that, I'm going to turn it over to Marie..

Thanks, Caroline. Let's start with a review of the third quarter operating results and then I will review some balance sheet items. Third quarter and net revenue increased 10.6% or $6.2 million to $65.1 million as we saw increases in net revenue on a year-over-year basis in five our clusters.

Station operating expenses for the quarter rose 18.5% to $50.4 million resulting in a 9.9% decrease in station operating income to $14.8 million compared to $16.4 million in the year ago period.

The increase in station operating expenses reflects the Boston asset swap, the addition of WXPU inclusive of $0.9 million of LMA fees and $1.7 million charge due to the financial issues at United States Traffic Network. Excluding the USTN charge, our expenses would have increased 14.4% and our SOI would be 0.7% up.

Looking at our revenue categories on an actual basis; consumer services remained our largest revenue category in third quarter '18 representing about 20% of our revenue and we generated a mid-20% year-over-year revenue increase in this category during the quarter.

Our consumer services category includes advertisers such as medical, dental, construction, insurance and real estate. Our second largest category in third quarter was retail which was down low-to- mid single-digits.

Entertainment was our third largest category for the quarter which also showed a mid-20% year-over-year revenue increase while auto, our fourth largest revenue category was up in the mid-single digit range. And we are seeing improvements in national revenues as we are performing national on a combined basis.

Corporate G&A decreased by $190,000 during the quarter to $3.4 million. In addition, non-cash stock-based compensation decreased $84,000 for the quarter to $457,000 and we paid approximately $7,000 in cash taxes for the quarter and 273,000 year-to-date.

Reported third quarter 2018 operating income was approximately $2.7 million compared to $6.1 million in the third quarter of 2017. The year-over-year decrease primarily reflects several onetime items including the impact of the $1.7 million USTN charge.

A non-recurring $2.5 million change in the fair value of contingent consideration and approximately $800,000 of professional expenses incurred in connection with the July share sale by certain members of the Borges [ph] family who own Greater Media prior to our acquisition of the company in 2016.

Excluding these onetime expenses, Beasley's third quarter operating income increased approximately 45% year-over-year or approximately $1.6 million.

Total third quarter interest expense decreased approximately $0.6 million year-over-year to $4.1 million reflecting the November '17 refinancing of our senior debt and this was partially offset by the additional $35 million of borrowings for the WXTU acquisition. We ended the quarter with cash-on-hand of $10 million.

Reflecting the WXTU transaction, total outstanding debt as of September 30, 2018 was $253 million compared to $220 million at June 30, 2018. Our LTM consolidated operating cash flow as defined in the credit agreement was $52.6 million, resulting in a leverage ratio of 4.8x as of September 30, 2018; this compared to 4.48x as of June 30, 2018.

Our credit agreement allows the company to receive the benefits of upto $20 million of our total cash-on-hand in calculating net leverage, and reflecting our balance sheet cash, net leverage at September 30, 2018 was 4.62x that compares to a maximum leverage covenant of 6x and also compares with 4.18x on the same basis at June 30, 2018.

The company spent $1.2 million in CapEx during the current quarter compared to $1.4 million in the prior year quarter. And the company spent $3.3 million in CapEx year-to-date 2018 compared to $3 million year-to-date 2017.

For the September 2018 quarter, excluding the $1.7 million onetime write-off of USTN, free cash flow was $7.6 million compared to $7.3 million in the year ago period.

On a year-to-date basis, free cash flow increased 4.5% to $17 million and reflecting our focus on growing free cash flow from strategic transaction, expense management, and the benefit of our November '17 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, to compete and select strategic accretive transactions, and to reinvest in our stations for research, promotion, sales and other initiatives that strengthen our position in our market.

And with that, I will turn it back to Caroline..

Thanks, Marie. Looking ahead, actual Q4 revenue is pacing up double-digits as October rose double-digits in November and December are pacing up as well. And again, this is actual, we're going to go into same station in a few minutes during Q&A.

With respect to political, we had approximately $1.2 million in political in the first nine months of the year and we expect total political advertising to reach just north of $3 million for the year. We're very excited about our Esports content acquisition and it's future potential looking into '19.

As many of you are aware, this is a space that is in it's infancy, and as radio leader in this area we look forward to offering more exciting and engaging content. In closing, it's important for all of us in the industry to hammer-home the fact that radio remains the number one reach medium in the U.S.

We outreach broadcast and cable TV and digital for advertisers, and we provide audiences great and in many cases original content.

These factors allow our stations to build local connections and now coupled with the attribution technology available today, we're able to demonstrate to advertisers and brand radio's unique effectiveness in reaching audiences of all ages and demographics on a highly targeted and cost effective spaces.

As such we remain hyper-focused on driving ratings and revenue share in our existing markets towards or over our goal of 30% of title [ph] market revenue, or like sending our brands across multiple platforms.

We also remain committed to reducing our leverage ratios by through growth and latest trailing 12-month consolidated operating cash flow and voluntary prepayments. We saw our leverage increase slightly with the XTU acquisition, and we're very mindful of bringing this down within a short period of time.

We're managing our capital structure and we continue to return capital to shareholders as we just paid our 20th consecutive quarterly cash dividends. We also expect to continue to act on strategic opportunities to increase our scale, diversify our revenue and grow our free cash flow with a long-term point of view.

And so on behalf of our corporate and stationed personnel, thank you for participating. And with that, I'm going to turn it over to Marie; she has a number of questions to ask and answer..

We have received several questions; and the first question for Caroline is how was the core advertising in first quarter on the same station basis, ex-political?.

Core advertising ex-political on a same station basis was down approximately 3%, with political it was down approximately 2% on a same station basis..

How is core pacing in fourth quarter?.

So core pacing ex-political is currently pacing up on a low single-digit basis for same station..

Also, how is political tracking relative to 2014? I will take that. So the political revenue in 2014 which was another non-election year was approximately $1.2 million. We expect our political to finish in 2018 just north of $3 million which is a little bit above our initial expectations.

Another question is, how dependent are you on auto and talk about auto in the next year? So auto on a natural basis was our fourth largest category in third quarter, and it was up as we discussed earlier. And looking into 2019, at a very early stage, Auto is pacing up and it is pacing to be our third largest category.

Another question is, where does your leverage stand today? And how do you think about 2019? So our net leverage for third quarter as we discussed was 4.62x.

We're very focused on continuing to delevering in fourth quarter and also into 2019; and we're going to do that by continuing to pay down debt focused on growing our revenues and also managing our expenses. Another question is, if we can review the USTN financial issue and help to invoice [ph] our exposure to them.

And should we expect anymore loses in fourth quarter?.

Right. So USTN we did a write-down of $1.7 million, that was our complete exposure to USTN. There should be no further write-downs for that..

And what is your options for the USTN Government stalwart's [ph]?.

So for us I just want to say that we in the past used multiple vendors so we didn't put all of our eggs in one basket which was the reason that we only had $1.7 million write-down. We are working with CATS [ph] currently on reselling some of this inventory and we are also monetizing some of this inventory in-house as well..

And if you have any additional questions, we will be happy to answer those after the earnings call and please feel free to call either Caroline or myself..

Alright. Well, thank you again for participating. And as always, as Marie said, feel free to call..

This does conclude today's conference. We thank you for your participation. You may now disconnect..