Good morning, and welcome to the Beasley Broadcast Group’s First Quarter 2021 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 of Regulation SK.

A reconciliation of these non-GAAP measures with their most direct comparable financial measures calculated and presented in accordance with GAAP can be found in this morning’s news announcement on the company’s website.

I would also like to 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 it..

Thank you, Stephanie, and good morning. Thank you for joining us to review our first quarter operating results. Marie Tedesco, our CFO, is on the call with me this morning.

Consistent with industry trends, January and February started strong, but slowed significantly at the midpoint as we were again challenged by tightened COVID-related restrictions in several of our markets as well as the snow storm that affected a large portion of the Northeast in February.

We ended Jan and February each down 21% when compared to 2020, and as a reminder, January and February of 2020, were up 7% over the same period when comparing to 2019, and that was in part due to political. March revenue increased 3.9% compared to March 2020 as we lapped the initial impact of the pandemic.

Overall, first quarter revenue declined 16.4% and offset revenue increased in our Atlanta, Augusta and Detroit markets. As I noted, political spending also impacted the comps as net political revenue in first quarter of ‘20 was $1.7 million compared to $265,000 in Q1 ‘21. In addition, we’re still waiting for the return of NTR and event revenue.

In this regard, our futurely popular wild Splash and Tampa Home show events, both of which took place in 2020 did not recur in Q1 of ‘21, impacting Q1 comparisons by about $1 million. Normalizing for political and NTR event revenue, Q1 ‘21 would have been down 8.8%.

The good news is that while we didn’t have revenue from Wild Splash or the Tampa home show in the first quarter, both of these events have been rescheduled to later in the year.

Continuing the momentum of recent quarters, we continue to make meaningful progress with our digital growth initiatives as Q1 digital revenue rose 10% year-over-year and accounted for 12% of our total revenue.

Given this continued growth and its accounting for more than 10% of total revenue, we have begun to report digital revenue on a segment basis effective first quarter. We believe this milestone represents an important inflection point in our evolution.

Revenue and cash flow diversification remain a strategic priority, and we’re making meaningful progress on these fronts and believe our results throughout 2021 will further highlight the complementary nature of our radio operations with our digital and esports offerings.

The first quarter results reflect some of the operating expense reductions implemented in 2020, offset in part by some increases in spending as we began reinvesting in research and marketing..

Thanks, Caroline. I will start with the review of the financial results and then provide the balance sheet update. First quarter net revenue decreased 16.4% or $9.4 to $48. 2 million, which includes $720,000 from our esports team. We generated $264,000 in political revenue during the quarter compared to $1.7 million in the prior year.

Breaking down the quarter, January decreased 21.3% year-over-year and February was down 21% as we comped against the strong start in 2020. In March, revenue rose 3.9% year-over-year, reflecting the comp against the beginning of the pandemic in mid-March 2020.

For the quarter, revenue was up year-over-year at our Atlanta Detroit, Wilmington and in our digital clusters. Station operating expenses for the quarter decreased $7.9 million or 15.6% to $43 million, resulting in first quarter SOI of $5.2 million.

Our quarterly expense decrease is the direct result of our 2020 permanent expense reduction, including a reduction of our allowance account, somewhat offset by the reinvestment in our digital agency, which we’ll continue through 2021, as will certain select increases in research and marketing as we reinvest in our markets and clusters..

Thank you, Marie. So let me add a bit more color on why we are optimistic about participating in the recovery as the vaccinations take hold, and we return to a new normal.

Despite the COVID and weather-related challenges and lack of NTR and event revenue in Q1, we continue to see a sequential increase in February over January, March over February and now April over March.

Revenue growth from our digital agency business exceeded our internal budget in first quarter, and this improvement, combined with the $7.9 million of operating expense reductions resulted in positive SOI and EBITDA for the quarter. Now moving on to esports.

These businesses continue to be a growing and popular facet of our company with a mass appeal to younger consumers. So let me give you a quick update on our recent initiatives in our Houston Outlaws platform.

During the quarter, we completed an asset swap, whereby we secured the remaining 10% interest in the Outlaws in exchange for our interest in the Detroit Renegades. And after naming a new coaching and player roster for 2021, the Outlaw season kicked off on Friday, April 16, being selected to host the league season opener against the Dallas Fuels.

Not only did we win the match against our biggest rival, but we then pulled in a historical win on that Sunday afternoon, beating the 2 time reigning world champions. Viewership for both of these matches exceeded 113,000 live viewers, and we were ranked as the #1 and #2 most viewed matches for the weekend.

Following that first weekend of play, we’ve competed in 3 additional matches, and we’re currently 4 in 1 having lost to the Dallas Fuels this past Sunday. And however, we are still one of the top ranked teams and the league.

We believe these positive early season results reinforce the popularity and fan-favorite status of Outlaws and are positioned to monetize this platform. So moving on with our focus on the best possible live and local content, our radio stations continue to gain audience share in the markets we operate.

Our PPM ratings share performance in Q1 was the best in over 3 years with adults 25-54. In fact, our PPM stations are up for Q1 of ‘19 and up nearly 2% from Q1 of ‘20. Like last quarter, our PPM cluster roll up share was once again the highest of any other major broadcaster in the industry.

And finally, our total on-air audience or has been consistently growing since the pandemic began, now more than 93% of where our audience was prior to COVID, and we will continue to see growth as our markets fully open..

Thanks, Caroline. And yes, we did receive a few questions that were not addressed in the earnings release. So with the first question, can you provide some color on the expense savings put in place last year compared to 2019 expenses? So operating expenses for first quarter declined $4.4 million or 9.4% when comparing to first quarter of 2019.

The full year operating expenses will include our investment of approximately $10 million of our Digital Direct agency and also includes a full year of operating expenses of our esports team, which is equivalent to approximately $2.5 million.

Including these added expenses and the fact that we are reinvesting in marketing and research of our assets, we expect flat to a small increase in full year expenses. This also includes the shift of some of the -- our digital expenses from corporate overhead to the market as we expect corporate overhead expenses also to decrease. Next question.

Please explain that the first tax liability on the balance sheet? So, the deferred tax liability on the balance sheet comes primarily from the difference between book and past amortorization of our FCC licenses. And this liability will only be realized if our assets are sold. Next question.

Can you provide some insight on expected CapEx for this year, and is it mostly spending on property and equipment of existing radio station?.

Yes. So the pacing that we provided in the call are year-over-year to 2020. We do use 2019 for internal comparison purposes, as going forward, we believe that they are more relevant. So April ‘19 compared with April ‘21 was down 8%. May ‘19 compared to May ‘21, we are 75% of May ‘19 of final number.

And then in June ‘19 compared to June ‘21 were 57% of June ‘19 final number. So June appears to be, at this point, a little stronger than May. Right now, we are 75% of Q2 ‘19 in terms of bookings.

And in terms of pacings and where we potentially will end, given this data, we expect that Q2 ‘21 compared with Q2 ‘19 could be down in the mid-single digits and the caveat being NTR events, and that could swing it either way. And as I know, the bookings are coming very, very late, as we have seen over the last few months..

Great. Thank you. And we have one more question.

How do you plan to use excess cash or retain cash from revenue going forward?.

Yes. So for now, we’re keeping the cash on our balance sheet, we are reinvesting in our company in research and marketing and also in digital. And we are looking for potential strategic investments that are targeted towards digital..

That is all the questions we have..

Okay, great. All right. Well, thank you very much for your time this morning. And should you have any questions, please feel free to call..

Thank you. Ladies and gentlemen, this concludes today’s presentation. You may now disconnect..