Good morning and welcome to the Beasley Broadcast Group's Fourth Quarter 2021 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 is 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 the morning's news announcement and on the company's Web site.

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 Web site, 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 CEO, Caroline Beasley. Please go ahead..

Thank you, Anna, and good morning, everyone, and thank you for joining us to review our 2021 fourth quarter and full-year operating results. Marie Tedesco, our CFO, is with me this morning.

So, Q4 proved to be another strong quarter with total revenue growth of 3.3%, nicely outpacing the 2% revenue guidance we provided on our last earnings call, as we successfully offset the 4Q 2020 political revenue contribution.

Our active new business initiatives, sports betting revenue, and a $3.4 million increase in digital revenue were the primary drivers to the strong quarter. As a reminder, we recorded approximately $10.2 million of political revenue in the fourth quarter of 2020, and $15.1 million net political for the full-year.

As such, our ex political, our 2021 fourth quarter revenues exceeded Q4 '20 levels by $12.1 million or about 21%, with local spot increasing 14.1%, and national increasing 9.2%. Now, including political, so these are actual numbers for the same period, over-the-air spot revenue increased 10.9%, while national declined 38%.

And this represents a large portion of this decline coming from political, for 2020. Of special note here is that we were able to offset over-the-air spot declines from political with increases from digital to generate overall revenue growth for the quarter, of 3.3%.

And as with recent quarters, our gains were broad-based, with seven of 13 markets delivering year-over-year revenue increases, including double-digit growth in Boston, Fort Myers, Las Vegas, and Philadelphia.

Now, looking at the quarter, October was down 10.4% as the political comp had the biggest impact, while November was up 16.8%, and December was up 8% year-over-year. Comparing our revenue performance to 4Q, 2019, and this is a target comparison in our pandemic recovery, our revenues for the quarter was down less than 2% or $1.4 million.

And for the full-year, when comparing to 2019, revenue declined 7.7% or $20 million. While our goal is to grow our total audience, we are focused on growing and expanding our digital platform, where impressions have become a valuable and marketable commodity, making content on the digital side our priority.

Having said that, during the quarter, we continued to make meaningful progress with our digital growth initiative as Q4 digital revenue rose 47.3% year-over-year, and represented 15.2% or $10.7 million of total fourth quarter revenue. And that's up from 10.7% in the comparable year-ago quarter.

This trend was also evident in the 2021 full-year result, with digital revenue representing 13.7% or $32.7 million of total revenue, marking a significant increase from 10.7% for the full-year of 2020. We are moving closer to our near-term goal of digital revenue representing 20% of our total revenue.

And as noted on previous calls, we are laser-focused on diversifying our revenue stream and increasing our cash flow. Now, sports betting revenue continued to grow to $4.3 million or 6.4% of total revenue for the quarter. This is an increase of 65% year-over-year, and $15.2 million for the full-year, where it represented 6.6% of our total revenue.

The sports betting revenue growth was driven by our Detroit, Philadelphia, and New Jersey clusters, and reflect our strong local presence in these markets. Now, Massachusetts is in the process of legalizing sports betting, which if approved by this year's third quarter, could represent meaningful revenue given our sports station in Boston.

Now, our fourth quarter operating expenses increased 17.6% year-over-year, which resulted in fourth quarter SOI decreasing $6.2 million, to $13.9 million, compared with $20.1 million in last year's fourth quarter. Breaking down the increase in operating expenses, $2.5 million is directly related to the build-out of our digital agency.

Additional drivers were the temporary cost reductions implemented, in 2020, which have returned, such as wage cuts and furloughs, investment in marketing and research, and, of course, an increase in cost of sales related to the increase in revenue. Finally, we are seeing an overall increase in wages due to inflation.

Now, I'm going to turn it over to Marie, and she's going to give you more detailed data on fourth quarter..

Thanks, Caroline, and good morning, everyone. I will start with overview of the fourth quarter and full-year results, followed by overview of our balance sheet.

Fourth quarter net revenue increased 3.3% or $2.3 million to $70.7 million, which includes $585,000 from our esport teams, the Outlaws, and Rocket League, our new organically created esport team. We generated approximately $400,000 in net political revenue, compared to $10.2 million in the prior year.

Excluding 2020 political, our revenue would have increased 20.7%. Besides the prior year political, we grew revenue year-over-year at our Boca Raton, Boston, Fort Myers, Las Vegas, New Jersey, Philadelphia, and Wilmington clusters.

Furthermore, when comparing fourth quarter '21 to fourth quarter 2019, net revenue was down just 1.9% or just under $1.4 million. Full-year revenues increased 17.1% or $35.3 million, to $241 million, compared to $206 million in 2020, which included approximately $15 million of political ad revenue.

Boston and Philadelphia had year-over-year revenue increases of more than $10 million, and generated double-digit revenue growth, along with Detroit, Fort Myers, Las Vegas, New Jersey, and Wilmington on a year-over-year basis.

Digital revenue for the quarter and year grew to 47.3% and 51.6%, respectively, to $10.7 million and $32.7 million, respectively, and we are pleased with the returns we are getting on our investment in growing this revenue stream and diversifying our revenue sources.

Station operating expenses for the quarter increased $8.5 million or 17.6% to $56.8 million resulting in fourth quarter ‘21 SOI of $13.9 million. Our quarterly expense increased includes $2.5 million directly related to the buildup of our digital agencies.

The other drivers of the expense increase were $3.1 million of increased wages primarily from the reinstatement of 2020 wage reduction to pre-pandemic level including the return of furloughed employees. A $2.8 million cost of sales related to the increase in revenue including an increase in digital third-party large costs.

A 1.2 million of investment in advertising, promotion, and research expense, and $1.2 million increase in rights fees with Sacred Games played in the current quarter. Putting station to more normalized prospects, our fourth quarter ‘21 expenses when compared fourth quarter 2019 was up just $3000.

Full-year expenses increased 17.1% or $17.3 million to $199.5 million which includes our esports operation. SOI for the full-year increased 75% to approximately $42 million. Now looking at our revenue categories for fourth quarter, consumer Services remained our largest revenue category at 29% of our total revenue.

And we drove an 18.8% year-over-year revenue increase in this category for the quarter. Our second largest category was Retail which represented around 15.7% of fourth quarter total revenue. And retail increased 21% year over year. Entertainment landed in third spot with 15% of our total revenue. And Entertainment grew 86.3% year over year.

This was driven by sports betting which accounted for approximately $4.3 million for the quarter with this revenue driven by our Detroit, Philadelphia, and New Jersey clusters. Auto, our fourth category, increased 1.3% year over year and accounted for 9.2% of total revenue.

We saw a double digit increase in Auto as our Boston, Augusta, and Las Vegas clusters with mid-single digit increased from Tampa and New Jersey. This despite continued labor, chip, and supply issues. We expect this category to show a significant improvement by early third quarter once the supply issue has normalized.

Consumer products and Telecom ground set our fifth and sixth category, up 6% and 13% respectively. On a full-year basis, Consumer Services increased 28.4%, Retail increased 24.4%, Entertainment was up 70.8%, Auto was up 12%, and Consumer Products increased 35.7%.

Looking at our fourth quarter market performance according to Miller Kaplan, three of our seven clusters that report to Miller Kaplan, outperformed their market representing about 55% of our fourth quarter revenue.

On a combined basis, these three market clusters drove a revenue increase of 2.2% for the quarter outperforming our market which rose 1.9%. We are taking a larger share of local revenue in our market and that is very evident when looking at our local spot as our cluster share increased 10.1% compared to the combined market which increased 5.7%.

Likewise, our digital investment continue to drive our digital revenue growth as our clusters digital revenue increased 52% compared to the market which on a combined basis increased 19.5%. Looking at the full-year Miller Kaplan performance, our clusters were up 17.9% compared to our market, which were up 15.5%.

With hyper focus local revenue, our cluster’s local revenues for the full-year were up 22.5% compared to the market, which were up 17.3%. Our full-year digital revenues were up 53.2% versus the market up 31.5%. Corporate G&A expenses for the quarter increased 28.7% or by $1.1 million compared to the same quarter a year ago to $4.7 million.

The year-over-year increase in corporate G&A is related to the reinstatement of wages, contract services, and non-cash stock-based compensation. Full-year corporate G&A increased $950,000 or 6.1% non-cash stock-based compensation increased $153,000 to $209,000 in the quarter and increased $633,000 to $1.4 million for the Full-year.

We had an income tax benefits for the quarter of $904,000 and then income benefits for the Full-year of $5.3 million. Our effective tax rate for the quarter was 26.2%.

Fourth quarter 2021 operating income was $6.5 million compared to $19.6 million in the year ago quarter, which benefited from the fourth quarter 2020 non-recurring gain on disposition from a Charlotte land sale and other operating income, which totaled around $8 million.

Full-year operating income increased 341% from a loss of $4.3 million to a gain of $14.7 million. Total fourth quarter interest expense increased $2.5 million year-over-year to $6.8 million and for the Full-year 2021, interest expense increased approximately $9.6 million due to the increased borrowing costs.

We did not have any scheduled term loan payments that payments during the quarter or year, leaving us with a total debt of $300 million. Our $10 million PPP loan was fully forgiven on November 5th. This is recorded as forgiveness on debt on our balance sheet and as an add-back on calculating leverage.

Fourth quarter 2021 free cash flow was $12.2 million, which includes $10 million of the PPP cash compared with $16.8 million in the 2020 fourth quarter, which included political revenue. Full-year free cash flow including the PPP cash was $10.8 million.

We ended the quarter with cash on hand of $51.4 million and lastly, our capital expenditures for the quarter was $795,000 compared to prior year of $481,000. Full-year CapEx spend was $4.5 million compared to 2020 CapEx spend or $7.5 million. And with that, I will turn it back to Caroline..

Thank you, Marie. As the data confirms, our radio stations continue to gain share an audience, driven by the highest quality multi-platform local content in the industry.

In the following Nelson audio rating period, our overall share increased by 1% quarter-to-quarter with the top advertising demographic of adults 2,554, looking only at our largest PPM market, we saw a 4.5% share increase quarter-to-quarter and an 8% year-over-year increase with adults 2554.

This is the largest quarterly share we have ever had in our PPM markets. We currently have the highest average cluster share when compared to the largest radio broadcasters in PPM and our digital content strategy continues to show great success. And in Q4 impressions grew by over 39% year-over-year and by 20% on a quarterly sequential basis.

This was once again the biggest quarter ever for digital impressions at Beasley. In addition to ratings and audience performance, Beasley puts a higher priority on serving the communities in which we operate, and almost every station here at held charity events during the holiday season.

For example, WMMR's President Steve's morning show hosted their annual camp out for hunger food drive or 2.3 million pounds of food and over $1 million in cash was collected for the hungry in Philadelphia.

While the Morning Show, Orlando in the freak show held their annual toys drive, where they collected almost 700 bicycles $80,000 and gift cards and four positive toys for the children of Tampa. It was an amazing quarter of audience growth and good causes for the content department here at Beasley.

Now moving on to esports, which continues to be a growing and popular facet of our company. During 2021, we continue to focus on expanding our viewership, fan based and revenue stream. We have a new player roster and the management team in place and we are eagerly awaiting the release of Overwatch 2.

During 2021, we expanded our footprint into a Rocket League team, AXLE-R8, a gang with increasing popularity, which already boasts a 90 million player base each month.

From an audience, fan base, and entertainment perspective, all our content platforms are digital, and we saw phenomenal audience growth during 2021, largely due to the popularity of our team, our players, online matches, streaming, and expansion efforts. And we look forward to more growth in 2022.

Now, looking ahead to first quarter and into 2022, our focus will include revenue diversification, audience expansion, and growing free cash flow, maintaining a strong balance sheet, improving margins, and reducing net leverage. We expect progress on these fronts as we continue to close the gap toward our pre-COVID revenue and SOI levels.

As of today, our first quarter revenue is pacing up approximately 12%. And breaking that down, January ended up 17%, with February and March pacing up 7% and 12%, respectively. Our first quarter has gotten off to a good start, but as a reminder, another COVID variant could offset revenue growth.

Lastly, I'll address the substantial cash on hand on our balance sheet. This is allowing the financial flexibility to either reduce debt and/or pursue a potential acquisition or investment within the digital space should an opportunity arise, which could accelerate our digital growth or provide significant synergies and free cash flow.

So, before going to Q&A, I'd like to acknowledge our team members across the company for everything they've done and are doing to help us quickly address and overcome the challenges of the past two years, I am thrilled to be part of the team.

As we move into 2022 with the possibility of some challenges, and we know that there will be some, but also many opportunities. So, on behalf of everyone at Beasley, thank you for joining us today. And, Marie, I think we have a couple of questions..

Thanks, Caroline. Yes, we do..

The first question is there is lots of talk about the great resignation and companies having a harder time recruiting new employees.

Is Beasley seeing any impact?.

Yes, we are seeing some impact from the -- and we're seeing this primarily from the digital side of the company. And I will say that we are adjusting accordingly. And we're looking at different options to address this great resignation.

We believe that we're going to be able to turn these challenges into opportunities, helping us to -- allowing us -- in making sure that we focus on new areas of recruitment. And as another point on that is that we're not seeing as many resignations on the radio side.

And I really attribute this to the culture of our radio stations and the dynamic brands that we have in the market where the radio stations are located..

Thank you.

And the second, and the last question we got, is that can you give us the political expectations for 2022?.

Sure. So, let's just go back and review where we were in 2018. We ended the year at about $5 million in political, so that's a non-presidential year. 2020, we ended the year with $15 million in political. So, for 2022, we are looking at political revenue to come in slightly north of 2018..

Perfect, thank you..

So, with that, those were all the questions that we had. I thank you for your time. And should you have any questions, please feel free to reach out to Marie or myself. Thank you..

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect..