Good morning, and welcome to the Beasley Broadcast Group First Quarter 2022 Conference Call.

Before proceeding, I would like to emphasize that today's conference call and webcast will contains 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 the 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 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, www.bbgi.com. You can also find a copy of today's press release on the Investors or Press Room section of the site.

At this time, I'd like to turn the conference over to your host, Beasley Broadcast Group's CEO, Caroline Beasley. Please go ahead, ma'am..

Thank you, Cody, and good morning, everyone. Thank you for joining us to review our 2022 first quarter operating results. Marie Tedesco, our CFO, is with me this morning.

I'm thrilled to share our first quarter 2022 results with you as our digital growth initiatives, strong presence and share in broadcast market resulted in revenue, SOI, and EBITDA growth on a year-over-year basis.

Overall, Q1 was another strong quarter for us with total revenue growth of 15.6%, outpacing the 13% revenue guidance we provided on our last earnings call. New business initiatives, sports betting and a $2 million year-over-year increase in digital revenue were the primary drivers to the strong quarter.

These results are beginning to replace the power of our platform and diversification efforts and are truly a testament to the hardworking team we have. As mentioned, 2022 first quarter revenue rose 15.6% over Q1 2021. Over the year, local spot revenue increased 20.6%, while national spot revenue declined 12.1%.

Our gains were again broad-based with 11 of 14 markets delivering year-over-year revenue increases including double-digit growth in Boston, Detroit, New Jersey, Philadelphia, Tampa, and Wilmington. Looking closer at the quarter, January was up 17%; February up 8%; and March rose almost 13% year-over-year.

We have now almost fully regained business at the levels achieved in Q1 2019 and Q1 2020. When comparing our revenue performance to Q1 2019, our revenue was down $2 million or 3.4%, which the difference is primarily from event and NTR revenue that have not fully recovered to pre-pandemic levels.

We are exceeding our goals of growing our total audience, and that is coming from the accelerated growth on our digital platform, where we have doubled and tripled our increases in unique visitors and unique page views since 2019.

These page views are directly related to our large increase in impressions, which, in turn is driving the increase in digital revenue, making content creation on the digital side a priority.

This initiative resulted in continued digital growth, where Q1 digital revenue rose 26% year-over-year and represented 14% or $7.8 million of total first quarter revenue and that's up from 12% in the comparable year ago quarter.

A special note when comparing Q1 2022 digital with Q1 2019, our digital revenue has more than doubled from $3.4 million or 6% of total revenue.

We continue moving closer to our near-term goal of digital representing 20% of total revenue, and we are laser-focused on increasing our digital cash flow with a goal to achieve margins comparable to our over-the-air business. And as in this side, we do expect our digital agency to contribute to positive SOI in third quarter.

Touching on sports betting. We recorded $3.6 million of revenue or 6.5% of total revenue in this category during the quarter on par with first quarter of 2021, but slightly down from fourth quarter. Sports betting revenue was again driven by our Detroit, Philadelphia, and New Jersey clusters.

In Massachusetts, sport betting legislation was recently approved by the Senate with some restrictions compared to the helpers previously approved version, moving us closer to another meaningful source of new revenue once these differences are resolved.

First quarter SOI increased $645,000 or 15.6% year-over-year as we were able to leverage the revenue growth in the quarter. First quarter operating expenses increased 16% year-over-year with higher cost of sales directly related to the revenue increase, and we also absorbed inflation-related increases in wages, and reinvestment in station marketing.

We are hyper-focused on reducing our leverage, and we were able to take advantage of our bonds trading below par and repurchased $5 million at a discounted rate of approximately 4%.

This was completed in the first week of April and is a permanent reduction of our debt, which will reduce cash interest expense and hence had a positive benefit on our free cash flow. I'm now going to turn it over to Marie, who will provide you more details into the quarter..

Thanks, Caroline, and good morning, everyone. Let me start with a review of the first quarter results, followed by a review of our balance sheet. First quarter net revenue increased 15.6% or $7.5 million to $55.7 million, which includes $550,000 from two esports teams, the Outlaws and AXLR-R8.

We grew revenue year-over-year as all the three of our markets, including Atlanta, Boston, Charlotte, Detroit, Fort Myers, Las Vega, New Jersey, Philadelphia, Tampa and Wilmington. And for comparison, we generated approximate with 50,000 in net political revenue in first quarter 2022 compared to $265,000 last year first quarter.

Digital revenue for the quarter grew 26% to $7.8 million and now represents 14% of total revenue. We are focused on continue to grow this revenue stream and diversifying our revenue sources.

Station operating expenses for the quarter increased $6.9 million or 16% to $49.8 million, resulting in first quarter 2022 SOI of $5.9 million, an increase year-over-year of approximately $600,000. Breaking down the increase in operating expenses, the main drivers were cost of sales directly related to the revenue increase of $2 million-plus.

Inflation-related wage increases and increased talent fees, sports rights fee due to increased games played, investment in station marketing and a bad debt variance of approximately $1 million stemming from the prior year credit taken.

Reflected in the variance above is approximately $2.5 million, which is directly related to the buildup of our digital agency and the driver of the success and ongoing growth of our digital revenue. Now looking at our revenue categories for first quarter.

Consumer services remained our largest revenue category at 30% of our total revenue, and we drove a 15% year-over-year revenue increase in this category for the quarter. Our second largest category was entertainment, which split cost with retail. Entertainment grew 48% year-over-year and accounted for 16% of total revenues.

This jump was partly driven by sports betting, which added $3.6 million more revenue in first quarter 2022. Retail number three represents around 15% of first quarter total revenue and retail increased 16% year-over-year. Auto, our fourth largest category, saw revenues down 1.2% year-over-year and the category accounted for 10% of total revenue.

We saw double-digit increases in auto at our Detroit and New Jersey clusters and the year-over-year decline in this category was less than 65,000. We believe this revenue category can show improvement by the latter part of the year, provided that supply chain issues have normalized.

Moving into the fifth part is financial services, up 22.6%, and representing 6% of total revenues. Telecom rounds out our top six categories and was up 3%. Looking now at our first quarter market performance according to Miller Kaplan of our seven clusters that report to Miller Kaplan, Boston, Detroit and Tampa outperformed their markets.

On a combined basis, these three market clusters increased 13.9% for the quarter compared to our combined market up 15.3%.

Our clusters exceeded their market on a combined basis in local, digital and CR and of course, we continue to stay hyper-focused on local revenue and growing this with new business initiatives and growing our digital share, while we expect national demand will continue to slowly decrease.

National revenue in first quarter represented less than 16% of our total revenues. Corporate G&A expenses for the quarter increased 8.4% or by $328,000 compared to the same quarter a year ago to $4.2 million.

The year-over-year increase in corporate G&A is related to increased wages, insurance expense and T&E, partially offset by a reduction of stock-based compensation. And stock-based compensation decreased $300,000 to $149,000 in the quarter, and we had an income tax benefit of the quarter of $5.8 million.

First quarter 2022 operating income declined $200,000 to a negative $2.7 million compared to a negative $2.5 million in the year ago quarter, largely due to an impairment charge of $1.9 million related to the sale of our Buca Raton AM station.

Total first quarter interest expense increased $1.1 million year-over-year to $6.8 million and represent a full quarter of increased borrowing costs compared to a partial period in first quarter 2021. We did not have any scheduled debt payments during the quarter, leaving us with a total debt of $300 million.

However, as Caroline noted, we repurchased $5 million of our bonds debt between April 1 and April 5 at an average discount of around 4%. Additionally, we made an interest payment of approximately $12.9 million on February 1.

First quarter 2022 free cash flow was a negative $6 million compared with a negative $4.2 million in the 2021 first quarter, which due to seasonality is typically a negative free cash flow quarter for us. We ended the quarter with cash on hand of $50.7 million.

Our substantial cash balance is allowing us the financial flexibility to reduce debt just as we did earlier in second quarter, and/or pursue a potential acquisition or investments within the digital space should an opportunity arise that could accelerate our digital growth or provide significant synergies and free cash flow.

Our capital expenditures for the quarter were $1.4 million compared to the prior-year of $1 million. And with that, I'll turn it back to Caroline..

Number one, Former U.S. Senator and Former CEO of the NAB, Gordon Smith, has agreed to be included as the nominee for our Board of Directors to be voted on by the end of this month. And then, number two, Tina Murley was promoted from VP of Sales, where she oversaw radio revenue to Chief Revenue Officer, overseeing all revenues for the company.

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 make past the challenges presented by the pandemic and now even more economic headwinds. So with that, Marie, I'm going to turn it over. I know that we do have a few questions to address today..

That's correct, Caroline. We have a few questions that was not covered in our prepared remarks. And first, a request to touch on revenue categories for second quarter, and I will take that. So as of today, our top sized categories look like this.

Consumer Services is up 8%; retail is up 28%; Entertainment is up 23%; Finance is up 28%; and auto is down, as of today 6% or approximately $300,000. So as you can see, auto sale is somewhat weak still suffering from the supply chain issues, and we also see an improvement in that revenue category by the end of the year.

The next question is, what are you contemplating on the M&A front, Caroline?.

So what we have been saying over the last several quarters as we are hyper-focused on digital. And we're looking at various digital assets that would complement what we are currently doing, focusing either on content or on our digital agency business and acquisitions that would be accretive to the company.

In addition, I think many of you may have read that we did sell off one of our smaller radio properties, which was an AM station located in Buca Raton and we did that because it just wasn't strategic to our company any longer..

Thank you. And all other questions were covered in our prepared earnings remarks..

Okay. Well, with that, I thank you very much for listening today. And should you have any further questions, please feel free to reach out to either Marie or myself. Thank you, and hope you all have a great week..

Thank you. That does conclude today's conference. We thank you all for your participation, and you may now disconnect..