BEASLEY BROADCAST GROUP INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File
No. 000-29253
(Exact Name of Registrant as Specified in Its Charter)
(State of Incorporation) |
(I.R.S. Employer Identification Number) |
(Address of Principal Executive Offices and Zip Code)
(239 ) 263-5000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange on which Registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Yes
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act. Large accelerated filer |
☐ |
Accelerated filer |
☐ | |||
| ☐ | Smaller reporting company | |||||
| Emerging growth company | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule ☒
12b-2
of the Exchange Act). Yes ☐ No Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class A Common Stock, $0.001 par value, 12,731,019 Shares Outstanding as of May
2
, 2022 Class B Common Stock, $0.001 par value, 16,662,743 Shares Outstanding as of May
2
, 2022
INDEX
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, 2021 |
March 31, 2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, less allowance for doubtful accounts of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Finance lease right-of-use |
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FCC licenses |
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Goodwill |
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Other intangibles, net |
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Other assets |
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Total assets |
$ | $ | ||||||
LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Operating lease liabilities |
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Finance lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Due to related parties |
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Long-term debt, net of unamortized debt issuance costs |
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Operating lease liabilities |
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Deferred tax liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock, $ |
||||||||
Class A common stock, $ |
||||||||
Class B common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Treasury stock, Class A common stock; |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
3
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
Three Months Ended March 31, |
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2021 |
2022 |
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| Net revenue |
$ | $ | ||||||
| |
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|
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| Operating expenses: |
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| Operating expenses (including stock-based compensation of $ |
||||||||
| Corporate expenses (including stock-based compensation of $ |
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| Depreciation and amortization |
||||||||
| Impairment loss |
||||||||
| Gain on disposition |
( |
) | ||||||
| Other operating expense s |
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| |
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| Total operating expenses |
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| |
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|||||
| Operating loss |
( |
) | ( |
) | ||||
| Non-operating income (expense): |
||||||||
| Interest expense |
( |
) | ( |
) | ||||
| Loss on extinguishment of long-term debt |
( |
) | ||||||
| Other income, net |
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| |
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|||||
| Loss before income taxes |
( |
) | ( |
) | ||||
| Income tax benefit |
( |
) | ( |
) | ||||
| |
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|
|||||
| Loss before equity in earnings of unconsolidated affiliates |
( |
) | ( |
) | ||||
| Equity in earnings of unconsolidated affiliates, net of tax |
( |
) | ( |
) | ||||
| |
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|||||
| Net loss |
( |
) | ( |
) | ||||
| Earnings attributable to noncontrolling interest |
||||||||
| |
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|
|||||
| Net loss attributable to BBGI stockholders |
$ | ( |
) | ( |
) | |||
| |
|
|
|
|||||
| Net loss attributable to BBGI stockholders per Class A and Class B common share: |
||||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | ||
| Weighted average shares outstanding: |
||||||||
| Basic and diluted |
||||||||
4
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, |
||||||||
2021 |
2022 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Stock-based compensation |
||||||||
| Provision for bad debts |
( |
) | ||||||
| Depreciation and amortization |
||||||||
| Impairment loss |
— | |||||||
| Gain on disposition |
( |
) | ||||||
| Amortization of loan fees |
||||||||
| Loss on extinguishment of long-term debt |
||||||||
| Deferred income taxes |
( |
) | ( |
) | ||||
| Equity in earnings of unconsolidated affiliates |
||||||||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable |
||||||||
| Prepaid expenses |
( |
) | ||||||
| Other assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Other liabilities |
( |
) | ||||||
| Other operating activities |
( |
) | ||||||
| |
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|
|||||
| Net cash provided by operating activities |
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| Cash flows from investing activities: |
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| Capital expenditures |
( |
) | ( |
) | ||||
| Proceeds from dispositions |
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| |
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| Net cash used in investing activities |
( |
) | ( |
) | ||||
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| Cash flows from financing activities: |
||||||||
| Issuance of debt |
||||||||
| Payments on debt |
( |
) | ||||||
| Payment of debt issuance costs |
( |
) | ||||||
| Reduction of finance lease liabilities |
( |
) | ( |
) | ||||
| Purchase of treasury stock |
( |
) | ( |
) | ||||
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| Net cash provided by (used in) financing activities |
( |
) | ||||||
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| Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents at beginning of period |
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| Cash and cash equivalents at end of period |
$ | $ | ||||||
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| Cash paid for interest |
$ | $ | ||||||
| |
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| Cash paid for income taxes |
$ | $ | ||||||
| |
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| Supplemental disclosure of non-cash investing and financing activities: |
||||||||
| Acquisition of noncontrolling interest |
$ | $ | ||||||
| |
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| Extinguishment of trade sales payable |
$ | $ | ||||||
| |
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| Class A common stock returned to treasury stock |
$ | $ | ||||||
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5
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of Beasley Broadcast Group, Inc. and its subsidiaries (the “Company”) included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2021. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented, and all such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations; therefore the results shown on an interim basis are not necessarily indicative of results for the full year. (2) Disposition
On April 1, 2022, the Company completed the sale of substantially all of the assets used in the operations of 1.25 $1.9
WWNN-AM
in West Palm Beach-Boca Raton, FL to a third party for $million in cash. As a result of the sale, the Company recorded an impairment loss of
million related to the FCC license during the first quarter of 2022.
(3) Long-Term Debt
Long-term debt is comprised of the following:
December 31, 2021 |
March 31, 2022 |
|||||||
Secured notes |
$ | $ | ||||||
Less unamortized debt issuance costs |
( |
) | ( |
) | ||||
| $ | $ | |||||||
On February 2, 2021, the Company issued $300.0 million aggregate principal amount of 8.625 % senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year. The Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority owned subsidiaries and are guaranteed jointly and severally by the Company and its majority owned subsidiaries. The Indenture contains restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of its subsidiaries. Prior to February 1, 2025, the Company will be subject to certain premiums, as defined in the Indenture, for optional or mandatory (upon certain contingent events) redemption of some or all of the Notes.
In April 2022, the Company repurchased
% of the principal amount. As a result of the repurchase, the Company recorded an aggregate gain on extinguishment of long-term debt of
second
quarter of 2022. (4) Stockholders’ Equity
The changes in stockholders’ equity are as follows:
Three months ended March 3 1 , |
||||||||
2021 |
2022 |
|||||||
Beginning balance |
$ | $ | ||||||
Stock-based compensation |
||||||||
Acquisition of noncontrolling interest |
( |
) | — | |||||
Purchase of treasury stock |
( |
) | ( |
) | ||||
Net loss |
( |
) | ( |
) | ||||
Elimination of noncontrolling interest |
— | |||||||
Ending balance |
$ | $ | ||||||
6
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(5) Net Revenue
Net revenue is comprised of the following:
Three months ended March 31, |
||||||||
2021 |
2022 |
|||||||
Audio |
$ | $ | ||||||
Digital |
||||||||
Other |
||||||||
| $ | $ | |||||||
The Company recognizes revenue when it satisfies a performance obligation under a contract with an advertiser. The transaction price is allocated to performance obligations based on executed contracts which represent relative standalone selling prices. Payment is generally due within 30 days, although certain advertisers are required to pay in advance. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. The Company has elected to use the practical expedient to expense sales commissions as incurred. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue in the balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date.
December 31, 2021 |
March 31, 2022 |
|||||||
Deferred revenue |
$ | $ | ||||||
Three months ended March 31, |
||||||||
2021 |
2022 |
|||||||
Losses on receivables |
$ | $ | ||||||
Audio revenue includes revenue from the sale or trade of aired commercial spots to advertisers directly or through national, regional or local advertising agencies. Each commercial spot is considered a performance obligation. Revenue is recognized when the commercial spots have aired. Trade sales are recorded at the estimated fair value of the goods or services received. If commercial spots are aired before the goods or services are received, then a trade sales receivable is recorded. If goods or services are received before the commercial spots are aired, then a trade sales payable is recorded. Other revenue includes revenue from concerts, promotional events, talent fees and other miscellaneous items. Such revenue is generally recognized when the concert, promotional event, or talent services are completed.
December 31, 2021 |
March 31, 2022 |
|||||||
Trade sales receivable |
$ | $ | ||||||
Trade sales payable |
||||||||
Three months ended March 31, |
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2021 |
2022 |
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Trade sales revenue |
$ | $ | ||||||
Digital revenue includes revenue from the sale of streamed commercial spots, station-owned assets and third-party products. Each streamed commercial spot, station-owned asset and third-party product is considered a performance obligation. Revenue is recognized when the commercial spots have streamed. Station-owned assets are generally scheduled over a period of time and revenue is recognized over time as the digital items are used for advertising content except for streamed commercial spots. Third-party products are generally scheduled over a period of time with an impression target each month. Revenue from the sale of third-party products is recognized over time as the digital items are used for advertising content and impression targets are met each month.
7
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(6) Stock-Based Compensation
The Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”) permits the Company to issue up to 7.5
million shares of Class A common stock. The 2007 Plan allows for eligible employees, directors and certain consultants of the Company to receive restricted stock units, shares of restricted stock, stock options or other stock-based awards. The restricted stock units that have been granted under the 2007 Plan generally vest over one to five years of service.
A summary of restricted stock unit activity is presented below:
Units |
Weighted- Average Grant-Date Fair Value |
|||||||
Unvested as of January 1, 2022 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Unvested as of March 31, 2022 |
$ | |||||||
As of March 31, 2022, there was $1.6 million of total unrecognized compensation cost for restricted stock units granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average period of 2.2 years.
(7) Income Taxes
The Company’s effective tax rate was 20 % and 61 % for the three months ended March 31, 2021 and 2022, respectively. These rates differ from the federal statutory rate of 21 % due to the effect of state income taxes, certain
non-taxable
income, and certain expenses that are not deductible for tax purposes. (8) Earnings Per Share
Earnings per share calculation information is as follows:
Three months ended March 31, |
||||||||
2021 |
2022 |
|||||||
Net loss attributable to BBGI stockholders |
$ | ( |
) | $ | ( |
) | ||
Weighted-average shares outstanding: |
||||||||
Basic |
||||||||
Effect of dilutive restricted stock units and restricted stock |
||||||||
Diluted |
||||||||
Net loss attributable to BBGI stockholders per Class A and Class B common share – basic and diluted |
$ | ( |
) | $ | ( |
) | ||
The Company excluded the effect of restrictive stock units and restricted stock under the treasury stock method when reporting a net loss as the addition of shares was anti-dilutive. The number of shares excluded was 32,166 and 178,625 for the three months ended March 31, 2021 and 2022, respectively.
8
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(9) Financial Instruments
The carrying amount of the Company’s financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these financial instruments.
The estimated fair value of the Notes, based on available market information, was
million as of December 31, 2021 and March 31, 2022, respectively. The Company used Level 2 measurements under the fair value measurement hierarchy to determine the estimated fair value of the Notes.
(10) Segment Information
The Company currently operates three operating segments (Audio, Digital, esports) and two reportable segments (Audio, Digital). The identification of segments is consistent with how the segments report to and are managed by the Company’s Chief Executive Officer (the Company’s Chief Operating Decision Maker). The Audio segment generates revenue primarily from the sale of commercial advertising to customers of the Company’s radio stations in the following radio markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, and Wilmington, DE. The Digital segment generates revenue primarily from the sale of digital advertising to customers of the Company’s radio stations and other advertisers throughout the United States. Corporate includes general and administrative expenses and certain other income and expense items not allocated to the operating segments.
Non-operating
corporate items including interest expense and income taxes, are reported in the accompanying condensed consolidated statements of comprehensive loss. Reportable segment information for the three months ended March 31, 2022 is as follows:
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Net revenue |
$ | $ | $ | $ | — | $ | ||||||||||||||
Operating expenses |
— | |||||||||||||||||||
Corporate expenses |
— | — | — | |||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||
Impairment loss |
— | — | — | |||||||||||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Capital expenditures |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Reportable segment information for the three months ended March 31, 2021 is as follows:
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Net revenue |
$ | $ | $ | $ | — | $ | ||||||||||||||
Operating expenses |
— | |||||||||||||||||||
Corporate expenses |
— | — | — | |||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||
Gain on disposition |
( |
) | — | — | — | ( |
) | |||||||||||||
Other operating expense s |
— | — | ||||||||||||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Capital expenditures |
$ |
$ |
— |
$ |
$ |
$ |
||||||||||||||
9
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Reportable segment information as of March 31, 2022 is as follows:
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Property and equipment, net |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
FCC licenses |
— | — | — | |||||||||||||||||
Goodwill |
— | — | ||||||||||||||||||
Other intangibles, net |
— | |||||||||||||||||||
Reportable segment information as of December 31, 2021 is as follows:
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Property and equipment, net |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
FCC licenses |
— | — | — | |||||||||||||||||
Goodwill |
— | — | ||||||||||||||||||
Other intangibles, net |
— | |||||||||||||||||||
10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
General
We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. We own and operate radio stations in the following radio markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, and Wilmington, DE. We refer to each group of radio stations in each radio market as a market cluster. Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc. and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements” about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based on the current beliefs and expectations of the Company’s management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, contain words such as: “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “plans,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions.
Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:
• |
the effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s Federal Communications Commission (“FCC”) licenses and/or goodwill; |
• |
external economic forces that could have a material adverse impact on the Company’s advertising revenues and results of operations; |
• |
the ability of the Company’s radio stations to compete effectively in their respective markets for advertising revenues; |
• |
the ability of the Company to develop compelling and differentiated digital content, products and services; |
• |
audience acceptance of the Company’s content, particularly its radio programs; |
• |
the ability of the Company to respond to changes in technology, standards and services that affect the radio industry; |
• |
the Company’s dependence on federally issued licenses subject to extensive federal regulation; |
• |
actions by the FCC or new legislation affecting the radio industry; |
• |
increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists; |
• |
the Company’s dependence on selected market clusters of radio stations for a material portion of its net revenue; |
11
| • | credit risk on the Company’s accounts receivable; |
| • | the risk that the Company’s FCC licenses and/or goodwill could become impaired; |
| • | the Company’s substantial debt levels and the potential effect of restrictive debt covenants on the Company’s operational flexibility and ability to pay dividends; |
| • | the potential effects of hurricanes on the Company’s corporate offices and radio stations; |
| • | the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming; |
| • | disruptions or security breaches of the Company’s information technology infrastructure; |
| • | the loss of key personnel; |
| • | the Company’s ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on the Company’s financial condition and results of operations; |
| • | the fact that the Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of the Company; and |
| • | other economic, business, competitive, and regulatory factors affecting the businesses of the Company, including those set forth in the Company’s filings with the SEC. |
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. We do not intend, and undertake no obligation, to update any forward-looking statement.
Financial Statement Presentation
The following discussion provides a brief description of certain key items that appear in our financial statements and general factors that impact these items.
Net Revenue.
Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors:
| • | a radio station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio; |
| • | the number of radio stations, as well as other forms of media, in the market competing for the attention of the same demographic groups; |
| • | the supply of, and demand for, radio advertising time; and |
| • | the size of the market. |
12
Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our radio market clusters. Seasonal revenue fluctuations are also common in the radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues typically are lowest in the first calendar quarter of the year. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups. This political spending typically is heaviest during the fourth quarter of such years.
We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime.
We also continue to invest in digital support services to develop and promote our radio station websites, applications, and other distribution platforms. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our radio stations over the internet. We also generate revenue from selling third-party digital products and services.
Operating Expenses.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:
| • | it involves a significant level of estimation uncertainty; and |
| • | changes in the estimate or different estimates that could have been selected have had or are reasonably likely to have a material impact on our results of operations or financial condition. |
Our critical accounting estimates are described in Item 7 of our Annual Report on Form
10-K
for the year ended December 31, 2021. There have been no additional material changes to our critical accounting estimates during the three months ended March 31, 2022. Recent Accounting Pronouncements
There were no recent accounting pronouncements that have or will have a material effect on our financial condition or results of operations.
Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021
The following summary table presents a comparison of our results of operations for the three months ended March 31, 2021 and 2022, with respect to certain of our key financial measures. These changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 1 of this report.
Results of Operations - Consolidated
Three Months ended March 31, |
Change |
|||||||||||||||
2021 |
2022 |
$ |
% |
|||||||||||||
| Net revenue |
$ | 48,212,040 | $ | 55,720,268 | $ | 7,508,228 | 15.6 | % | ||||||||
| Operating expenses |
42,967,871 | 49,830,436 | 6,862,565 | 16.0 | ||||||||||||
| Corporate expenses |
3,905,289 | 4,233,460 | 328,171 | 8.4 | ||||||||||||
| Impairment loss |
— | 1,857,226 | 1,857,226 | — | ||||||||||||
| Other operating expenses |
1,100,000 | — | (1,100,000 | ) | (100.0 | ) | ||||||||||
| Interest expense |
5,778,071 | 6,849,037 | 1,070,966 | 18.5 | ||||||||||||
| Loss on extinguishment of long-term debt |
4,996,731 | — | (4,996,731 | ) | (100.0 | ) | ||||||||||
| Income tax benefit |
2,602,886 | 5,849,318 | 3,246,432 | 124.7 | ||||||||||||
| Net loss |
10,684,641 | 3,738,945 | (6,945,696 | ) | (65.0 | ) | ||||||||||
13
Results of Operations - Segments
Three Months ended March 31, |
Change |
|||||||||||||||
2021 |
2022 |
$ |
% |
|||||||||||||
| Net revenue |
||||||||||||||||
| Audio |
$ | 41,729,602 | $ | 47,365,145 | $ | 5,635,543 | 13.5 | % | ||||||||
| Digital |
5,763,728 | 7,808,250 | 2,044,522 | 35.5 | ||||||||||||
| Other |
718,710 | 546,873 | (171,837 | ) | (23.9 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
| $ | 48,212,040 | $ | 55,720,268 | $ | 7,508,228 | 15.6 | ||||||||||
| |
|
|
|
|
|
|||||||||||
| Operating expenses |
||||||||||||||||
| Audio |
$ | 34,735,469 | $ | 40,683,812 | $ | 5,948,343 | 17.1 | % | ||||||||
| Digital |
7,257,915 | 8,401,763 | 1,143,848 | 15.8 | ||||||||||||
| Other |
974,487 | 744,861 | (229,626 | ) | (23.6 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
| $ | 42,967,871 | $ | 49,830,436 | $ | 6,862,565 | 16.0 | ||||||||||
| |
|
|
|
|
|
|||||||||||
Net Revenue.
COVID-19
pandemic. Digital revenue increased $2.0 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued growth in the digital segment. Operating Expenses.
COVID-19
pandemic. Digital operating expenses increased $1.1 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued investment in the digital segment. Corporate Expenses.
Impairment Loss.
WWNN-AM
in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, we recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022. Other Operating Expenses.
COVID-19
pandemic and expenses of $0.5 million related to the early termination of a programming contract. Interest Expense.
Loss on Extinguishment of Long-Term Debt.
Income Tax Benefit.
non-taxable
income, and certain expenses that are not deductible for tax purposes. 14
Net Loss.
Liquidity and Capital Resources
Overview.
In response to the
COVID-19
pandemic, our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. In addition, as discussed in “Secured Notes” below, the Indenture governing our Notes limits our ability to pay dividends. Secured Notes.
From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units. We paid approximately $30,000 to repurchase 16,207 shares during the three months ended March 31, 2022. From time to time, we may seek to repurchase, redeem or otherwise retire our Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.
We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:
| • | internally generated cash flow; |
| • | additional borrowings or notes offerings, to the extent permitted under the Indenture governing our Notes; and |
| • | additional equity offerings. |
We believe we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next twelve months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Notes, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect, and we may not secure financing when needed or on acceptable terms.
Off-Balance
Sheet Arrangements. off-balance
sheet arrangements as of March 31, 2022. Cash Flows
15
Three Months ended March 31, |
||||||||
2021 |
2022 |
|||||||
| Net cash provided by operating activities |
$ | 2,354,007 | $ | 735,374 | ||||
| Net cash used in investing activities |
(666,768 | ) | (1,375,775 | ) | ||||
| Net cash provided by (used in) financing activities |
33,763,934 | (31,544 | ) | |||||
| |
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
$ | 35,451,173 | $ | (671,945 | ) | |||
| |
|
|
|
|||||
Net Cash Provided By Operating Activities.
Net Cash Used In Investing Activities.
Net Cash Provided By (Used In) Financing Activities.
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not required for smaller reporting companies.
ITEM 4. |
CONTROLS AND PROCEDURES. |
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule
13a-15(b)
as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report.There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
16
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We currently and from time to time are involved in ordinary routine litigation and are the subject of threats of litigation that are incidental to the conduct of our business. These include indecency claims and related proceedings at the FCC, as well as claims and threatened claims by private third parties. However, we are not a party to any lawsuit or other proceedings, or the subject of any threatened lawsuit or other proceedings, which, in the opinion of management, is likely to have a material adverse effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS.
There have been no material changes to the risks affecting our Company as previously disclosed in Item 1A, “Risk Factors” of our annual report on Form
10-K
for the year ended December 31, 2021. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Repurchases of Equity Securities
The following table presents information with respect to purchases we made of our Class A common stock during the three months ended March 31, 2022.
| Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program |
||||||||||||
| January 1 – 31, 2022 |
4,400 | $ | 1.85 | — | — | |||||||||||
| February 1 – 28, 2022 |
— | — | — | — | ||||||||||||
| March 1 – 31, 2022 |
11,807 | 1.82 | — | — | ||||||||||||
| |
|
|||||||||||||||
| Total |
16,207 | |||||||||||||||
| |
|
|||||||||||||||
On March 27, 2007, our board of directors approved the Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”). The original ten year term of the 2007 Plan ended on March 27, 2017. Our stockholders approved an amendment to the 2007 Plan at the Annual Meeting of Stockholders on June 8, 2017 to, among other things, extend the term of the 2007 Plan until March 27, 2027. The 2007 Plan permits us to purchase sufficient shares to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock. All shares purchased during the three months ended March 31, 2022 were purchased to fund withholding taxes in connection with the vesting of restricted stock units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
17
ITEM 6. EXHIBITS.
| Exhibit Number |
Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
| 32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
| 32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BEASLEY BROADCAST GROUP, INC. | ||||
| Dated: May 9, 2022 | /s/ Caroline Beasley | |||
| Name: | Caroline Beasley | |||
| Title: | Chief Executive Officer (principal executive officer) | |||
| Dated: May 9, 2022 | /s/ Marie Tedesco | |||
| Name: | Marie Tedesco | |||
| Title: | Chief Financial Officer (principal financial and accounting officer) | |||
19
TABLE OF CONTENTS
Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits