Beasley Broadcast Group, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited. Beasley is a U.S. multi-platform media company operating radio stations and selling audio, digital, and event-related advertising. Comparisons below are to Q1 2023.
Key financial results
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $54.4 million | $57.8 million | Down 5.9% |
| Operating expenses | $55.5 million, including $49.2 million of operating expenses, corporate expenses, and depreciation and amortization | $57.4 million | Total down $1.9 million |
| Operating income (loss) | $(1.1) million | $0.4 million | Deteriorated $1.5 million |
| Net income (loss) | $8,000 | $(3.5) million | Improved $3.5 million |
| Operating margin | Approximately (2.0)% | Approximately 0.7% | Lower |
| Cash and cash equivalents | $27.8 million | $26.7 million at December 31, 2023 | Up $1.0 million |
| Net cash used in operating activities | $4.0 million | $2.4 million | Use increased $1.6 million |
Q1 2024 basic and diluted earnings per share were reported as a dash, reflecting approximately zero per share. Audio revenue was $43.4 million, down 8.4%; digital revenue was $11.0 million, up 9.8%. Digital growth partly offset weaker audio revenue. Audio operating expenses declined, while digital expenses increased with continued investment.
Cash flow, debt, and liquidity
- Investing activities provided $5.1 million, including $6.0 million of proceeds from the sale of the company’s BMI investment, partly offset by $0.9 million of capital expenditures. The sale generated a $6.0 million gain and left the company with no BMI investment.
- Cash declined by $4.0 million from operating activities; financing activities used $13,000. The company cited lower cash receipts from revenue as the principal driver of the year-over-year increase in operating cash use.
- Long-term debt was $267.0 million principal, or $264.5 million net of unamortized issuance costs, at March 31, 2024. The secured notes bear interest at 8.625% and mature February 1, 2026; cash interest paid in Q1 was $11.5 million. Estimated fair value of the notes was $160.2 million, based on a Level 2 measurement.
- Current assets were $80.6 million and current liabilities $42.0 million. The company identifies cash on hand and internally generated cash flow as primary liquidity sources and says it expects adequate resources to meet obligations for the next 12 months and thereafter, while cautioning that weak results or unexpected costs could create earlier financing or liquidity needs.
Material changes, outlook, and risks
- Management attributed the audio decline primarily to lower local agency and direct revenue and the October 2023 disposition of WJBR-FM. Digital revenue grew, alongside higher digital operating costs. The esports business was discontinued in December 2023, eliminating prior-period “other” revenue and expenses.
- Interest expense fell $1.0 million year over year, which the company attributed to 2023 repurchases of secured notes. The $6.0 million BMI gain was a one-time item and materially affected reported net income; excluding it, the quarter’s reported profit would not have been achieved.
- The board has suspended future quarterly dividends; the notes’ covenants also restrict dividends and other actions. The notes are secured by substantially all company and majority-owned subsidiary assets and contain restrictive covenants.
- No specific financial guidance or quantified forecast is provided. Management notes that revenue is seasonal and typically lowest in Q1, and that political advertising can cause year-to-year fluctuations. Forward-looking risks include advertising demand and competition, digital execution, FCC regulation and licenses, debt and covenant constraints, severe weather and technology disruptions, and Nasdaq listing compliance.
- Nasdaq approved transfer of the stock listing to the Nasdaq Capital Market effective April 18, 2024, granting until October 7, 2024 to regain the $1.00 minimum bid-price requirement. The company may consider a reverse stock split; compliance is not assured. Management reported ordinary-course litigation but no matter expected to have a material adverse effect. Disclosure controls were assessed as effective, with no material quarterly change in internal control over financial reporting.
Key facts for investors to verify
- Whether operating cash use and declining audio revenue improve in subsequent quarters, and how durable digital growth is.
- Liquidity and refinancing plans for the $267.0 million secured notes due in February 2026, including the impact of the 8.625% coupon and covenant restrictions.
- Nasdaq bid-price compliance progress before October 7, 2024 and any decision regarding a reverse stock split.
- How results look apart from the nonrecurring BMI sale gain, and whether the company’s stated liquidity expectations remain supported by cash generation.