Beasley Broadcast Group, Inc. — Q1 2023 Form 10-Q
Business context and period: Beasley operates radio stations and sells audio, digital and event-based advertising. This unaudited report covers the three months ended March 31, 2023, compared with the same period in 2022. The company notes that first-quarter revenue is typically seasonally low and interim results may not indicate full-year performance.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Net revenue | $57.8 million | $55.7 million |
| Operating income (loss) | $0.4 million | $(2.7) million |
| Net loss | $(3.5) million | $(3.7) million |
| Basic and diluted loss per share | $(0.12) | $(0.13) |
| Operating cash flow | $(2.4) million | $0.7 million |
| Capital expenditures | $1.2 million | $1.4 million |
Revenue grew 3.7%. Digital revenue increased 27.8% to $10.0 million, while audio revenue was nearly flat at $47.4 million. Operating expenses rose 1.7% and corporate expenses rose 5.9%. Digital expense growth reflected continued investment in the segment. Operating margin was approximately 0.7% in Q1 2023, versus approximately (4.9)% in Q1 2022; the prior-year result included a $1.9 million impairment.
Cash and cash equivalents were $35.9 million at March 31, 2023, down from $39.5 million at year-end 2022. Current assets were $92.1 million and current liabilities $51.0 million. Long-term debt, net of issuance costs, was $285.8 million; the associated secured notes have $290 million principal outstanding, bear interest at 8.625%, and mature February 1, 2026. Total liabilities were $478.0 million.
Changes, outlook and risks
- Net loss narrowed by $0.2 million year over year. The prior-year quarter included a $1.9 million FCC-license impairment tied to the sale of substantially all WWNN-AM operating assets, completed April 1, 2022, for $1.25 million.
- Other income was $0.54 million in Q1 2023, compared with less than $0.01 million in Q1 2022. The filing does not provide a clear explanation for the increase.
- Operating cash flow declined by $3.2 million year over year; management attributed the change primarily to $3.8 million more cash paid for operating expenses, partly offset by lower interest payments.
- Management expects liquidity needs to include working capital, debt service, capital expenditures and general corporate purposes. It believes available resources will meet obligations for the next 12 months and thereafter, but warns that weak results or unanticipated costs could create earlier financing or liquidity needs, and financing may not be available on acceptable terms.
- No specific revenue or earnings guidance is provided. The board has suspended quarterly dividends; the notes’ covenants also restrict dividends and other actions, including additional debt and certain asset sales.
- Key risks include advertising and economic conditions, competition, digital execution, audience acceptance, FCC regulation and license impairment, substantial debt and restrictive covenants, receivable credit risk, technology or infrastructure disruption, severe weather, and dependence on selected station markets. The company reported routine litigation but no matter management believed likely to materially harm financial condition or results.
Investor verification points
- Track whether digital growth continues to offset nearly flat audio revenue, and whether related digital investment produces improved segment profitability.
- Review operating cash flow, cash balances, debt service capacity and compliance with note covenants, especially given the 8.625% debt due in 2026.
- Confirm the drivers and recurrence of the $0.54 million of other income and assess the effects of seasonal advertising patterns.
- Monitor FCC-license and goodwill impairment exposure, advertiser receivables, and any changes to dividend suspension or liquidity plans.