Beasley Broadcast Group, Inc. — FY2022 Form 10-K
Business context and period: Annual report for the year ended December 31, 2022, filed March 27, 2023. Beasley operates radio stations in 14 U.S. markets and sells audio, digital and event-based advertising. It also operates an esports business. The figures below compare FY2022 with FY2021; they are not standalone fourth-quarter results.
Key financial results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net revenue | $256.4 million | $241.4 million |
| Operating income (loss) | $(34.3) million | $14.7 million |
| Net income (loss) | $(42.1) million | $(1.5) million |
| Net loss per share, basic and diluted | $(1.43) | $(0.05) |
| Net cash from (used in) operating activities | $11.1 million | $(1.9) million |
| Cash and cash equivalents at year-end | $39.5 million | $51.4 million |
| Long-term debt, net of issuance costs | $285.5 million | $293.8 million |
| Total stockholders’ equity | $223.5 million | $263.1 million |
- Revenue increased 6.2%. Audio revenue rose 3.2% to $213.0 million; digital revenue grew 24.5% to $40.8 million. Management attributed audio growth primarily to post-pandemic recovery and 2022 political advertising, and digital growth to continued expansion and the Guarantee Digital acquisition.
- Operating expenses rose 6.9% to $213.2 million, and corporate expenses increased 8.6% to $18.0 million. Reported operating margin was approximately negative 13.4%, compared with positive 6.1% in 2021; reported net margin was approximately negative 16.4%, versus negative 0.6%.
- FY2022 included $52.9 million of impairment losses: $23.8 million for FCC licenses, $16.3 million for goodwill and $12.8 million for esports franchise rights. These non-cash charges were the principal unusual items behind the reported operating loss. The filing cites higher discount rates and lower projected revenue in affected markets and esports.
- Interest expense was $26.9 million, versus $26.5 million in 2021. The company recorded a $17.8 million income tax benefit in 2022.
- Operating cash flow improved by $13.1 million year over year. Investing cash outflow was $14.2 million, including $13.4 million of capital expenditures and $2.0 million for Guarantee, partly offset by $1.2 million in disposition proceeds. Financing cash outflow was $8.8 million, including $8.7 million of note repurchases; cash declined by $11.8 million during the year.
- Current assets were $105.7 million and current liabilities were $56.7 million at year-end. The company reported $49.0 million of working capital. Long-term debt principal was $290.0 million, consisting of 8.625% senior secured notes due February 2026; the notes are secured by substantially all company and majority-owned subsidiary assets and contain restrictive covenants.
Material changes and management outlook
- FY2022 revenue growth was accompanied by higher operating costs and a substantially larger net loss, primarily reflecting impairment charges. Management said pandemic effects were less significant in 2022 than in 2020 and 2021; certain cost-control measures remained in place.
- The company acquired Guarantee Digital for $2.0 million in cash in June 2022, sold substantially all WWNN-AM operating assets for $1.25 million in April, and exchanged KDWN-AM assets for KXTE-FM assets in Las Vegas in December, recognizing a $3.4 million gain.
- Management stated it believed liquidity and capital resources would be sufficient to meet obligations for the next 12 months and thereafter. The filing provides no specific revenue, earnings or cash-flow guidance.
- Quarterly dividends remain suspended; any resumption is at the board’s discretion and subject to note-indenture restrictions. The company may repurchase or otherwise retire notes depending on liquidity, market conditions and contractual limits.
- Key risks include competition from digital platforms, advertising sensitivity to economic conditions, inflation and higher costs, debt service and covenant constraints, and reliance on a few markets. Boston, Detroit and Philadelphia generated 58% of FY2022 net revenue. FCC licenses and goodwill are highly judgmental valuations; a 10.0% discount-rate assumption, with other assumptions unchanged, would have produced an additional $20.5 million of FCC-license impairment excluding Atlanta.
- The Beasley family held 94% of total voting power, and the company disclosed multiple leases and other transactions with family-affiliated entities. Management reported disclosure controls and internal control over financial reporting were effective; the independent auditor issued an unqualified opinion on the financial statements. The audit identified impairment assessments for FCC licenses and esports franchise rights as critical audit matters.
Most important facts for investors to verify
- Whether revenue and digital growth can translate into stronger operating cash flow after expenses, capital spending and interest payments.
- The assumptions supporting FCC-license, goodwill and esports franchise-right valuations, especially projected market revenue and discount rates.
- Debt-service capacity, covenant headroom and refinancing options before the 2026 note maturity; confirm the implications of the 8.625% coupon and secured collateral.
- Whether cash and working capital remain adequate given seasonal advertising revenue, committed programming payments and the suspended dividend.
- Exposure to Boston, Detroit and Philadelphia, and the terms and governance of material related-party arrangements.