Beasley Broadcast Group, Inc. — Q1 2021 Form 10-Q
Business context and period. The filing covers the three months ended March 31, 2021, compared with the same period in 2020. Beasley operates radio stations and sells audio, digital and event-related advertising. Results are seasonal, and management cautions that interim results are not necessarily indicative of full-year performance.
Key financial results
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $48.2 million | $57.7 million |
| Operating loss | $2.5 million | $7.1 million |
| Net loss | $10.7 million | $8.9 million |
| Net loss attributable to BBGI stockholders | $10.6 million; $0.36 per share | $8.8 million; $0.32 per share |
| Cash provided by operating activities | $2.4 million | $2.0 million |
| Capital expenditures | $1.0 million | $3.4 million |
Revenue fell 16.4%. Audio revenue declined to $41.7 million from $50.9 million; digital revenue rose to $5.8 million from $5.3 million; other revenue declined to $0.7 million from $1.5 million. Operating expenses decreased 15.6% to $43.0 million. Operating margin, calculated as operating loss divided by revenue, improved to approximately negative 5.2% from negative 12.4%.
Net loss worsened despite the narrower operating loss, mainly reflecting $5.0 million of debt-extinguishment loss and higher interest expense, which rose 38.1% to $5.8 million. Q1 2020 included $6.8 million of FCC-license impairment charges; no impairment loss was recorded in Q1 2021.
Balance sheet, debt and liquidity
At March 31, 2021, cash and cash equivalents were $56.2 million, compared with $20.8 million at December 31, 2020. Current assets were $101.9 million and current liabilities were $37.6 million. Long-term debt, net of issuance costs, was $302.6 million; total liabilities were $509.4 million. Cash less reported long-term debt was approximately negative $246.4 million.
Operating cash flow was positive $2.4 million. Financing activities provided $33.8 million, primarily reflecting the debt refinancing and PPP loan proceeds; investing activities used $0.7 million. The increase in cash therefore principally reflects financing transactions rather than operating cash generation.
Material changes, outlook and risks
- Debt refinancing: In February, the company issued $300 million of 8.625% senior secured notes due February 2026. Proceeds repaid its prior credit facility, the esports acquisition promissory note and a $5 million related-party loan, as well as fees and expenses. The notes are secured by substantially all company and majority-owned subsidiary assets and include restrictive covenants, including limits on dividends and additional debt.
- PPP borrowing: The company borrowed $10 million at 1% interest, due in 2026, with payments deferred while it may apply for forgiveness. Management intends to use proceeds for eligible expenses, but forgiveness is not assured.
- Dividends: The board suspended future quarterly dividends amid the pandemic; the 2021 quarter had no dividend declared. The notes’ covenants also restrict dividend payments.
- Business performance: Management attributed lower revenue primarily to continuing COVID-19 effects on audio and other revenue, partly offset by digital growth. Expense reductions reflected pandemic-related cost controls, including headcount reductions implemented in 2020. The newly reported Digital segment generated $5.8 million in revenue but an operating loss of $1.5 million; Audio generated $4.7 million of operating income.
- Management outlook: No specific revenue or earnings guidance is provided. Management stated it believes liquidity and capital resources are sufficient to meet requirements and obligations for the next twelve months and thereafter, while warning that poor results or unexpected expenses could create earlier financing or liquidity needs.
- Risks and contingencies: COVID-19 uncertainty may affect advertising, receivables and impairment estimates for FCC licenses, goodwill and lease assets. Other cited risks include advertising competition, digital execution, FCC regulation, substantial debt and covenant restrictions, severe weather, technology disruptions and family control. Management reported no litigation it considers likely to have a material adverse effect and no material change to previously disclosed risk factors.
- Other changes: In March, the company exchanged its interest in Renegades for Renegades’ interest in Outlaws; Outlaws became wholly owned and Renegades was no longer consolidated. The reported loss on the exchange was approximately $3,000. The company sold WHSR-AM and a translator license for $0.4 million in February.
Important facts for investors to verify
- Whether advertising demand, particularly audio revenue, recovers and digital growth continues.
- PPP loan forgiveness eligibility, application status and any repayment obligation.
- Debt-service capacity under the 8.625% notes, compliance with restrictive covenants and any limits on dividends or future borrowing.
- Whether operating cash generation improves enough to support debt service and liquidity needs beyond the reported cash increase from financing.
- Potential further COVID-related impairment or credit-loss effects, given the sensitivity of estimates to economic and advertising conditions.