Beasley Broadcast Group, Inc. — 2012 Form 10-K
Reporting period: Fiscal year ended December 31, 2012. This is an annual report, not a standalone fourth-quarter report. Beasley operated 43 radio stations across 11 U.S. markets and provided management services to one Las Vegas station.
Financial performance and position
| Metric | 2012 | 2011 | Change |
|---|---|---|---|
| Net revenue | $100.2 million | $97.7 million | +2.6% |
| Operating income | $27.5 million | $23.9 million | +14.9% |
| Operating margin | 27.4% | 24.5% | +2.9 percentage points |
| Net income | $11.0 million | $10.1 million | +9.2% |
| Basic / diluted EPS | $0.49 / $0.48 | $0.45 / $0.45 | Higher |
| Operating cash flow | $20.4 million | $20.7 million | Down $0.3 million |
- Net revenue increased mainly from $1.9 million more political advertising during the election year and $1.3 million of revenue from KOAS-FM, acquired in Las Vegas in August 2012. Revenue at the remaining market clusters was described as comparable.
- Station operating expenses fell 1.3% to $62.5 million, aided by a $0.8 million BMI settlement-related decrease and $0.9 million of lower Miami-Fort Lauderdale costs; KOAS-FM added $0.6 million of expense. Corporate G&A was broadly flat at $8.1 million.
- Interest expense declined 11.8% to $6.5 million. A $2.6 million loss on extinguishment of debt related to refinancing partly offset operating improvement. The effective tax rate was approximately 40%.
- Cash and cash equivalents were $11.7 million at year-end, down from $13.6 million. Investing used $3.8 million, including $2.0 million for KOAS-FM and $1.7 million for capital expenditures. Financing used $18.6 million, including debt repayments, refinancing fees, repayment of a related-party note, and the special dividend.
- Year-end total debt was $116.75 million, versus $126.7 million in 2011; stockholders’ equity was $83.0 million. Debt less cash was approximately $105.1 million. Current assets were $33.4 million and current liabilities $12.6 million.
Material changes and unusual items
- In August 2012, the company replaced its prior credit facility with a $110 million first-lien facility and a $25 million second-lien facility. At year-end, $15 million remained available under the $20 million revolving commitment; the company reported $5 million drawn on the revolver.
- Year-end debt carried stated rates of 5.18% on the first-lien facility and 11.25% on the second-lien term loan. The facilities mature in 2017 and 2018, respectively, and are secured by substantially all company and subsidiary assets.
- At December 31, 2012, Beasley reported compliance with debt covenants, a consolidated total debt ratio of 3.61x, and interest coverage of 4.99x. The agreements impose progressively tighter leverage limits and restrict dividends, repurchases, additional debt, and other actions.
- The board paid a one-time $0.085-per-share special dividend, totaling approximately $1.9 million. The filing gives no assurance of future dividends.
- KOAS-FM was acquired for $4.5 million from an entity owned by CEO George G. Beasley; $2.5 million was initially financed with a related-party note, repaid during 2012. Several properties and towers are also leased from entities or individuals related to the Beasley family.
Outlook, risks, and contingencies
- Management said it expected sufficient liquidity to meet obligations for the next 12 months, relying on operating cash flow and the credit facility. It warned that weak results, unexpected expenses, or acquisitions could create additional liquidity needs or threaten covenant compliance. No specific revenue or earnings guidance was provided.
- Advertising demand is exposed to economic downturns, changing audience preferences, ratings and pricing pressure, and competition from broadcast, digital, satellite, and other media. Revenue is seasonal and typically lowest in the first quarter.
- Miami-Fort Lauderdale and Philadelphia generated 47.1% of 2012 revenue; Florida stations generated 37.6%. The company also identified hurricanes, disruption to transmission infrastructure, and potential regulatory changes as risks.
- FCC licenses and goodwill together represented 75.9% of total assets. No license or goodwill impairment was recorded in 2012; however, license valuations—particularly in Las Vegas and Wilmington—depend on assumptions about market growth, share, margins, and discount rates.
- Some FCC license renewal applications remained pending, though the licenses continue in effect while timely applications are processed. Management reported no legal matter expected to materially harm financial results. The filing discusses potential FCC indecency enforcement and proposed recording-artist royalties as industry risks.
- CEO George G. Beasley and family interests held substantial voting control; the filing says the CEO could control the vote on most stockholder matters. The company disclosed related-party leases, receivables, and transactions.
Important facts for investors to verify
- Reconcile the $116.75 million year-end debt balance, $11.7 million cash balance, available revolver commitment, and subsequent reported debt of $115.7 million as of February 5, 2013.
- Track covenant headroom against the scheduled leverage limits and the large $68 million of scheduled debt payments in 2017.
- Assess whether revenue growth can persist without 2012 election-related advertising, and monitor performance in Miami-Fort Lauderdale and Philadelphia.
- Review the assumptions behind FCC license valuations and the status of pending license renewals.
- Examine related-party transactions and governance implications of concentrated voting control.