Beasley Broadcast Group, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Beasley operates radio stations and sells advertising and related services across audio, digital, and event platforms. Effective January 1, 2021, it reported Audio and Digital as separate segments.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $59.6 million | $30.4 million | $107.8 million | $88.0 million |
| Operating income (loss) | $5.8 million | $(17.6) million | $3.3 million | $(24.8) million |
| Net income (loss) | $0.2 million | $(18.2) million | $(10.5) million | $(27.1) million |
| Operating margin | 9.7% | (58.0)% | 3.0% | (28.1)% |
| Operating cash flow | Not presented for quarter | Not presented for quarter | $4.8 million | $7.1 million |
Q2 diluted earnings per share were $0.01 versus a loss of $0.63 per share. Six-month loss per share was $0.35 versus $0.95. The filing does not provide a clear quarterly cash-flow figure. Six-month capital expenditures were $2.6 million; cash increased $36.4 million to $57.1 million, principally reflecting debt financing activity.
At June 30, 2021, total assets were $771.9 million and total liabilities were $518.6 million. Current assets were $114.4 million and current liabilities $49.4 million (current ratio approximately 2.3). Debt principal was $310.0 million, comprising $300.0 million of secured notes and a $10.0 million PPP loan; debt carrying value, net of issuance costs, was $303.0 million. Cash less debt principal was approximately $252.9 million.
Material changes versus comparable periods
- Q2 revenue rose 96.1%; six-month revenue rose 22.4%. Management attributed audio and digital growth primarily to recovery from the COVID-19 pandemic. Q2 audio revenue was $51.2 million and digital revenue $8.0 million.
- Q2 returned to modest net income from a substantial year-earlier loss. For the first half, the net loss narrowed by $16.6 million, aided by higher revenue, lower operating and corporate expenses, and no repeat of the prior-year $6.8 million FCC-license impairment.
- Six-month operating cash flow declined $2.2 million to $4.8 million, despite higher revenue; management cited higher operating-expense and tax payments, partly offset by lower interest payments and higher cash receipts.
- Interest expense increased to $12.6 million for the first half from $8.0 million. The company recorded a $5.0 million debt-extinguishment loss in 2021, compared with a $2.8 million debt-modification loss in 2020.
Debt, outlook, risks, and unusual items
- In February 2021, Beasley issued $300 million of 8.625% first-lien secured notes due February 2026 and used proceeds to repay its prior credit facility, an esports-related promissory note, a $5 million related-party loan, and related costs. The notes are secured by substantially all company and majority-subsidiary assets and include restrictive covenants, including limits on dividends, additional debt, acquisitions, and asset sales.
- The company received a $10 million PPP loan at 1% interest, due in 2026. It intends to use proceeds for qualifying expenses but gave no assurance that any portion will be forgiven.
- Quarterly dividends remain suspended; the debt indenture also restricts dividends. Management said it believes liquidity and capital resources are sufficient for obligations over the next twelve months and thereafter, while cautioning that weak results or unexpected expenses could create earlier financing needs. No revenue or earnings guidance was provided.
- Q2 other operating income included $3.0 million of life-insurance proceeds following former Chairman George Beasley’s death, partly offset by $1.5 million accrued under his employment contract. First-half other operating income also included $0.6 million of pandemic-related consulting costs and $0.5 million of early programming-contract termination costs.
- COVID-19, economic conditions, advertising demand, audience competition, digital execution, FCC regulation, receivable credit risk, and substantial debt and covenant restrictions remain key risks. Management reported no FCC-license impairment trigger in the first half of 2021; the filing notes $6.8 million of license impairments in 2020. Management said no pending or threatened litigation was expected to materially affect results or financial condition.
Important facts for investors to verify
- Whether the post-pandemic rebound in audio and digital advertising continues and translates into sustained operating cash flow.
- Debt-service capacity under the 8.625% notes, covenant headroom, and the status and potential forgiveness of the PPP loan.
- Whether FCC-license and goodwill valuations remain supportable if advertising recovery weakens.
- Dividend policy and the impact of the indenture’s restricted-payment provisions.
- Effects of the former Chairman’s death, including the insurance proceeds and contractual payments, and the company’s transition in leadership.