Beasley Broadcast Group, Inc. — FY 2013 Form 10-K
Reporting period: Year ended December 31, 2013. This is an annual filing; the supplied text does not provide standalone fourth-quarter results. Beasley operated 44 radio stations across 11 U.S. markets, plus one expanded-band AM station.
Financial performance and liquidity
| Metric | FY 2013 | FY 2012 | Change |
|---|---|---|---|
| Net revenue | $104.9 million | $100.2 million | +4.7% |
| Operating income | $26.8 million | $27.5 million | -2.5% |
| Operating margin | 25.6% | 27.4% | -1.9 percentage points |
| Net income | $11.5 million | $11.0 million | +4.7% |
| Diluted EPS | $0.51 | $0.48 | +$0.03 |
| Operating cash flow | $19.9 million | $20.4 million | -2.4% |
- Station operating costs rose 7.2% to $67.0 million, outpacing revenue growth; corporate G&A increased 6.4% to $8.6 million. Interest expense rose 9.1% to $7.1 million. The lower debt-extinguishment loss ($1.3 million versus $2.6 million) helped net income rise despite lower operating income.
- Cash and equivalents were $14.3 million at year-end, versus $11.7 million a year earlier. Current assets were $35.9 million and current liabilities $14.3 million (current ratio approximately 2.5).
- Net cash used in investing was $6.7 million, including $4.0 million for the KVGS-FM acquisition and $2.8 million of capital expenditures. Net cash used in financing was $10.6 million, principally debt repayments and loan fees. Cash increased $2.6 million for the year.
- Debt totaled $106.9 million at December 31, 2013, down from $116.8 million a year earlier; stockholders’ equity was $93.6 million. The company reported $13.0 million of undrawn revolving commitments. Its year-end debt ratio was 3.26x and interest coverage was 4.61x; it was in compliance with covenants.
Changes, outlook and notable items
- Revenue growth reflected Philadelphia and Las Vegas; 2013 Las Vegas revenue included the acquired KOAS-FM and KVGS-FM stations. The 2012 comparison included approximately $2.0 million of additional political advertising. Miami-Fort Lauderdale and Philadelphia together generated 47.9% of 2013 revenue.
- In April 2013, Beasley refinanced and repaid its $25.0 million second-lien facility, using additional first-lien borrowings and $3.0 million of cash. The transaction included a $1.0 million prepayment fee and a $1.3 million debt-extinguishment loss. First-lien debt carried a 4.17% adjusted-LIBOR-based rate at year-end and matures in August 2017.
- Management said liquidity should be sufficient to meet obligations for at least the next 12 months, relying on operating cash flow and credit facilities. It gave no specific revenue or earnings guidance, and cautioned that poor results or unexpected expenses could constrain borrowing capacity. Debt-ratio covenant limits tighten from 5.0x through 2013 to 4.5x in 2014, then decline annually to 3.0x in 2017.
- The board declared a $0.045-per-share dividend in December, paid in January 2014; no cash dividends were paid during 2013. Management intended to pay quarterly dividends in 2014, subject to board discretion, financial condition and credit-agreement restrictions.
- KVGS-FM was acquired for $4.0 million from an entity owned by CEO George G. Beasley. Other related-party arrangements include property and tower leases and a $2.3 million note receivable from a family-controlled entity; review the terms and governance disclosures. The filing also reports a $185,916 payment to the related seller for KVGS management losses.
- No FCC license or goodwill impairment was recorded in 2013, following qualitative assessments. Those assets represented a substantial share of total assets. The filing identifies risks from advertising competition and economic sensitivity, FCC license renewals and regulation, debt covenants, market concentration, hurricanes, and potential music royalty changes. Management reported no litigation expected to have a material adverse effect.
Investor verification points
- Review the full credit agreement and monitor leverage, coverage, required amortization and the step-down covenant limits.
- Verify the economics and independent oversight of related-party acquisitions, leases, payments and the note receivable.
- Assess whether revenue growth can be sustained as station costs rise faster than revenue, and consider the political-advertising comparison and concentration in Miami-Fort Lauderdale and Philadelphia.
- Confirm FCC renewal status for pending applications and monitor impairment sensitivity for FCC licenses and goodwill.
- Distinguish the dividend declared in 2013 from cash paid: the $1.0 million payment occurred in January 2014. Confirm future distributions remain discretionary and covenant-compliant.