Beasley Broadcast Group, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing is an annual report, not a standalone fourth-quarter report; it provides full-year comparisons with 2020.
Business context
Beasley is a U.S. multi-platform media company primarily operating radio stations, with digital advertising and esports activities. It reported Audio and Digital as reportable segments; esports did not meet separate disclosure thresholds. Advertising is the principal revenue source. The company cited intense competition from other broadcasters, streaming and digital platforms, and technology companies.
Key financial metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Net revenue | $241.4 million | $206.1 million |
| Operating income (loss) | $14.7 million | $(4.3) million |
| Operating margin | 6.1% | (2.1)% |
| Net loss | $(1.5) million | $(18.9) million |
| Net loss per share, basic and diluted | $(0.05) | $(0.63) |
| Net cash from (used in) operating activities | $(1.9) million | $4.2 million |
| Cash and cash equivalents at year-end | $51.4 million | $20.8 million |
| Long-term debt, face amount | $300.0 million | $263.5 million |
| Total stockholders’ equity | $263.1 million | $267.7 million |
Revenue grew 17.1%, with Audio revenue of $206.5 million and Digital revenue of $32.7 million. The filing attributes the increase primarily to recovery from the pandemic, partly offset by lower political advertising and other revenue. Operating expenses rose 9.5% to $199.5 million; corporate expenses rose 6.1% to $16.6 million. The reported net loss improved substantially, but included a $10.0 million gain from forgiveness of the PPP loan.
Current assets were $112.2 million and current liabilities $44.5 million at year-end. The resulting current ratio was approximately 2.5. Operating cash flow turned negative despite higher revenue; management cited a $33.8 million increase in cash operating-expense payments, partly offset by $27.5 million of additional cash receipts. Investing cash use was $1.1 million, and financing provided $33.7 million. Capital expenditures were $4.5 million.
Material changes versus 2020
- Revenue rebounded from pandemic-affected 2020; operating results moved from a loss to operating income.
- Digital revenue increased from $21.6 million to $32.7 million. A dedicated digital division was established effective January 1, 2021.
- Interest expense increased 56.6% to $26.5 million, primarily due to higher debt and interest rates; the company also recorded a $5.0 million debt-extinguishment loss.
- In February 2021, the company issued $300.0 million of 8.625% senior secured notes due February 2026 and used proceeds to repay its prior credit facility, esports promissory note, and a related-party loan. The notes are secured by substantially all company and majority-owned subsidiary assets and carry restrictive covenants.
- The $10.0 million PPP loan was forgiven in November 2021 and recognized as a gain. The company’s cash balance increased, while operating cash flow declined.
- No FCC-license impairment was recorded in 2021; $9.0 million of impairment losses were recorded in 2020. At year-end, FCC licenses were $508.4 million, approximately 67% of total assets.
Outlook, risks and unusual items
- Management said pandemic-related expense controls reduced costs during 2020 and, to a lesser extent, 2021, and expected reductions to continue into 2022. It provided no quantified revenue, earnings or cash-flow guidance.
- Management stated it believed liquidity and capital resources would be sufficient for obligations over the next twelve months and thereafter, while warning that poor results or unexpected expenses could create earlier financing or liquidity needs.
- Quarterly dividends remain suspended; any resumption is at the board’s discretion and subject to debt restrictions.
- COVID-19 variants and economic conditions remain uncertain. Key risks include advertising demand, competition and audience shifts, regulation and FCC license renewals, music royalties, receivables credit risk, cyber and distribution disruptions, hurricanes, and dependence on major markets. Boston, Detroit and Philadelphia generated 59.2% of 2021 revenue.
- FCC-license fair values depend on management estimates and discounted cash-flow assumptions. The 2021 impairment test found fair value exceeded carrying value in all markets, but some cushions were relatively narrow, including Wilmington at 7.9%, Las Vegas at 10.3%, and Fort Myers-Naples at 15.0%.
- Other unusual items included $3.0 million of life-insurance proceeds related to former Chairman George Beasley’s death, partly offset by contract-related and other costs. After year-end, the company agreed to sell WWNN-AM assets for $1.25 million, subject to approvals, and estimated a potential $1.5 million loss if completed.
- The Beasley family held 94.3% of total voting power. The company also leases facilities and towers from entities affiliated with family members; review disclosed related-party transactions and terms.
Investor verification checklist
- Confirm whether the operating cash-flow shortfall and cash-conversion trend persisted after 2021.
- Review the $300 million notes’ 8.625% interest burden, restrictive covenants, maturity, and refinancing capacity.
- Assess revenue recovery by Audio and Digital, especially the durability and margins of digital growth and advertising demand in the three largest markets.
- Check FCC-license valuation assumptions and impairment headroom, particularly in markets with smaller valuation cushions.
- Verify the status and financial effect of the WWNN-AM asset sale and whether dividends remain suspended.
- Review related-party leases and the effect of family voting control on governance and minority shareholders.
Audit and controls: Crowe LLP issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation.