# Beasley Broadcast Group Inc: Form 10-Q for the period ended Mar 31, 2022

- Company: [Beasley Broadcast Group Inc](/companies/bbgi.md) (CIK 1099160)
- Form: 10-Q
- Filed: 2022-05-09
- Accepted by EDGAR: May 9, 2022, 20:07 ET
- Period: 2022-03-31
- Accession: 0001193125-22-144976
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1099160/000119312522144976/d333846d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1099160/000119312522144976/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $55.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2022-01-01 to 2022-03-31 | −$2.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-01-01 to 2022-03-31 | $6.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | −$5.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | −$3.7m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2022-01-01 to 2022-03-31 | 29,370,789 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-01-01 to 2022-03-31 | $735.4k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-01-01 to 2022-03-31 | $1.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2022-01-01 to 2022-03-31 | $29.6k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-03-31 | $50.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-03-31 | $99.5m | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $746.6m | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $37.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-03-31 | $487.1m | us-gaap:Liabilities |
| Long-term debt | at 2022-03-31 | $294.2m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2022-03-31 | $259.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 21,310 characters.

### General

We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. We own and operate radio stations in the following radio markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, and Wilmington, DE. We refer to each group of radio stations in each radio market as a market cluster. Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc. and its subsidiaries.

### Cautionary Note Regarding Forward-Looking Statements

This report contains “forward-looking statements” about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based on the current beliefs and expectations of the Company’s management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, contain words such as: “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “plans,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions.

Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements.

Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:

- the effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s Federal Communications Commission (“FCC”) licenses and/or goodwill;
- external economic forces that could have a material adverse impact on the Company’s advertising revenues and results of operations;
- the ability of the Company’s radio stations to compete effectively in their respective markets for advertising revenues;
- the ability of the Company to develop compelling and differentiated digital content, products and services;
- audience acceptance of the Company’s content, particularly its radio programs;
- the ability of the Company to respond to changes in technology, standards and services that affect the radio industry;
- the Company’s dependence on federally issued licenses subject to extensive federal regulation;
- actions by the FCC or new legislation affecting the radio industry;
- increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists;
- the Company’s dependence on selected market clusters of radio stations for a material portion of its net revenue;
- credit risk on the Company’s accounts receivable;
- the risk that the Company’s FCC licenses and/or goodwill could become impaired;
- the Company’s substantial debt levels and the potential effect of restrictive debt covenants on the Company’s operational flexibility and ability to pay dividends;
- the potential effects of hurricanes on the Company’s corporate offices and radio stations;
- the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming;
- disruptions or security breaches of the Company’s information technology infrastructure;
- the loss of key personnel;
- the Company’s ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on the Company’s financial condition and results of operations;
- the fact that the Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of the Company; and
- other economic, business, competitive, and regulatory factors affecting the businesses of the Company, including those set forth in the Company’s filings with the SEC.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. We do not intend, and undertake no obligation, to update any forward-looking statement.

### Financial Statement Presentation

The following discussion provides a brief description of certain key items that appear in our financial statements and general factors that impact these items.

*Net Revenue.* Our net revenue is primarily derived from the sale of commercial spots to advertisers directly or through national, regional or local advertising agencies. Revenues are reported at the amount we expect to be entitled to receive under the contract. Local revenue generally consists of commercial advertising sales, digital advertising sales and other sales to advertisers in a radio station’s local market, either directly to the advertiser or through the advertiser’s agency. National revenue generally consists of commercial advertising sales through advertiser agencies. National advertiser agencies generally purchase advertising for multiple markets. National sales are generally facilitated by our national representation firm, which serves as our agent in these transactions.

Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors:

- a radio station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio;
- the number of radio stations, as well as other forms of media, in the market competing for the attention of the same demographic groups;
- the supply of, and demand for, radio advertising time; and
- the size of the market.

Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our radio market clusters. Seasonal revenue fluctuations are also common in the radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues typically are lowest in the first calendar quarter of the year. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups. This political spending typically is heaviest during the fourth quarter of such years.

We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime.

We also continue to invest in digital support services to develop and promote our radio station websites, applications, and other distribution platforms. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our radio stations over the internet. We also generate revenue from selling third-party digital products and services.

*Operating Expenses.* Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our radio stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our radio market clusters.

### Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:

- it involves a significant level of estimation uncertainty; and
- changes in the estimate or different estimates that could have been selected have had or are reasonably likely to have a material impact on our results of operations or financial condition.

Our critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no additional material changes to our critical accounting estimates during the three months ended March 31, 2022.

### Recent Accounting Pronouncements

There were no recent accounting pronouncements that have or will have a material effect on our financial condition or results of operations.

### Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

The following summary table presents a comparison of our results of operations for the three months ended March 31, 2021 and 2022, with respect to certain of our key financial measures. These changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 1 of this report.

### Results of Operations - Consolidated

|  | Three Months ended March 31, 2021 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $48,212,040 | $55,720,268 | $7,508,228 | 15.6% |
| Operating expenses | 42,967,871 | 49,830,436 | 6,862,565 | 16.0 |
| Corporate expenses | 3,905,289 | 4,233,460 | 328,171 | 8.4 |
| Impairment loss | — | 1,857,226 | 1,857,226 | — |
| Other operating expenses | 1,100,000 | — | (1,100,000) | (100.0) |
| Interest expense | 5,778,071 | 6,849,037 | 1,070,966 | 18.5 |
| Loss on extinguishment of long-term debt | 4,996,731 | — | (4,996,731) | (100.0) |
| Income tax benefit | 2,602,886 | 5,849,318 | 3,246,432 | 124.7 |
| Net loss | 10,684,641 | 3,738,945 | (6,945,696) | (65.0) |

13

### Results of Operations - Segments

| Net revenue | Three Months ended March 31, 2021 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Audio | $41,729,602 | $47,365,145 | $5,635,543 | 13.5% |
| Digital | 5,763,728 | 7,808,250 | 2,044,522 | 35.5 |
| Other | 718,710 | 546,873 | (171,837) | (23.9) |
|  | $48,212,040 | $55,720,268 | $7,508,228 | 15.6 |
| Operating expenses |  |  |  |  |
| Audio | $34,735,469 | $40,683,812 | $5,948,343 | 17.1% |
| Digital | 7,257,915 | 8,401,763 | 1,143,848 | 15.8 |
| Other | 974,487 | 744,861 | (229,626) | (23.6) |
|  | $42,967,871 | $49,830,436 | $6,862,565 | 16.0 |

*Net Revenue.* Net revenue increased $7.5 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. Audio revenue increased $5.6 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued recovery from the COVID-19 pandemic. Digital revenue increased $2.0 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued growth in the digital segment.

*Operating Expenses.* Operating expenses increased $6.9 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. Audio operating expenses increased $5.9 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued recovery from the COVID-19 pandemic. Digital operating expenses increased $1.1 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to continued investment in the digital segment.

*Corporate Expenses.* Corporate expenses increased $0.3 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primary due to an increase in contract services.

*Impairment Loss.* On April 1, 2022, we completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, we recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.

*Other Operating Expenses.* Other operating expenses for the three months ended March 31, 2021 include payments of $0.6 million for consulting services related to the COVID-19 pandemic and expenses of $0.5 million related to the early termination of a programming contract.

*Interest Expense.* Interest expense increased $1.1 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. The primary factors affecting interest expense were an increase in long-term debt outstanding and the applicable interest rate.

*Loss on Extinguishment of Long-Term Debt.* We recorded a loss on extinguishment of long-term debt of $5.0 million during the three months ended March 31, 2021, resulting from the issuance of the Notes (as defined below) on February 2, 2021 and the use of proceeds to repay the credit facility.

*Income Tax Benefit.* Our effective tax rate was approximately 20% and 61% for the three months ended March 31, 2021 and 2022, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain non-taxable income, and certain expenses that are not deductible for tax purposes.

*Net Loss.* Net loss for the three months ended March 31, 2022 was $3.7 million compared to net loss of $10.7 million for the three months ended March 31, 2021 as a result of the factors described above.

### Liquidity and Capital Resources

*Overview.* Our primary sources of liquidity is internally generated cash flow and cash on hand. Our primary liquidity needs have been, and for the next twelve months and thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and radio station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with radio station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our office and studio space, the maintenance of our radio towers and equipment, and digital products and information technology. We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our operations.

In response to the COVID-19 pandemic, our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. In addition, as discussed in “Secured Notes” below, the Indenture governing our Notes limits our ability to pay dividends.

*Secured Notes.* On February 2, 2021, we issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year. The Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority owned subsidiaries and are guaranteed jointly and severally by the Company and its majority owned subsidiaries. The Indenture contains restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of our subsidiaries.

From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units. We paid approximately $30,000 to repurchase 16,207 shares during the three months ended March 31, 2022. From time to time, we may seek to repurchase, redeem or otherwise retire our Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:

- internally generated cash flow;
- additional borrowings or notes offerings, to the extent permitted under the Indenture governing our Notes; and
- additional equity offerings.

We believe we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next twelve months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Notes, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect, and we may not secure financing when needed or on acceptable terms.

*Off-Balance Sheet Arrangements.* We did not have any off-balance sheet arrangements as of March 31, 2022.

*Cash Flows*. The following summary table presents a comparison of our cash flows for the three months ended March 31, 2021 and 2022 with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 1 of this report.

|  | Three Months ended March 31, 2021 | 2022 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $2,354,007 | $735,374 |
| Net cash used in investing activities | (666,768) | (1,375,775) |
| Net cash provided by (used in) financing activities | 33,763,934 | (31,544) |
| Net increase (decrease) in cash and cash equivalents | $35,451,173 | $(671,945) |

*Net Cash Provided By Operating Activities.* Net cash provided by operating activities was $0.7 million during the three months ended March 31, 2022, as compared to net cash provided by operating activities of $2.4 million during the three months ended March 31, 2021. Significant factors affecting the $1.6 million decrease in net cash provided by operating activities included an $11.1 million increase in interest payments, partially offset by a $6.1 million increase in cash receipts from revenue, a $1.7 million decrease in cash paid for operating expenses and a $1.3 million decrease in income tax payments.

*Net Cash Used In Investing Activities.* Net cash used in investing activities during the three months ended March 31, 2022 included payments of $1.4 million for capital expenditures. Net cash used in investing activities for the same period in 2021 included payments of $1.0 million for capital expenditures.

*Net Cash Provided By (Used In) Financing Activities.* Net cash provided by financing activities during the three months ended March 31, 2021 included proceeds of $300.0 million from the issuance of the Notes and proceeds from a $10.0 million loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, partially offset by credit facility and promissory note repayments of $263.5 million, repayment of a $5.0 million loan provided by George Beasley, and payments of $7.6 million for debt issuance costs related to the Notes.

## Controls and procedures

As filed, 750 characters.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 193 characters.

There have been no material changes to the risks affecting our Company as previously disclosed in Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2021.

Filed May 9, 2022.
Source: SEC EDGAR, the filing index for accession 0001193125-22-144976. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.